Hannover Re expects stable to slightly lower prices and sustained favorable terms and conditions for the upcoming treaty renewals in property and casualty reinsurance as of January 1, 2026. The company cites strong demand from primary insurers for reliable reinsurance protection, even as competition among reinsurers increases due to improved capitalization across the sector.
Throughout the year, prices remained mostly stable or saw slight declines during renewal rounds. Natural catastrophe covers that did not incur losses experienced price decreases from previously high levels, but pricing continues to reflect underlying risks. Terms and conditions, along with retentions, have stayed at a solid level across all renewal periods. This has allowed Hannover Re to pursue selective growth in areas such as catastrophe covers and structured reinsurance.
The insurance industry faces ongoing challenges from climate change-related extreme weather events, rising claims costs, and geopolitical tensions. Hannover Re emphasizes its diversified portfolio and financial strength as factors enabling it to offer consistent protection in uncertain times. The company maintains that long-term partnerships are central to its strategy for profitable growth alongside clients.
Looking ahead to the January 2026 renewals, Hannover Re plans to make more reinsurance capacity available if risk-adequate pricing can be achieved. "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."
For loss-impacted programs, prices are expected to rise further; however, loss-free treaties may see modest price reductions while remaining technically adequate. Market dynamics will depend on large loss activity in the second half of the year as well as inflation trends.
Hannover Re reports a Solvency II capital adequacy ratio of 261% and strong ratings from major agencies—Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior"—supporting its ability to maintain margins into 2026.
Regionally, Europe has seen stabilized prices and terms after moderate losses this year compared with last year’s heavier tolls from extreme weather events. In Germany’s motor market, profitability is improving following measures by ceding companies despite ongoing claims inflation challenges. France experienced a significant wildfire near Marseille but otherwise avoided major catastrophes; Benelux countries faced notable industrial losses underscoring the need for robust coverage against human-caused risks.
In Central, Eastern, and Southern Europe—including Turkey—reinsurance prices have generally settled at risk-appropriate levels after last year’s catastrophic floods. Northern European markets show steady demand with modest price reductions under loss-free treaties.
North America’s property market remains adequately priced amid early signs of rate reductions despite extensive wildfires in Los Angeles earlier this year. Social inflation continues to drive up claims costs due to increased litigation and compensation amounts; Hannover Re expects further adjustments in liability segment pricing.
Asia-Pacific markets remain stable or slightly lower in both pricing and terms for 2026 renewals following profitable growth driven by established client relationships across South-East Asia, Korea, Japan, India, China, Australia, and New Zealand.
Latin American insurance markets continue growing faster than mature regions while avoiding major new losses since Brazil’s flooding event last year; rates remain appropriate despite some declines observed during July renewals.
Climate change is increasing global demand for catastrophe covers due to more frequent extreme weather events—a trend likely requiring greater supply of reinsurance capacity worldwide over time.
In natural catastrophe markets:
- North America saw higher retentions leading to satisfactory results for reinsurers but significant rate hikes followed California wildfires.
- Europe remains exposed after years of disasters; absent major new losses this year could bring stable or slightly declining rates.
- Asia-Pacific shows initial rate reductions in Japan amid persistent flood/typhoon activity; earthquake coverage demand rose sharply after recent seismic events affecting Myanmar and Thailand.
- Australia/New Zealand have seen fewer climate-driven disasters recently but expect medium-term market stabilization.
Geopolitical tensions continue impacting marine/offshore energy business with increased shipping accidents reported off India’s coast yet minimal direct financial impact so far from Red Sea incidents. Competitive conditions persist amid growing capacity availability resulting in adequate-level price reductions through 2025 renewals.
Aviation reinsurance terms remain broadly stable with minor single-digit non-proportional rate cuts observed; product liability terms hold steady while space cover markets harden following substantial recent losses.
Hannover Re transferred several catastrophe bonds (cat bonds) totaling USD 2 billion within six months of 2025 after placing USD 4 billion through thirteen transactions in 2024—covering perils like windstorms and earthquakes—and introduced a cat bond offering resilience funding for homeowners via collaboration with North Carolina Insurance Underwriting Association and GC Securities.
"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."
Investor interest remains strong as demonstrated by repeat placements of parametric cloud outage covers via cat bonds at increased volumes.
To expand its insurance-linked securities solutions portfolio further Hannover Re plans establishing Hannover Re Capital Partners (HCP), an underwriting agency based in Bermuda focused on non-proportional catastrophe business supported by third-party investor capital leveraging existing expertise/network reach globally.
Demand persists within structured reinsurance despite heightened competition; Hannover Re sees itself well positioned given deep experience providing solvency relief/earnings volatility management tools essential for clients’ needs.