Hannover Rueck Stock: Record Profits Defy Market Challenges

Hannover Rueck has shattered expectations with a stellar second-quarter performance, posting a net profit of €833 million—a 38% surge year-over-year and well above analyst forecasts of €792 million. Gross premiums rose to €6.37 billion, underscoring the reinsurer’s operational resilience despite costly wildfires in California earlier this year. For the first half, net profit reached €1.3 billion, up 13.2%, with an impressive 23% return on equity, far exceeding its 14% target. CEO Clemens Jungsthöfel reaffirmed an ambitious full-year goal of €2.4 billion, buoyed by strong capitalization (Solvency II ratio: 261%) and strategic efficiency measures.

Price Pressures Loom Amid Growth

However, challenges persist. Recent contract renewals saw price declines of 2.9%, adjusted for inflation and risk, squeezing margins. Business volume dipped 2.1%, though excluding a major contract reduction, growth would have hit 4.5%. Natural catastrophe claims soared to €976 million, driven by the California fires (€615 million), pushing the combined ratio to 88.4%, slightly above target. Despite these headwinds, the company plans to raise its regular dividend and issue a special payout, signaling confidence in its ability to navigate a tightening market.