Global reinsurance giant Hannover Re reported its third-quarter and nine month results today and perhaps the most notable aspect of them for the insurance-linked securities (ILS) community is that the company has reported a slight shrinking in the amount of its large losses ceded to insurance-linked securities (ILS) capital sources.This comes as Hannover Re reported that its large man-made and natural catastrophe losses are running meaningfully below budget, helping to reinsurance firm report stellar results and raise its full-year guidance as it expects higher profits.After the first-quarter of 2025, Hannover Re had reported going meaningfully over its loss budget for the first-quarter as the California wildfires drove significant impacts, that resulted in the reinsurance firm .After the second-quarter, , suggesting a far smaller nat cat burden for the company and only an additional EUR 21 million of losses ceded to ILS investors and third-party capital partners.

Now, after the third-quarter of 2025, Hannover Re has reported that the ILS investor share of its gross losses has declined slightly to EUR 448 million, suggesting some improvement or reduction in the amount of losses to be ceded for prior events.In fact, Hannover Re’s net loss for the California wildfires is now reported as EUR 614.8 million, which is a reduction on the post-Q2 disclosure of a net wildfire loss of EUR 615.1 million and this had been reduced in the quarter prior as well.However, that wildfire loss reduction alone is not enough to support the reduced cession of losses to ILS capital on its own, so there must be some other smaller events that have declined, or another reporting factor that has caused the overall to fall.

It is worth noting that while Hannover Re’s gross large man-made and natural catastrophe losses are running at almost EUR 1.9 billion after the third-quarter, the amount of losses shared with ILS investors is already higher than was seen after full-year 2024, which had a higher gross loss burden.Meaning the proportion of large losses Hannover Re has shared with ILS investors is higher in 2025 so far.So far in 2025, around 24% of Hannover Re’s gross large losses have been shared with its ILS investors and capital partners, which compares to under 15% in 2024, only 3% in 2023, and 34% in 2022 (prior years never got above 22% of large losses shared with ILS capital).

So this year sees Hannover Re sharing the second highest proportion of its large losses with ILS investors in the reporting record, showing the important role insurance-linked securities relationships play for the reinsurance company, but we think also likely reflecting their increasing scale in capital terms within the organisation as well.Overall, Hannover Re ceded EUR 714 million of large losses in the first nine months, the majority from natural catastrophe events and with the California wildfire making up EUR 676 million of that total.In general, Hannover Re’s reporting reflects the strength of reinsurance market results in 2025, with natural catastrophe losses coming in well below budget and profitability very high.

For the nine months of 2025, Hannover Re’s group net income was up by +7.7% to EUR 2.0 billion, return on equity was running at an impressive 22%, and large losses were running at EUR 1.1177 billion, well below the budgeted EUR 1.636 billion and also running at a lower pace than the prior year.At the same time reinsurance new business contract service margin and revenues have risen, as Hannover Re continued to grow into the still attractive marketplace.All of this has driven an increase to full-year earnings guidance, which has been raised to around EUR 2.6 billion by the reinsurer.

“We generated a very good Group profit in the first nine months.Both business groups as well as the investments and our lean operating model contributed to this.In view of this favourable business performance we are raising our earnings guidance for the current year,” commented Clemens Jungsthöfel, Chief Executive Officer.

“For the coming year we are looking at a market environment with broadly adequate prices and conditions,” added Jungsthöfel.“In a landscape still clouded by uncertainties, demand for reliable and high-quality reinsurance protection remains strong – which is why we expect further profitable growth side-by-side with our clients wherever conditions are commensurate with the risks.” ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.