Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Rück — Investor Presentation (November 2023)
103 slides from Hannover Rueck's investor presentation, November 2023
Slide 1: Hannover Re: the somewhat different reinsurer
Hannover Re: the somewhat different reinsurer November 2023
Slide 2: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 2 Hannover Re: the somewhat different reinsurer
Slide 3: Key facts about Hannover Re
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Key facts about Hannover Re 1966 3rd Founded Largest reinsurer by HDI (P&C in the world reinsurance only) 1990 2022: Start of L&H >3,300 reinsurance as strategic Total number of growth segment employees 1994 HR share 2022: >170 Initial Public 2004
Slide 4: Growth and international expansion mainly organically driven
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Growth and international expansion mainly organically driven M&A activity not accompanied by high integration cost and complexity Hamburger Internationale RV (L&H incl. US) E+S Rück (Germany) Skandia (portfolios, incl. L&H UK, Hollandia South P&C f
Slide 5: Group structure supports our business model
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Group structure supports our business model Free float Talanx AG1) 49.8% 50.2% 64.8% 8 German >170 subsidiaries, primary insurers branch/rep. 35.1% offices worldwide Domestic business International business 1) Majority shareholder HDI V.a.G. 5 Hann
Slide 6: Executive Board of Hannover Rück SE
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Executive Board of Hannover Rück SE Jean-Jacques Henchoz Clemens Jungsthöfel Chief Executive Officer Chief Financial Officer Group Operations and Strategy, Information Technology, Facility Asset Management, Reinsurance Management, Human Resources A
Slide 7: We are among the top reinsurers in the world
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | We are among the top reinsurers in the world Premium ranking 2022 in m. USD Rank Group Country GWP NPW 1 Munich Re DE 51,331 48,550 2 Swiss Re CH 39,749 37,302 3 Hannover Re1) DE 35,528 29,672 4 Canada Life Re CA 23,414 23,414 5 Berkshire Hathaway
Slide 8: Reinsurance has the character of a specialty market
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Reinsurance has the character of a specialty market With a share of 8% of the overall insurance market Market size primary insurance vs. reinsurance Global insurance premium ~ EUR 4.5 trillion Global reinsurance premium ~ EUR 344 billion 2022 or la
Slide 9: Growing Property and Casualty reinsurance market
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Growing Property and Casualty reinsurance market Hannover Re outperforms the market Market size and concentration 2022 GWP in bn. EUR Market share 2022 Hannover Re Top 10 Other Top 10 • Low market entry 67 % 235 barriers lead to high Other fragment
Slide 10: Life and Health reinsurance in a global perspective
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Life and Health reinsurance in a global perspective Concentrated market due to high entry barriers Market size and concentration 2022 GWP in bn. EUR Market share 2022 Hannover Re Top 7 Other Other 16% Top 7 • High market entry 84% 109 barriers lead
Slide 11: Reinsurance is and will be an attractive product
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Reinsurance is and will be an attractive product Drivers for reinsurance demand Trends, conditions and expectations Value Proposition R/I Global trends Protection gap Demographic change Strong capital base Climate change Diversification New product
Slide 12: Favourable premium growth accelerates in last 5 years
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Favourable premium growth accelerates in last 5 years 10-year CAGR: +9.2% Gross written premium in m. EUR 33,276 27,762 27% 24,770 22,598 31% 19,176 32% 17,069 17,791 16,354 35% 13,963 14,362 38% 40% 45% 44% 73% 44% 45% 69% 68% 65% 60% 62% 55% 55%
Slide 13: Well-balanced international portfolio growth
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Well-balanced international portfolio growth Gross written premium in m. EUR Africa 33,276 1.9% 6.3% Australia 27,762 4.0% Latin America 24,770 16.0% 22,598 Asia 14.0% 19,176 17,791 17,069 6.3% 16,354 Other European countries 13,963 14,362 3.4% 5.9
Slide 14: Strong earnings track record
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Strong earnings track record 2022: net income target achieved in a challenging market environment Operating profit (EBIT) in m. EUR 2,087 1,755 1,853 1,689 1,735 1,597 1,466 1,364 1,229 1,214 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Earnin
Slide 15: Dividend strategy emphasizes continuity of ordinary dividend
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Dividend strategy emphasizes continuity of ordinary dividend 2022: increased ordinary dividend reflects positive earnings trend Dividend per share in EUR Dividend strategy 6.00 5.75 5.50 1.00 5.25 1.25 5.00 5.00 1.50 4.75 1.50 1.50 1.50 4.50 5.00 4
Slide 16: RoE of 14.1% well above target for 2022
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | RoE of 14.1% well above target for 2022 5-year average RoE of 11.7% is highly satisfactory despite exceptional loss burden Return on Equity: yearly Return on Equity: average 11,440 10,762 9,652 9,988 8,653 14.1% 13.3% 12.8% 12.8% 12.2% 11.7% 10.8%
Slide 17: Hannover Re remains one of the most profitable reinsurers
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Hannover Re remains one of the most profitable reinsurers No. 1 position on 5-year average RoE – significantly above peer average 2018 2019 2020 2021 2022 2018 - 2022 Company RoE Rank RoE Rank RoE Rank RoE Rank RoE Rank avg. RoE Rank Hannover Re 12
Slide 18: Long-term value creation for shareholders
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Long-term value creation for shareholders 2022: book value per share decreased mainly due to rising interest rates Book value and accumulated paid dividends in EUR 131.07 58.23 53.73 48.23 63.98 32.98 42.98 37.98 28.23 23.98 20.98 98.55 87.30 91.17
Slide 19: Shareholders' equity decreased mainly due to rising interest rates
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Shareholders' equity decreased mainly due to rising interest rates From an economic view, impact on capitalisation is moderate due to strict ALM Policyholders' surplus in m. EUR Change in shareholders' equity in m. EUR 15,734 14,071 13,589 2,977 1,
Slide 20: Low expense ratio is an important competitive advantage
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Low expense ratio is an important competitive advantage Administrative expense ratio Expense ratio (P&C reinsurance) 2) 5-year average 32.0% 30.4% 30.3% 5.6% 5.6% 28.9% 5.0% 4.8% 4.8% 3.2% 2.9% 2.4% 2.4% 2.2% 2.1% 1.9% 2018 2019 2020 2021 2022 Peer
Slide 21: Purpose & Values
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Purpose & Values The “why” and the “how” articulate our distinctive corporate culture Our self-conception Our values Purpose Why do we do what we do? We are ambitious - We are open-minded for our clients’ success and give things a try Core values B
Slide 22: Our competitive strengths lie in our corporate culture and operating model
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Our competitive strengths lie in our corporate culture and operating model and lead to higher profitability with lower volatility Focus on client loyalty and Lean operating partnerships model and cost leadership Strong Effective underwriting capita
Slide 23: Striving for sustainable outperformance
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Striving for sustainable outperformance Group strategy 2021 - 2023 Performance drivers Beyond risk sharing – Performance enablers we team up to create opportunities Preferred Responsibility Drive business partner Empowered people We-spirit Earnings
Slide 24: Sustainability at Hannover Re: How we evolved
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Sustainability at Hannover Re How we evolved 2011 2015 2017 2019 2021 2023 • Publication of • Listed in • Listed in Global • Phased exit for any coal • Signature of UN PSI • CSRD pre-study first sustainability FTSE4Good-Index Challenges index based
Slide 25: Sustainability Strategy 2021 - 2023 – Overview
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Sustainability at Hannover Re Sustainability Strategy 2021 - 2023 – Overview • In summer 2020, we teamed up to develop our new Sustainability Strategy 2021 - 2023 • The sustainability strategy serves our purpose and values • It is closely related t
Slide 26: Sustainability Strategy 2021 - 2023 – Action fields
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Sustainability at Hannover Re Sustainability Strategy 2021 - 2023 – Action fields encompass our material topics Transparency encompasses voluntary commitments and fundamental issues Motivated and well-trained employees are a crucial with implicatio
Slide 27: Net zero targets
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Net zero targets Comprehensive goal setting in core business and own business operations Net zero Net zero Net zero by 2050 by 2050 by 2030 Asset Management Underwriting Own business operations • Climate strategy: • Exit from all risks connected wi
Slide 28: Present on all continents
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Present on all continents Europe Madrid Dublin London Paris Hannover Milan Stockholm The Americas Asia Manama Toronto Seoul Chicago Tokyo Denver Orlando Taipei Hamilton Shanghai Hong Kong Mexico City Mumbai Bogotá Africa Australia Kuala Lumpur Rio
Slide 29: HR share price increased by +20% over the last 3 years
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | HR share price increased by +20% over the last 3 years Performance comparison (incl. reinvested dividends) 140% +32% 130% +20% 120% +16% 110% +5% 100% -1% 90% 80% 70% -34% 60% 50% 40% Hannover Re DAX SXIP Munich Re Swiss Re Scor 29 Hannover Re: the
Slide 30: Yearly Total Shareholder Return (TSR) of 12.6%
| 1 Hannover Re Group | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Yearly Total Shareholder Return (TSR) of 12.6% Value creation since IPO in m. EUR 2021 2022 Market capitalisation as of date 20,158 22,371 - Market capitalisation at IPO 1,084 1,084 (Nov 1994) +2,645% + Dividend payments (cumulative) 7,473 8,197 -
Slide 31: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 31 Hannover Re: the somewhat different reinsurer
Slide 32: We are somewhat different
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | We are somewhat different Distribution Central U/W Distribution channels Property & Casualty reinsurance Central underwriting • Flexible cost base due to with local talent is key to relatively higher share of our success business writ
Slide 33: Property & Casualty: Strategy
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Property & Casualty: Strategy Further expand our bottom line through existing and new client Use internal and external retrocession to optimise the internal relationships model and rating agency capital requirements as well as • Custo
Slide 34: Property & Casualty reinsurance: strong and diversified growth
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Property & Casualty reinsurance: strong and diversified growth 5-year CAGR +17.7% GWP split by reporting categories in m. EUR Gross written premium split by regions Agricultural Risks 24,242 Latin America 4% 4% Africa 3% Australia 1%
Slide 35: Around 2/3 of our business is written via brokers
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Around 2/3 of our business is written via brokers ~1/3 of our business is non-proportional Breakdown of treaties by volume in % and m. EUR GWP by segment 24,242 19,224 16,744 30% Other 14,781 12.0% 30% 11,976 29% 32% 33% 70% 71% 70% 6
Slide 36: 2022: strong premium growth – large losses exceed budget
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Margin-oriented U/W approach leads to profitable growth 2022: strong premium growth – large losses exceed budget by EUR 306 m. Gross written premium in m. EUR EBIT/EBIT margin in m. EUR 24,242 12.2% 5y CAGR: 10.0% 9.1% 17.7% 5.8% 6.2%
Slide 37: Resiliency reserve decreased as expected to EUR 1,378 m.
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Resiliency reserve decreased as expected to EUR 1,378 m. Level of additional IBNR is 51% of total reserves Development of resiliency reserves reviewed by WTW P&C gross loss reserves3) EUR 41 bn. in m. EUR Resiliency Impact on P&C prem
Slide 38: The risk is manageable: stress tests for natural catastrophes
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | The risk is manageable Stress tests for natural catastrophes after retrocessions Effect on forecast net income in m. EUR 2021 2022 100-year loss (1,452) (1,378) Hurricane US/Carribean 250-year loss (1,959) (1,859) 100-year loss (839)
Slide 39: Previous years confirm our reliable planning of NatCat budget
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Previous years confirm our reliable planning of NatCat budget NatCat losses vs. budget in % of NPE average NatCat 15% losses vs. Volatility1) budget 10% (1.4%) 2.7% 5% Peers 1.0% 5.6% 0% 2013 2014 2015 2016 2017 2018 2019 2020 202
Slide 40: Overview Renewals 2023
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | 7 | 8 | Overview Renewals 2023 Market environment supports risk-adjusted price increases throughout the year 1/1 Renewals Comments 9,870 727 9,797 • Positive pricing momentum continued throughout the year, driven (800) by a shortage in reinsu
Slide 41: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 41 Hannover Re: the somewhat different reinsurer
Slide 42: We are somewhat different
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | We are somewhat different Undogmatic Responsive We have an undogmatic Life & Health reinsurance We are committed to time to approach market & responsiveness • Strong entrepreneurial spirit • Rapid decision-making processes • Appetite to inn
Slide 43: Life & Health: Strategy
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Life & Health: Strategy Support our clients in optimizing consumer experience Identify and actively manage value-destroying risks in and risk segmentation our portfolio • Deepen data analytics expertise in combination with artificial • Expa
Slide 44: Life & Health reinsurance: moderate and diversified growth
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Life & Health reinsurance: moderate and diversified growth 5-year CAGR +5.0% GWP split by reporting categories in m. EUR Gross written premium split by regions Germany Africa Latin 3% 4% America 9,033 North 5% 8,538 America 8,026 26% 7,815
Slide 45: Favourable premium growth
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Favourable premium growth 2022: significant increase in underwriting profitability Gross written premium in m. EUR EBIT/EBIT margin in m. EUR 8.2% 9.2% 5.5% 4.3% 3.0% 5y CAGR: 4.9% 9,033 737 8,538 7,815 8,026 7,200 570 393 276 223 2018 2019
Slide 46: Value of New Business well above target
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Value of New Business well above target Mainly driven by Financial Solutions and Longevity business Value of New Business development in m. EUR 893 778 663 543 496 448 364 326 290 Target 2022 ≥ EUR 250 m. 1) 1) 2) 2) 2) 2) 2) 2) 2) 2014 201
Slide 47: Writing attractive traditional life & health business
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Writing attractive traditional life & health business Whilst positioning ourselves for sustainable growth with a clear strategic focus Risk Solutions Financial Solutions Reinsurance Services Provide terms and capacity Achieve financial obje
Slide 48: Our clients are served by our network of offices and expert networks
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Our clients are served in the markets by our network of offices and by our solution-orientated expert networks Automated Biometric U/W systems research L&H Expert networks Longevity Financial solutions solutions R&D Health (re-) technology
Slide 49: Complete offerings
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Complete offerings Risk and financial solutions & services Risk Solutions Financial Solutions Reinsurance Services Competitive terms and appropriate Structured agreements to achieve Comprehensive range geared capacity for technical risks ce
Slide 50: Example risk solution: mortality & longevity
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Example risk solution: mortality & longevity Risks Trigger Mortality Life expectancy Life expectancy Risk of paying more death benefits than expected Mortality Mortality Risk Longevity Risk of paying annuities longer than expected Longevity
Slide 51: Example risk solution: morbidity - critical illness
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Example risk solution: morbidity - critical illness Morbidity Product: Critical illness insurance Risk of experiencing a higher claims burden from traditional Helps consumers to protect their life quality health, critical illness, long-term
Slide 52: Example: services offered with risk and/or financial solutions
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Example: services offered with risk and/or financial solutions Products Innovative, e.g. products with little or no underwriting Processes Lean, e.g. distribution directly to individuals, without advisers Biometrics Cover of death, disease
Slide 53: Primary differences between L&H and P&C business
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Primary differences between L&H and P&C business Simplified illustration Accounting considerations (premium) Single Recurring IBNR reserve impact Low High Involvement of brokers Low High Number of competitors Few Many Number of reinsurer pa
Slide 54: Takeaways for the Life & Health Business Group
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | 7 | 8 | Takeaways for the Life & Health Business Group Business Service 1 All lines of life, health & annuities 4 An important component Focus Premium 2 Biometric risks not asset risk 5 Not the only meaningful benchmark → EBIT Relationship Financia
Slide 55: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 55 Hannover Re: the somewhat different reinsurer
Slide 56: Strong operating cash flow driven by premium growth
| 1 | 2 | 3 | 4 Investment management | 5 | 6 | 7 | 8 | Strong operating cash flow driven by premium growth AuM +1.3%, cash flow and stronger USD offset impact of rising interest rates Operating cash flow in m. EUR Assets under own management (AuM) in m. EUR 5,164 4,940 56,940 56,213 747 1,396 49,00
Slide 57: Increasing assets under own management and net investment income
| 1 | 2 | 3 | 4 Investment management | 5 | 6 | 7 | 8 | Increasing assets under own management and net investment income Assets under own management at EUR 57 bn. Total investments in m. EUR Investment income in m. EUR 67,520 68,478 2,061 1,943 11,539 236 58,960 11,306 1,757 58,903 268 1,686 53,062
Slide 58: Stable asset allocation with defensive credit risk taking
| 1 | 2 | 3 | 4 Investment management | 5 | 6 | 7 | 8 | Stable asset allocation with defensive credit risk taking since beginning 2022 Listed equities sold; increased liquidity to seize market opportunities Ordinary income split Asset class 2018 2019 2020 2021 2022 Short-term Fixed Income 87% 87% 85
Slide 59: High-quality fixed-income book well balanced
| 1 | 2 | 3 | 4 Investment management | 5 | 6 | 7 | 8 | High-quality fixed-income book well balanced Geographical allocation mainly in accordance with our broad business diversification Pfandbriefe, Short-term Governments Semi-governments Corporates Covered bonds, investments, cash ABS AAA 75% 54% 0
Slide 60: Currency allocation and duration
| 1 | 2 | 3 | 4 Investment management | 5 | 6 | 7 | 8 | Currency allocation and duration Duration-neutral strategy intact; lower modified duration as result of yield increases Currency split of investments Others 12% • Modified duration of fixed-income mainly congruent with CAD EUR liability- and ca
Slide 61: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 61 Hannover Re: the somewhat different reinsurer
Slide 62: Our capital structure consists not only of equity
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Our capital structure consists not only of equity Use of hybrids, securitisations etc. lowers cost of capital and levers RoE • Equity capital is by far the most expensive form of capital. Therefore, we make optimal use of equity substitut
Slide 63: Net risk appetite geared to desired level with large retrocession programme
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Net risk appetite geared to the desired level with one of the largest retrocession programme in the market Agg. XL ~ EUR 71 m. Cat swap max. EUR 100 m. ~ EUR 3.48 bn. Whole Account XL ~ EUR 387 m. K-Cession securitisation ~ USD 831 m.1) G
Slide 64: We pioneered in transferring risks into capital markets via securitisations
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | We pioneered in transferring risks into capital markets via securitisations Equity Substitutes Transactions Expired transactions On-going transactions Portfolio-linked securitisation (P&C), K-Cessions (in m. USD if not otherwise stated) 8
Slide 65: Financial strength ratings
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Financial strength ratings Group S&P A.M. Best Berkshire Hathaway AA+ A++ Hannover Re AA- A+ 1) Munich Re AA- A+ XL Bermuda AA- A+ Swiss Re AA- A+ Everest Re A+ A+ Partner Re A+ A+ SCOR A+ A Lloyd's A+ A1) As at 1st November 2023 1) Posit
Slide 66: Benefits of an above-average rating
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Benefits of an above-average rating We have a better showing of business than the Our cost of financing in the capital markets average player is lower • Access to all lines of business • Hybrid bonds trade at tighter spreads Low cost of A
Slide 67: Capital adequacy ratio remains well above target
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Capital adequacy ratio remains well above target Own Funds increase supported by operating earnings and new hybrid bond Development of the Solvency II ratio Comments on 2022 development 243% 252% • Increase in eligible own funds due to st
Slide 68: Strong capital generation driven by business growth
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Strong capital generation driven by business growth Increase in solvency ratio supported by issuance of new hybrid bond Solvency II movement analysis 5.4% 9.2% -4.1% 250% -2.0% 0.3% 200% Positive EOF decrease contribution due to higher 15
Slide 69: High-quality capital base with 83% Tier 1
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | High-quality capital base with 83% Tier 1 Unutilised Tier 2 provides additional flexibility Reconciliation of IFRS Shareholders’ equity vs. Solvency II own funds in m. EUR 8,907 2,317 450 17,514 15,548 768 2,897 17% 650 486 3% Unutilised
Slide 70: Efficient capital deployment supported by significant diversification
| 1 | 2 | 3 | 4 | 5 Capital and risk management | 6 | 7 | 8 | Efficient capital deployment supported by significant diversification Increase in own funds and capital requirements in line with business growth Solvency Capital Requirements in m. EUR Property & Casualty 5,664 (5,474) Life & Health 2,51
Slide 71: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 71 Hannover Re: the somewhat different reinsurer
Slide 72: IFRS significantly changes the structure of the balance sheet
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | IFRS 17 significantly changes the structure of the balance sheet IFRS 9 changes the classification and measurement of financial instruments IAS 39 / IFRS 4 (US GAAP) IFRS 9 / 17 Retro share in technical Retro-LRC Equity Equity provisions Retro-LIC LRC withou
Slide 73: IFRS 17 - Full adoption of GMM
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | IFRS 17 - Full adoption of GMM allows to steer business on a consistent basis Ensuring transparency and bridging the GA(A)P to economic view Full adoption of General Measurement Model (GMM) Valuation methods and rationale for entire business (P&C and L&H) •
Slide 74: IFRS 9 - Fundamental revision of accounting rules for financial instruments
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | IFRS 9 - Fundamental revision of accounting rules for financial instruments Higher share of assets at Fair Value through P&L Assets categorised Fair Value P&L Classification and valuation • Main asset classes: Private-Equity, Real-Estate, fixed-income funds
Slide 75: Transition to IFRS 17 moderately increases earnings level
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | Transition to IFRS 17 moderately increases earnings level Impact of IFRS 17/9 accounting change Property & Casualty reinsurance Life & Health reinsurance Investments • Prudent Reserving approach • CSM release with stabilising • Volatility likely to increase
Slide 76: Reinsurance revenue will be lower than gross written premium
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | Reinsurance revenue will be lower than gross written premium Reinsurance revenue Accounting impact IFRS 17 IFRS 17 impact EUR 33.3 bn. • Exclusion of commissions and non-distinct investment components (NDIC) EUR 24.1 bn. • Exclusion of unearned premiums (mai
Slide 77: FY2022 IFRS 17/9 EBIT IFRS17 vs IFRS4
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | FY2022 IFRS 17/9 EBIT IFRS17 vs IFRS4 P&C • Discounted presentation of technical results, including interest accretion, resulting in a net effect of about 150 m. • Volume-driven change in currency result 116 m. 307 (20) L&H 2,087 • IFRS4 contains +183 m. Cov
Slide 78: P&C: IFRS 17 with limited impact on earnings level
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | P&C: IFRS 17 with limited impact on earnings level Prudent reserving approach Underlying development Accounting impact IFRS 17 Discounting Discounting • Positive impact from margin improvements expected in 2023 renewals provides flexibility to strengthen res
Slide 79: P&C: translation to IFRS 17 metrics results in lower combined ratio
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | P&C: translation to IFRS 17 metrics results in lower combined ratio Outlook 2023: Expected margin improvements enable strengthening of resiliency Accounting impact IFRS 17 IFRS 17 combined ratio (net / net calculation) Discounting • Positive impact on combin
Slide 80: L&H: IFRS 17 transition effects lead to moderately higher earnings
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | L&H: IFRS 17 transition effects will lead to moderately higher earnings level Outlook 2023: further growth mainly from Longevity and Financial Solutions Underlying development Accounting impact IFRS 17 • Supported by further growth mainly in Longevity and •
Slide 81: Investments: IFRS 9 has limited impact on underlying earnings level
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | Investments: IFRS 9 has limited impact on underlying earnings level P&L volatility likely to increase due to higher share of assets FVPL Underlying development Accounting impact IFRS 9 • Ordinary investment income • Volatility likely to increase (more pronou
Slide 82: Strategic RoE target increased to 1000 bps above risk free
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | Strategic RoE target increased to 1000 bps above risk free… …reflecting transition to IFRS 17/9 Total equity in bn. EUR Accounting impact IFRS 17 Group net income RoE = Average equity 4.7 CSM after tax • Unlocking of best-estimate liabilities in L&H results
Slide 83: Risk-adjustment methodology based on internal view on price for insurance risks
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | Risk-adjustment methodology based on internal view on price for insurance risks Interest rates Risk adjustment • Bottom-up approach (risk-free rates + illiquidity premium (ILP)) • Margin approach aligned with pricing metrics for insurance risks • Interest ra
Slide 84: CSM reflects future profits of L&H reinsurance business
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | CSM reflects future profits of L&H reinsurance business and stabilises profit emergence over time Contractual service margin L&H: ~85% • New business contribution expected to be higher than CSM release (~10% p.a., on average/multi-year view) P&C ~15% • Volat
Slide 85: Key take-aways: Greater transparency on future results
| 1 | 2 | 3 | 4 | 5 | 6 IFRS 17 | 7 | 8 | Key take-aways: Greater transparency on future results Increasing earnings in the medium term Outlook for Hannover Re: Property & Casualty reinsurance: • Very favourable underlying market conditions − improved net risk return and underlying earnings profile
Slide 86: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 86 Hannover Re: the somewhat different reinsurer
Slide 87: Q1-3/2023 performance fully supports targets for the full year
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Q1-3/2023 performance fully supports targets for the full year L&H with strong operating performance, margin and resiliency improvement in P&C Group P&C reinsurance Reinsurance revenue Group net income Reinsurance revenue (gross) EBIT 18,33
Slide 88: Continued margin improvement in favourable market environment
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Continued margin improvement in favourable market environment Combined ratio reflects increase in reserve resiliency Property & Casualty R/I Q3/2022 Q3/2023 Q1-3/2022 Q1-3/2023 YTD • Reinsurance Revenue (RR) / New business CSM & LC (net) Re
Slide 89: Q1-3/2023 large losses 124 m. below budget
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Q1-3/2023 large losses 124 m. below budget of 1,328 m. 521 m. budget available for Q4 Natural and man-made catastrophe losses1) in m. EUR 2,944 2,649 2,127 1,790 1,722 1,706 1,595 1,497 1,446 1,250 1,204 1,127 850 956 714 846 724 578 559 57
Slide 90: Large losses within Q1-3/2023 budget of EUR 1,328 m.
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Large losses within Q1-3/2023 budget of EUR 1,328 m. Catastrophe losses1) in m. EUR Date Gross Net Floods, New Zealand 26 Jan - 6 Feb 90.4 45.7 Wildfires, Chile 21 Feb - 31 Mar 22.9 22.9 Earthquake, Türkiye 6 Feb 279.2 273.1 Cyclone "Gabrie
Slide 91: Large losses within Q1-3/2023 budget of EUR 1,328 m.
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Large losses within Q1-3/2023 budget of EUR 1,328 m. Catastrophe losses1) in m. EUR Date Gross Net Earthquake, Morocco 08 Sep 70.0 70.0 Typhoon "Haikui", China 08 Sep 18.0 18.0 Storm "Ophelia", USA 28 Sep - 03 Oct 23.6 23.6 18 Natural catas
Slide 92: Strong operating performance in L&H reinsurance
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Strong operating performance in L&H reinsurance Life & Health R/I Q3/2022 Q3/2023 Q1-3/2022 Q1-3/2023 YTD • Reinsurance Revenue (RR) / New Business CSM & LC (net) Reinsurance revenue (gross) 1,977 1,870 5,943 5,778 – Reinsurance revenue (gr
Slide 93: RoI well above target, driven by favourable ordinary income
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | RoI well above target, driven by favourable ordinary income Resilient portfolio with minor impact from credits and FVTPL Investments 2016A Q3/2022 Q3/2023 Q1-3/2022 Q1-3/2023 RoI YTD Ordinary investment income 1) 523 517 1,399 1,458 3.4% •
Slide 94: Our business groups at a glance Q3/2023 vs. Q3/2022
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Our business groups at a glance Q3/2023 vs. Q3/2022 Property & Casualty R/I Life & Health R/I Total in m. EUR Q3/2022 Q3/2023 ∆-% Q3/2022 Q3/2023 ∆-% Q3/2022 Q3/2023 ∆-% Reinsurance revenue (gross) 4,539 4,371 -3.7% 1,977 1,870 -5.4% 6,515
Slide 95: Our business groups at a glance Q1-3/2023 vs. Q1-3/2022
| 1 | 2 | 3 | 4 | 5 | 6 | 7 Interim results Q1-3/2023 | 8 | Our business groups at a glance Q1-3/2023 vs. Q1-3/2022 Property & Casualty R/I Life & Health R/I Total in m. EUR Q1-3/2022 Q1-3/2023 ∆-% Q1-3/2022 Q1-3/2023 ∆-% Q1-3/2022 Q1-3/2023 ∆-% Reinsurance revenue (gross) 12,389 12,736 +2.8% 5,943
Slide 96: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 96 Hannover Re: the somewhat different reinsurer
Slide 97: Outlook for 2023
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 Outlook | Outlook for 2023 Hannover Re Group • Reinsurance revenue1) ≥ 5% growth • Return on investment 2) ≥ 2.4% • Group net income 2) ≥ EUR 1.7 bn. • Ordinary dividend ≥ prior year • Special dividend if capitalisation exceeds capital requirements for future growth a
Slide 98: 2023 assumptions
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 Outlook | 2023 assumptions Expectations for business groups P&C L&H Reinsurance service result 91% - 92% Combined ratio EUR 750 - 800 m. Interest accretion ~ EUR 650 m. ~ EUR 170 m. (within reinsurance finance result) EBIT ≥ EUR 1,600 m. ≥ EUR 750 m. 98 Hannover Re: t
Slide 99: Agenda
Agenda 1 Hannover Re Group 2 2 Property & Casualty reinsurance 31 3 Life & Health reinsurance 41 4 Investment management 55 5 Capital and risk management 61 6 IFRS 17 71 7 Interim results Q1-3/2023 86 8 Outlook 96 Appendix 99 99 Hannover Re: the somewhat different reinsurer
Slide 100: Financial calendar and our Investor Relations contacts
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Financial calendar and our Investor Relations contacts 12 December 2023 Karl Steinle General Manager Investors’ Day 2023 Phone: +49 511 5604 - 1500 [email protected] 7 February 2024 1 January P&C Treaty Renewals Axel Bock Senior Investor Relations Manager
Slide 101: Basic information on the Hannover Re share
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Basic information on the Hannover Re share Basic information International Securities Identification Number (ISIN) DE 000 840 221 5 Ticker symbols -Bloomberg HNR1 -Thomson Reuters HNRGn -ADR HVRRY Exchange listings -Germany Xetra, Frankfurt, Munich, Stuttgart, Hambu
Slide 102: Details on reserve review by WTW
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Details on reserve review by WTW • The scope of WTW’s work was to review certain parts of the held loss and loss adjustment expense reserve, net of outwards reinsurance, from Hannover Re Group’s consolidated IFRS financial statements and the implicit resiliency rese
Slide 103: Disclaimer
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 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 regarding the appropriateness of investing i
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