Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Rück — Q3 2021 Earnings Presentation
30 slides from Hannover Rueck's earnings presentation, Nov 4, 2021
Slide 1: Conference Call on Q3/2021 financial results
Conference Call on Q3/2021 financial results Hannover, 4 November 2021
Slide 2: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 2 Conference Call on Q3/2021 financial results
Slide 3: Strong nine-month results demonstrate resilience and earnings power in a heavily loss-affected year
| 1 Group overview | 2 | 3 | 4 | 5 | 6 | Strong nine-month results demonstrate resilience and earnings power in a heavily loss-affected year GWP F/x-adj. +14.4% NPE F/x-adj. +13.9% EBIT Group net income 24.000 21,620 24.000 1400 1,281 1400 19,295 17,634 15,772 903 856 668 12.000 12.000 700 700 +12.0
Slide 4: Very strong operating cash flow driven by profitable premium growth
| 1 Group overview | 2 | 3 | 4 | 5 | 6 | Very strong operating cash flow driven by profitable premium growth AuM +12.3%, cash flow and f/x effects more than offset lower asset valuation Operating cash flow in m. EUR Assets under own management (AuM) in m. EUR 55,030 4,193 49,002 47,629 1,513 42,197
Slide 5: Shareholders' equity up by 3.8%
| 1 Group overview | 2 | 3 | 4 | 5 | 6 | Shareholders' equity up by 3.8% Policyholders' surplus in m. EUR Change in shareholders' equity in m. EUR 15,238 856 14,071 11,409 13,589 10,995 509 2,978 2,232 (543) 2,234 (408) 852 10,779 11,035 844 826 1,492 1,493 758 765 10,995 11,409 10,528 8,528 8,777 2
Slide 6: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 6 Conference Call on Q3/2021 financial results
Slide 7: Continued strong growth in an attractive market environment
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | Continued strong growth in an attractive market environment Favourable underwriting result despite high large-loss activity in Q3/2021 Property & Casualty R/I in m. EUR Q3/2020 Q3/2021 Q1-3/2020 Q1-3/2021 YTD Gross written premium 4,173 5,003
Slide 8: Large losses exceed budget of EUR 849 m. for Q1-3/2021 by EUR 221 m.
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | Large losses exceed budget of EUR 849 m. for Q1-3/2021 by EUR 221 m. Full-year budget almost exhausted after 9 months; EUR 251 m. budgeted for Q4/2021 Natural and man-made catastrophe losses1) in m. EUR 2,127 1,790 1,855 1,730 1,722 1,595 1,4
Slide 9: Large-loss budget Q1-3/2021 exceeded for both NatCat and man-made losses
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | Large-loss budget Q1-3/2021 exceeded for both NatCat and man-made losses Catastrophe losses 1) in m. EUR Date Gross Net Storm "Filomena", Spain 7 - 8 Jan 12.9 12.9 Texas winter storm/freeze, USA 11 - 21 Feb 259.2 158.1 Floods, Australia 18 -
Slide 10: Combined ratios impacted by large losses
| 1 | 2 Property & Casualty reinsurance | 3 | 4 | 5 | 6 | Combined ratios impacted by large losses Q1-3/2021: Combined ratio vs. target combined ratios EMEA1) 104.0% Regional Americas1) 101.1% markets APAC1) 93.3% Structured Reinsurance and ILS 96.7% Credit, Surety and Political Risks 87.0% Facultat
Slide 11: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 11 Conference Call on Q3/2021 financial results
Slide 12: Favourable premium growth
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | Favourable premium growth Result impacted by Covid-19 losses; partly offset by positive one-off effects Life & Health R/I in m. EUR Q3/2020 Q3/2021 Q1-3/2020 Q1-3/2021 YTD Gross written premium 1,975 2,152 5,947 6,350 • GWP f/x-adjusted +6.9% diver
Slide 13: Promising pipeline for the rest of 2021
| 1 | 2 | 3 Life & Health reinsurance | 4 | 5 | 6 | Promising pipeline for the rest of 2021 Q3/2021 new and pipeline business1) New Pipeline business business Financial Solutions Mortality Financial Solutions Mortality Longevity Morbidity Longevity Morbidity • Solvency relief (China) – Financial S
Slide 14: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 14 Conference Call on Q3/2021 financial results
Slide 15: Very satisfactory return on investment
| 1 | 2 | 3 | 4 Investments | 5 | 6 | Very satisfactory return on investment Increasing ordinary income and moderate realised gains compensate for valuation effects in m. EUR Q3/2020 Q3/2021 Q1-3/2020 Q1-3/2021 RoI YTD Ordinary investment income 1) 370 408 984 1,106 2.8% • Very pleasing increase in
Slide 16: Ordinary return with continued strong support from alternative assets
| 1 | 2 | 3 | 4 Investments | 5 | 6 | Ordinary return with continued strong support from alternative assets Slightly higher share of corporates, strong AuM growth Asset allocation1) Ordinary income split Investment category 2017 2018 2019 2020 Q3/2021 Short-term Fixed-income securities 87% 87% 87% 8
Slide 17: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 17 Conference Call on Q3/2021 financial results
Slide 18: Target Matrix: Q1-3/2021
| 1 | 2 | 3 | 4 | 5 Target Matrix | 6 | Target Matrix: Q1-3/2021 Strategy cycle 2021 - 2023 Business group Key figures Strategic targets Q1-3/2021 Group Return on equity1) 900 bps above risk-free 10.2% Solvency ratio2) ≥ 200% 239% Property & Casualty reinsurance Gross premium growth3) ≥ 5% +17.7% EB
Slide 19: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 19 Conference Call on Q3/2021 financial results
Slide 20: Guidance for 2021
| 1 | 2 | 3 | 4 | 5 | 6 Outlook | Guidance for 2021 Hannover Re Group • Gross written premium1) ≥ upper single-digit growth • Return on investment 2) > 2.4% • Group net income 2) EUR 1.15 - 1.25 bn. • Ordinary dividend ≥ prior year • Special dividend if capitalisation exceeds capital requirements fo
Slide 21: Guidance for 2022
| 1 | 2 | 3 | 4 | 5 | 6 Outlook | Guidance for 2022 Hannover Re Group • Gross written premium1) ≥ 5% • Return on investment 2) ≥ 2.3% • Group net income 2) EUR 1.4 - 1.5 bn. • Ordinary dividend ≥ prior year • Special dividend if capitalisation exceeds capital requirements for future growth and profi
Slide 22: Agenda
Agenda 1 Group overview 2 2 Property & Casualty reinsurance 6 3 Life & Health reinsurance 11 4 Investments 14 5 Target Matrix 17 6 Outlook 19 Appendix 22 22 Conference Call on Q3/2021 financial results
Slide 23: Our business groups at a glance Q1-3/2021 vs. Q1-3/2020
| 1 | 2 | 3 | 4 | 5 | 6 | Our business groups at a glance Q1-3/2021 vs. Q1-3/2020 Property & Casualty R/I Life & Health R/I Total in m. EUR Q1-3/2020 Q1-3/2021 Q1-3/2020 Q1-3/2021 Q1-3/2020 Q1-3/2021 Gross written premium 13,348 15,269 5,947 6,350 19,295 21,620 Change in GWP +14.4% +6.8% +12.0% Net
Slide 24: Our business groups at a glance Q3/2021 vs. Q3/2020
| 1 | 2 | 3 | 4 | 5 | 6 | Our business groups at a glance Q3/2021 vs. Q3/2020 Property & Casualty R/I Life & Health R/I Total in m. EUR Q3/2020 Q3/2021 Q3/2020 Q3/2021 Q3/2020 Q3/2021 Gross written premium 4,173 5,003 1,975 2,152 6,149 7,155 Change in GWP +19.9% +9.0% +16.4% Net premium earned 3,643
Slide 25: Stress tests on assets under own management
| 1 | 2 | 3 | 4 | 5 | 6 | Stress tests on assets under own management Focus still on credit exposures with further spread tightening Change in market Change in OCI before Portfolio Scenario value tax in m. EUR in m. EUR -10% -199 -199 Equity (listed and private equity) -20% -399 -399 +50 bps -1,356
Slide 26: High-quality fixed-income book well balanced
| 1 | 2 | 3 | 4 | 5 | 6 | High-quality fixed-income book well balanced Geographical allocation mainly in accordance with our broad business diversification Pfandbriefe, Short-term Semi- Governments Corporates Covered bonds, investments, Total governments ABS cash AAA 73% 54% 1% 57% - 41% AA 11% 25%
Slide 27: Currency allocation matches modelled liability profile
| 1 | 2 | 3 | 4 | 5 | 6 | Currency allocation matches modelled liability profile Strict duration-neutral strategy continued Currency split of investments Others 11% • Modified duration of fixed-income mainly congruent with CAD EUR 3% 29% liabilities and currencies AUD 3.2 • GBP’s higher modified dur
Slide 28: Individual events with limited impact on Solvency ratio
| 1 | 2 | 3 | 4 | 5 | 6 | Individual events with limited impact on Solvency ratio Solvency ratio robust under stressed conditions Sensitivities and stress tests Solvency II ratio Basis 235% 250-year US hurricane1) 210% 250-year EU winter storm 226% 250-year US earthquake 217% Extended power outage 2
Slide 29: IR calendar
| 1 | 2 | 3 | 4 | 5 | 6 | IR calendar IR-only Roadshow Frankfurt Roadshow Milan Roadshow Vienna 09.11 30.11 02.12. 15.12. 16.11 01.12. 03.12. UBS European DZ BANK Equity Société Générale IR-only Virtual Conference Conference The Premium Review Roadshow Warsaw 29 Conference Call on Q3/2021 financial
Slide 30: Disclaimer
| 1 | 2 | 3 | 4 | 5 | 6 | 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