Commission Successfully Demonstrates Impressive Recovery Efforts in Largest Annual Deficit Case
Hannover Re, a leading global reinsurer, has reported a net loss of approximately 276 million euros due to Hurricane Ian, the highest natural catastrophe loss this year for the insurance industry. However, the company's financial performance remains robust, with a 13.5% increase in gross premium income in the first nine months.
The company's CEO, Jean-Jacques Henchoz, confirmed the profit forecast for the business year, despite the significant loss burden from Hurricane Ian. This forecast is bolstered by gains from inflation-linked bonds in capital investments.
Hannover Re's strategy in managing risk is diverse, encompassing differing reinsurance structures, geographic spread, and types of policies. This diversification, coupled with a broader risk diversification across various regions and types of policies, might have cushioned the impact of Hurricane Ian.
The use of parametric insurance, which pays out based on predetermined event characteristics rather than actual damage, could also have influenced Hannover Re's exposure to losses from Hurricane Ian. However, specific details on Hannover Re's approach to risk management and insurance policies relevant to Hurricane Ian are not available.
Comparatively, Munich Re and Swiss Re have reported higher losses from Hurricane Ian, with Munich Re estimating losses at 1.6 billion euros and Swiss Re at 1.3 billion US dollars. Hannover Re's market share in the reinsurance of Hurricane Ian's damages is 0.7%.
The company aims to increase its gross premium income in 2022, adjusted for currency effects, by at least 7.5 percent. Due to the increased costs of rebuilding from natural disasters like Hurricane Ian, driven by inflation rates, premiums in upcoming policy renewals are expected to significantly increase.
Despite the losses, Hannover Re's stock remains an attractive long-term investment, offering a sustainable dividend yield of over four percent. The net loss figure excludes risks secured with other companies or passed on in catastrophe bonds.
In the third quarter, Hannover Re earned approximately 222 million euros net, a 20% increase from the previous year. However, the losses from January to September amounted to almost 1.5 billion euros, exceeding reserves by 400 million euros.
Further factors contributing to higher premiums include substantial price increases in daily business, such as car repairs and the construction industry. Henchoz stated that inflation rates would increase the costs of rebuilding.
In summary, while Hannover Re has faced losses from Hurricane Ian, the company's financial performance remains strong, with a robust strategy in managing risk and a commitment to increasing premiums to absorb the losses. The company's stock continues to be an attractive long-term investment for those seeking a sustainable dividend yield.
The CEO, Jean-Jacques Henchoz, affirmed the profit forecast for the business year, attributing it to gains from inflation-linked bonds in capital investments, even though Hannover Re sustained a significant loss burden from Hurricane Ian. Despite the losses, Hannover Re's stock remains an attractive long-term investment, offering a sustainable dividend yield of over four percent.
