EQS-News: Hannover Re anticipates continued attractive market environment in 1 January 2026 renewals

Hannover Re anticipates continued attractive market environment in 1 January 2026 renewals

• Strong demand for high-quality and reliable reinsurance protection
• Increasing competition in a continued attractive market environment
• Quality of the business remains on a good level
• Hannover Re anticipates stable or slightly lower reinsurance prices in its business
• Terms and conditions as well as retentions on an unchanged good level
• Hannover Re is well positioned for further profitable growth

Monte Carlo, 8 September 2025: Hannover Re anticipates stable to slightly lower prices overall and sustained good terms and conditions in a continued attractive market environment for the treaty renewals in property and casualty reinsurance as at 1 January 2026.

Current situation on global property and casualty reinsurance markets

The market landscape in worldwide property and casualty reinsurance remains attractive, even though competition has increased. Given the sound capitalisation of many reinsurers, the supply of capacity is rising. At the same time, demand among primary insurers for high-quality and reliable reinsurance protection continues to grow.

Prices remained broadly stable or declined slightly in the various rounds of treaty renewals held during the year, while natural catastrophe covers that had not incurred losses saw price declines coming off a high level. Pricing was thus still commensurate with the risk. Terms and conditions and retentions remained on a comparatively good level in all rounds of renewals, enabling Hannover Re to generate further selective growth in areas such as catastrophe covers and structured reinsurance.

"The insurance industry continues to face a wide range of challenges – whether from climate change-induced extreme weather events, rising claims costs or geopolitical tensions. Reliable reinsurance protection is especially important for our clients in such an environment," said Clemens Jungsthöfel, Chief Executive Officer of Hannover Re. "As a broadly diversified and financially strong reinsurer, we are optimally positioned and offer reliable protection even in volatile times. We continue to regard long-term, partnership-based business relationships as the basis for generating sustained, profitable growth shoulder-to-shoulder with our clients."

Outlook for the renewals as at 1 January 2026

Hannover Re anticipates stable or slightly lower prices overall in its property and casualty reinsurance business for the treaty renewals as at 1 January 2026. Terms and conditions and retentions will likely remain unchanged on a sustained adequate level. Overall, Hannover Re plans to make more reinsurance capacity available for the 1 January 2026 renewals, provided risk-adequate prices can be obtained.

"We anticipate that reinsurance prices will remain on an adequate level," said Sven Althoff, Executive Board member for property and casualty reinsurance. "We are staying focused, writing only business that meets our profitability requirements. If these are not met, we are also willing to refrain from accepting business in the interests of active cycle management. On the whole, though, we continue to see good opportunities for profitable growth together with our clients." 

Prices under loss-impacted programmes will probably continue rising. In the case of loss-free treaties, on the other hand, prices are more likely to decrease, but should, however, remain on an adequate technical level. If loss expenditure stays within expectations over the remainder of the year, competition can be expected to further intensify – especially in business with natural catastrophe covers. Further developments therefore depend primarily on the large loss situation in the second half of the year as well as the pace of Inflation and supply dynamics.

Thanks to its customer-centric approach, a capital adequacy ratio under Solvency II of 261% and very good ratings, Hannover Re is very well capitalised to continue growing profitably and maintain its margins in 2026. Demand for reinsurance protection remains strong – especially in dynamic segments such as cyber covers, structured reinsurance and catastrophe covers. Additional impetus derives from regulatory changes, technological advances and the growing protection gap in emerging economies.

Against this backdrop, Hannover Re emphasises a highly client-centric approach and a lean, focused business model that guarantees reliable reinsurance solutions. Long-term partnerships and profitable growth remain core elements of the company's strategy, complemented by targeted investments in resilience, efficiency and innovation.

Hannover Re anticipates the following developments for its business in individual regions and lines in the treaty renewals as at 1 January 2026:

Development trends in regional markets

Prices and terms and conditions have stabilised on a good level in Europe. Hannover Re expanded its premium volume in Germany and other European countries and benefited from increased demand for reinsurance protection. Losses this year have been less heavy than in the previous one. From Hannover Re's perspective, however, no appreciable price reductions are expected in its own portfolio owing to the rise in extreme weather events. Hannover Re anticipates broadly stable prices as well as terms and conditions for its business in Europe for 2026. In the case of loss-affected natural catastrophe covers, it is Hannover Re's expectation that prices in its business will tend to move higher.

The motor market in Germany has improved appreciably in 2025 after measures implemented by ceding companies and is well on track to regain profitability. The challenges posed by claims inflation and elevated volatility nevertheless persist. Losses caused by natural perils remain moderate to date. The structural adjustments made under reinsurance covers in prior years have provided some relief here. At the same time, the underlying exposure and the demand for capacity are increasing. In industrial insurance, prices are showing signs of weakening in the property line.

France has so far been largely spared natural catastrophes in 2025 – with the exception of a sizeable wildfire near Marseille in July. Several significant large losses occurred in industrial business in the Benelux countries. These underscore once again the importance of reliable insurance cover for human-caused risks. If the situation remains essentially unchanged through year-end, a slightly lower but still adequate price level can be anticipated. In the United Kingdom and Ireland minimal rate increases were observed over the course of the year in the primary marketThey were, however, somewhat below the rate of inflation. In view of the high price level compared to previous years, this trend will likely continue for the liability lines and in motor business.

After the catastrophic floods of September 2024, business in Central, Eastern and Southern Europe was broadly spared large losses in 2025. In most cases, reinsurance prices across the entire region, including Turkey, have settled on a level commensurate with the risk. In Northern European markets, demand for high-quality reinsurance coverage is holding steady. Loss-free treaties recorded modest price reductions. Recent years had, however, seen considerable losses, especially in industrial lines. Against this backdrop, Hannover Re anticipates adequate prices and stable terms and conditions overall in its business for the upcoming renewals.

The market for property business in North America has maintained an adequate level, although early indications of rate reductions are emerging. Even though the year got off to a challenging start with the extensive wildfires in the Los Angeles area, sufficient reinsurance capacity remains available to service the further increase in demand for insurance protection.

Increasing insured values continue to prove particularly challenging for regionally operating insurers, whose concentration of insured risks is especially high. Overall, though, sufficient capacity is available in the market, with the result that reinsurance programmes can normally be fully placed. Hannover Re is seeing an increasing openness to price adjustments under loss-free programmes. 

Social inflation, which remains at an above-average level, continues to pose a challenge for the insurance sector. It leads to rising claims costs due to increased litigation, higher amounts of compensation and expanded definitions of liability. From Hannover Re's perspective, further adjustments to prices as well as terms and conditions are therefore expected in the liability segment, both on the insurance and reinsurance side.

Hannover Re further extended its strong positioning in the Asia-Pacific markets. In South-East Asia, Korea and Japan it continued to generate profitable growth thanks to its long-standing relationships with clients and brokers. In India and China, Hannover Re successfully asserted its market position and achieved its strategic objectives. The company similarly maintained its positioning in Australia and New Zealand. Stable or slightly lower prices as well as terms and conditions are anticipated in the Asia-Pacific region for 2026.

Hannover Re is seeing stability across insurance markets in Latin America, even though local differences persist. Growth in the region continues to outpace that of mature markets. The market has been spared any further large losses since the last sizeable loss event – the flooding in Brazil –, with positive implications for results. Terms and conditions in insurance and reinsurance business are on an adequate level in most markets, despite slight declines recorded in the latest round of renewals in July. Furthermore, the company is seeing a consistent increase in its lead positions on reinsurance programmes.

Inflation has driven a moderate increase in the general demand for natural catastrophe capacity. While prices for loss-free programmes showed first rate reductions, Hannover Re recorded sometimes significant rate increases for loss-impacted programmes – especially after the major California wildfires. All in all, rates remain on an appropriate level. Further price developments are dependent on the claims experience in the second half of the year – and in particular on the Atlantic hurricane season.

Climate change continues to drive a proliferation of extreme weather events, which in turn fuels the demand for catastrophe covers. A greater supply of reinsurance capacity will be needed globally to narrow a protection gap that has the potential to grow in the future.

Overall, assuming that prices as well as terms and conditions remain adequate, Hannover Re is prepared to strategically expand its exposure to natural catastrophe covers over time.

For 2026, Hannover Re expects to see the following trends on the major markets for natural catastrophe business:

North America: In the United States, higher retentions over the past two years have led to satisfactory results for reinsurers, with rate reductions observed under some loss-free programmes in 2025.

However, the devastating California wildfires took a heavy toll on national and especially regional insurers as well as international reinsurers, prompting a re-evaluation of the exposure and leading to significant rate increases. Furthermore, the Midwest was once again impacted by a series of tornadoes. The hurricane season is predicted to be unusually active, although no sizeable insured windstorm events have occurred so far. With average losses continuing to increase, Hannover Re anticipates growing demand for its reinsurance capacity and sees a sustained favourable environment for risk-adequate underwriting.

Europe: Many parts of Europe have been affected by major natural disasters in recent years. The financial strain has been exacerbated by high inflation and supply chain disruptions. While the losses for reinsurers have so far remained moderate in the year to date, the loss experience of the past five years nevertheless calls for risk-adequate pricing. In the absence of any substantial losses, stable or slightly declining prices are to be expected.

Asia-Pacific: With market demand holding stable, initial rate reductions were observed on the reinsurance market in Japan in the 1 April renewals. A high frequency of flood and typhoon losses as well as hail events in the past three years have underscored the need to factor all climate-related perils into the pricing of Japanese catastrophe business, even though most of these events remained below the attachment point of the excess of loss treaties covering natural catastrophe risks.

It is Hannover Re's assumption that stable prices can play a part in safeguarding sustainable capacity. Following the major earthquake affecting Myanmar and Thailand, demand for earthquake coverage and hence also for additional reinstatement capacities has risen in Thailand. The increasing risks are keeping demand for catastrophe covers on a correspondingly high level.  After many years of major climate-related catastrophe events in Australia and New Zealand, the region has recently been largely spared. In the 1 July renewals, Hannover Re observed moderate rate reductions in its portfolio. Here too, though, Hannover Re anticipates stabilisation in the market environment over the medium term.

Development trends in global markets

Geopolitical tensions and conflicts continue to leave their mark on marine and offshore energy business. While the latest attacks on commercial shipping in the Red Sea have so far had only minimal financial impacts, they make the ongoing elevated risk posed by war and terrorism events only too clear. The first half of 2025 additionally saw an increased number of conventional shipping accidents, including off the coast of India. Despite continued geopolitical uncertainties, the insurance and reinsurance markets are currently competitive. Hannover Re noted price reductions in its business environment in the 2025 renewals due to an increased availability of capacity, although these remained at an adequate level. Depending on the further claims experience, this development can be expected to continue in 2026.

Terms and conditions in aviation reinsurance are broadly stable at the present time: while the market environment for proportional treaties remains unchanged, isolated rate reductions in the single digits are observed in non-proportional business. This development does not yet factor in the implications of the latest loss events – in particular the ruling recently handed down on leasing losses in Russia, the specific consequences of which cannot yet be foreseen.

The airline segment could see improved market conditions in primary insurance. Recent loss events may further reinforce the current trend. In contrast, price declines can be observed in the general aviation segment, while terms and conditions in product liability business remain stable. The market for space covers has hardened following considerable losses incurred in 2023 and 2024. This segment nevertheless remains challenging – not least due to the comparatively small number of major launches and the associated low premium volume for the market as a whole.

In the insurance-linked securities (ILS) market, Hannover Re again transferred several catastrophe bonds to the capital market for its clients. Following thirteen transactions in 2024 with a total volume of USD 4.0 billion, seven deals have already been completed in the first six months of 2025 with a total volume of USD 2.0 billion. Covers were placed against losses from natural catastrophes such as windstorms and earthquakes.

In addition, Hannover Re worked with the North Carolina Insurance Underwriting Association and GC Securities to bring to the capital market the first catastrophe bond to include potential payments to homeowners for resilience measures.

"With this innovative cat bond, Hannover Re, in close cooperation with its partners, has brought a new feature to the insurance-linked securities market that for the first time provides funds to help build more disaster-resistant communities," said Silke Sehm, Executive Board member for property and casualty reinsurance. "If we want to effectively mitigate the costs of catastrophes, we must not only work on increasing coverage but also invest in adaptive measures. This placement combines both elements and should serve as a blueprint for more such transactions."

The parametric cloud outage cover in the form of a catastrophe bond that was successfully placed for the first time in the previous year was again transferred to the capital market with an increased volume. From Hannover Re's perspective, this shows that investors have considerable interest in well-structured risks and are thus able to provide cedants with additional, much sought-after capacities.

To complement its existing range of ILS solutions, Hannover Re plans to establish a Bermuda-based underwriting agency named Hannover Re Capital Partners (HCP). HCP will write additional non-proportional catastrophe business backed by third-party capital from investors. In so doing, Hannover Re will draw on its many years of expertise and its global client network.

Demand in structured reinsurance remains stable, albeit with increasingly intense competition. Based on its extensive experience and very deep market penetration, Hannover Re considers itself well positioned going forward. Structured reinsurance solutions continue to be an important tool in providing solvency relief and managing earnings volatility for its clients.

Hannover Re is one of the world’s leading reinsurers. It transacts all lines of property & casualty and life & health reinsurance and is present worldwide with around 4,000 staff. German business of the Hannover Re Group 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 outstanding financial strength ratings: Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior".

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