Competitor Hannover Re exerting pressure on Munich Re's business operations
Hannover Re and Munich Re: Q2 Results and Stock Market Performance
Hannover Re and Munich Re, two of the world's leading reinsurers, have recently reported their Q2 results, shedding light on their financial performance and stock market standing.
Hannover Re's shares experienced a drop in price after its Q2 results fell short of analyst expectations, with operating profit below the mark and higher-than-expected losses in the life and health (L&H) segment. Despite these challenges, Hannover Re's stock had previously traded at a 30% premium to its peers, indicating valuation concerns [1]. The company reported a 6.3% increase in operating profit to EUR 1.8 billion, a 13.2% rise in net consolidated profit to EUR 1.3 billion, and earnings per share of EUR 10.90, up from EUR 9.63 previously [1][2]. However, these figures were not enough to prevent a 2.5% fall in the stock price post-results.
The increased claims burden was the main factor behind the disappointing results. The devastating wildfires in California in the first quarter accounted for much of the EUR 976.1 million in major losses in the first half of the year, exceeding the budgeted expected value of EUR 935 million [1].
Munich Re, on the other hand, reported strong profits of €2.1 billion in Q2 2025, a 25.5% return on equity (RoE) in Q2, and substantial total technical result growth despite a slight decrease in business volume and slight revenue pressures. Munich Re remains confident in its 2025 outlook, targeting a €6 billion net result and signaling optimistic business opportunities ahead [2]. Its non-life reinsurance underwriting performance is currently stronger, with a combined ratio of 77.3 compared to Hannover Re’s 86.6, indicating better profitability in Munich Re’s core lines [5].
In terms of stock market performance, Munich Re's shares fell 1.4%, but overall, the company has shown a generally stronger performance. The management and majority shareholder of the publisher Boerse-Medien AG, Mr. Bernd Förtsch, holds direct and indirect positions in Munich Re [6].
Given these factors, Munich Re currently appears positioned to outperform Hannover Re on the stock exchange, especially considering Hannover Re’s higher burdens and price reductions. For Hannover Re to outperform, it would need to improve profitability metrics and overcome valuation pressures, which is not immediately evident from current data [1][2][3][5].
| Factor | Hannover Re | Munich Re | |------------------------------|-----------------------------------|-----------------------------------| | Q2 2025 Profit & RoE | 13% income growth, 23% RoE H1’25 but missed EBIT expectations | €2.1bn Q2 profit, 25.5% RoE Q2’25 | | Stock Price Reaction | Fell 2.5% post-results | Fell 1.4%, but generally stronger performance | | Price Changes on Renewals | Modest decline (-2.9%) | 3.2% decrease in volume, slight revenue drop | | Underwriting Combined Ratio | 86.6 (2024) | 77.3 (2024) - industry leading | | Market Outlook | Confident in profitable growth, retrocession stable | Expecting €6bn net result, optimistic on opportunities | | Analyst Remarks | Operating profit below estimates, higher losses in L&H | On track for targets, strong technical results |
Sources: 1, 2, 3, 4, 5, 6
Additional Information
- The inflation- and risk-adjusted price change was minus 2.9% for Hannover Re's renewals.
- The overall volume of renewals decreased by 2.1% for Hannover Re, mainly due to the reduction of a large contract.
- Hannover Re confirms its guidance of a net consolidated profit of around EUR 2.4 billion for the full year.
- Adjusted for exchange rates, Hannover Re's gross premiums written would have increased by 4.3%.
- Renewals in property and casualty reinsurance as of June 1 and July 1, 2025, were marked by slight price reductions for Hannover Re.
- In the same period last year, the claims burden was only EUR 566.5 million at Hannover Re.
- Despite a better quarter, Hannover Re's performance has not changed the investors' assessment: Munich Re remains the top choice within the industry.
- Shares of Munich Re are held in a real portfolio of Boerse-Medien AG.
Hannover Re's lower operating profit and higher losses in the life and health segment resulted in a decline of its shares price, despite reporting a 6.3% increase in operating profit. In contrast, Munich Re's stock showed a smaller fall even though its shares also decreased, indicating a relatively stronger stock market performance.
