Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Re — Corporate Update (July 2005)
11 slides from Hannover Rueck's corporate update, Jul 1, 2005
Slide 1: From Program to Specialty
From Program to Specialty Wilhelm Zeller Chairman of the Executive Board & Chief Executive Officer 0 Hannover, 1 July 2005
Slide 2: Creating a Sharply Focused, Profitable Clarendon
Overview CREATING A SHARPLY FOCUSED, PROFITABLE CLARENDON Æ New management conducted intense analysis of business, driven internally but supported by parent company and external advisors Æ Clear conclusion: Transform Clarendon into a highly focused specialty insurer by organizational separation of t
Slide 3: From Fee-Based Program Company to Specialty Insurer
FROM FEE-BASED PROGRAM COMPANY TO SPECIALTY INSURER Core tenets Æ Fee-based program model: Market dynamics shifted dramatically after acquisition of Clarendon • Workers' compensation carve-out prohibition on primary insurers • "Unwillingness" of reinsurers to pay ¬ Significant rise in disputed reins
Slide 4: From Fee-Based Program Company to Specialty Insurer (cont'd)
FROM FEE-BASED PROGRAM COMPANY TO SPECIALTY INSURER Core tenets (cont'd) Æ Manage business selectively for gross underwriting profitability, not premium volume • Expand and enhance specialized expertise • Deepen relationships with profitable partners • Business model offers flexibility to migrate fr
Slide 5: Our Four Strategic Business Groups
Conclusion OUR FOUR STRATEGIC BUSINESS GROUPS Four-pillar-structure remains unchanged . . . hannover re ® Property/Casualty Reinsurance Life/Health Reinsurance Financial Reinsurance Program Business hannover re ® hannover life re ® hannover re hannover insurance Advanced Solutions® E+S Rück, Hannove
Slide 6: From Program Business to Specialty Insurance
Conclusion (cont'd) FROM PROGRAM BUSINESS TO SPECIALTY INSURANCE . . . as changes are limited to reorganisation of our fourth business group hannover re ® Property/Casualty Reinsurance Life/Health Reinsurance Financial Reinsurance Specialty Insurance hannover re ® hannover life re ® hannover re hann
Slide 7: What We Will Do and What We Will Not Do
Specialty vs. Commodity WHAT WE WILL DO AND WHAT WE WILL NOT DO Specialty (Yes) Full year 2004 premium $ 2.3 bn. Æ Lines of business 100% • Specialty auto (e.g. LAD/assigned risk), specialty workers' compensation, second loss (e.g. public entity), fine arts, 80% bobcats, mobile phones Æ Other charac
Slide 8: Clarendon Going Forward
Key financial considerations CLARENDON GOING FORWARD Cancellation/non-renewal of commodity business Æ Gross premium to come down Æ Group net retention will by ca. $ 1 bn. go up to ca. 70 – 80% in bn. $ 3,0 3.0 $2.9 100% 80% 80% 2,5 2.5 62% $2.3 60% 2.0 2,0 $2.1 44% $1.9 40% 37% 1,5 1.5 $1.5 20% 1,0
Slide 9: Clarendon Going Forward (cont'd)
Key financial considerations CLARENDON GOING FORWARD (CONT'D) High retention of specialty business Æ Reinsurance requirements will change • Catastrophe, capacity covers (non-prop.) only • Mid-term (after phase-out) limited external pro-rata reinsurance • Mid-term net retention increase to 70% – 80%
Slide 10: Distinct Run-Off Portfolio
Effective management DISTINCT RUN-OFF PORTFOLIO Æ Run-offs require special attention/treatment • Install experienced advisor "in-house" to • Support dedicated run-off management team • Bring down legal expenses Reinsurance recoverables • Potentially supplement with a professional (as of 31 Mar 2005)
Slide 11: Summary
SUMMARY Æ Separate the past from the future Æ Consummate underwriting model Æ Discontinue commodity business, focus on specialty Æ Retain core business to the extent possible Æ Tackle run-off professionally and proactively Convert Clarendon from a Program company to a specialty carrier 10