Hanover Re grows retrograde on January renovations, adds seismic boundary cover

Major European reinsurer Hannover Re has expanded downside protection by around 17%, or €200 million, to €1.4 billion on January 1, 2026, and reinsurance renewals, with increased capacity for its capital markets-backed K-Cessions facility, and new border seismic cover. Today, Hannover Re reported overall premium growth of 3.3% in traditional property and casualty reinsurance renewals in 1.1 2026, with average risk-adjusted rates declining by 3.2%.

Although it has been a highly competitive environment for protection sellers, Hannover Re has taken advantage of market conditions to increase its retroactive protection at improved prices, reporting a stable relative retroactive surrender rate.

For 2026, the structure of Hannover Re’s natural disaster retrospective program has not changed since 2025, but has increased in size to approximately €1.4 billion, with all three layers expanding compared to the previous year.

At the bottom of the old tower is the K-Cessions share, which has increased by more than 31% to US$964 million, compared to US$735 million in 2025. Above that is the excess full loss coverage account, which stands at €449 million for 2026, an increase of 4% compared to €434 million for the 2025 programme. At the top of the tower is Hannover’s total retroactive loss coverage. RE, which grew by 8% year-on-year to reach €108 million for 2026 compared to €100 million last year.

Hannover Re also unveiled its new parametric earthquake retrograde envelope for 2026, although emphasizing that it currently only has a small bound.

Overall, the German reinsurer benefited from improved pricing on proportional and non-proportionate placements in line with the internal market trend, with all legacy placements seeing a higher number of partners for 2026. You can see Hannover Re’s 2026 retrospective program below.

At 1.1 reinsurance renewals for 2026, Hannover Re’s renewable treaties amounted to €10.2 billion, representing 61% of its traditional property and casualty reinsurance business, excluding facultative reinsurance, ILS business and structured reinsurance. The reinsurer renewed treaties worth €9.4 billion, and chose to cancel treaties worth €827 million. Combined with new secured treaties and restructured treaties, as well as price changes and treaty shares amounting to EUR 1.2 billion, Hannover Re’s total revolving premium volume amounted to EUR 10.535 billion.

“While the terms and conditions of the treaty have remained largely stable, price declines have been more pronounced than expected – particularly in highly competitive lines and contracts with moderate loss experience,” said Sven Althof, Hannover Re Executive Board member responsible for property and casualty reinsurance.

“However, the price level is above the multi-year average and remains risk-proportionate. We have therefore continued to profitably grow our portfolio by strengthening relationships with existing clients and developing new ones. The pro-rata programs have benefited from the growth of our clients’ core businesses. We have also improved our downside protection.”

Premium volume in the Americas grew by 6.5% at the last renewal, while premium growth in the EMEA region grew by 0.4%, and in the Asia Pacific premium volume increased by 1.9%.

Hannover Re expanded its premium volume in specialty lines by 5.8% on renewals in what it describes as a highly competitive market environment.

In its natural catastrophe business, the reinsurer notes that the abundant capacity available in the market has led to more intense competition and reductions in risk-adjusted rates of 10% to 20%, both in international markets and in the US, but adds that rates overall remain adequate.

“The successful launch of Hannover Re Capital Partners has contributed to strengthening cooperation with the capital market in the field of natural catastrophe coverage,” the company explains.

Hannover Re announced the launch of its Bermuda-based insurance-linked securities (ILS) platform, Hannover Re Capital Partners, last year, and the unit now appears to be writing business.

Furthermore, Hannover Re saw continued demand for structured solutions upon recent renewal, with the majority of contracts renewed and new treaty relationships created, despite the competitive environment.

“We achieved profitable growth in a highly competitive market environment in renovations at the beginning of the year,” said Clemens Youngstoffel, CEO of Hannover Re. “Our strong market position, long-standing partnership-focused customer relationships, as well as cost advantages were decisive factors.”

“We have been able to partially offset significant price reductions in some lines within our overall portfolio thanks to our broad positioning. In areas where the business is profitable, we have been able to add to our market share. The quality of our written portfolio remains at a good level overall.”

Today, Hannover Re also presented some preliminary numbers for the full year 2025, including reinsurance revenue of €26.8 billion and operating profit of €3.5 billion, both higher than the previous year. The company says property and casualty reinsurance contributed €2.6 billion to operating results, while property and casualty reinsurance added €900 million. Group net income increased to €2.64 billion in 2025 from €2.23 billion in 2024.

“With renewals wrapping up in January and a successful 2025, we look forward with confidence,” Youngstoffel said. “Even in the face of increasing competition, our careful planning and strong market position continually open up additional profitable opportunities for growth. Thanks to our conservative P&C reinsurance and active loss recognition on our investments, we have laid the foundation for more sustainable earnings growth over the coming years.”

The reinsurer also confirmed its guidance for 2026, with the company expecting the group’s net income for the 2026 financial year to reach at least €2.7 billion.

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