Investing.com -- Shares of Hannover (ETR:HNR1) fell 0.7% as investors digested the insurer’s mixed financial results and outlook.
Despite reporting a 7.6% increase in treaty renewal volumes, the company experienced a risk-adjusted rate reduction of -2.1%. This contrasted with Scor (EPA:SCOR)’s recently reported volume increase of 9.6% and nominal rate increases.
Hannover’s preliminary results for the fiscal year 2024 showed a group net income of €2.3 billion, falling short of the consensus estimate of €2.4 billion.
However, the property and casualty (P&C) earnings before interest and taxes (EBIT) exceeded expectations at €2.4 billion, compared to the anticipated €2.3 billion. The life and health (L&H) EBIT of €934 million was slightly below the consensus of €952 million.
Looking ahead, Hannover reiterated its 2025 targets, which include a net income of €2.4 billion, a P&C combined ratio of less than 88%, and an L&H reinsurance service result of more than €875 million.
These figures are generally in line with consensus estimates but fall short in some areas, such as the L&H reinsurance service result expected to be €924 million by consensus and €965 million by RBC.
In other details, the company reported an average risk-adjusted rate decrease of -5.4% for natural catastrophe coverage, with retention levels and terms and conditions remaining broadly stable. Hannover achieved high single-digit premium growth and is expecting double-digit growth rates for structured reinsurance by 2025.
An analyst at RBC commented on Hannover’s position, stating, "A long-term steady compounder. HNR1’s reserve buffer build in 2023 should help to extend its best-in-class ROE track record by improving its ability to absorb shocks in future years. The uptick in P&C growth may drive further earnings upside. We also see potential for another dividend step-up in FY24."
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