Hannover Re sees profitable growth opportunities in an increasingly challenging market environment

Hannover Re sees profitable growth opportunities in an increasingly challenging market environment

• High-quality and reliable reinsurance protection continues to be in demand
• Increasingly challenging market environment in property and casualty reinsurance
• Slightly lower prices while quality of the business remains good
• Terms and conditions and retentions still on a good level
• Selective growth at risk-adequate prices remains achievable

Monte Carlo, 7 September 2026: Hannover Re sees further attractive business opportunities for the property and casualty reinsurance renewals as at 1 January 2027 and anticipates slightly lower prices with broadly stable terms and conditions in the face of an increasingly competitive market environment.

“Growing uncertainties combined with intensifying competition are causing increasing headwinds for the reinsurance industry. Geopolitical tensions, inflation, digital threats and climate-related risks make it more difficult to evaluate long-term claim costs and hence risk-appropriate pricing,” said Clemens Jungsthöfel, Chief Executive Officer of Hannover Re. “Drawing on our thorough risk assessment, capital strength, lean operating model and consistent underwriting discipline, we create the basis for profitable growth across market cycles – both for our clients and for Hannover Re.”

Current situation on global property and casualty reinsurance markets

High-quality and reliable reinsurance protection continues to be highly sought-after, while supply of capacity is increasing due to healthy capitalisation of the reinsurance market.

Prices declined overall in the various rounds of treaty renewals throughout the year, while terms and conditions remained good. At the same time, the significant increase in premium booked by Hannover Re shows that attractive growth opportunities are still available to well positioned reinsurers.

Based on Hannover Re’s observations, property and casualty reinsurance markets continue to present a differentiated picture: while greater competitive pressure was evident for natural catastrophe covers and in business that had not incurred losses, prices in other segments were still stable. Terms and conditions also remained largely on a good level, with softening seen only in isolated cases.

Long-term loss drivers such as earthquakes, climate change, inflation and asset concentrations in exposed regions remain unchanged. At the same time, loss expenditure from natural catastrophes has been moderate on the whole so far this year. Furthermore, weather-related natural perils such as floods, drought, hail, wildfires and severe storms are becoming increasingly significant as causes of losses. Over the long term, they will lead to higher potential loss expenditures and rising demand for reinsurance protection. The burden of man-made losses was somewhat higher than in prior years, especially on account of the protracted geopolitical tensions in the Middle East connected with the Iran war.

Outlook for the renewals as at 1 January 2027

Hannover Re anticipates generally risk-adequate prices for the treaty renewals as at 1 January 2027 in its book of property and casualty reinsurance. Along with slightly lower prices, terms and conditions will likely remain broadly unchanged. Hannover Re plans to make at least stable reinsurance capacities available for the renewals, provided risk-adequate prices can be obtained.

“We grow where prices are commensurate with the risks and relinquish business that does not meet our profitability requirements. Growth opportunities are expected in regions with increasing insurance penetration and economic growth as well as in markets where we expand our shares selectively,” said Sven Althoff, Executive Board member for Hannover Re’s property and casualty reinsurance. “Thanks to our low expense ratio, pure-play focus on reinsurance and long-standing customer relationships, we are able to benefit from these profitable growth opportunities while at the same time securing our profitability on a lasting basis.”

Particularly in dynamic segments such as cyber, structured reinsurance and natural catastrophe covers, demand for high-quality and reliable reinsurance protection remains solid. Additional momentum comes from regulatory changes, technological advances, a shifting risk landscape due to natural perils and growing regional economic activity, especially in emerging markets.

Development trends in regional markets

From Hannover Re’s perspective, prices as well as terms and conditions in Europe showed a broadly stable development. Hannover Re further enlarged its market share and benefited from sustained strong demand for high-quality and reliable reinsurance protection. Given the low claims activity in the year to date and the continued healthy capitalisation of the insurance and reinsurance industry, loss-free programmes are particularly likely to see further price reductions. Higher inflation expectations and another increase in frequency losses are, however, limiting the pressure on prices. This is partially driven by this year’s heatwaves and associated wildfires and severe storm events in some parts of Europe. At the same time, reinsurance covers are in demand due to the increasing natural perils exposure and impacts of heatwaves and other extreme weather events.

The insurance market in Germany has been generally profitable over the past year. Motor insurance, in particular, has stabilised of late after extensive rehabilitation efforts. The major challenges facing motor business include, as before, the development of own damage claims – especially those resulting from hail events – and the continuing elevated level of claims inflation. Softening tendencies can be discerned in industrial lines. The coming year is expected to bring further pressure on prices, provided there are no exceptional loss events. For Hannover Re, therefore, risk-adequate pricing and sustainable business development will be key points of emphasis in the next renewals.

In France, natural disasters have been largely confined to the recent wildfires and storms early in the year. The primary market experienced increasing price pressure due to higher capacities and more intense competition. This trend was, however, counteracted by the uptick in claims inflation.

Hannover Re observed price reductions in the United Kingdom driven by fierce competition and surplus capacities, which were especially evident in property and motor reinsurance. While prices in the liability lines for the most part still held stable, the various rounds of renewals in the year ahead are expected to bring added pressure on prices with stable terms and conditions. As a result, differentiation according to customer and portfolio quality will likely increase further.

In Central, Eastern and Southeastern Europe, the year passed off uneventfully overall as far as losses were concerned. More notable individual losses occurred at refineries and industrial plants. In the region as a whole, including Türkiye, reinsurance prices in most lines have stabilised on a level commensurate with the risk. At the same time, the impacts of climate change are becoming ever more palpable: heatwaves, hailstorms, heavy rainfall events and tornados are increasingly causing losses. Hannover Re stands by its clients in the region as a reliable and capable partner. From Hannover Re’s perspective, the price trend in the coming renewal season will be crucially influenced by the loss experience in the second half of 2026 and ongoing inflation expectations.

Demand for reinsurance covers remains high in Northern European markets. Nevertheless, growing competitive pressure with corresponding price reductions is evident in segments that have been spared losses. While no sizeable loss events have occurred to date, the region has been affected in the current year by multiple small and mid-sized natural disasters. Overall, Hannover Re anticipates a continued risk-adequate market environment and stable terms and conditions in the upcoming renewals.

Despite geopolitical uncertainties, the long-term prospects in the Middle East remain positive due to comparatively low insurance penetration and sustained economic growth. The increase in reinsurance capacity makes itself felt in pricing negotiations for loss-free programmes.

In North America, the market for property business has still been able to maintain a risk-adequate level even though clear indications of rate reductions are emerging. Hannover Re is seeing a growing willingness to accept price adjustments under loss-free programmes. While an El Niño year generally suggests lower hurricane activity, the unusually warm ocean surface temperatures may mitigate this effect.

On the whole, sufficient reinsurance capacity is available to cover the rising demand for insurance protection. Increasing insured values, especially in connection with infrastructure and data centres, are nevertheless making it more difficult for primary insurers to provide the necessary capacities.

Social inflation, which results in rising claims costs due to increased litigation, higher amounts of compensation and expanded definitions of liability, also remains challenging. From Hannover Re’s standpoint, therefore, modifications in prices and conditions that at least preserve stability on a risk-adjusted basis are needed in the liability segment on both the insurance and reinsurance side.

In the Asia-Pacific region, Hannover Re asserted its strong market position in a highly competitive landscape. Hannover Re anticipates broadly stable or slightly softer reinsurance rates for 2027. Natural catastrophe events in the region continue to highlight the need for quality and consistent reinsurance support. Hannover Re’s focus on holistic client relationships and solution-oriented offerings will support targeted growth in this diverse region.

In Japan, Korea and Southeast Asia, the supply of capital and competition remain high against a backdrop of moderate rate reductions. Demand for reinsurance protection remains stable overall. At the same time, selective growth opportunities are available in business with bespoke reinsurance solutions.

The reinsurance market in India was notable for abundant capacity and sometimes appreciable rate reductions in 2026. Thanks to a highly client-centric approach combined with agile and disciplined underwriting, Hannover Re was nevertheless able to sustainably strengthen its market position.

The insurance and reinsurance markets in China are growing moderately in step with the country’s economic growth. New technologies and the energy transition are creating additional demand for insurance and reinsurance. This contrasts with an increase in the available capacities in the market, adding to the pressure on prices – especially for natural catastrophe covers. Thanks to strong customer relationships and local expertise, Hannover Re considers itself well positioned for the upcoming renewals despite increasing competition.

Hannover Re cemented its market position in Australia and New Zealand, expanding cooperation with core clients in its reinsurance business. Demand for reinsurance is growing in line with the market.

Latin America has once again been impacted by major natural events in the current year, including wildfires in Chile, a volcanic eruption in Guatemala and two severe earthquakes in Venezuela and Colombia. While the effects of the wildfires and volcanic eruption remained limited, both earthquakes claimed numerous lives and caused extensive property damage. The events highlight the importance of effective insurance and reinsurance protection while at the same time illustrating the existence of a considerable gap between economic and insured losses in many parts of the region. Hannover Re anticipates growing demand for reinsurance protection in the affected markets. Notwithstanding recent loss events, Latin America remains an attractive market offering long-term growth prospects.

Development trends in global and specialty markets

In business with natural catastrophe covers, Hannover Re expects to see consistent growth in demand for reinsurance solutions over the long term. Key factors here are climate change, a rising concentration of values in regions exposed to natural perils and inflation. In addition, a substantial gap remains between economic and insured losses.

While prices are below the peak levels of 2023 and 2024, they continue to be technically risk-adequate. Looking to the upcoming renewals, Hannover Re expects moderate price movements that will depend primarily on the claims experience and regional market circumstances. Risk-adequate prices as well as terms and conditions remain key given the considerable volatility of natural catastrophe business. Hannover Re sees attractive opportunities in this landscape and is prepared to make additional capacity available. 

Prices in North America have softened in recent renewals, but they are still risk-adequate from a technical standpoint. Further market developments will be crucially shaped by claims activity, especially involving weather-related natural perils such as severe storms, tornados, hail and heavy rain events. Following significant adjustments that took effect on 1 January, Hannover Re expects the price trend in Europe to normalise and stabilise in the absence of any sizeable loss events. As far as retentions and scope of coverage are concerned, terms and conditions will likely remain broadly unchanged. Losses in the Asia-Pacific region remained below the long-term expectation overall, leading to more marked price reductions – especially in Japan, Australia and New Zealand. In view of the price corrections that have already taken place, Hannover Re now sees a need for stabilisation of the pricing level.

Marine and upstream energy business is feeling the impacts of increased claims expenditures and continued geopolitical uncertainties. Most notably, payments in connection with the collapse of the Francis Scott Key Bridge in Baltimore – which have far exceeded original expectations – and the repercussions of regional conflicts have weighed on the results of many market players. Developments in the Middle East and the associated risks for international trade and shipping routes underscore the continued major significance of geopolitical risks for the global transport and energy sectors.

At the same time, the insurance and reinsurance market remains highly competitive. An abundant supply of capacity has again led to widespread price reductions in the current year, prompting Hannover Re to maintain its selective underwriting approach in this segment. Looking ahead to the 1 January 2027 renewals, a sharper distinction will likely be drawn between loss-free and loss-affected programmes. Not only that, the quality of the underlying business, the individual claims history and the specific business relationship will all factor prominently into pricing considerations.

Turning to aviation and space business, positive rate tendencies can be observed in the primary insurance market – especially in the airline segment – and these should filter through to the reinsurance side over a longer timeframe. In the general aviation segment, the market is on an unchanged risk-adequate level, with price competition more marked outside the United States. The product liability segment remains broadly stable. Space business has recovered after the elevated claims burdens of 2023 and 2024 but continues to be structurally challenging on account of low market premiums, high volatility and limited launch volumes.

Terms and conditions in aviation reinsurance are generally holding stable with a slight downward tendency and greater differentiation by segment and client quality: proportional covers are largely unchanged. Moderate price softening can be discerned in non-proportional business, while terms and conditions are for the most part stable. Recent large losses, geopolitical uncertainties and the complex settlement of leasing claims in Russia in connection with the war in Ukraine are currently limiting more broad-based market softening. It is Hannover Re’s expectation that this trend will continue into the upcoming rounds of renewals, including those as at 1 January 2027.

In the area of insurance-linked securities (ILS), Hannover Re once again transferred several catastrophe bonds to the capital market for its clients. Following twelve transactions in 2025 with a total volume of USD 3.4 billion, eight deals with a total volume of USD 2.3 billion have already been successfully completed so far in 2026. Protection was arranged for coverage against natural catastrophe losses.

The volume of business in collateralised fronting for ILS investors remained stable at a high level in the year under review and this continues to be the largest segment in Hannover Re’s ILS activities.

At the end of 2025 Hannover Re further expanded its existing range of ILS solutions by setting up an underwriting agency in Bermuda. Hannover Re Capital Partners (HCP) has already written additional non-proportional catastrophe business in 2026 under its first third-party capital mandates. HCP is thus well positioned in a segment offering attractive growth prospects and delivers value added for insurance customers and investors alike with Hannover Re’s long-standing expertise and a worldwide client network.

Demand remains solid in structured reinsurance, although business is increasingly competitive. Based on its long-standing experience, very deep market penetration and long-term client relationships, Hannover Re considers itself well placed for the future in this area. Structured reinsurance solutions remain an important tool for managing solvency requirements and minimising earnings volatility on the client side.
 

Hannover Re is one of the world's leading reinsurers. We transact all lines of property & casualty and life & health reinsurance and are present worldwide with around 4,000 staff. Property and casualty reinsurance in Germany is written by the subsidiary E+S Rück. Established in 1966, Hannover Re is recognised as a reliable partner for innovative risk solutions, exceptional customer intimacy and financial soundness. The rating agencies most relevant to the insurance industry have awarded both Hannover Re and E+S Rück very good financial strength ratings: Standard & Poor’s AA- "Very Strong" and A.M. Best A+ "Superior".

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