Hannover Re achieved its increased earnings guidance in the 2025 financial year despite challenging market conditions, with group net income rising sharply by 13.4% to EUR 2.6 billion. The company simultaneously strengthened its resilience and sustained profitability, with the Executive Board and Supervisory Board proposing a 39% higher dividend of EUR 12.50 per share, aligning with a new dividend strategy aimed at distributing around 55% of IFRS Group net income.
Chief Executive Officer Clemens Jungsthofel emphasized that Hannover Re stands for reliability and financial strength, noting that strategic actions taken during the successful financial year have reinforced future profitability. Shareholders are participating more than ever in the company's success through the substantial dividend increase and higher payout ratio. Reinsurance revenue for the Group rose by 1.5% to EUR 26.8 billion, with growth reaching 4.7% at constant exchange rates, while the reinsurance service result increased by 15.8% to EUR 3.5 billion.
The operating profit increased by 5.7% to EUR 3.5 billion, and earnings per share reached EUR 21.90. Given high business profitability, underutilization of the large loss budget, and a positive currency result, Hannover Re delivered increased net income while boosting earnings power for future years. The company expanded the resilience of its loss reserves and actively realized hidden losses in its investment portfolio, contributing to a return on equity of 21.4% that clearly surpassed the strategic target of more than 14%.
Chief Financial Officer Christian Hermelingmeier stated that through systematic realization of hidden losses in investments and by further expanding resilience in loss reserves, Hannover Re has continued to significantly reinforce its financial soundness. The company now has the strongest balance sheet in its history, supported by an extremely robust solvency ratio. The capital adequacy ratio under Solvency II stood at 256% at year-end, comfortably above the threshold of more than 200%, even after accounting for the proposed dividend and planned business growth.
In property and casualty reinsurance, reinsurance revenue rose slightly by 0.6% to EUR 18.8 billion, with growth reaching 3.8% at constant exchange rates. Net expenditures for large losses totaled EUR 1,725 million, coming in below the full-year budgeted expectation of EUR 2.1 billion. The largest expenditures for individual losses included the California wildfires at EUR 595 million, Hurricane Melissa at EUR 329 million, the earthquake in Myanmar at EUR 118 million, and severe hailstorms in Australia at EUR 102 million. The reinsurance service result increased considerably to EUR 2.6 billion, and the combined ratio improved to 84.0%.
Life and health reinsurance saw sustained demand across all segments despite intense competition worldwide. Reinsurance revenue increased to EUR 8.0 billion, with growth of 6.8% at unchanged exchange rates. The reinsurance service result climbed to EUR 903.0 million, surpassing the target of more than EUR 875 million. The return on investment reached 2.5%, falling short of the guided target primarily due to strategically motivated active realization of hidden losses in the fixed-income portfolio to boost future earnings.
Hannover Re fully confirmed its guidance for 2026, expecting Group net income of at least EUR 2.7 billion. Adjusted for exchange rate effects, property and casualty reinsurance is expected to deliver growth in reinsurance revenue in the mid-single-digit percentage range in traditional business, with a combined ratio below 87%. Life and health reinsurance is expected to achieve a reinsurance service result of around EUR 925 million, while the return on investment is projected to reach around 3.5%. Achievement of the 2026 earnings guidance assumes large loss expenditure does not significantly exceed the budgeted level of EUR 2.3 billion and that there are no unforeseen distortions on capital markets.
The company's financial strength is further demonstrated by its ratings from Standard & Poor's and A.M. Best, with additional information available in the financial supplement at https://www.hannover-re.com/en/investors/results-and-reports/#2025. Further details about the company's legal information can be found at https://www.hannover-re.com/en/legal-information/.
