Hannover Re lifted its full-year net income outlook on Monday, showcasing favorable business development alongside a positive tax effect in the third quarter, which drove shares up 4% in midmorning trade. For 2024, the German reinsurer's net income guidance now aligns with the consensus and RBC Capital Markets estimate of 2.3 billion euros, marking an increase from the group's previous outlook of at least 2.1 billion euros.
This upgrade relies on capital markets remaining free of unforeseen distortions and large loss expenditures staying within the expectation of 1.83 billion euros. Hannover reiterated their reinsurance revenue growth target of over 5% at constant exchange rates for 2024. The sustained favorable market climate has led to expectations of a combined ratio below 89% in property and casualty reinsurance, compared to the consensus of 87.6% and RBC estimate of 87.4%. The ordinary dividend is also anticipated to increase annually between 2024 and 2026, with the possibility of a special dividend if profits meet the target and capitalization exceeds the capital required for future growth. For 2025, the group projects a net income of 2.4 billion euros.
Analysts point out that this figure is conservatively set when compared with the consensus and RBC estimate of 2.5 billion euros. The 2025 outlook also assumes that there will be no unforeseen distortions or significant variations in large loss expenditures from the established budget of 2.1 billion euros. "Demand for the kind of high-quality reinsurance protection offered by Hannover Re will be sustained," stated Chief Executive Officer Jean-Jacques Henchoz.
"In this attractive market environment, we see profitable growth opportunities in both business groups. We are focused on increasing earnings and revenue for the 2025 financial year. Hannover Re's long-term earnings stability and resilience remain our focus." For the three months ending September 30, Hannover indicated that group net income surged to 663.3 million euros from 439.4 million euros year over year, fueled by an adequate pricing level in property and casualty reinsurance as well as a release of deferred tax liabilities.
Gross reinsurance revenue climbed to 6.78 billion euros from 6.24 billion euros annually. "HNR1's reserve buffer build in 2023 should help extend its best-in-class return on equity track record by enhancing its capacity to absorb shocks in future years," noted RBC. "The uptick in P&C growth could lead to further earnings upside.
We also see potential for another dividend step-up in FY24e.".