Hannover Re suspends all underwriting in Russia, Belarus

Hannover Re has put the underwriting of all new and renewal business in Russia and Belarus on hold as the war in Ukraine rages on.

Executives during an earnings call said it was too early to estimate the reinsurer's exposure to claims from the war, in part because of the rapidly changing sanctions regimes. Sanctions are "sometimes potentially causing loss situations [and] at the same time also preventing reinsurers from making any payments," board member Sven Althoff said.

The U.S., EU, U.K. and a number of other countries have imposed sanctions on Russian companies and high-profile individuals in response to the country's invasion of Ukraine. The EU has blocked seven Russian banks and plans to block three Belarusian banks from the Swift global financial messaging system.

Althoff said Hannover Re's reinsurance premium volume in Russia and Ukraine is "relatively small" and "not very material." Fellow executive board member Klaus Miller said that on the life side, Hannover Re's premium volume for former Soviet Union countries is less than €1 million in total.

The company has some exposure to Russia and Ukraine through foreign currency bonds, which it uses to match the currency and duration of its reinsurance liabilities, CFO Clemens Jungsthöfel said, which are in the "mid-double-digit millions" of euros. In the context of Hannover Re's total assets of €56.2 billion, that exposure is "not a material number," he said.

"I do not expect a material impact on our earnings from that portfolio in the first quarter," Jungsthöfel added.

Separately, Hannover Re faces losses from the European winter storms in February and flooding in Australia. The company assumes the losses were within its large loss budget for the first quarter, which stands at €284 million. However, it is too early to provide loss estimates for the events "especially as the rains in Australia are still continuing," CEO Jean-Jacques Henchoz said.

Hannover Re made a profit of €1.23 billion in 2021, up 39.4% from the €883.1 million it made in 2020. The company said the profit was in the upper end of its guidance. Hannover Re continues to expect a 2022 profit of €1.4 billion to €1.5 billion.