Hannover Re lifted its full-year net income outlook on Monday, highlighting favorable business development and a positive tax effect in the third quarter, which propelled shares up 4% during mid-morning trading. For 2024, the German reinsurer's net income guidance aligns with the consensus and RBC Capital Markets estimate of 2.3 billion euros, an increase from the previous outlook of at least 2.1 billion euros.
This upgrade depends on capital markets remaining stable without unforeseen distortions and large loss expenditures staying within an expected 1.83 billion euros. Hannover reiterated its goal for reinsurance revenue growth of over 5% at constant exchange rates in 2024. The ongoing favorable market conditions led the group to anticipate a combined ratio below 89% in property and casualty reinsurance, compared to the consensus of 87.6% and RBC's estimate of 87.4%. The ordinary dividend is also expected to increase annually between 2024 and 2026, with a special dividend issued if profits meet targets and capitalization exceeds future growth requirements. For 2025, the company predicts net income of 2.4 billion euros, which is slightly below the consensus and RBC estimate of 2.5 billion euros; analysts note that their guidance is 'typically conservatively set, as seen in prior years.' This outlook for 2025 also operates under the assumption of no unforeseen distortions or significant deviations from the large loss expenditure budget of 2.1 billion euros. 'Versatile demand for the high-quality reinsurance protection provided by Hannover Re will remain strong,' stated Chief Executive Officer Jean-Jacques Henchoz.
'In this appealing market climate, we identify profitable growth prospects across both business segments. For the 2025 financial year, our aim is to elevate earnings and revenue while emphasizing Hannover Re's long-term earnings stability and resilience.' For the three months ending Sept. 30, Hannover reported a rise in group net income to 663.3 million euros from 439.4 million euros year-over-year, driven by adequate pricing levels in property and casualty reinsurance and the release of deferred tax liabilities.
Gross reinsurance revenue surged to 6.78 billion euros from 6.24 billion euros annually. 'HNR1's reserve buffer accumulation in 2023 is poised to enhance its best-in-class return on equity track record by bolstering its capacity to weather shocks in the years to come,' remarked RBC. 'The increase in property and casualty growth may further elevate earnings potential.
We also foresee the possibility of another dividend increase in FY24e.'.