Hannover Re has reported going “significantly” above its large loss budget for the first-quarter of 2025 with the California wildfires the main driver at a cost of EUR 631 million, saying that it shared EUR 438 million of its large natural catastrophe losses with insurance-linked securities (ILS) capital sources during the period.Still, the large reinsurance company delivered a EUR 480 million net result, or profit, for the period, growing its reinsurance revenues by 4.5% to EUR 7 billion and remains on target for its full-year guidance despite the significant catastrophe losses suffered.Hannover Re’s large losses in property and casualty reinsurance reached EUR 765 million, which exceeded its budget for Q1 and the reinsurance service result fell 28.5% from EUR 720 million a year ago, to EUR 515 million for Q1 2025.But, the reinsurers use of insurance-linked securities (ILS) capital sources as a risk partner as well as important retrocessional protection continues to be a benefit in moderating losses for Hannover Re, as the company revealed sharing EUR 438 million of its large losses with ILS during Q1 this year.

During an analyst call Hannover Re executives said .Clemens Jungsthöfel, Chief Executive Officer, commented on the quarter, “The devastating wildfires in California are another example of how climate change is exacerbating the risks of extreme weather events.The expenditures for the wildfires put us significantly above the large loss budget for the first quarter.

At the same time, our underlying business has continued to develop favourably, and we are therefore confident of achieving our full-year targets.” The California wildfires drove a gross loss of EUR 1.361 billion for Hannover Re, but on a net basis that was reduced to EUR 631.4 million for the reinsurance, on the back of the losses shared with ILS risk partners and retrocession, we assume.With a nat cat large loss budget of EUR 1.7 billion for the full-year, the wildfires have eaten a meaningful chunk, as we’ve seen with all major re/insurers that have reported their losses for the catastrophe event.Hannover Re remains positive on the market in general though, citing “healthy underlying business” in its portfolio.

“The positive development of the underlying business is driven by our clear focus on the clients, our pragmatic and solution-centred approach as well as our long-term and partnership-based business model,” said CEO Jungsthöfel explained.“These qualities reinforce our confidence in our future growth prospects.This puts us on the right track to achieve our goals and enjoy lasting success.” April reinsurance renewals resulted in ” stable or slightly softer conditions at a price level that remained attractive,” the company explained, with growth of 10.4% in volume terms and a risk-adjusted price decline of 2.4% on renewed business.

In the Americas, Hannover Re said that overall pricing remains attractive and that a general downward pressure on US property pricing has been offset by double-digit rate increases on LA wildfire-affected reinsurance programmes so far this year.An abundance of capacity in the market drove price reductions in Korea and Japanese renewals, the reinsurer said, driving Hannover Re to pursue selective growth despite what it called a “competitive market environment.” As is typical, business in the structured reinsurance and ILS area was seen as a diversified contribution to new business contractual service margin, as Hannover Re has been citing for some years now.The reinsurers activities in the ILS space have been driving additional profit for the company and when major losses do strike the reinsurer now shares a significant proportion with the ILS capital partners it works with, as well as with traditional retrocessionaires.

As we reported in April, , with the number of collateralised reinsurance participations fronted for investors rising, while its catastrophe bond fronting also grew to a new record level...All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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