Hannover Re, one of Europe’s big four reinsurers, has raised its full year 2025 net income guidance by €200 million to €2.6 billion on the back of a strong performance in the first nine months of the year, during which net income increased by 7.7% to €2 billion with a strong result in property and casualty (P&C) reinsurance.
Group operating profit also increased year-on-year, by 2.5% to €2.5 billion from €2.1 billion.
As at September 30th, 2025, shareholders’ equity amounted to €12 billion, up from €11.8 billion at the end of December 2024, as the book value per share reached €99.51, compared with €97.80 at the end of December.
The Group net contractual service margin (CSM) increased by 2.1% to €8.3 billion at the end of September, compared with €8.2 billion at the end of 2024.
Within P&C reinsurance, Hannover Re notes “broadly stable conditions and prices that were still commensurate with the risks” from the 2025 renewal rounds, as the firm capitalised on growth opportunities and expanded its business in view of “the continued good state of the market.”
As a result of the favourable outcome of the various treaty renewals, the P&C new business CSM improved by 6.9% in 9M’25 to €2.6 billion compared with €2.5 billion in 9M’24, while the net new business LC fell to €27.7 million from €30 million.
Gross P&C reinsurance revenue was stable in 9M’25 at €13.9 billion, but would have grown by 2% at unchanged exchange rates. In fact, excluding a base effect from the previous year, Hannover Re reports that growth would have been roughly 9.5% adjusted for exchange rate effects.
In terms of net large loss expenditure, for 9M’25 the €1.177 billion booked is 10% lower than the prior year’s €1.304 billion, and comfortably within the budget of €1.636 billion for the period. The large loss budget for the 2025 financial year is unchanged at €2.1 billion.
The Los Angeles California wildfires, at a cost of €615 million, was the largest net individual loss for Hannover Re during 9M’25, followed by the earthquake in Myanmar at €91 million, the fire at an oil refinery in Texas at €76 million, the fire at an oil refinery in California at €72 million, and the series of tornadoes in the US Midwest at a cost of €51 million.
During the nine month period, the reinsurer also boosted its loss reserves, notably in the first half of the year, via “continued adherence to a prudent reserving policy.”
Within P&C, the net reinsurance service result increased to €1.7 billion for 9M’25 from €1.5 billion in 9M’24, as the combined ratio strengthened by 1.9 percentage points to 86%. The P&C operating profit grew by 7.6% to €1.9 billion for 9M’25 compared with €1.7 billion in 9M’24.
The company’s life and health (L&H) reinsurance division “continued to develop robustly in the first nine months,” with Hannover Re highlighting longevity covers.
The L&H net new business CSM rose to €373 million for 9M’25 from €223.1 million in the prior year, while the net loss component totalled €10 million, compared with €17.8 million last year. Contract renewals and amendments in the in-force portfolio came to €211.9 million, down on the prior year’s €293.3 million.
Gross L&H reinsurance revenue increased slightly to €5.8 billion, but growth would have been 2.2% at unchanged exchange rates.
The net L&H reinsurance service result lifted to €671.3 million for 9M’25 from €668.4 million in 9M’24, so is still in a good level for achieving the 2025 target of more than €875 million. The L&H operating result decreased by 9.9% year-on-year to €645.3 million for 9M’25.
“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,” said Clemens Jungsthöfel, Chief Executive Officer of Hannover Re. “In view of this favourable business performance we are raising our earnings guidance for the current year.”
On the asset side of the balance sheet, the portfolio of investments decreased to €64.6 billion as at the end of September 2025 from €65.9 billion as at the end of December 2024. Net investment income hit €1.3 billion, slightly down on the prior year’s €1.4 billion, with an annualised average return on investments under own management of 2.8%.
Christian Hermelingmeier, Chief Financial Officer of Hannover Re, commented: “We took advantage of the favourable development in reinsurance business and systematically boosted the resilience of our investment portfolio by active loss realisation in our fixed income portfolio. This will improve our future investment income through reinvestment at prevailing higher interest rates.”
As mentioned, in light of the strong performance through the first nine months of 2025, the reinsurer has increased its Group net income guidance for the year to €2.6 billion, which assumes the full utilisation of the €2.1 billion large loss budget by year-end, but does not take into account the possibility of further realisation of losses on fixed-income securities to strengthen future investment income and increase flexibility in the investment portfolio.
Hannover Re expects gross reinsurance revenue in P&C to grow by more than 7% this year, and has also revised the P&C 2025 expected combined ratio to less than 87% from the previous less than 88%.
In L&H reinsurance, the company expects a net reinsurance service result of more than €875 million, with the net CSM expected to grow by roughly 2%.
Additionally, the target return on investments under own management was revised to around 2.9% from the previous 3.2%, due to active realisation of losses in the third quarter.
For the 2026 financial year, Hannover Re has reported that it anticipates Group net income of at least €2.7 billion, with a P&C combined ratio of less than 87%, based on large loss expenditure not significantly exceeding the budgeted level of €2.3 billion and there are no unforeseen distortions on capital markets.
In L&H reinsurance, Hannover Re anticipates a reinsurance service result of around €925 million in 2026.
Further, the return on investment is expected to reach around 3.5%.
Jungsthöfel commented: “For the coming year we are looking at a market environment with broadly adequate prices and conditions. 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.”
About the Author
