Hannover Re expects price pressure at 1/1 but doubles down on nat cat appetite

Speaking at Hannover Re’s Investors’ Day 2025, Sven Althoff, Member of the Executive Board for Property & Casualty, said that while some areas of the market may see a slight softening in 2026, overall pricing is expected to remain at an adequate level.

This, he added, will enable Hannover Re to maintain strong profitability and continue growing its business.

Althoff’s comments, delivered alongside a detailed presentation, revealed that Hannover Re’s natural catastrophe business has produced a clearly positive gross technical result over the cycle, with average annual outcomes around €200 million.

Over the past decade, the firm’s actual net large-loss experience from natural catastrophes has been about 12% below its budgeted allowance, reflecting strong modelling and risk management.

While individual years such as 2021 saw elevated losses, Hannover Re’s results for 2022–2024, with net nat cat losses of €1.2–1.3 billion, remained well within expected ranges.

Althoff said this consistency supports continued attractive profitability for the underwriting year 2025, with returns expected to remain comfortably above the cost of capital.

Diversification within the property and casualty portfolio, he added, also reduces the capital requirement for property business by around 30%, providing a solid foundation for further growth.

He added, “For 2026, from a trading environment point of view, we are expecting a broadly similar situation as we have found in 2025.”

“There will be pockets where we will see softening, most likely on the property catastrophe-related side, but for the most part of our business, we expect that pricing will remain at an adequate level, and it will allow us to produce good profitability and hence also further grow the business.”

This aligns with his comments in August, when the Hannover Re executive reported year-to-date growth of 5.4% in traditional treaty renewals in the firm’s H1 2025 results.

He attributed the growth primarily to the underlying expansion of Hannover Re’s ceding companies, while also highlighting the firm’s increasing appetite for natural catastrophe risk.

Meanwhile, Sharon Ooi, also a Member of Hannover Re’s Executive Board for Property & Casualty, discussed the pricing outlook for the 1/1 2026 reinsurance renewal at the Investors’ Day.

Ooi observed, “Generally, I think it’s always easiest to start with markets where there have been losses. While they haven’t been significant, there have still been earthquakes, floods, and other events.

“In markets with losses, I think pricing will generally remain flat, or if there are underlying increases in exposure, those will be taken into account. Inflation, at least in the markets I look after, is less of an issue currently, but it still needs to be considered.

“In markets that have been really clean, without losses, there will be very interesting discussions about how to continue with the current pricing. And there will definitely be pressure.

“But a lot of that pressure tends to come mainly on the nat cat side. On the per-risk side, looking at liability and other lines, underlying changes in the portfolio have to be taken into account as well.”