Hannover Rueck Se · XETR:HNR1

Hannover Rueck — Hannover Re — Investor Presentation (July 2005)

13 slides from Hannover Rueck's investor presentation, Jul 1, 2005

  1. Slide 1: Managing Major Loss Exposures by Structuring Effective Retrocessional Programs

    Managing Major Loss Exposures by Structuring Effective Retrocessional Programs Ulrich Wallin Executive Bord Member Specialty R/I & Group Protections Hannover, 1 July 2005

  2. Slide 2: Our largest exposures stem from natural catastrophes

    P/C exposures Aviation Cession limits OUR LARGEST EXPOSURES STEM FROM NAT. CATASTROPHES 11 largest natural catastrophe scenarios in m. € 1,020 1,001 829 781 734 751 634 521 513 490 458 436 335 323 317 270 258 195 200 159 127 85 US East Coast Europe ST Australia US West Coast Japan Tokyo Canada B.C.

  3. Slide 3: We are protected against our largest exposures

    P/C exposures Aviation Cession limits WE ARE PROTECTED AGAINST OUR LARGEST EXPOSURES in m. € 1,645 1,432 625 1,137 447 Clarendon Q/S Clarendon 403 154 829 cat. XL 200 C1 200 C1 77 Swap 77 Swap 1,001 1,020 751 Cat. prot. 734 Cat. prot. 554 P/C 554 P/C 100 year Europe 250 year Europe Protections* 100

  4. Slide 4: Our earnings exceed our largest net exposures

    P/C exposures Aviation Cession limits OUR EARNINGS EXCEED OUR LARGEST NET EXPOSURES in m. € 1,645 213 1,432 625 Program 447 Clarendon Q/S 182 Clarendon 154 813 cat. XL 89 200 C1 625 99 77 Swap 84 84 1,020 P&C Cat. 554 prot. 541 541 541 P/C 182 213 250 year US Protections Net loss P/C* EBIT P/C Net l

  5. Slide 5: Cat. premiums are small but very profitable

    P/C exposures Aviation Cession limits CAT. PREMIUMS ARE SMALL BUT VERY PROFITABLE Total Factor for property Premium property in m. € premium cat. business cat. business Cat. XL 329 100% 329 Stop loss 16 100% 16 Facultative 153 10% 15 Per risk XL 289 23% 65 Pro rata 707 20% 140 Total 1,494 565 4

  6. Slide 6: Our protections manage the exposure and keep the profitability

    P/C exposures Aviation Cession limits OUR PROTECTIONS MANAGE THE EXPOSURE And keep the profitability Æ € 226 m. potential profit to cope with major cat. events based on 60% underlying loss ratio Æ Maximum downside without any form of protection in case of a 1/250 Florida storm: € 1.02 bn. - € 226 m.

  7. Slide 7: Our 2nd largest exposure stems from aviation

    P/C exposures Aviation Cession limits OUR 2ND LARGEST EXPOSURE STEMS FROM AVIATION A market loss of 3.5 bn. would produce a very significant underwriting loss in m. USD 277 150 -475 127 130 -300 -345 -175 HR loss (XL and pro- Gross premium income Expected gross profit Gross result after loss rata/fa

  8. Slide 8: Our retrocessions almost eliminate negative impact

    P/C exposures Aviation Cession limits OUR RETROCESSIONS ALMOST ELIMINATE NEGATIVE IMPACT in m. USD 341 277 75 150 160 -475 127 98 106 -26 -300 -175 HR loss (XL and pro- Gross premium Expected net profit Protections Net result after loss* * rata/fac portfolio) income AV XL portfolio AV pro-rata/fac p

  9. Slide 9: Managing the counterparty risk is essential

    P/C exposures Aviation Cession limits MANAGING THE COUNTERPARTY RISK IS ESSENTIAL Æ We have developed our cession limit tool to manage the counterparty risk. This tool has been implemented on a group-wide basis in order to • Improve transparency of ceded business and limit our risk of financial loss

  10. Slide 10: Counterparty risk becomes transparent in its entirety

    P/C exposures Aviation Cession limits COUNTERPARTY RISK BECOMES TRANSPARENT IN ITS ENTIRETY Æ Determination of free maximum cession limit takes into consideration: • Limits already placed with a retrocesssionaire • Assets we are holding from previous and current retrocessionaires in the form of outs

  11. Slide 11: Our default exposure becomes transparent

    P/C exposures Aviation Cession limits OUR DEFAULT EXPOSURE BECOMES TRANSPARENT Æ Based on our counterparty exposure for each retrocessionaire, we establish the monetary amount of our total counterparty exposure. Æ We use a PML-approach utilising a probability distribution depending on tail of busine

  12. Slide 12: In P/C the default exposure is relatively small

    P/C exposures Aviation Cession limits IN P/C THE DEFAULT EXPOSURE IS RELATIVELY SMALL Exposure € 2.9 m. Receivables € 20.5 m. Recoverables € 23.6 m. Total: € 47.0 m. 11

  13. Slide 13: We place our business with high quality partners

    P/C exposures Aviation Cession limits WE PLACE OUR BUSINESS WITH HIGH QUALITY PARTNERS Split by S&P Rating AAA BB NR 7% Fully 1% 4% collateralised BBB 1% 1% AA 24% A 62% 12

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