HANNOVER (dpa-AFX) - Despite the devastating wildfires in California, Hannover Re, the world's third-largest reinsurer, posted another record profit in 2025. Net income increased by 13 percent to €2.64 billion, the DAX-listed company announced on Thursday in Hannover, citing preliminary figures. However, the reinsurer had to contend with a further decline in prices in its property and casualty business as of January 1. Management expects this trend to continue during subsequent contract renewals throughout the year.
The news was poorly received on the stock market: Hannover Re shares fell 1.3 percent in the morning to €244.60, making it one of the weaker performers on the DAX. Since the turn of the year, the stock has lost about eight percent, after reaching an all-time high of €292.60 last May.
Analysts had long anticipated a further decline in reinsurance prices. In recent years, the industry had sharply increased rates in its business with primary insurers such as Allianz and Generali. However, a trend reversal occurred at the start of 2025; now, reinsurers have had to accept further markdowns.
Just a few days ago, rating agency Moody's reported that reinsurance coverage, particularly in property and most specialty lines, had become significantly cheaper. Experts cited reinsurers' recent high profits and the increased issuance of catastrophe bonds as reasons. As a result, available reinsurance capital has risen to record levels, intensifying competition.
Hannover Re reported an average risk-adjusted price decline of 3.2 percent as of January 1. Prices fell in all regions worldwide, board member Sven Althoff said during a conference call. Risk-adjusted coverage against natural catastrophes became even 10 to 20 percent cheaper.
Nevertheless, Hannover Re expanded its business by 3.3 percent to €10.5 billion at the turn of the year. Reinsurance coverage against natural catastrophe losses remains largely appropriately priced, Althoff explained.
Last year, the devastating wildfires in Los Angeles proved particularly costly for Hannover Re. According to earlier reports, the destruction cost the company €615 million. Across the entire insurance industry, studies estimate total damages at around $40 billion (€33.9 billion).
However, expensive hurricane losses failed to materialize as the year progressed, and overall, Hannover Re's business performed well. As a result, CEO Clemens Jungsthöfel, who has been in office since last April, raised his profit target in November from around €2.4 billion to about €2.6 billion. The reinsurer was able to slightly exceed this mark.
According to preliminary figures, reinsurance revenue rose from €26.4 billion to €26.8 billion. Both the property and casualty segment and life and health reinsurance increased their operating profits. Thanks to this strong performance, Hannover Re bolstered its loss reserves and reduced hidden burdens in its investment portfolio.
In the current year, Jungsthöfel aims to further increase the group's profit to at least €2.7 billion. The board plans to announce further details and the dividend proposal for 2025 along with the audited annual financial statements on March 12./stw/nas/mis
