In This Article:
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Group Net Income: EUR480 million for Q1 2025.
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P&C Revenue Growth: Increased by 5.1% adjusted for FX; underlying growth in double digits.
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Combined Ratio: 93.9%, exceeding large loss budget by EUR330 million.
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Life and Health Revenue: Decreased by 4.1% adjusted for currency effects.
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New Business CSM: EUR1.5 billion for P&C; EUR232 million for Life and Health.
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Return on Investment: 3.5%, above the target of 3.2%.
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Solvency Ratio: 273%.
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Shareholders' Equity: Increased by 2.4%.
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CSM Increase: 8.4% due to new business.
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Risk Adjustment Increase: 3.3% driven by new business in P&C and assumption changes in Life and Health.
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EBIT Contribution from Life and Health: EUR253 million in Q1 2025.
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Reserve Adequacy: EUR2.53 billion as per Willis Towers Watson review.
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Premium Volume Growth: 10.4% in April renewals.
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Risk Adjusted Price Decrease: 2.4% in April renewals.
Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Hannover Rueck SE (HVRRF) reported a solid start to 2025 with a group net income of EUR480 million, maintaining their full-year target of EUR2.4 billion.
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The company demonstrated strong underlying profitability in its P&C portfolio, with a combined ratio of 93.9%, despite large losses from the LA wildfires.
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Investment performance was robust, with a return on investment of 3.5%, exceeding the target of 3.2%.
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The solvency ratio remains strong at 273%, allowing the company to redeem a EUR500 million hybrid bond without refinancing.
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The company achieved double-digit growth in P&C reinsurance revenue when adjusted for accounting changes, supporting their target of more than 7% growth for the year.
Negative Points
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Hannover Rueck SE (HVRRF) faced significant large losses in Q1 2025, particularly from the LA wildfires, impacting their quarterly results.
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Life and health reinsurance revenue decreased by 4.1%, primarily due to a reduction in the US mortality book.
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The combined ratio exceeded the large loss budget by EUR330 million, indicating higher-than-expected claims.
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Currency translation effects partially diminished the positive contribution from Q1 earnings.
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The company observed a 2.4% risk-adjusted price decrease in their portfolio, reflecting some pricing pressure in the market.
Q & A Highlights
Q: Can you explain the factors behind the higher-than-expected solvency ratio of 273%, and why didn't you change your investment return guidance given the strong Q1 performance? A: The solvency ratio, adjusted for a quarterly accrued ordinary dividend, is 265%, up from last year due to positive new business and favorable life and health experience. The SCR decreased slightly due to FX exposure. As for the investment return, it's too early to change guidance due to potential volatility in private equity and real estate portfolios. We are pleased with the 3.5% ROI but will reassess later in the year. - Christian Hermelingmeier, CFO