Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Re — Q1 2010 Earnings Presentation
34 slides from Hannover Rueck's earnings presentation, May 4, 2010
Slide 1: Conference Call on Interim Report 1/2010
Conference Call on Interim Report 1/2010 Hannover, 4 May 2010
Slide 2: Q1/2010: Further topline growth and satisfying results
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Q1/2010: Further topline growth and satisfying results Group net income in line with full year 2010 profit targets Stable reinsurance markets High catastrophe burdens Favourable capital markets I
Slide 3: Q1/2010: Further topline growth and satisfying results
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Q1/2010: Further topline growth and satisfying results EBIT growth +11%, excluding ING Life Re VOBA of EUR 86.4 m. in Q1/2009 Group P/L figures at a glance in m. EUR Q1/2009 Variance Q1/2010 Gross
Slide 4: Topline growth as anticipated
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Topline growth as anticipated Positive run-off result pushes combined ratio to below 100% Q1/2009 Variance Q1/2010 EUR 264.4 m. impact of large Non-life reinsurance in m. EUR losses; significantl
Slide 5: High burden of large losses in Q1/2010
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | High burden of large losses in Q1/2010 Volume already higher than full year 2009 Natural and man-made catastrophe losses1) in m. EUR 2,373 1.000 1,775 1,070 800 775 665 672 600 2010e: 472 458 500 4
Slide 6: Major losses Q1/2010: Chile earthquake
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Major losses Q1/2010: Chile earthquake. . . . . .with net impact of EUR 185 m. Catastrophe loss* in m. EUR Gross Net Date Earthquake Haiti 12 Jan 25.5 25.5 Storm Mexico 2 Feb 5.5 5.5 Earthquake Chi
Slide 7: Strong premium growth continues
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Strong premium growth continues Q1 earnings met our expectations Strong premium growth due to: Life and health reinsurance in m. EUR Q1/2009 Variance Q1/2010 - BATs in 2009 Gross written premium
Slide 8: Satisfying net investment income
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Satisfying net investment income 3.6% RoI on assets under own management Increased assets lead to in m. EUR Q1/2009 Variance Q1/2010 higher ordinary investment Ordinary investment income1) 199 +8
Slide 9: Conservative approach unchanged
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Conservative approach unchanged Significant growth by assets under own management Tactical Asset Allocation Investment category 2006 2007 2008 2009 Q1/2010 Fixed-income securities 82% 79% 89% 87% 8
Slide 10: Focus on high quality securities remains
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Focus on high quality securities remains More than 75% invested in AA or better Fixed-income portfolio in m. EUR 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 ,0 2006 2007 200
Slide 11: No material PIIGS exposure
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | No material PIIGS exposure Merely 2% of total assets under own management Asset allocation in m. EUR Portugal 56 Spain 141 2% Ireland Greece 188 35 Italy 43 Total book of asset under own mgmt. EUR
Slide 12: Mid-term target matrix
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Mid-term target matrix Strategic Business group Key figures targets Q1/2010 2009 Non-life R/I Gross-premium growth (y-o-y) none 4.0% 15.2% Combined ratio - assuming a <100% 1) 99.3% 96.6% expecte
Slide 13: Outlook on 2010
hannover re’ Outlook on 2010
Slide 14: Stable non-life renewals as of 1 April 2010
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Stable non-life renewals as of 1 April 2010 Marine/Aviation • Aviation XoL: modest increases • Marine XoL: small reductions Japan • Portfolio has been stable. We kept market position and premiu
Slide 15: Stable non-life renewals as of 1 April 2010
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Stable non-life renewals as of 1 April 2010 in m. EUR 1 Change of Hannover Re shares: + 2pp Other changes (price & volume): - 1pp 325 304 12% 6% 1% 1 107% 100% 94% 0 Inforce book Cancelled/ Renewed
Slide 16: Profitable growth continues: Guidance for 2010
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Profitable growth continues Guidance for 2010 Hannover Re Group • Gross written premium (GWP)1) +~5% • Net premium earned (NPE)1) +~5% Non-life reinsurance (NPE)1) +~4% Life and health reinsu
Slide 17: 2009 Market Consistent Embedded Value (MCEV)
2009 Market Consistent Embedded Value (MCEV)
Slide 18: Highlights 2009
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Highlights 2009 HR adopted the MCEV Principles published by the CFO Forum • No consideration of liquidity premium as part of spread-widening • Therefore no sensitivity of a liquidity premium of 1
Slide 19: Strong development of MCEV in 2009
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Strong development of MCEV in 2009 After consolidation 2008 2009 Stable operating in m. EUR MCEV earnings Opening MCEV 1,715.1 1,652.0 Opening Adjustments1) (131.5) (25.1) Positive economic Adj
Slide 20: Stable operating earnings
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Stable operating earnings 2008 2009 Operating MCEV earnings in m. EUR Value of New Business (VNB) 150.5 83.9 Expected existing business contribution (reference rate)1) 99.5 76.5 Expected existing b
Slide 21: Broad diversification reduces risk remarkably
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Broad diversification reduces risk remarkably A snapshot of 2009 Value of In-Force covered business (VIF)* Domestic Foreign Total in m. EUR operations operations Life 695.0 473.2 1,168.2 Annuities
Slide 22: Reconciliation to IFRS equity
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Reconciliation to IFRS equity. . . . . .demonstrates "off balance sheet"-values in m. EUR 2.400 Not recognised in balance sheet: Not recognised in EUR 305.5 m. balance sheet: 1.800 EUR 295.5 m. 889
Slide 23: Appendix
hannover re’ Appendix
Slide 24: 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 Q1/2009 Q1/2010 Q1/2009 Q1/2010 Q1/2009 Q1/2010 Q1/2009 Q1/2010 Gross writte
Slide 25: 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% -2 -2 Equities Prices -20% -4 -4 Equities Prices -30% -6 -6 Fixed-income se
Slide 26: Asset allocation
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Asset allocation Reflects market spectrum Corporate sector allocation in % Others Others 4% 2% Insurance 24% Industrials 42% Publicly Financials guaranteed 53% 3% Banks covering all Special activit
Slide 27: Asset allocation
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Asset allocation Focus on balanced risk return ratio Corporates by currency and rating in % EUR Corporates USD Corporates Other Currencies Corporates <BBB AAA AA AAA <BBB BBB 2% 7% 10% <BBB 3% 12%
Slide 28: Elements of the MCEV
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Elements of the MCEV in m. EUR 2008 2009 Variance Free Surplus 525.0 793.8 +51.2% Required Capital 992.4 1,299.1 +30.9% Shareholders' Net Worth before consolidation 1,517.3 2,092.9 +37.9% Consolida
Slide 29: Split of value of new business
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Split of value of new business Domestic Foreign Total in m. EUR operations operations Profit/Loss on new business during year (96.1) (204.5) (300.6) PVNB 229.3 490.4 719.7 - CoRNHR1) 38.6 267.6 306
Slide 30: Financial options and guarantees (FOGs)
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Financial options and guarantees (FOGs) Significant increase due to change in volatilities Domestic Foreign Total in % of MCEV in m. EUR operations operations FOGs 2008 5.0 36.6 41.6 2.5 FOGs 2008
Slide 31: Satisfying new business margins
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Satisfying new business margins MCEV-Margins Domestic Foreign Total in m. EUR operations operations Value of New Business (basic) 89.8 (5.9) 83.9 New Business Premium (NBP) in 2009 1,267.0 953.5 2,
Slide 32: Sensitivities of value of new business
Group | Non-life reinsurance | Life and health reinsurance | Investments | Outlook | MCEV | Appendix | Sensitivities of value of new business Domestic operations Foreign operations Total in m. EUR Value of New Business (basic) 89.8 (5.9) 83.9 Sensitivities to economic assumptions Interest rate envir
Slide 33: 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 Before consolidation After consolidation in m. EUR Domestic operations Foreign operations Total Total MCEV (basic) 1,852.0 1,538.3 3,390.3 2,21
Slide 34: 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