Hannover Rueck Se · XETR:HNR1
Hannover Rueck — Hannover Re — FY2013 Earnings Presentation
38 slides from Hannover Rueck's earnings presentation, Mar 12, 2014
Slide 1: Welcome to Hannover Re's Analysts' Conference
Welcome to Hannover Re's Analysts' Conference Annual Results 2013 Frankfurt/London, 12 March 2014
Slide 2: Record result supported by non-life U/W result and tax effect
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Record result supported by non-life U/W result and tax effect RoE of 15.0% well in excess of strategic target Group Gross written premium: EUR 13,963 m. (+1.4%) GWP f/x-adjusted growth of 4.2% with N
Slide 3: Moderate growth due to strict U/W in a competitive market
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Moderate growth due to strict U/W in a competitive market 2013: +1.4%; 5-year CAGR +11.4% Gross written premium in m. EUR 13,774 13,963 12,096 11,429 10,275 44% 44% 44% 8,121 45% 44% 39% 56% 56% 55% 56% 56
Slide 4: Continued positive cash flow
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Continued positive cash flow AuM affected by f/x effects, decrease in valuation reserves & high dividend payment Operating cash flow in m. EUR Assets under own management (AuM) in m. EUR 31,874 31,875 2,63
Slide 5: Capital base remains on high level
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Capital base remains on high level Substantial increase of solvency margin since 2009 Policyholders' surplus in m. EUR Solvency margin* 8,947 8,768 7,338 2,233 2,238 6,987 73.1% 71.7% 1,732 682 69.5% 5,622
Slide 6: Dividend payment of EUR 3.00 at upper end of payout range
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Dividend payment of EUR 3.00 at upper end of payout range Attractive dividend yield of 4.8% Dividend per share in EUR Payout ratio: [43%] [-] [37%] [38%] [-] [35%] [37%] [42%] [42%] [40%] 3.00 3.00 * 0.40
Slide 7: Group net income at record level
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Group net income at record level Group figures in m. EUR Q4/2012 Q4/2013 2012 2013 YTD 2013 Gross written premium 3,478 3,426 13,774 13,963 GWP f/x-adjusted growth +4.2% Net premium earned 3,320 3,109 12
Slide 8: Strategic RoE target well exceeded
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Strategic RoE target well exceeded Solid 5-year track record Return on Equity: yearly Return on Equity: average 22.4% 18.2% 16.8% 15.4% 15.0% 13.5% 14.1% 12.8% 11.1% 11.0% 11.0% 11.5% 10.6% 10.0% 10.5% 9.8
Slide 9: Hannover Re remains no. 1 position in RoE ranking
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Hannover Re remains no. 1 position in RoE ranking We aim to be one of the top 3 reinsurers in terms of RoE 2009 2010 2011 2012 2013 2009 - 2013 Company RoE Rank RoE Rank RoE Rank RoE Rank RoE Rank avg. RoE
Slide 10: Excellent underwriting result from non-life business
Group Non-life Non-life reinsurance reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Excellent underwriting result from non-life business. . . . . .overcompensates decline in ordinary investment income Non-life reinsurance in m. EUR Q4/2012 Q4/2013 2012 2013 YTD 2013 Gross w
Slide 11: All but two lines of business outperform the MtCR
Group Non-life Non-life reinsurance reinsurance Life and health reinsurance Investments Outlook 2014 Appendix All but two lines of business outperform the MtCR Combined Ratio 2013 vs. MtCR in % Target North America* 92.9% markets Germany* 111.2% Marine (incl. energy) 76.2% Aviation 78.4% Specialty C
Slide 12: Major losses EUR 47 m. below budget of EUR 625 m.
Group Non-life Non-life reinsurance reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Major losses EUR 47 m. below budget of EUR 625 m. Natural and man-made catastrophe losses1) in m. EUR 2,373 1,730 1,070 981 863 775 724 672 662 662 578 410 458 478 377 285 291 240 121 107 20
Slide 13: Overall low burden from natural catastrophes
Group Non-life Non-life reinsurance reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Overall low burden from natural catastrophes. . . . . .but exceptionally high loss activity in Germany and Canada Catastrophe losses* in m. EUR Date Gross Net Tornados, USA 19 - 20 May 15.5
Slide 14: Premium growth within target range
Group Non-life reinsurance Life Lifeand and health health reinsurance reinsurance Investments Outlook 2014 Appendix Premium growth within target range Australian disability business burdens result; improvements in US mortality business Life and health R/I in m. EUR Q4/2012 Q4/2013 2012 2013 YTD 2013
Slide 15: Positive development of MCEV in 2013
Group Non-life reinsurance Life Lifeand and health health reinsurance reinsurance Investments Outlook 2014 Appendix Positive development of MCEV in 2013 Value of new business remains on high level Development of MCEV in m. EUR Excellent Value of New Business of EUR 308.5 m. +17% Compound Annual
Slide 16: Further increase of MCEV
Group Non-life reinsurance Life Lifeand and health health reinsurance reinsurance Investments Outlook 2014 Appendix Further increase of MCEV in m. EUR 2012 2013 Opening adjustments Opening MCEV 3,065.8 3,133.9 Capital injection of EUR 309.0 m. Opening adjustments (7.3) 275.8 Correction of 2012 f
Slide 17: Further increase of MCEV
Group Non-life reinsurance Life Lifeand and health health reinsurance reinsurance Investments Outlook 2014 Appendix Further increase of MCEV Excellent operating embedded value earnings in m. EUR 2012 2013 in m. EUR 2012 2013 Opening MCEV 3,065.8 3,133.9 New business value 313.6 308.5 Opening adjustm
Slide 18: Return on Investments fully in line with expectation
Group Non-life reinsurance Life and health reinsurance Investments Investments Outlook 2014 Appendix Return on Investments fully in line with expectation in m. EUR Q4/2012 Q4/2013 2012 2013 RoI YTD 2013 Ordinary investment income* 272 263 1,099 1,054 3.3% Continued low interest rate levels Realise
Slide 19: Asset allocation largely unchanged
Group Non-life reinsurance Life and health reinsurance Investments Investments Outlook 2014 Appendix Asset allocation largely unchanged Increased real estate and corporates exposure support ordinary yield Tactical asset allocation 1) Investment category 2009 2010 2011 2012 31 Dec 13 Fixed-income sec
Slide 20: Target Matrix 2013
Group Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Target Matrix 2013 Despite challenging market environment most targets outperformed Business group Key figures Strategic targets 2013 Group Return on investment 1) ≥3.4% 3.4 % 2) Return on equity ≥9.8% 15.
Slide 21: Outlook 2014
somewhat diyerent Outlook 2014 hannover re’
Slide 22: Overall largely stable portfolio with continued good quality
Group Non-life reinsurance Life and health reinsurance Investments Outlook Outlook 2014 2014 Appendix Overall largely stable portfolio with continued good quality Development of non-life reinsurance lines of business (FY 2014e) Lines of business Volume1) Profitability2) Target North America3) + mark
Slide 23: Life and health R/I profitability back on track in 2014
Group Non-life reinsurance Life and health reinsurance Investments Outlook Outlook 2014 2014 Appendix Life and health R/I profitability back on track in 2014 Positive contributions from all reporting categories Reporting categories Volume1) Profitability2) Financial Financial solutions ++ solutions
Slide 24: Guidance for 2014
Group Non-life reinsurance Life and health reinsurance Investments Outlook Outlook 2014 2014 Appendix Guidance for 2014 Major loss budget of EUR 670 m. Hannover Re Group Gross written premium1) flat to low single-digit growth rate Return on investment2) ~ 3.2% Group net income3) ~ EUR 850 m.
Slide 25: Rationale for the 2014 profit guidance
Group Non-life reinsurance Life and health reinsurance Investments Outlook Outlook 2014 2014 Appendix Rationale for the 2014 profit guidance Net income ~ EUR 850 m. We expect that our life and health result will improve significantly Further strengthening of the confidence level of our non-life rese
Slide 26: Appendix
somewhat diyerent Appendix hannover re’
Slide 27: Our strategic business groups at a glance
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Our strategic business groups at a glance 2013 vs. 2012 Non-life Life and health Total reinsurance reinsurance in m. EUR 2012 2013 2012 2013 2012 2013 Gross written premium 7,717 7,818 6,058 6,145 13,77
Slide 28: Our strategic business groups at a glance
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Our strategic business groups at a glance Q4 stand-alone Non-life Life and health Total reinsurance reinsurance in m. EUR Q4/2012 Q4/2013 Q4/2012 Q4/2013 Q4/2012 Q4/2013 Gross written premium 1,820 1,86
Slide 29: Well balanced international portfolio
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Well balanced international portfolio Gross written premium (Group) in m. EUR 9,567 9,317 9,289 8,259 8,121 10,275 11,429 12,096 13,774 13,963 3% Africa 6% 4% 6% Australia 14% 12% 1) Latin America 14% 1
Slide 30: Non-life reinsurance: selective growth
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Non-life reinsurance: selective growth GWP split by LoB in m. EUR GWP split by regions Global 7,717 7,818 Australia Africa cat XL 5% 2% (3%) 4% (4%) 5% Latin North Global 6,826 11% America America facul
Slide 31: Life and health reinsurance: well diversified portfolio
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Life and health reinsurance: well diversified portfolio GWP split in m. EUR GWP split by regions 6,145 Australia Africa 6,058 9% (9%) 3% (3%) Latin 13% 14% America North 5,270 4% America 12% (3%) 34% (3
Slide 32: Excellent Value of New Business
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Excellent Value of New Business 2012 2013 Development VNB in m. EUR in m. EUR Profit/Loss on new business during year (127.7) (81.6) 313.6 308.5 Present Value of New Business Profits 489.8 450.7 240.6 -
Slide 33: Very good development in recent years
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Very good development in recent years MCEV and its components since 2010 2010 2011 2012 2013 in m. EUR Present Value of Future Profits 2,211.5 2,469.3 2,677.6 2,605.9 - Cost of Residual Non-Hedgeable Ri
Slide 34: Stress tests on assets under own management
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Stress tests on assets under own management. . . . . . partly materialised via yield developments Change in Changes in ALM* net total Portfolio Scenario market value OCI before tax in m. EUR in m. EUR i
Slide 35: Fixed-income book well balanced
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Fixed-income book well balanced Allocation reflects reinsurance liabilities Pfandbriefe, Short-term Semi- Governments Corporates Covered Bonds, investments, Total governments ABS cash AAA 21.9% 50.4% 1.
Slide 36: Currency allocation matches liability profile of balance sheet
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Currency allocation matches liability profile of balance sheet Active asset liability management ensures durational match to a large extent Currency split of investments Modified duration of fixed Oth
Slide 37: Market sensitivity of inflation hedges
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 Appendix Appendix Market sensitivity of inflation hedges Average hedged inflation level of 2.02% EUR and 2.44% USD p.a. • P&L effect YTD EUR -41.0 m. (thereof EUR -17.2 m.; -23,8 m. EUR of USD) • OCI effect YTD EUR -21
Slide 38: Disclaimer
Group Non-life reinsurance Life and health reinsurance Investments Outlook 2014 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 ow