Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Re — Investor Day (June 2006)
39 slides from Hannover Rueck's investor day presentation, Jun 23, 2006
Slide 1: Life/Health Reinsurance - The Dynamic Evolution of our Global Strategy
Life/Health Reinsurance - The Dynamic Evolution of our Global Strategy Wolf S. Becke Member of the Executive Board & CEO Hannover Life Re 9th International Investors' Day ® London, 23 June 2006 hannover life re
Slide 2: Overview
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook OVERVIEW Æ Introduction • Hannover Life Re: snapshots 2005 Æ Partnership approach • Basic business credo Æ Five Pillar Model • Current status • Numbers behind the Five Pillar Model Æ Looking forward • Global gr
Slide 3: From Nobody to a Premier League Player
Introduction Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Snapshot 1 FROM NOBODY TO A PREMIER LEAGUE PLAYER Hannover Life Re (HLR) in m. EUR 2,728 2,733 2.800 2,660 2,494 2,534 2,488 2.100 1,403 1.400 700 142 0 19911) 1998 1) 2000 2) 20012) 2002 2) 2003 2
Slide 4: Lines of Business - HLR Consolidated Figures
Introduction Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Snapshot 2 LINES OF BUSINESS - HLR CONSOLIDATED FIGURES Life increases, health decreases, annuities catching up Gross premium in m. EUR 2,472 2,425 2,276 2,177 1,921 1,706 1,510 1,400 653 382 350 3
Slide 5: Top Global Life Reinsurers
Introduction Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Snapshot 3 TOP GLOBAL LIFE REINSURERS Six players dominate the market - for how long? in m. USD Life gross premium Variance Rank Group/Rating unit 2003 2004 in % 1 Swiss Re 9,393.1 10,356.1 +10 2 M
Slide 6: Market Position of Hannover Life Re
Introduction Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Snapshot 4 MARKET POSITION OF HANNOVER LIFE RE Germany, UK and southern hemisphere are strongholds Æ We currently entertain No. 2 position in Germany, No. 3 position in Europe and No. 4 position wo
Slide 7: An International Network
Introduction Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Hannover Life Re AN INTERNATIONAL NETWORK A solid infrastructure on five continents Æ A network of operating companies, branches and offices • Hannover Life Re International, with offices in Stockh
Slide 8: Short-Term Earnings and Long-Term Values
Introduction Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook SHORT-TERM EARNINGS AND LONG-TERM VALUES Moving in the right direction 2002 2003 2004 2005 in m. EUR Development of operating earnings/EBIT 48.5 61.0 76.7 93.1 Development of value of new business
Slide 9: Evolution of the Partnership Approach
Introduction Partnership Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Evolution EVOLUTION OF THE PARTNERSHIP APPROACH Started many years ago Flashback to 1990/91: Rules for Hannover Life Re, "new kid on the block". . . Æ Rule No. 1 • Avoid imitating your big competito
Slide 10: A Fresh Look at Life Reinsurance: No Zero-Sum Games
Introduction Partnership Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Evolution A FRESH LOOK AT LIFE REINSURANCE: NO ZERO-SUM GAMES Basic business approach since mid-90s: Æ Creating long-term business partnerships with interested stakeholders by identifying win-win si
Slide 11: Main Strategic Initiatives of Long-Term Business Model
Introduction Partnership Five Five Pillar Model Pillar Model Looking forward Talanx Risk management Outlook Business model MAIN STRATEGIC INITIATIVES OF LONG-TERM BUSINESS MODEL 1) Stochastic partnerships (SP) worldwide • New business financing, block assumption transactions in life, personal accide
Slide 12: Proliferation of a Dynamic Business Approach
Introduction Partnership Five Five Pillar Model Pillar Model Looking forward Talanx Risk management Outlook Business model PROLIFERATION OF A DYNAMIC BUSINESS APPROACH Five Pillar Model has been gradually implemented over years and constitutes a unique business model in life reinsurance, with follow
Slide 13: Breakdown of Financial Results 2005
Introduction Partnership Five Five Pillar Model Pillar Model Looking forward Talanx Risk management Outlook Numbers BREAKDOWN OF FINANCIAL RESULTS 2005 International Stochastic Banc- Risk- New markets key client Total partnerships assurance oriented R/I in m. EUR groups 2005 IFRS 21% 13% 9% 44% 13%
Slide 14: Geographical Split Mirrors Diversified Portfolio
Introduction Partnership Five Five Pillar Model Pillar Model Looking forward Talanx Risk management Outlook Numbers GEOGRAPHICAL SPLIT MIRRORS DIVERSIFIED PORTFOLIO International Stochastic Banc- Risk-oriented 2005 premium New markets key client Total partnerships assurance R/I groups Africa 9% - -
Slide 15: Development of Growth Matrix
Introduction Partnership Five Pillar Model Looking forward Looking forward Talanx Risk management Outlook Looking forward DEVELOPMENT OF GROWTH MATRIX The big question: Where do we want to grow our business? Æ Following the Five Pillar Model we have subdivided our worldwide portfolio into 40 growth
Slide 16: Hannover Life Re's Expected Growth in 2006-2008
Introduction Partnership Five Pillar Model Looking forward Looking forward Talanx Risk management Outlook Growth matrix HANNOVER LIFE RE'S EXPECTED GROWTH IN 2006 - 2008 The answer: Country/ SP NM BA RR MN Total points business segment Germany = = +/++ + + 3.5 UK ++ ++ = - + 4.0 Other Europe = + + +
Slide 17: A Lot of Growth Opportunities in Different Markets
Introduction Partnership Five Pillar Model Looking forward Looking forward Talanx Risk management Outlook Executive summary A LOT OF GROWTH OPPORTUNITIES IN DIFFERENT MARKETS Æ Most pronounced growth is expected in bancassurance driven by Middle East and Germany as well as U.S. (financial institutio
Slide 18: The Captive Market of Talanx Life Companies
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Talanx life companies THE "CAPTIVE MARKET" OF TALANX LIFE COMPANIES A strong source of quality business Æ Talanx Group – our majority shareholder: Rapidly growing by acquisitions and joint ventures on a pan-Eur
Slide 19: Breakdown of Premium Income Ceded in 2005
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Talanx life companies BREAKDOWN OF PREMIUM INCOME CEDED IN 2005 Corporate headquarter 2005 in m. EUR 1 Aspecta Leben Hamburg 133.9 2 Aspecta Liechtenstein Vaduz 20.1 3 Aspecta Luxembourg Luxembourg 19.0 4 Aspec
Slide 20: Pandemics: Identification of Potential Effects
Introduction Partnership Five Pillar Model Looking forward Talanx Risk Risk management management Outlook Pandemics IDENTIFICATION OF POTENTIAL EFFECTS Examination of potential effects of emergence of a major pandemic like Avian Flu on our worldwide portfolio in 2006 by selecting six large represent
Slide 21: Key Financial Results of Investigation
Introduction Partnership Five Pillar Model Looking forward Talanx Risk Risk management management Outlook Pandemics KEY FINANCIAL RESULTS OF INVESTIGATION The good, the bad and the ugly Æ Stochastic partnerships • Decrease of IFRS result by only 2%, still very profitable • PVFP practically unchanged
Slide 22: Key Financial Results of Investigation (Cont'd)
Introduction Partnership Five Pillar Model Looking forward Talanx Risk Risk management management Outlook Pandemics KEY FINANCIAL RESULTS OF INVESTIGATION (CONT'D) The good, the bad and the ugly Risk reassurance: Æ Mortality treaty with profit participation (p.p.): • Drop of IFRS result from 10.2% m
Slide 23: Diversified Portfolio Mitigates Effects of a Pandemic
Introduction Partnership Five Pillar Model Looking forward Talanx Risk Risk management management Outlook Conclusions DIVERSIFIED PORTFOLIO MITIGATES EFFECTS OF A PANDEMIC Æ Broad diversification of Hannover Life Re's portfolio provides for a substantial risk mitigation in the event of a pandemic Æ
Slide 24: Many Major Transactions on Front Burner
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Outlook Hannover Life Re MANY MAJOR TRANSACTIONS ON FRONT BURNER Æ Stochastic partnerships • HLR U.S. just concluded a large BAT (50% quota share) on senior business of Ceres Group – as part of acquisition by G
Slide 25: The Way Forward
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Outlook Hannover Life Re THE WAY FORWARD Growth matrix 2006 – 2008 as a platform for developing necessary action and implementation plans in respect of Æ Liquidity Æ Capital requirements Æ Rating requirements Æ
Slide 26: The Best Is Yet to Come
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook Outlook Hannover Life Re THE BEST IS YET TO COME Æ Financial targets 2008 (on IFRS accounting standards) • Gross written premium: Range of EUR 3.0 – 3.3 bn. • Net earned premium: Range of EUR 2.7 – 3.0 bn. • Op
Slide 27: Appendix
alent Appendix hannover life re’
Slide 28: Effects of a Pandemic on Life & Health Business
Effects of a Pandemic on Life & Health Business Dr. Wolf Becke ® hannover life re
Slide 29: Content
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook CONTENT Æ How did we proceed Æ Effects of a pandemic on our portfolio Æ Conclusion ® hannover life re I
Slide 30: How Did We Proceed? The Clusters
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook How did we proceed? THE 6 CLUSTERS Æ The Life/Health business can be categorised in various clusters Æ For the evaluation of a pandemic on our portfolio we chose 6 clusters, representing the majority of our bus
Slide 31: The Clusters (Cont'd)
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook How did we proceed? THE 6 CLUSTERS (CONT'D) • Cluster 4: Risk premium business without profit commission (for sake of completeness, not very typical for our portfolio) • Cluster 5: Disability income insurance (
Slide 32: Basic Assumptions
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook How did we proceed? BASIC ASSUMPTIONS Æ Assumptions are in line with "high impact scenario" of U.S. Centre for Disease Control (CDC), resulting in 0.7 deaths per 1,000 of population from pandemic flu Æ We adjus
Slide 33: Financing Business with Deficit Account
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook FINANCING BUSINESS WITH DEFICIT ACCOUNT Increase of NPV by 0.08% NPV base projection = 13,522,003 EUR NPV Avian Flu scenario = 13,532,939 EUR in EUR in EUR Mortality increase by 0.35 ‰ Base projection Avian Flu
Slide 34: Enhanced Annuities - Single Premium Business
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook ENHANCED ANNUITIES - SINGLE PREMIUM BUSINESS Increase of NPV by 3% NPV base projection = 29,718,805 GBP NPV Avian Flu scenario = 30,529,685 GBP Mortality increase in 2006 in GBP in GBP by 3.5 ‰ (equivalent to 4
Slide 35: Risk Premium Business with Profit Commission
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook RISK PREMIUM BUSINESS WITH PROFIT COMMISSION Decrease of NPV by 10% NPV base projection = MYR 50,641,668 NPV Avian Flu scenario = MYR 45,536,347 Mortality increase in 2006 by in MYR in MYR 0.35 ‰ (equivalent to
Slide 36: Risk Premium Business without Profit Commission
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook RISK PREMIUM BUSINESS WITHOUT PROFIT COMMISSION Decrease of NPV by 84% NPV base projection = GBP 11,508,827 NPV Avian Flu scenario = GBP 1,880,258 Mortality increase in 2006 by in GBP in GBP 0.35 ‰ (equivalent
Slide 37: Disability Income Insurance
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook DISABILITY INCOME INSURANCE Increase of NPV by 2% NPV base projection = AUD 5,824,323 NPV Avian Flu scenario = AUD 5,912,351 in AUD in AUD Mortality increase in 2006 by Base projection Avian Flu scenario 0.35 ‰
Slide 38: Medicare Supplement Business
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook MEDICARE SUPPLEMENT BUSINESS Decrease of NPV by 4% NPV base projection = USD 39,751,070 NPV Avian Flu scenario = USD 38,326,545 in USD in USD Mortality increase in 2006 Base projection Avian Flu scenario by 0.3
Slide 39: Conclusion
Introduction Partnership Five Pillar Model Looking forward Talanx Risk management Outlook CONCLUSION Short-term effects Æ Losses for risk premium Life/Health business Æ Profits for annuity and disability business Æ Financing life business on original terms basis (our main portfolio) nearly insensiti