Hannover Re achieved its increased earnings guidance for the 2025 financial year with group net income rising sharply by 13.4% to EUR 2.6 billion, demonstrating sustained profitability despite challenging market conditions. The reinsurer's strong performance was accompanied by a substantial 39% increase in the proposed dividend to EUR 12.50 per share, reflecting a new payout ratio strategy aimed at distributing around 55% of IFRS Group net income to shareholders.
The company's financial strength is evident in its return on equity of 21.4%, which clearly surpasses the strategic target of more than 14%. This achievement comes as Hannover Re actively reinforced its balance sheet through strategic actions including the realization of hidden losses in its investment portfolio and expansion of resilience in loss reserves. Chief Financial Officer Christian Hermelingmeier noted that these measures have equipped Hannover Re with "the strongest balance sheet in its history" for navigating an increasingly challenging market landscape.
Property and casualty reinsurance delivered a good result with increased resilience in loss reserves, recording a combined ratio improvement to 84.0% from 86.6% in the previous year. Large loss expenditures totaled EUR 1,725 million, coming in below the full-year budgeted expectation of EUR 2.1 billion despite significant individual events including California wildfires (EUR 595 million), Hurricane Melissa (EUR 329 million), an earthquake in Myanmar (EUR 118 million), and severe Australian hailstorms (EUR 102 million). The reinsurance service result in this segment increased considerably to EUR 2.6 billion.
Life and health reinsurance also performed well, with the reinsurance service result beating guidance at EUR 903.0 million, surpassing the target of more than EUR 875 million. While intense competition marked the segment worldwide, sustained demand across all areas contributed to positive results. The investment portfolio delivered a 2.5% return, though this fell short of the guided target return of around 2.9% due to the strategic realization of hidden losses in the fixed-income portfolio to boost future earnings.
Looking ahead, Hannover Re has fully confirmed its guidance for 2026, expecting Group net income of at least EUR 2.7 billion. The company anticipates mid-single-digit percentage growth in property and casualty reinsurance revenue (adjusted for exchange rate effects), a combined ratio below 87%, a reinsurance service result of around EUR 925 million in life and health reinsurance, and a return on investment projected to reach around 3.5%. These projections assume large loss expenditure does not significantly exceed the budgeted level of EUR 2.3 billion and that there are no unforeseen distortions on capital markets.
The company's financial strength is further underscored by its capital adequacy ratio under Solvency II, which stood at 256% at year-end, comfortably above the threshold of more than 200%. This ratio already takes into account the proposed dividend for 2025 as well as planned business growth in 2026. Additional information about the company's performance and financial position can be found in their investor reports section, while legal disclosures are available through their legal information page.
