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Sven Althoff, Member of the Executive Board for Property & Casualty at large reinsurer Hannover Re, said today that the company is comfortable growing in this P&C market environment, while the firm expects property catastrophe price reductions to decelerate heading into the January 1st, 2027, renewals.
This morning, Althoff, alongside other executives at global reinsurer Hannover Re, discussed the firm’s strong half-year results with analysts.
In its results announcement, the reinsurer revealed that its in-force book grew by 12.3% at the mid-year renewals despite rates on the renewed business falling by 4.5% on an inflation and risk-adjusted basis. Year-to-date 2026 renewals growth amounts to 7.2%, with an overall risk-adjusted price change of -3.9%.
So, despite property, and notably property catastrophe rate softening, Hannover Re is still growing in the P&C space. In light of this, during the call with analysts, the firm was questioned on how comfortable it is growing in the current market landscape, characterised by price declines and falling margins.
“The majority of the growth has come from renewed business, so business we know really, really well, so we are obviously very comfortable pricing that business,” said Althoff. “It’s clear that given how the market is developing, the pricing levels are not as attractive as they were last year, and last year was a deterioration on the year prior. But still, despite the fact that the attractiveness of margins has reduced, it’s still attractive in the sense that it’s making our hurdle rates, and therefore growing in these lines of business is value accretive, also in a softening market environment.”
Althoff emphasised that the level of softening is not happening to the same extent everywhere. While property cat is clearly experiencing the most dramatic softening, other parts of Hannover Re’s portfolio are significantly more stable when it comes to the terms and conditions.
“So, therefore, when it comes to new business, it has been a diversified picture. We have written some more cyber non-proportional business, for example, which was new demand, so business that was not previously purchased, to give you one example. The same goes for credit and surety, where the surety products become more prominent in some of the more emerging country environments, and both businesses certainly are not subject to the kind of pricing pressure we see on the nat cat side,” he said.
Nevertheless, Hannover Re is still growing “a little bit” on the nat cat side, noted Althoff. “So, whatever we wrote new (in nat cat), despite the rate reductions, is making our hurdle rates, and we were also prepared to write lesser positions on business where the pricing did not work so well any longer.”
Althoff reminded listeners that the reason the firm still finds some new nat cat business attractive, must be seen in the context that Hannover Re’s relative market share in nat cat reinsurance business is significantly lower compared to the firm’s average market share across all lines of business.
“So, if you take that all together, we are comfortable in growing in this market environment, as we still see that as an attractive market environment. And you can also see that by the still very limited loss component we are showing after the first half of the year, which clearly demonstrates that the growth will be value accretive over time when we release the CSM,” said Althoff.
Later in the call, Althoff was also quizzed on the outlook for 2027, in terms of rates and terms and conditions (T&Cs), and also whether Hannover Re expects brokers to push for improved T&Cs for cedents at this year’s RVS in Monte Carlo.
“When it comes to what to expect for 2027… Our experience with the softening of the market so far has been that it’s really concentrating on price only. The very few discussions we have on terms and conditions in general are client-specific, so very bespoke discussions,” he said.
He went on to note that this could be things like an hours clause here, or the reintroduction for strike riots or commotion coverage there, but overall there’s no clear trend, and importantly, “no general pressure that reinsurers are now supposed to cover something which they didn’t cover before.”
“When it comes to the aggregate protections, yes, some clients are buying a little more than they did in the past, but it’s very often clients that have always purchased aggregate protections. So, again, the market is not awash with this kind of product. And quite frankly, as we talk today, that’s the general picture we would expect also going into 2027.
“And of course, we would say, particularly on the property cat side, the base level from which we are starting in many cases is now through two renewal cycles with meaningful discounts. So, therefore, the room for further discounts is certainly no longer the healthy 2023 levels, and therefore logic would tell you that we would see a certain deceleration,” explained Althoff.
The executive doubled down on this prediction later on in the call, emphasising that Hannover Re does “expect a deceleration of the price reductions” in property cat.
“Everywhere else, we would say, well, the softening did not start as early as on the property cat side. It’s significantly lower compared to what we have experienced on the property cat side. So, therefore, there’s no change in sight, and at the end of the day, it all depends on the loss experience of the client. If that is very positive, reinsurers will be minded to take that into account. If there have been losses, then even today we also see increases. So, therefore, there’s less of a general trend outside property cat,” he said.
The post Hannover Re is comfortable growing in this market, expects property cat rate reductions to decelerate: Althoff appeared first on ReinsuranceNe.ws.
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