Slide 1: Welcome to Hannover Re's Analysts' Conference
Welcome to Hannover Re's Analysts' Conference Annual Results 2014 London, 10 March 2015
Slide 2: Record result fuelled by both business groups
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Record result fuelled by both business groups Group net income increased by 10.1%; dividend proposal of EUR 4.25 per share Group Gross written premium: EUR 14,362 m. (+2.9%) GWP f/x-adjusted growth of 2.8% in
Slide 3: Continued positive cash flow
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Continued positive cash flow AuM increased by 13.7% helped by lower yields and strengthening of USD Operating cash flow in m. EUR Assets under own management (AuM) in m. EUR 2,637 36,228 2,523 31,874 31,875 493 2
Slide 4: Shareholders' equity increased by 28.2%
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Shareholders' equity increased by 28.2% Driven by strong earnings and growing valuation reserves Policyholders' surplus in m. EUR Change in shareholders' equity in m. EUR 10,239 8,947 8,768 1,986 2,233 702 403 7,
Slide 5: Dividend payment of EUR 3.00 + EUR 1.25 special dividend
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Dividend payment of EUR 3.00 + EUR 1.25 special dividend Initiation of capital management activities Dividend per share in EUR Payout ratio: [-] [37%] [38%] [-] [35%] [37%] [42%] [42%] [40%] [52%] 4.25* 1.25 3.00
Slide 6: RoE target clearly exceeded despite accelerated capital growth
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix RoE target clearly exceeded despite accelerated capital growth Strong 5-year track record, new target of 900 bps above risk free Return on Equity: yearly Return on Equity: average 6,720 5,960 5,500 4,738 4,112 18
Slide 7: Hannover Re is one of the most profitable reinsurers
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Hannover Re is one of the most profitable reinsurers 2010 2011 2012 2013 2014 2010 - 2014 Company RoE Rank RoE Rank RoE Rank RoE Rank RoE Rank avg. RoE Rank Hannover Re 18.2% 1 12.8% 1 15.4% 3 15.0% 3 14.7% 3 15.
Slide 8: Improved results from both underwriting and investments
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Improved results from both underwriting and investments Group net income at record level Group figures in m. EUR Q4/2013 Q4/2014 2013 2014 YTD 2014 Gross written premium 3,426 3,657 13,963 14,362 GWP f/x-adjust
Slide 9: Good U/W profitability in a competitive environment
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2015 Appendix Good U/W profitability in a competitive environment EBIT up by 12.2% Property & Casualty R/I in m. EUR Q4/2013 Q4/2014 2013 2014 YTD 2014 GWP f/x-adjusted growth +1.2%; mainly from Gross written
Slide 10: Overall portfolio outperforms the MtCR
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2015 Appendix Overall portfolio outperforms the MtCR Aviation impacted by high claims burden Combined Ratio 2014 vs. MtCR Target North America* 91.8% markets Continental Europe* 93.1% Marine 67.2% Aviation 112.1
Slide 11: Major losses of EUR 426 m. below budget of EUR 670 m.
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2015 Appendix Major losses of EUR 426 m. below budget of EUR 670 m. 2014: third consecutive year of benign large-loss experience Natural and man-made catastrophe losses1) in m. EUR 2,373 1,730 1,070 981 863 724
Slide 12: Benign large-loss experience from NatCat
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2015 Appendix Benign large-loss experience from NatCat Man-made losses above expectation Catastrophe losses* in m. EUR Date Gross Net Snowstorm, Japan 8 Feb 13.7 10.7 Snowstorm, Japan 14 Feb 24.5 10.4 Storm, USA
Slide 13: Results improved significantly
Group Property & Casualty R/I Life Life & Health Health R/I R/I Investments Outlook 2015 Appendix Results improved significantly Premium growth in line with expectation Life & Health R/I in m. EUR Q4/2013 Q4/2014 2013 2014 YTD 2014 Gross written premium 1,564 1,814 6,145 6,459 GWP f/x-adjusted gro
Slide 14: Positive development of MCEV in 2014
Group Property & Casualty R/I Life Life & Health Health R/I R/I Investments Outlook 2015 Appendix Positive development of MCEV in 2014 Value of new business increased remarkably Development of MCEV in m. EUR Development VNB in m. EUR 4,275 +16% 3,675 3,066 3,134 2,568 2,568 2,040 448 1,941 2,131 314
Slide 15: Pleasing Return on Investments
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook 2015 Appendix Pleasing Return on Investments Supported by stronger realised gains in m. EUR Q4/2013 Q4/2014 2013 2014 RoI YTD 2014 Ordinary investment income* 263 272 1,054 1,069 3.1% Despite continued low interest rat
Slide 16: Asset allocation overall stable
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook 2015 Appendix Asset allocation overall stable Strong rise in AuM due to USD and yield development as well as positive cash flows Tactical asset allocation 1) Investment category 2010 2011 2012 2013 31 Dec 14 Fixed-income
Slide 17: Target Matrix 2014
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Target Matrix 2014 All Group targets achieved Strategic targets Business group Key figures 2014 for 2014 Group Return on investment 1) ≥3.2% 3.3 % Return on equity 2) ≥10.7% 14.7% Earnings per share growth (y-o-y
Slide 18: Outlook 2015
somewhat diyerent Outlook 2015 hannover re’
Slide 19: Selective growth and satisfying profitability expected
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2015 2015 Appendix Selective growth and satisfying profitability expected Development of Property & Casualty R/I lines of business (financial year 2015e) Lines of business Volume1) Profitability2) Target North America3) + ma
Slide 20: Increased profitability expected for Life & Health R/I
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2015 2015 Appendix Increased profitability expected for Life & Health R/I Development of reporting categories (financial year 2015e) Reporting categories Volume1) Profitability2) Financial Financial solutions ++ solutions Lo
Slide 21: Guidance for 2015
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2015 2015 Appendix Guidance for 2015 Hannover Re Group Gross written premium1) flat to low single-digit growth rate Return on investment2) 3) ~ 3.0% Group net income2) ~ EUR 875 m. Dividend payout ratio4) 35% - 40% 1
Slide 22: Rationale for the 2015 profit guidance
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2015 2015 Appendix Rationale for the 2015 profit guidance Long-term success in a competitive business We expect a further increase in profits from our Life & Health business group We expect a largely unchanged technical prof
Slide 23: Appendix
somewhat diyerent Appendix hannover re’
Slide 24: Our strategic business groups at a glance
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Our strategic business groups at a glance 2014 vs. 2013 Property & Casualty Life & Health Total reinsurance reinsurance in m. EUR 2013 2014 2013 2014 2013 2014 Gross written premium 7,818 7,903 6,145 6,459 13,
Slide 25: Our strategic business groups at a glance (Q4)
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Our strategic business groups at a glance Q4 stand-alone Property & Casualty Life & Health Total reinsurance reinsurance in m. EUR Q4/2013 Q4/2014 Q4/2013 Q4/2014 Q4/2013 Q4/2014 Gross written premium 1,861 1,
Slide 26: Well balanced international portfolio
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Well balanced international portfolio Gross written premium (Group) in m. EUR 9,317 9,289 8,259 8,121 10,275 11,429 12,096 13,774 13,963 14,362 3% 3% Africa 4% 2% 6% 4% 6% Australia 14% 15% 1) Latin America 14
Slide 27: Property & Casualty reinsurance: selective growth
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Property & Casualty reinsurance: selective growth GWP split by line of business in m. EUR GWP split by regions 2014 Cat XL 7,717 7,818 7,903 Africa Australia 5% 4% 4% 2% 5% Latin North Structured R/I 8% 12% Am
Slide 28: Life & Health reinsurance: a well diversified portfolio
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Life & Health reinsurance: a well diversified portfolio GWP split by reporting categories in m. EUR GWP split by regions 2014 6,459 Latin Africa 6,058 6,145 America 3% 4% 18% Australia 14% North 13% 12% Americ
Slide 29: Further increase of MCEV
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Further increase of MCEV in m. EUR 2013 2014 Opening adjustments Opening MCEV 3,133.9 3,675.1 Recapture internal retro HR / E+S (EUR -29.8 m.) Opening adjustments 275.8 (44.8) Free Surplus Restatement HR (
Slide 30: Further increase of MCEV
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Further increase of MCEV Good operating embedded value earnings in m. EUR 2013 2014 in m. EUR 2013 2014 Opening MCEV 3,133.9 3,675.1 New business value 308.5 448.4 Opening adjustments 275.8 (44.8) Expected exi
Slide 31: Excellent Value of New Business
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Excellent Value of New Business 2013 2014 Development VNB in m. EUR in m. EUR 448,4 Profit/Loss on new business during year (81.6) (66.6) Present Value of New Business Profits 450.7 634.0 313,6 308,5 - Cost of
Slide 32: Very good development in recent years
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Very good development in recent years MCEV and its components since 2011 2011 2012 2013 2014 in m. EUR Present Value of Future Profits 2,469.3 2,677.6 2,605.9 3,398.6 - Cost of Residual Non-Hedgeable Risks (41
Slide 33: Stress tests on assets under own management
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Stress tests on assets under own management. . . . . .unchanged focus on interest and spread developments Change in Changes in ALM* net Portfolio Scenario market value OCI before tax total in m. EUR in m. EUR
Slide 34: Fixed-income book well balanced
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Fixed-income book well balanced Geographical allocation mainly according to our business diversification Pfandbriefe, Short-term Semi- Governments Corporates Covered bonds, investments, Total governments ABS c
Slide 35: Currency allocation matches liability profile of balance sheet
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Currency allocation matches liability profile of balance sheet Active asset liability management ensures durational match Currency split of investments Modified duration of fixed Others CAD 5.5% income mainl
Slide 36: Market sensitivity of inflation hedges
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 Appendix Appendix Market sensitivity of inflation hedges Average hedged inflation level of 1.73 % EUR and 2.22 % USD p.a. • P&L effect YTD EUR -28.9 m (thereof -11.7 m. EUR; -17,1 m. EUR of USD) • OCI effect YTD EUR -40.2 m (
Slide 37: Disclaimer
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2015 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 perform their own analy