Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Re — H1 2006 Earnings Presentation
45 slides from Hannover Rueck's earnings presentation, Aug 8, 2006
Slide 1: Conference Call on Interim Report 2/2006
Conference Call on Interim Report 2/2006 ® Hannover, 8 August 2006 hannover re
Slide 2: 1H/2006 Highlights
Highlights Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook 1H/2006 HIGHLIGHTS Æ All Business Groups achieving return-on-equity target • Double-digit (gross & net) premium growth > 10% • EBIT growth even more remarkable +29.7% • Net income on track for full-year target EUR 256.6
Slide 3: 1H/2006 Highlights (cont'd)
Highlights Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook 1H/2006 HIGHLIGHTS (CONT'D) Æ Strong operating cash flow continuing ¬ Supports NII from assets under own mgmt. Æ Shareholders' equity impacted by market value changes of bonds 31 Dec 05 Variance 30 Jun 06 in m. EUR Oper
Slide 4: Group figures at a glance
Highlights Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Group figures at a glance IMPROVED U/W RESULT GENERATING EBIT GROWTH 2005 2006 in m. EUR 1H Q1 Q2 1H Variance Gross written premium 4,831 2,849 2,598 5,448 +12.8% Net premium earned 3,675 1,998 2,047 4,045 +10.1% Net un
Slide 5: Property/Casualty R/I key figures
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Key figures SOLID EBIT GROWTH FROM U/W AND INVESTMENT INCOME Combined ratio reflects ongoing risk-adjusted reserving 2005 2006 in m. EUR 1H Q1 Q2 1H Variance Gross written premium 2,424 1,419 1,188 2,607 +7.6% Net premium earned 1
Slide 6: Catastrophe losses
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Catastrophe losses 1) 2006 SO FAR A QUIET YEAR 2,095 in m. EUR 1,775 1,029 665 497 472 449 370 341 287 240 225 235 175 173 163 164 105 69 103 175 149 83 60 59 60 126 54 28 102 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2) L
Slide 7: 2006 catastrophe losses
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook 2006 catastrophe losses* IN Q2 MAN-MADE LOSSES, EXCLUSIVELY in m. EUR Property/Casualty R/I Catastrophe loss Date Gross Net 1 Satellite claim 28 Feb 2006 10.3 9.9 Cyclone Larry 20 Mar 2006 10.2 8.0 1 Marine claim 31 Mar 2006 7.5 5
Slide 8: Life/Health R/I key figures
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Key figures GROWTH AND RETURN EXPECTATIONS MET EBIT return above target - helped by one-off effect 2005 2006 in m. EUR 1H Q1 Q2 1H Variance Gross written premium 1,131 606 677 1,283 +13.4% Net premium earned 1,053 526 598 1,124 +6
Slide 9: Financial R/I key figures
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Key figures PREMIUM GROWTH AND RESULT FULLY ON TRACK EBIT return back to normal 2005 2006 in m. EUR 1H Q1 Q2 1H Variance Gross written premium 510 450 261 711 +39.5% Net premium earned 375 237 199 436 +16.5% Net underwriting resul
Slide 10: Specialty Insurance key figures
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Specialty Ins. Investments Outlook Key figures FAVOURABLE DEVELOPMENT CONTINUING EBIT return on track to target 2005 2006 in m. EUR 1H Q1 Q2 1H Variance Gross written premium 821 520 552 1,072 +30.6% Net premium earned 413 213 236 450 +8.8% Net under
Slide 11: Investment Income
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Investments Outlook Investment Income STRONG ORDINARY INCOME FROM ASSETS UNDER OWN MGMT. Rising bond yields depressing shareholders' equity in m. EUR 1H/2005 Variance 1H/2006 Ordinary investment income1) 312 +28.2% 401 Realised gains/loss
Slide 12: Target Matrix
Highlights Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook TARGET MATRIX Business Group Key figures Target 1H/2006 2005 2004 2003 Property/Casualty R/I Gross-premium growth none 7.6% 12.0% (12.0%) (20.5%) Combined ratio - assuming a ≤ 100% 1) 98.2%9 112.8% 97.2% 96.0% net cat-l
Slide 13: Outlook for 2006
Outlook for 2006 ® hannover re
Slide 14: Outlook: Guidance for 2006 largely unchanged
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Outlook GUIDANCE FOR 2006 LARGELY UNCHANGED Gross written premium (calendar year)1) Æ Group > 5% • Property/Casualty R/I + 3 - 5% • Life/Health R/I + 12 - 15% • Financial R/I > 10% • Specialty Insurance + 10 - 15% Æ Group RoE at l
Slide 15: Appendix
alent Appendix hannover re’
Slide 16: Our strategic business groups at a glance
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook OUR STRATEGIC BUSINESS GROUPS AT A GLANCE Property/Casualty Life/Health Financial Specialty Consolidation Total R/I R/I R/I Insurance in m. EUR 1H/2005 1H/2006 1H/2005 1H/2006 1H/2005 1H/2006 1H/2005 1H/2006 1H/2005 1H/2006 1H/200
Slide 17: Tactical asset allocation
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Tactical asset allocation SMALL INCREASE IN LISTED EQUITIES Investment category 2002 2003 2004 2005 30 Jun 06 Fixed income securities 75% 81% 81% 82% 81% - Governmentals 26% 25% 25% 26% 24% - Semi-governmentals 20% 21% 21% 20% 21%
Slide 18: Fixed income portfolio
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Fixed income portfolio HIGH QUALITY - MORE THAN 90% RATED "A" AND BETTER in m. EUR 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2002 2003 2004 2005 30 Jun 06 AAA AA A BBB <BBB Modified duration as of 30 Jun 2006: 4.0 (3
Slide 19: Stress tests
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Stress tests RELEVANCE FOR FIXED INCOME Change in fair value Portfolio Scenario in m. EUR Equities* Prices -10% -151 Equities* Prices -20% -302 Equities* Prices -30% -452 Fixed income securities Yield increase +50 bp -332 Fixed in
Slide 20: Loss ratio development U.S. casualty U/Y 1980
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1980 MODERATE ACTIVITY Very low premium volume: USD 23 m. 300 270 240 210 180 150 118 120 102 109 113 90 79 60 30 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid rati
Slide 21: Loss ratio development U.S. casualty U/Y 1981
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1981 STILL SOME ACTIVITY Very low premium volume: USD 20 m. 300 270 240 210 175 180 171 150 150 143 120 136 129 90 103 60 30 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 UL
Slide 22: Loss ratio development U.S. casualty U/Y 1982
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1982 STABILISING AT VERY HIGH LEVEL But very low premium volume: USD 24 m. 300 270 240 210 192 180 179 174 171 150 162 165 120 134 139 126 90 60 30 0 1994 1995 1996 1997 1998 1999 2000 2001
Slide 23: Loss ratio development U.S. casualty U/Y 1983
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1983 SOME ACTIVITY Very low premium volume: USD 23 m. 300 270 255 249 240 211 218 226 235 232 210 205 180 192 189 185 150 180 142 120 90 60 30 0 1994 1995 1996 1997 1998 1999 2000 2001 2002
Slide 24: Loss ratio development U.S. casualty U/Y 1984
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1984 STABILISING ON VERY HIGH LEVEL But very low premium volume: USD 34 m. 306 300 299 276 284 262 270 269 240 227 214 231 210 213 205 204 180 150 120 90 60 30 0 1994 1995 1996 1997 1998 19
Slide 25: Loss ratio development U.S. casualty U/Y 1985
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1985 STABLE AND PROFITABLE With strongly increased premium volume: USD 92 m. 120 100 80 63 60 60 55 47 40 40 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid ratio
Slide 26: Loss ratio development U.S. casualty U/Y 1986
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1986 VERY STABLE, VERY PROFITABLE With even higher premium volume: USD 134 m. 120 100 80 60 43 42 40 40 32 29 29 20 26 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid
Slide 27: Loss ratio development U.S. casualty U/Y 1987
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1987 OUTSTANDING OUTPERFORMER With peaking premium volume: USD 144 m. 120 100 80 60 40 40 37 29 25 20 25 22 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid ratio real
Slide 28: Loss ratio development U.S. casualty U/Y 1988
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1988 AGAIN STABLE AND PROFITABLE Premium volume declining too early: USD 94 m. 120 100 80 64 55 57 60 45 40 38 37 32 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Pai
Slide 29: Loss ratio development U.S. casualty U/Y 1989
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1989 AGAIN STABLE AND PROFITABLE Premium volume beyond peak: USD 77 m. 120 100 78 80 68 61 60 56 60 47 40 39 37 28 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid
Slide 30: Loss ratio development U.S. casualty U/Y 1990
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1990 AGAIN STABLE AND PROFITABLE Premium volume moving sideways: USD 84 m. 120 100 80 72 65 57 60 60 47 40 39 35 20 21 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid
Slide 31: Loss ratio development U.S. casualty U/Y 1991
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1991 STILL STABLE AND PROFITABLE Premium volume moving sideways: USD 82 m. 120 107.5 100 82 80 76 60 61 50 49 40 41 20 23 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR P
Slide 32: Loss ratio development U.S. casualty U/Y 1992
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1992 STILL STABLE AND PROFITABLE Premium volume moving sideways: USD 87 m. 120 102.5 100 84 80 77 82 60 57 46 40 38 30 20 21 11 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 33: Loss ratio development U.S. casualty U/Y 1993
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1993 STABLE AND PROFITABLE Premium volume moving sideways: USD 91 m. 120 115 100 107.5 95 78 80 74 64 60 50 40 46 35 19 27 20 6 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 34: Loss ratio development U.S. casualty U/Y 1994
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1994 QUITE STABLE AND PROFITABLE Premium volume moving sideways: USD 90 m. 120 113 100 107.5 100 94 82 79 80 60 60 45 47 40 42 38 32 20 24 6 15 0 1994 1995 1996 1997 1998 1999 2000 2001 200
Slide 35: Loss ratio development U.S. casualty U/Y 1995
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1995 QUITE STABLE AND STILL PROFITABLE Premium volume still USD 100 m. 120 120 107.5 110 100 105 88 80 74 60 56 40 46 20 25 16 7 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 200
Slide 36: Loss ratio development U.S. casualty U/Y 1996
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1996 STABILISING ACTIVITY Premium volume: USD 99 m. 120 112.5 102 107.5 100 93 93 80 74 60 56 40 28 20 7 17 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid ratio real
Slide 37: Loss ratio development U.S. casualty U/Y 1997
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1997 QUITE NORMAL ACTIVITY Premium volume starting to accelerate: USD 112 m. 120 115 110 112.5 107 100 85 80 60 55 40 28 20 7 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 U
Slide 38: Loss ratio development U.S. casualty U/Y 1998
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1998 SUBSTANTIAL ACTIVITY - CASH IS GONE Premium volume climbing: USD 117 m. 200 180 162.5 160 140 120 123 115 108 100 105 95 80 77 60 53 40 28 20 9 0 1994 1995 1996 1997 1998 1999 2000 200
Slide 39: Loss ratio development U.S. casualty U/Y 1999
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 1999 STABILISING ON "HIGH LEVEL" Premium volume growing too early: USD 170 m. 200 180 160 145 140 120 110 100 94 80 83 60 62 40 44 20 23 8 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 200
Slide 40: Loss ratio development U.S. casualty U/Y 2000
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 2000 HIGH ACTIVITY BUT STABLE IBNR LEVEL Premium volume growing too early: USD 245 m. 200 180 160 142.5 140 120 115 100 105 107.5 100 80 77 60 60 40 42 20 21 7 0 1994 1995 1996 1997 1998 19
Slide 41: Loss ratio development U.S. casualty U/Y 2001
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 2001 SO FAR BETTER THAN EXPECTED Premium volume jumping: USD 408 m. 120 107.5 97.5 100 97.5 95 92.5 80 60 43 40 30 20 17 3 9 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 UL
Slide 42: Loss ratio development U.S. casualty U/Y 2002
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 2002 PROMISING DEVELOPMENT Eventually, the "hard" market in full swing - premium volume: USD 608 m. 120 100 80 75 75 70 67.5 60 40 20 20 19 10 1 3 0 1994 1995 1996 1997 1998 1999 2000 2001
Slide 43: Loss ratio development U.S. casualty U/Y 2003
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 2003 ALSO PROMISING Still a "hard" market - premium volume: USD 783 m. 120 100 80 67.5 70 70 60 40 20 1 3 8 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Paid ratio real
Slide 44: Loss ratio development U.S. casualty U/Y 2004
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 2004 COMPARABLE START TO PREVIOUS U/YS Premium volume reaching its peak: USD 802 m. 120 100 80 72.5 67.5 60 40 20 0.5 2 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ULR Pai
Slide 45: Loss ratio development U.S. casualty U/Y 2005
Highlights P/C R/I L/H R/I Fin R/I Specialty Ins. Investments Outlook Loss ratio development U.S. casualty U/Y 2005 ANOTHER PROMISING START. . . 2005 premium volume should be close to 2004 level: Around USD 800 m. 120 100 80 80 60 40 20 1 0 0.5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004