Hannover Re has reported 7% higher first-half net income of EUR 1.4 billion for the first-half of 2026, while the reinsurance firm reported higher underwriting volumes at mid-year renewals amid continued price declines. Notably, with catastrophe losses below budget, only EUR 18 million was shared with insurance-linked securities (ILS).
Hannover Re explained that it sees “an increasingly challenging market landscape” but with the first-half beat on net income, with the EUR 1.4 billion up on H1 2025’s EUR 1.314 billion, sees itself as on-track to achieve its full-year guidance of EUR 2.7 billion.
Clemens Jungsthöfel, Chief Executive Officer, explained, “We can look back on a successful six months. Our partnership-based approach and lean organisation remain pivotal in our ability to operate successfully in an increasingly challenging market environment. It is precisely for this reason that we were able to selectively acquire further market shares side-by-side with our clients in the first half-year.”
Gross reinsurance revenue fell by 3.1% to EUR 12.9 billion, but adjusted for rate effects the reinsurer said this would only have been a 0.7% decline.
Hannover Re’s net reinsurance service result came in at EUR 1.7 billion after deductions for retrocession and insurance-linked securities (ILS) business, up on the prior year’s EUR 1.4 billion.
Operating profit grew 9.7% to EUR 1.9 billion, while Hannover Re’s annualised return on equity was 21.5%, a little down on the 23% from the prior year first-half.
Importantly, net contractual service margin, which quantifies unearned profit embedded in underwritten business, rose 11.4% to EUR 8.8 billion at June 30th 2026 from the end of the prior year.
Property and casualty reinsurance volumes were affected by the ongoing price declines being seen in the softening market environment.
Net new business contract service margin came down 13.3% to EUR 1.7 billion, which Hannover Re noted was “driven primarily by price declines in the most recent rounds of renewals as well as exchange rate effects, partially offset by volume growth due to increased new business – especially in the second quarter.”
Gross reinsurance revenue in P&C risks fell by 8.0% to EUR 8.8 billion, or 3.9% at unchanged exchange rates.
Notably, large losses across catastrophes and man-made events came in well-under the budget of EUR 1.0246 billion, with Hannover Re reporting EUR 784.7 million for H1 2026, lower than H1 2025’s EUR 976.1 million.
Winter Storm Fern’s impacts across the United States and Canada at the start of this year drove a EUR 130.4 million loss, while severe Atlantic windstorms affecting the Iberian Peninsula and Morocco cost Hannover Re EUR 126.4 million. The company has also reserved EUR 75 million for the Venezuela earthquake.
The reinsurance company also said it has reserved EUR 200 million for potential impacts from the Iran war, as well as other amounts for additional risks in the reporting period and to strengthen its loss reserves. In addition, Hannover Re still booked its full large loss budget for the period, as it tends to do.
With this low catastrophe loss experience, it’s unsurprising that Hannover Re only shared $18 million with its insurance-linked securities capital partners in the first-half of 2026, a particularly low amount.
Notably, the company had shared EUR 17 million of large losses with ILS investors in the first-quarter of this year, meaning the second-quarter total appears to have been a tiny EUR 1 million.
Which shows that the the ILS investors Hannover Re works with took very few losses from their arrangements facilitated by the company so far this year, which serves to underscore high profitability for ILS strategies and investments, especially given the company’s stature in ILS fronting and facilitation of transactions for these investors.
Retrocession partners also seem to have only taken a minor share of losses in the first-half from Hannover Re as well, as the reinsurance company reported EUR 493.9 million of gross large catastrophe losses for the period, with EUR 436.1 million net.
The wider that gap tends to be, the more in losses tend to be shared with retro partners, but in H1 2026 it sems any retrocessional protection would only have been minor, given the well-below budget catastrophe losses.
The net reinsurance service result in P&C reached EUR 1.3 billion, much higher than the prior year’s EUR 975.1 million, with a combined ratio of only 83.2%, again much lower than H1 2025’s 88.4% and beating the full-year guidance of an 87% CR.
Property and casualty reinsurance operating profit soared 17.7% to EUR 1.5 billion, again well-ahead of the prior year’s EUR 1.3 billion.
“The very good half-year result puts Hannover Re in an excellent position,” said CEO Clemens Jungsthöfel. “Taken together with our resilience, which we again strengthened considerably in the previous year, and our lean operating model, I am looking to the full 2026 financial year and our long-term profitability with confidence.”
Moving on to the reinsurance renewals at the mid-year, Hannover Re noted that June and July 1st “brought continued price declines” for the company.
However, volumes increased by 12.3% as the reinsurer found new opportunities to deploy capacity, but pricing across the renewed business fell by 4.5% on an inflation- and risk-adjusted basis.
While reinsurance revenue in P&C reinsurance “grew more modestly than originally anticipated in the first half of the year,” only rising 0.2% year-on-year adjusted for exchange rate effects, Hannover Re noted that the renewal book is expected to have “an appreciable positive impact on reinsurance revenue (gross) over the remainder of the year.”
Hannover Re still expects currency-adjusted growth in the mid-single-digit percentage range is still possible for the full-year, in traditional P&C reinsurance and excluding structured deals, while its 87% combined ratio target remains expected to be achieved.
Over the renewals so far this year, Hannover Re has grown 7.2% in volume terms, but volumes in structured reinsurance and ILS have fallen by 18.7% year-to-date.
Hannover Re noted that, given market conditions, achieving its traditional reinsurance growth target is “challenging” but still achievable due to expected catch-up in the second-half of this year.
In the US at the renewals, Hannover Re said it continued to grow at what it deems adequate pricing, despite the rate pressures in property risks and for well-performing accounts.
The reinsurance company said it achieved disciplined selective growth in natural catastrophe risks, and noted strong demand for nat cat protection in Latin America as well.
Volumes in Asia decreased due to increased competition, while in Australia Hannover Re saw attractive growth opportunities despite decreasing rates.
Similar to the other major reinsurers that have already reported their first-half results, the competitive market environment and declining prices has driven volume impacts, but these companies have used their scale and diversification, as well as selectivity to remain on-track for the year.
Low levels of catastrophe losses have helped, of course, while this has also served to benefit the third-party and ILS capital partners that work with the major reinsurers, evidenced in Hannover Re’s low share of losses being ceded to ILS investors.
Read all of our reinsurance renewal news coverage.
View all of our Artemis Live video interviews and subscribe to our podcast.
All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.
Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.
