Hannover Rueck SE · XETR:HNR1

Hannover Rueck — Hannover Re — Corporate Update (February 2010)

38 slides from Hannover Rueck's corporate update, Feb 3, 2010

  1. Slide 1: Conference Call on Non-Life Treaty Renewals

    Conference Call on 1 Jan 2010 Non-Life Treaty Renewals Hannover, 3 February 2010

  2. Slide 2: Disclaimer

    Renewals Outlook 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 analysis regarding the appropriateness of investing in any of our secu

  3. Slide 3: Important Note

    Renewals Outlook IMPORTANT NOTE  Unless otherwise stated, the renewals part of the presentation is based on underwriting-year (U/Y) figures. This basis is only remotely comparable with calendar-year (C/Y) figures, which are the basis of quarterly and annual accounts.  The situation shown in this p

  4. Slide 4: Renewal analysis covers 78% of non-life reinsurance

    Renewals Renewals Outlook RENEWAL ANALYSIS COVERS 78% OF NON-LIFE REINSURANCE (R/I) Structured EUR 5,613 m. ,1 R/I & ILS 13% ,1 Global ,1 facultative in m. EUR business ,1 ,1 9% ,1 59% Global 1,314 ,1 R/I ,1 ,1 ,1 Traditional treaty R/I 73% Specialty ,1 78% 1,301 ,0 lines ,1 ,0 ,0 ,0 73% ,0 Target 1

  5. Slide 5: 68% out of 78% non-life R/I renewed as at 1 Jan 2010

    Renewals Renewals Outlook Traditional treaty reinsurance 68% OUT OF 78% NON-LIFE R/I RENEWED AS AT 1 JAN 2010 various Reported in Q1 Reported in Q2 countries Others 6% Latin US 3% America 6% Others Australia US 1% 4% Korea 4% Japan 4% 2% 2% 68% 1 Jan 2 Jan - 1 Apr 2 Apr - 1 Jul after 1 Jul renewal r

  6. Slide 6: Overall satisfactory renewals - mostly as expected

    Renewals Renewals Outlook Market highlights OVERALL SATISFACTORY RENEWALS - MOSTLY AS EXPECTED  Market situation mostly as anticipated in Monte Carlo  Reinsurance rate development depending on market, line of business and loss experience  U/Y rate quality still good - somewhere between 2008 and 2

  7. Slide 7: A mixed basket

    Renewals Renewals Outlook Market highlights by line of business A MIXED BASKET  Target markets • North America: - Property: mostly stable with some rate reductions (~10% partly risk adjusted) but still at a profitable level - Casualty: anticipated improvement did not take place, nevertheless rates

  8. Slide 8: Selective growth of our profitable portfolio

    Renewals Renewals Outlook Hannover Re's market position SELECTIVE GROWTH OF OUR PROFITABLE PORTFOLIO  Very good showing and signing for Hannover Re  Our S&P AA capacity is in high demand as markets are security-minded  We strictly adhere to our cycle management approach and cancelled participatio

  9. Slide 9: Profitability higher than cost of capital

    Renewals Renewals Outlook Revised Multi Specialist structure PROFITABILITY HIGHER THAN COST OF CAPITAL (COC) 1/1/2009 1/1/2010 Non-life reinsurance Volume Volume Profitability (in m. EUR) (in m. EUR) Target North America* 380 365 + markets Germany* 902 898 + Marine (incl. energy) 129 112 + Aviation

  10. Slide 10: Market conditions remain favourable

    Renewals Renewals Outlook Cycle barometer MARKET CONDITIONS REMAIN FAVOURABLE Improvements balancing deteriorations Proportional1) Non-proportional2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0%

  11. Slide 11: No. of treaties nearly unchanged - volume increasing

    Renewals Renewals Outlook Traditional treaty reinsurance NO. OF TREATIES NEARLY UNCHANGED - VOLUME INCREASING By no. of treaties By volume 14,000 5,000 12,781 13,014 12,824 12,601 12,635 4,500 4,377 4,530 12,000 3,963 4,044 4,000 3,915 10,000 3,500 40% 38% 43% 3,000 46% 45% 8,000 84% 84% 85% 85% 85%

  12. Slide 12: Slight increase of volume as expected

    Renewals Renewals Outlook Traditional treaty reinsurance SLIGHT INCREASE OF VOLUME AS EXPECTED - Change of Hannover Re shares: +1pp - Other changes (price & volume): +2pp EUR 4,492 m. EUR 4,530 m. EUR 4,377 m. 104% 103% 100% EUR 4,044 m. 6% 92% 6% 3% 71% 71% 68% 1 Jan 62% renewal 33% Later 32% 32% r

  13. Slide 13: Solid growth

    Renewals Renewals Outlook Traditional treaty reinsurance - proportional business SOLID GROWTH - Change of Hannover Re shares: +2pp - Other changes (price & volume): +3pp EUR 2,773 m. EUR 2,797 m. EUR 2,646 m. 105% 106% 100% 6% EUR 2,321 m. 6% 5% 88% 78% 78% 73% 67% 1 Jan renewal 27% 27% 28% Later re

  14. Slide 14: Overall stable volume

    Renewals Renewals Outlook Traditional treaty reinsurance - non-proportional business OVERALL STABLE VOLUME - Change of Hannover Re shares: +/-0pp - Other changes (price -3pp & volume+3pp): +/-0pp EUR 1,731 m. EUR 1,733 m. EUR 1,723 m. EUR 1,719 m. 100% 100% 99% 100% 6% 5% 0% 61% 60% 60% 1 Jan 55% re

  15. Slide 15: North America: satisfactory renewal

    Renewals Renewals Outlook North America SATISFACTORY RENEWAL Our AA security is in high demand (S&P AA capacity only 25% of market)  Property: clients increased retention levels (e.g. terrorism) • Proportional: almost stable on attractive level • Per-risk: rates on a comparable high level  Casualt

  16. Slide 16: Slightly increased deterioration

    Renewals Renewals Outlook North America - non-proportional business SLIGHTLY INCREASED DETERIORATION Cycle barometer 100% 100% 80% 50% 60% 0% 40% -50% 20% -100% 0% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 Improvement Unchanged Deterioration 13

  17. Slide 17: Stable portfolio but 56% still to be renewed

    Renewals Renewals Outlook North America business all lines STABLE PORTFOLIO BUT 56% STILL TO BE RENEWED - Change of Hannover Re shares: -1pp - Other changes (price & volume): +/-0pp EUR 860 m. EUR 845 m. EUR 845 m. EUR 808 m. 100% 98% 98% 94% 4% 3% - 1% 44% 40% 42% 42% 1 Jan renewal Later 56% 56% 56

  18. Slide 18: Overall trend flattening out

    Renewals Renewals Outlook US casualty premium development OVERALL TREND FLATTENING OUT D&O already hardening 1,029 1,047 in m. USD 947 852 728 631 584 564 552 436 166 149 122 119 57 84 56 35 31 63 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Hardening market: +140% Transitio

  19. Slide 19: Germany: development better than expected

    Renewals Renewals Outlook Germany DEVELOPMENT BETTER THAN EXPECTED  Further strengthened our leading market positioning  Customer base increasing (5 new clients/1 lost)  Overall stable market conditions, demand and premium volume  Stable prices in industrial fire despite very pleasing developmen

  20. Slide 20: Pleasing development

    Renewals Renewals Outlook Germany PLEASING DEVELOPMENT Cycle barometer Proportional1) Non-proportional2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 01 02 03 04 05 06 07 08 09 10 01 02 03 04

  21. Slide 21: Second biggest reinsurer in the German market

    Renewals Renewals Outlook Germany SECOND BIGGEST REINSURER IN THE GERMAN MARKET - Change of Hannover Re shares: +/-0pp EUR 941 m. - Other changes (price & volume): +2pp EUR 902 m. EUR 898 m. EUR 898 m. 104% 100% 100% 100% 5% 3% 2% 1 Jan renewal 100% 100% 100% 95% 2008 2009 Cancelled/ Renewed Price &

  22. Slide 22: Aviation: all in all pleasing renewal results

    Renewals Renewals Outlook Aviation ALL IN ALL PLEASING RENEWAL RESULTS  Primary rates increase (up to +25% for bigger airlines)  Aviation non-proportional rates increase by +10% to +15% for airlines  Good signing achieved - retention at same level  Cedents bought higher limits  General aviation

  23. Slide 23: Rate increases driven by 2009 loss activities

    Renewals Renewals Outlook Aviation - non-proportional business RATE INCREASES DRIVEN BY 2009 LOSS ACTIVITIES Cycle barometer 100% 100% 80% 50% 60% 0% 40% -50% 20% -100% 0% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 Improvement Unchanged Deterioration 20

  24. Slide 24: Further growth in a hardening market

    Renewals Renewals Outlook Aviation FURTHER GROWTH IN A HARDENING MARKET - Change of Hannover Re shares: +2pp - Other changes (price & volume): +4pp EUR 285 m. EUR 270 m. 112% EUR 255 m. 106% EUR 252 m. 2% 99% 100% 2% 6% 66% 66% 1 Jan 60% 58% renewal Later 46% 40% 40% renewals 2008 2009 Cancelled/ Re

  25. Slide 25: A hard market hardening even further

    Renewals Renewals Outlook Credit, surety & political risks A HARD MARKET HARDENING EVEN FURTHER  Renewals good to very good despite increased capacity in the market  Premium volume above plan  R/I rates increase • Credit: +10% to +20% • Surety: stable • Political risks: +10% to +20%  Credit prop

  26. Slide 26: Increasing premium - decreasing exposure

    Renewals Renewals Outlook Credit INCREASING PREMIUM - DECREASING EXPOSURE Premium 157% 179% 100% 82% Exposure 89% 2008 2009 2010 Exposure = PML of top 100 commercial risks 23

  27. Slide 27: Hard market continues

    Renewals Renewals Outlook Credit, surety & political risks HARD MARKET CONTINUES Proportional1) Non-proportional2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 01 02 03 04 05 06 07 08 09 10 0

  28. Slide 28: Best conditions ever

    Renewals Renewals Outlook Credit - proportional business BEST CONDITIONS EVER 113% 112% 110% 102% 106% 108% 115% 100% 103% 83% 73% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average commission index 25

  29. Slide 29: Expanding our market share

    Renewals Renewals Outlook Credit, surety & political risks EXPANDING OUR MARKET SHARE No. 2 worldwide - Change of Hannover Re shares: +11pp - Other changes (price & volume): +5pp EUR 559 m. EUR 566 m. 113% 115% EUR 493 m. 4% 100% 16% 7% EUR 355 m. 72% 1 Jan 89% 89% renewal 76% 69% 26% Later 24% 24%

  30. Slide 30: Global treaty: overall satisfactory growth

    Renewals Renewals Outlook Global treaty OVERALL SATISFACTORY GROWTH Diverse development depending on region  France: stable rates in long-tail business, lower rates in short-tail business  Scandinavia: unsatisfactory primary rates led to portfolio reductions  Central & Eastern Europe: good and pr

  31. Slide 31: Upwards trend reversed but still balanced

    Renewals Renewals Outlook Global treaty UPWARDS TREND REVERSED BUT STILL BALANCED Cycle barometer Proportional1) Non-proportional2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 01 02 03 04 05

  32. Slide 32: Moderate growth expected in 2010

    Renewals Renewals Outlook Global treaty MODERATE GROWTH EXPECTED IN 2010 - Change of Hannover Re shares: +1pp - Other changes (price & volume): +3pp EUR 1,043 m. EUR 1,056 m. EUR 1,073 m. 100% 101% 103% 9% EUR 864 m. 12% 4% 83% 1 Jan 60% 61% 61% renewal 48% Later renewals 40% 40% 42% 2008 2009 Cance

  33. Slide 33: Price decreases - market recovers

    Renewals Renewals Outlook Global catastrophe XL PRICE DECREASES - MARKET RECOVERS Renewal highlights  Prices for property catastrophe protections decrease • Nationwide programmes in USA up to -10%; Regional programmes -5% to +10% depending on 2009 loss experience; 1 Jan 2010 level now comparable to

  34. Slide 34: Deteriorated after an uneventful year

    Renewals Renewals Outlook Global catastrophe XL DETERIORATED AFTER AN UNEVENTFUL YEAR Cycle barometer 100% 100% 80% 50% 60% 0% 40% -50% 20% -100% 0% 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 Improvement Unchanged Deterioration 31

  35. Slide 35: 2010 level between 2008 and 2009

    Renewals Renewals Outlook US property catastrophe XL 2010 LEVEL BETWEEN 2008 AND 2009 in % 10.9 11.0 9.9 8.9 8.8 8.3 7.6 6.8 6.7 5.7 5.6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1 Jan U.S. property catastrophe RoL development 32

  36. Slide 36: Stable after reductions in 2009

    Renewals Renewals Outlook Global catastrophe XL STABLE AFTER REDUCTIONS IN 2009 - Change of Hannover Re shares: +2pp EUR 323 m. - Other changes (price & volume): -4pp 119% EUR 271 m. EUR 275 m. EUR 275 m. 100% 101% 101% 2% -2% 5% 1 Jan renewal 53% 51% 54% 54% Later renewals 47% 47% 47% 2008 2009 Can

  37. Slide 37: Target matrix - revised strategic targets

    Renewals Outlook Outlook TARGET MATRIX - REVISED STRATEGIC TARGETS Strategic 2009 Historical data Business group Key figures targets Q1-3 2008 2007 2006 Non-life R/I Gross-premium growth (y-o-y) none 16.2% (3.9%) (20.1%) (5.8%) Combined ratio - assuming a <100% 1) 96.8%  95.4% 99.7% 100.8% 2) expec

  38. Slide 38: Guidance for 2010

    Renewals Outlook Outlook 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 reinsurance (NPE)1) +~10%  Return on investment2) 3% - 3.5%  Return on equity2) ≥15%  Dividend pay-out ratio3

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