Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Re — Q1 2011 Earnings Presentation
33 slides from Hannover Rueck's earnings presentation, May 3, 2011
Slide 1: Conference Call on Interim Report 1/2011
Conference Call on Interim Report 1/2011 Hannover, 3 May 2011
Slide 2: Natural catastrophes set the tone of Q1/2011
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Natural catastrophes set the tone of Q1/2011 But net income still positive Very high catastrophe burden Strong growth in non-life reinsurance Result 1Q/2011 +11.8% Growth within expectations in
Slide 3: Group P/L figures at a glance
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Natural catastrophes set the tone of Q1/2011 Net income and EBIT benefit from tax one-offs Group P/L figures at a glance in m. EUR Q1/2010 Variance Q1/2011 Gross written premium 2,850 +10.3% 3,143
Slide 4: Net income positive despite major losses
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Net income positive despite major losses Excellent investment result, positive reserve run-offs and tax one-off Non-life reinsurance in m. EUR Q1/2010 Variance Q1/2011 Strong GWP growth of 11.8%
Slide 5: Budget for major losses already exhausted in Q1/2011
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Budget for major losses already exhausted in Q1/2011 Natural and man-made catastrophe losses1) in m. EUR 2,373 1.000 1,775 1,070 1,053 863 800 775 665 672 662 600 572 458 2011: 410 530 400 370 377
Slide 6: Q1/2011: High frequency of large losses
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Q1/2011: High frequency of large losses With earthquake Japan being the largest Catastrophe loss* in m. EUR Date Gross Net Flood Brisbane, Australia 10 - 31 Jan 64.8 51.5 Cyclone "Yasi", Australia
Slide 7: Our retrocession strategy works
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Our retrocession strategy works Recoveries from our retrocessions amounted to 43% of the total gross major losses in Q1/2011 Net of reinstatement premiums the total recoveries amounted to EUR ~
Slide 8: Satisfying start into 2011
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Satisfying start into 2011 Reduced earnings due to currency effects Life and health reinsurance in m. EUR Q1/2010 Variance Q1/2011 Gross written premium growth of 8.1% Gross written premium 1,128
Slide 9: Very satisfying investment income boosted by inflation swaps
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Very satisfying investment income boosted by inflation swaps Adjusted for inflation swaps RoI at 4.1% Q1/2010 Variance Q1/2011 Increased assets lead to higher in m. EUR ordinary investment income
Slide 10: Sale of equities drives increase in STI
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Sale of equities drives increase in STI Total asset driven by market value, interest rate increases and currencies 1) Tactical Asset Allocation Investment category 2007 2008 2009 2010 Q1/2011 Fixed
Slide 11: Target matrix
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Target matrix Strategic targets 2011 Strategic Business group Key figures targets Q1/2011 2010 Non-life R/I Combined ratio - assuming <100%1) 123.8% 98.2% 2) expected net large losses (in m. EUR)
Slide 12: Outlook on 2011
hannover re’ Outlook on 2011
Slide 13: Pleasing non-life renewals
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Pleasing non-life renewals 2 January 2011 - 1 April 2011 in m. EUR 1 Change of Hannover Re shares: + 7pp 585 Other changes (price & volume): + 1pp 518 15% 10% 8% 1 113% 100% 90% 0 Inforce book Canc
Slide 14: Since EQ Japan reversal of the softening trend
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Since EQ Japan reversal of the softening trend Pricing trends after natural catastrophes in Q1/2011 • Australia: loss free up 20%; loss to layer up 40% • New Zealand: loss free up 70% to 100%; lo
Slide 15: Updated guidance for 2011
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Updated guidance for 2011 After Q1/2011 results reduced from EUR 650 m. to EUR 500 m. Hannover Re Group • Gross written premium (GWP)1) ……………………………………~ +7% - +8% • Net premium earned (NPE)1) …………
Slide 16: 2010 Market Consistent Embedded Value (MCEV)
2010 Market Consistent Embedded Value (MCEV)
Slide 17: Highlights 2010
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Highlights 2010 Strong development of the MCEV from EUR 2,066.2 m to EUR 2,568.3 m. Excellent Value of New Business of EUR 149.3 m. (+89%) Value In Force increases from EUR 1,227.7 m to EUR 1
Slide 18: Substantial increase of MCEV, high return on MCEV
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Substantial increase of MCEV, high return on MCEV Analysis of Change (AoC) 1) in m. EUR 2009 2010 Opening MCEV 1,482.1 2,066.2 3) Opening Adjustments (29.0) 2) 204.4 Adjusted Opening MCEV 1,453.1 2
Slide 19: Strong result from operating business
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Strong result from operating business Operating MCEV Earnings 2009 2010 in m. EUR New business value 78.9 149.3 Expected existing business contribution (reference rate)1) 72.0 90.2 Expected existin
Slide 20: Excellent Value of New Business
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Excellent Value of New Business 2009 2010 in m. EUR Profit/Loss on new business during year (295.1) (127.4) Present Value of New Business Profits 706.4 331.0 - Cost of Residual Non Hedgeable Risks
Slide 21: Embedded Value Not Recognised more than doubled
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Embedded Value Not Recognised more than doubled Reconciliation to IFRS equity demonstrates "off balance sheet"-values in m. EUR 2.400 625.2 289.9 1.600 721.0 822.3 2,568.3 2,066.2 800 1,222.1 953.9
Slide 22: MCEV per Hannover Re share
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | MCEV per Hannover Re share 2009 Variance 2010 MCEV in m. EUR 2,066.2 +24.3% 2,568.3 Number of shares in m. 120.6 +0.0% 120.6 Share price in EUR 32.71 +22.6% 40.14 MCEV per Hannover Re share in EUR
Slide 23: Strong development over the last years
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Strong development over the last years MCEV and its components since 2007 2007 2008 2009 2010 in m. EUR Present Value of Future Profits 1,209.4 1,159.8 1,798.2 2,211.5 - Cost of Residual Non-Hedgea
Slide 24: Appendix
hannover re’ Appendix
Slide 25: Our strategic business groups at a glance
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Our strategic business groups at a glance Non-life Life and health Consolidation Total reinsurance reinsurance in m. EUR Q1/2010 Q1/2011 Q1/2010 Q1/2011 Q1/2010 Q1/2011 Q1/2010 Q1/2011 Gross writte
Slide 26: Focus on high quality securities
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Focus on high quality securities Strategically short modified duration Fixed-income portfolio in m. EUR 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 ,0 2007 2008 2009
Slide 27: No material exposure in Southern Europe and Ireland
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | No material exposure in Southern Europe and Ireland Merely 1.2% of total assets under own management Asset allocation in m. EUR Portugal 34 Ireland 61 1.2% Spain 173 Italy 26 Greece 7 Total assets
Slide 28: Stress tests
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Stress tests Change in market value Changes in OCI before tax Portfolio Scenario in m. EUR in m. EUR Equities Prices -10% -4 -4 Equities Prices -20% -7 -7 Equities Prices -30% -11 -11 Fixed-income
Slide 29: Partial hedging of technical inflation risks
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Partial hedging of technical inflation risks. . . . . .via inflation swaps in Q2/2010 and Q1/2011 Rise in inflation expectation leads to higher market Volume EUR EUR 930 m. values of inflation sw
Slide 30: Impact of the inflation swaps
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Impact of the inflation swaps Overview of sensitivities Current holding of inflation swaps of EUR 2.7 bn. (equivalent swap volume) reacts as follows on underlying risk factors: in m. EUR Change i
Slide 31: MCEV components
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | MCEV components Strong development of MCEV in 2010 in m. EUR 2009 Variance 2010 Free Surplus 772.1 +13.5% 876.7 Required Capital 1,246.0 -0.7% 1,237.4 Shareholders' Net Worth 2,018.1 +4.8% 2,114.1
Slide 32: Sensitivities of the Market Consistent Embedded Value
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Sensitivities of the Market Consistent Embedded Value in m. EUR Total MCEV (basic) 2,568.3 Sensitivities to economic assumptions Interest rate environment +100 bps -13.5 Interest rate environment -
Slide 33: Disclaimer
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | 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 pe