war against Ukraine
Hannover Re: “A series of uncertainties”
The headquarters of Hannover Re. Photo: Holger Hollemann/dpa
© dpa-infocom GmbH
Reinsurers support other insurers, even when major losses occur. One of the leading providers from Hanover still has little specific data on how badly the attack on Ukraine could affect him.
The third-largest reinsurer, Hannover Re, is concerned about Russia’s war against Ukraine after last year’s lavish profits.
“At the moment we cannot make a reliable assessment of this,” said CEO Jean-Jacques Henchoz on Thursday about the conflict’s possible major impact on business. However, he emphasized: “Even if our exposure, for example through capital investments in the affected region, is low, there are a number of uncertainties.”
Regardless, shareholders are initially set to receive a record dividend for 2021. For this year, the board is also aiming for a record profit of 1.4 to 1.5 billion euros.
Henchoz said that from the current perspective, one must expect indirect consequences in particular. These could result, for example, from further restrictions on international payment transactions due to the Swift exclusion of Russian banks or the war situation itself. “All of this can impact insurance coverage in one way or another.” Many business relationships with customers in Russia and Belarus are “on hold”.
It was initially unclear how much the destruction of infrastructure or industrial plants could specifically affect the Hanover-based group. In general, Henchoz said: “We are shocked and very concerned about the situation. As a reinsurer, we work to protect life and property. Therefore, I would like to express our hope that the war in Ukraine will end quickly.” Standard policies often do not cover damage caused by interstate wars.
According to Chief Financial Officer Clemens Jungsthöfel, Hannover Re’s investment capital in Russia is primarily tied up in government bonds. The amount is “in the double-digit million range” – in relation to the total amount of investments of the group “completely insignificant”.
Risks also arise from possible hacker attacks
According to specialist insurers, risks also arise from possible hacker attacks. Whether such damage is covered by cyber policies in the event of war must always be decided individually, it said in Hanover: “It is always a question of the individual case, whether it is due to the war or to a third party.”
After a jump in profits in the second Corona year, Hannover Re wants to pay out significantly more money to its shareholders. The dividend is set to rise from EUR 4.50 to a record EUR 5.75 per share. This includes an unchanged base dividend of EUR 4.50 and a special dividend of EUR 1.25. The biggest beneficiary is the Talanx Group (HDI), which owns a good half of the shares.
In 2021 Hannover Re increased its surplus by 39 percent to EUR 1.23 billion. On March 21, the insurer will be promoted from the MDax to the leading German index, the Dax. “For us, this is both an honor and an incentive,” said Henchoz. “The decisive factor is that we continue to grow at above-average profits, continue to develop Hannover Re and thus steadily increase our stock market value.”