Hannover Re whole account retro renews risk-adjusted flat, with Liberty lead

Artemis has learned that Hannover Re’s key whole account catastrophe excess-of-loss retrocession renewal was completed with pricing flat on a risk-adjusted basis, as higher exposure levels for large retro towers were met with comparably higher rates, resulting in roughly flat outcomes at January 1st.

We’re told that Liberty Mutual was the lead market for the worldwide peak peril part of this key piece of German reinsurer Hannover Re’s retrocessional arrangements, which has been finalised at a similar size to the prior year.

The whole account coverage is just one of the main pieces of Hannover Re’s retro reinsurance, alongside its K-Cession capital markets quota share sidecar, any catastrophe swaps the reinsurer usually buys and typically an aggregate retro layer as well.

Hannover Re’s whole account property catastrophe retro cover is split into worldwide peak and non-peak contracts, with the worldwide peak cover also split into two sections.

We understand the worldwide peak occurrence retro cover, which is effectively an all major natural perils protection, sits in a layer equivalent to EUR 500 million of protection excess of a EUR 700 million attachment.

Similarly to the prior year, for 2024 the first section of this peak peril retro cover, which is focused on North America, the Caribbean and Mexico, provides for US $600 million of limit excess of a US $840 million retention.

The second section, which is worldwide peak excluding those regions, provides EUR 500 million or JPY 70 billion of limit excess of a EUR 700 million or JPY 98 billion retention.

The premium for each section is equivalent to a 25% gross rate-on-line, we are told, and there are three limits across these two sections of the worldwide peak retro cover, so effectively EUR 1.5 billion across them, with one reinstatement available.

In addition, Hannover Re has renewed a non-peak whole account retrocession cover, which provides EUR 300 million of limit above a EUR 400 million retention, covering non-peak and regional perils, such as Asia excluding Japan, a number of earthquake regions, and all-natural perils in Latin America and South Africa, sources said.

The premium for this non-peak whole account retrocessional reinsurance cover works out as a gross 24% rate-on-line, we understand.

We’re also told a similar layer beneath this was also placed, for the non-peak retro protection, to provide another EUR 100 million of limit above a EUR 300 million attachment.

While Hannover Re’s exposure was up just over 10%, the pricing for the retrocession renewal rose by the same, resulting in what we’re told was a risk-adjusted flat renewal outcome for the global reinsurance firm.

The whole account excess-of-loss retro arrangement is the same size in limit terms, year-on-year, for Hannover Re.

We’re told that the whole account retrocession placement coverage for 2024 equates to around EUR 387 million of limit, which is stable compared to last year’s EUR 387 million, but still up on 2022’s EUR 285 million.

Hannover Re executives had previously said that they could shrink some elements of the retrocession program for 2024.

Finally, we are also told that the lead market for Hannover Re’s whole account retro renewal was Liberty Mutual Insurance, with numerous other well-known retro markets also participating.

Read all of our reinsurance renewals coverage here.