Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Rück — Q3 2018 Earnings Presentation
29 slides from Hannover Rueck's earnings presentation, Nov 8, 2018
Slide 1: Conference Call on Q3/2018 results
Conference Call on Q3/2018 results Hannover, 8 November 2018
Slide 2: RoE well above target, despite impact from recaptures in L&H
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix RoE well above target, despite impact from recaptures in L&H Guidance for 2018 reconfirmed GWP in m. NPE in m. EBIT in m. Group net income in m. 13,484 14,992 11,541 12,774 1,157 +11.2% 806 +10.7% 725 +43.5% 549 +32.1
Slide 3: Overall favourable earnings growth ...
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Overall favourable earnings growth ... ... outperforming strong growth in top line Group figures in m. EUR Q3/2017 Q3/2018 Δ Q1-3/2017 Q1-3/2018 Δ Gross written premium 4,486 5,007 +11.6% 13,484 14,992 +11.2% Net prem
Slide 4: Continued positive operating cash flow
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Continued positive operating cash flow AuM +3.5%; strengthening of USD largely offsets decrease in valuation reserves Operating cash flow in m. EUR Assets under own management (AuM) in m. EUR 41,793 41,468 39,347 40,0
Slide 5: Shareholders' equity strong despite dividend payment ...
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Shareholders' equity strong despite dividend payment ... ... and decreased OCI Policyholders' surplus in m. EUR Change in shareholders' equity in m. EUR 11,231 10,779 10,591 10,239 10,267 1,491 1,492 1,493 1,490 743 7
Slide 6: Good profitability supported by U/W and investment result
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook Appendix Good profitability supported by U/W and investment result Remarkable growth mainly from tailor-made Structured R/I Property & Casualty R/I in m. EUR Q3/2017 Q3/2018 Q1-3/2017 Q1-3/2018 YTD GWP f/x-adj
Slide 7: Major losses well below budget for Q1-3/2018
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook Appendix Major losses well below budget for Q1-3/2018 Significant remaining budget for Q4/2018 Natural and man-made catastrophe losses* in m. EUR 1,730 1,790 1,127 981 863 846 724 714 672 662 662 578 559 627 598
Slide 8: Overall benign large loss experience in Q1-3/2018
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook Appendix Overall benign large loss experience in Q1-3/2018 Significantly increased loss activity in Q3/2018 in line with quarterly expectation Catastrophe losses* in m. EUR Date Gross Net Storm "Friederike", Eur
Slide 9: C/R target of 96% for the full year still within reach
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook Appendix C/R target of 96% for the full year still within reach Q1-3/2018: Combined Ratio vs. MtCR EBIT margin Target North America* 97.2% 18.9% markets Continental Europe* 98.4% 12.4% Marine 36.2% 78.0% Aviatio
Slide 10: Good underlying profitability ...
Group Property & Casualty R/I Life Life & Health Health R/I R/I Investments Outlook Appendix Good underlying profitability ... ... partly mitigates negative effects from in-force management in US mortality Life & Health R/I in m. EUR Q3/2017 Q3/2018 Q1-3/2017 Q1-3/2018 YTD Gross written premium 1,71
Slide 11: Higher Ordinary due to US/UK yields and altern. investments
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook Appendix Higher Ordinary due to US/UK yields and altern. investments Yield curve movements and credit spreads drive down net unrealised gains in m. EUR Q3/2017 Q3/2018 Q1-3/2017 Q1-3/2018 RoI YTD Ordinary investment inco
Slide 12: Fixed income still supported by riskier asset classes...
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook Appendix Fixed income still supported by riskier asset classes... ... reflected in prominent contribution to income Ordinary income split EUR 994 m. Asset allocation Investment category 30 Sep 18 Short-term Fixed-income
Slide 13: Target Matrix
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Target Matrix Strategic targets for Business group Key figures Q1-3/2018 2018 Group Return on investment 1) ≥ 2.7% 3.3% Return on equity 2) ≥ 9.5% 11.5% Earnings per share growth (y-o-y) ≥ 5% 32.1% Economic value crea
Slide 14: Outlook
somewhat diyerent Outlook hannover re’
Slide 15: Unchanged guidance for 2018
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook Appendix Unchanged guidance for 2018 Hannover Re Group Gross written premium1) more than 10% growth Return on investment2) 3) at least 2.7% Group net income2) more than EUR 1 bn. Dividend payout ratio4) 35% - 45% (If
Slide 16: Overall profitability above margin requirements expected
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook Appendix Overall profitability above margin requirements expected Good growth opportunities in various lines of business Lines of business Volume1) Profitability 2) Target North America3) +/- markets Continental Europe 3) +
Slide 17: Good underlying profitability in L&H business
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook Appendix Good underlying profitability in L&H business Recapture charges of USD 350-400 m. in US mortality business expected in 2018 Reporting categories Volume1) Profitability2) Financial solutions Financial solutions ++ Lo
Slide 18: Guidance for 2019
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook Appendix Guidance for 2019 Hannover Re Group Gross written premium1) growth within a single-digit percentage range Return on investment2) 3) 2.8% Group net income2) in the region of EUR 1.1 bn. Dividend payout ratio4
Slide 19: Creating value through reinsurance is our strategic driver
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook Appendix Creating value through reinsurance is our strategic driver Three profit sources play their part in fuelling our future success P&C reinsurance L&H reinsurance Investments Market growth in line with or We enjoy g
Slide 20: Appendix
somewhat diyerent Appendix hannover re’
Slide 21: Our strategic business groups at a glance
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Our strategic business groups at a glance Q1-3/2018 vs. Q1-3/2017 Property & Casualty R/I Life & Health R/I Total in m. EUR Q1-3/2017 Q1-3/2018 Δ Q1-3/2016 Q1-3/2018 Δ Q1-3/2017 Q1-3/2018 Δ Gross written premium 8,
Slide 22: Our strategic business groups at a glance
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Our strategic business groups at a glance Q3/2018 vs. Q3/2017 Property & Casualty R/I Life & Health R/I Total in m. EUR Q3/2017 Q3/2018 Δ Q3/2017 Q3/2018 Δ Q3/2017 Q3/2018 Δ Gross written premium 2,772 3,190 +15.1%
Slide 23: Slight risk reduction reflected in governments and corporates
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Slight risk reduction reflected in governments and corporates Despite higher US yields impressive AuM growth due to cash flows / FX movements Asset allocation 1) Investment category 2014 2015 2016 2017 30 Sep 18 Fi
Slide 24: Stress tests on assets under own management
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Stress tests on assets under own management Unchanged focus on yields and credit spreads; reduced relevance of equities Change in market value Change in OCI before tax Portfolio Scenario in m. EUR in m. EUR -10% -8
Slide 25: High quality fixed-income book well balanced
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix High quality fixed-income book well balanced Geographical allocation mainly in accordance with our broad business diversification Pfandbriefe, Short-term Semi- Governments Corporates Covered bonds, investments, Tot
Slide 26: Currency allocation matches liability profile of balance sheet
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Currency allocation matches liability profile of balance sheet Duration-neutral strategy continued Currency split of investments Modified duration of fixed- Others CAD 7.3% income mainly congruent with 2.9% liabi
Slide 27: Low allocation in Southern Europe
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Low allocation in Southern Europe* Less than a half percent of assets under own management Asset allocation in m. EUR Portugal 6 EUR 41.9 bn. 0.4 % EUR 184 m.* Italy 68 Assets under own management Spain 110 Economi
Slide 28: Solvency II ratio (regulatory view)
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Appendix Solvency II ratio (regulatory view) Hannover Re Group Development of the Solvency II ratio (regulatory view) 260% 252% 230% 221% Threshold 200% Limit 180% Q4/2015 Q4/2016 Q4/2017 Q2/2018 VIII Conference Call on Q3/
Slide 29: Disclaimer
Group Property & Casualty R/I Life & Health R/I Investments Outlook Appendix Disclaimer This presentation does not address the investment objectives or financial situation of any particular person or legal entity. Investors should seek independent professional advice and perform their own analysis r