Hannover Rueck SE Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Huttner - Berenberg - Analyst : Oh, it's my lucky day. Good morning. Thank you very much and congratulations on, as you said, solid results. I really only had one question, and it was on the Solvency of the 273, which is well ahead of consensus, I think 262. I just wondered if you could walk us through the moving parts, particularly the The earnings contribution. My feeling is it's a little bit ahead of what you might have expected, but it's hard for me to kind of split it out because there are lots of moving parts, I imagine currency also played a role. And then the only other question, which is a very lightweight one, is given your 3.5% investment return in Q1 investment's a fairly stable thing. Why didn't you change your guidance anyway, that's it. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 8:00AM, HNRGn.DE - Q1 2025 Hannover Rueck SE Earnings Call

Question: Michael Huttner - Berenberg - Analyst : Thank you.

Question: Andrew Baker - Goldman Sachs - Analyst : Great, thank you for taking my questions. The first one, just on the PNC reinsurance revenue target of 7%. I appreciate that this is still in place on the new definition, but I believe it's prior to FX. Given where we've seen sort of the US dollar weakening, do you still think this sort of greater than 7% is achievable after FX based on what's happened here today? And then secondly, Just on the PNC reserve runoff, are you able to split the underlying reserve runoff that you saw in the first quarter with the reserve strengthening, and then as we think about this sort of reserve runoff as we go through the year, how should we expect this to develop just given, as you said, your prudent reserving on this side? Thank you.

Question: Andrew Baker - Goldman Sachs - Analyst : Great, thank you.

Question: Kamran Hossain - J.P. Morgan - Analyst : Hi, morning. Two questions for me. The first one is, coming back to the prudence. So I'm just trying to think this through. So 93.9% for the quarter, drag of [EUR167 million], and you say you should normally have a triple digit million positive, so kind of, Delta is probably like [EUR267 million]. Should we take that off plus the excess cat and that that's kind of what you're kind of printing at the moment on an underlying basis and comb ratio just a little bit confusing and kind of how these things add up and also kind of why in a very heavy cat loss quarter, or large loss quarter you added to kind of prudence and kind of thinking behind that. The second question is just on. The views on pricing at the mid-year, obviously it sounds like, kind of April went down a little bit, but still reasonable levels. What's your view on kind of how things will shape up heading into the mid-year renewals? Thank you.

Question: Kamran Hossain - J.P. Morgan - Analyst : Perfect, thank you.

Question: Iain Pearce - Exane BNP Paribas - Analyst : Hi, morning, everyone. Thanks for taking my questions. The first one is just on the California loss, where the level of retro protection you're getting on that loss seems pretty high compared to previous loss episodes. So just a couple of questions on that. So firstly, if there's creep on California, do you expect that you will continue to see losses there? And then is there any impact on retro for the remainder of the year, given the size of the loss that your retro partners have taken already? And then the second one was just on the currency result. I was pretty surprised to see that being positive, given given the US dollar movement. If you could just talk about expectations for that number for the remainder of the year, given what we've seen in currency markets, that'd be very useful. Thank you.

Question: Iain Pearce - Exane BNP Paribas - Analyst : Thank you.

Question: Shanti Kang - Bank of America - Analyst : Hi, good morning. Thank you. So just two questions for me. So the first one is, last week we had from a company that was able to secure aggregate cover, which is expected to buy in a 1 in 4 or 1 in 5 type scenario. So I was just curious if you could tell us more about your participation in aggregate cover markets today. And then the second question was on pricing. So obviously with the 2.4% decline in April, it seems that pricing is coming off peaks, but I'm just curious how far they could continue to decline before you'd stop pushing for growth. Thank you.

Question: Shanti Kang - Bank of America - Analyst : Okay, thank you.

Question: Will Hardcastleas - UBS - Analyst : Okay, thank you and morning everyone. Can you remind us again please, on where the reserve resilience rests relative to history and percentage terms when also you consider risk adjustment and in what circumstances would you look to build that beyond even this level and and beyond reserve growth I guess and what's the minimum level you'd be willing to have it at, and that's not for now, obviously, but I'm just thinking for the future, particularly given CFO change as well. And the second one, it's another reserved question, but it's just you mentioned there we'll see clear evidence on the reserving triangles of this. I guess can you point us in the right direction before we all drill down into these of what we should be looking for?Thank.You.

Question: Will Hardcastleas - UBS - Analyst : Thank you. Just a quick follow up on that if that's okay. I guess semi sort of wondering is it possible to go higher on this level as a percentage before you start getting knocks on the door? Is that plausible?

Question: Vinit Malhotra - Mediobanca - Analyst : Yes, good morning. So, frankly, most of my questions have been asked, but I have one, I mean, I'm still a little curious that how do you perceive the relation between building. Even more reserve redundancies and the cycle softening, I mean. I your expectation that When the cycle softens further, you will be leaning on the revers to meet. Profitability objectives. And do you think that's what the rough plan is? I'm just curious. Mainly on that. Thank you very much.

Question: Vinit Malhotra - Mediobanca - Analyst : And just to clarify, the trigger, the the trigger for this quarters. Was it the 2.5% price cut in If it doesn't sound like it was a surprise or a shocking number. I'm just curious as to was it a trigger or you just said let's do this for the medium term and see.

Question: Vinit Malhotra - Mediobanca - Analyst : Thank you very much.

Question: Ivan Bokhmat - Barclays - Analyst : Hi, good morning. Thank you very much. I have a couple of questions. The first one is about the new business CSM and PNC. So if I if I look at this number that you report on slide 8, the EUR1.5 billion, compare it to last year, first quarter, we're talking about approximately 4% growth year on year. So I'm just wondering if you could perhaps talk about the large books behind it of where do you think, what do you think was the bigger contributor to that growth, what changed year on year? Is it property? Is it structured reinsurance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 8:00AM, HNRGn.DE - Q1 2025 Hannover Rueck SE Earnings Call Maybe you could help put it into context. And also, when I think about, let's say you have an 88% combined ratio guidance, so you have like 12 points of margin. Our prices are down 2% to 3% points. So if we think about this new business, CSM, should we think about, that price headwind as like a 10% weighing down on the on the CSM offset by the exposure growth? Is that the right way to think about it or maybe I'm completely off? And secondly, I have a question on Life and Health 3. Also about the new business perhaps I'm just wondering whether the, in the past 12 months, let's say there's been several large transactions brought to the market, whether you've considered them attractive, to what extent you've participated, and also whether the changes in interest rates that we are seeing, the volatility, whether that makes the fins sole business more or less attractive to students as we go forward. Thank you.

Question: Ivan Bokhmat - Barclays - Analyst : Thank you very much.

Question: Jochen Schmitt - Metzler - Analyst : Thank you. Good morning. I have a follow up question on reinsurance pricing on slide 17. You state abundance of capacity twice on this slide, but in your remarks, you also mentioned no meaningful inflow of new capital into the industry. So would you consider the aforementioned abundance of capacity to be only particularly referring to individual regions or submarkets of the global reinsurance market? Maybe you could provide a bit more details here. That's my question. Thank you.

Question: Jochen Schmitt - Metzler - Analyst : Thank you.

Question: Roland Pfander - Oddo BHF - Analyst : Yeah, good morning. Thank you for taking my question. I would like to come back to the Life and Health business. Could you touch on the financial solutions business in China, I think you mentioned that there were some regulatory changes or challenges which might just fade out mid-year for the first quarter, you reported quite a healthy new business. So what is still in place, or are things moving? So could you provide maybe an outlook on this? And secondly, in the longevity business, you did mention it in the first quarter reporting. Could you indicate a view on your pipeline, what you see for longevity business you might be able to write in the near future, let's say. And maybe secondly, just housekeeping questions. Could you mention the running yield and reinvestment yield of your fixed income portfolio and investments. Thank you.

Question: Roland Pfander - Oddo BHF - Analyst : Okay, thank you.

Question: Michael Huttner - Berenberg - Analyst : Thank you so much. The first one is on slide 11. You talk about EUR81 million experience variants, mainly for mortality. I just wonder if you can give us some detail. I have this crazy theory that the new obesity drugs are starting to make a difference and probably wrong. And then the other one you talked about. Property pricing and and aggregate covers and stuff. Should I take this to mean that the, what I call attachment points are beginning to soften? Thank you.

Question: Roland Pfander - Oddo BHF - Analyst : Fantastic, thank you.

Question: Faizan Lakhani - HSBC - Analyst : Hi there, sorry, thank you for my questions. I have two questions on Life and Health 3. One was on the risk adjustment release, and you mentioned you expect to normalize future quarters. Will there be a catch up from Q1 and the rest of the three quarters or just normalization? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 8:00AM, HNRGn.DE - Q1 2025 Hannover Rueck SE Earnings Call And secondly, on Greater China, you mentioned that there was no change in trend or work experience, but you took the opportunity to increase risk adjustment. Should we assume that when you have quarter of positive experience variance that you will take actions like that to offset that, or is this just a one-off?Thank you.

Question: Faizan Lakhani - HSBC - Analyst : Okay, that's very helpful. Thank you.

Question: James Shuck - Citigroup - Analyst : Thank you and good morning everyone. I just had a few things left. So firstly, I just wanted to ask about the debt outlook. You mentioned that you're going to redeem the EUR500 million of debt in Q1. How do you think about your debt leverage? It is a bit higher versus peers, so just keen to understand if you intend to reduce the debt profile or keep it stable and grow the book value to reduce that debt leverage over time. That's my first question. And then secondly, I know you said in the in the comments that the STR in Q1 decreased a bit from FX. I'm a bit surprised to hear that given the amount of growth that's coming on the books even if we just let's call it stable. I'm particularly interested in the capital allocated to PNC for underwriting risk if you could perhaps tell me how that developed in the quarter and just remind me how you think about it when it's forward-looking on a 12 month basis, I think. And then finally, just quickly, I know you've had lots of questions on the resilience you deserve, so I'm not going to go back into that, but I would just like to know of that 5.5% excluding the risk adjustment, does that translate into some form of reserved percentile that you can tell us? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 8:00AM, HNRGn.DE - Q1 2025 Hannover Rueck SE Earnings Call

Question: James Shuck - Citigroup - Analyst : Mean certain other reinsurers when they reserve, they're reserving the 8th or 90th percentile around about that. So what does the EUR5.5 billion translate to for you?

Question: James Shuck - Citigroup - Analyst : Yeah, okay, thank you. And there's just a question on the underwriting risk rate on P&C.

Question: James Shuck - Citigroup - Analyst : Okay perfects thank you very much. Thank you.

Question: Michael Huttner - Berenberg - Analyst : Sorry about that. Can you say how big your stake is and what valuations in your balance sheet now? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 8:00AM, HNRGn.DE - Q1 2025 Hannover Rueck SE Earnings Call

Question: Michael Huttner - Berenberg - Analyst : Lovely, thank you.