Hannover Rueck Se · XETR:HNR1
Hannover Rueck — Hannover Re — FY2015 Earnings Presentation
34 slides from Hannover Rueck's earnings presentation, Mar 10, 2016
Slide 1: Welcome to Hannover Re's Analysts' Conference
Welcome to Hannover Re's Analysts' Conference Annual Results 2015 Frankfurt, 10 March 2016
Slide 2: Hannover Re posts fourth consecutive record result
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Hannover Re posts fourth consecutive record result Excellent foundation for 2016 Group Gross written premium: EUR 17,069 m. (+18.8%) Pleasing GWP growth of 8.7% (f/x adjusted), Net premium earned: EUR 14,59
Slide 3: Strong cash flow driven by premium growth
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Strong cash flow driven by premium growth AuM +8.6%, despite decreasing valuation reserves and higher dividend payment Operating cash flow in m. EUR Assets under own management (AuM) in m. EUR 39,347 36,228 2,637
Slide 4: Shareholders' equity up by 7%
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Shareholders' equity up by 7% Higher dividend payment and decreasing OCI offset by strong earnings Policyholders' surplus in m. EUR Change in shareholders' equity in m. EUR 10,239 10,267 8,947 1,490 8,768 1,986 1
Slide 5: Increasing ordinary dividend reflects improved earnings power
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Increasing ordinary dividend reflects improved earnings power Payout: EUR 3.25 ordinary + EUR 1.50 special dividend per share Dividend per share in EUR Payout ratio: [38%] [38%] [-] [35%] [37%] [42%] [43%] [40%]
Slide 6: Profit growth keeps pace with capital growth
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Profit growth keeps pace with capital growth Stable RoE on a very attractive level Return on Equity: yearly Return on Equity: average +16.2% 7,810 6,720 5,960 5,500 4,738 15.4% 15.0% 15.1% 14.7% 14.7% 14.5% 12.8%
Slide 7: Hannover Re is one of the most profitable reinsurers
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Hannover Re is one of the most profitable reinsurers 2011 2012 2013 2014 2015 2011 - 2015 Company RoE Rank RoE Rank RoE Rank RoE Rank RoE Rank avg. RoE Rank Hannover Re 12.8% 1 15.4% 3 15.0% 3 14.7% 4 14.7% 1 14.
Slide 8: Improved results from both underwriting and investments
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Improved results from both underwriting and investments Group net income at record level Group figures in m. EUR Q4/2014 Q4/2015 2014 2015 YTD Gross written premium 3,657 4,123 14,362 17,069 GWP f/x-adjusted gr
Slide 9: Attractive U/W profitability in a competitive environment
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2016 Appendix Attractive U/W profitability in a competitive environment Increased confidence level provides basis to maintain good profitability in the future Property & Casualty R/I in m. EUR Q4/2014 Q4/2015 20
Slide 10: Diversified portfolio outperforms the MtCR
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2016 Appendix Diversified portfolio outperforms the MtCR 2015: Combined Ratio vs. MtCR EBIT margin GWP growth Target North America* 99.6% 17.8% +23.1% markets Continental Europe* 98.4% 14.6% +1.8% Marine 60.0% 5
Slide 11: Major losses of EUR 573 m. below budget of EUR 690 m.
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2016 Appendix Major losses of EUR 573 m. below budget of EUR 690 m. 2015: fourth consecutive year of benign large loss experience Natural and man-made catastrophe losses1) in m. EUR 1,730 981 863 672 724 559 714
Slide 12: High level of man-made large losses
Group Property Property & Casualty CasualtyR/I R/I Life & Health R/I Investments Outlook 2016 Appendix High level of man-made large losses Overall benign loss experience from NatCat Catastrophe losses* in m. EUR Date Gross Net Storm, Northern Europe 08 - 11 Jan 10.0 6.9 Winter storm, USA 1 - 22 Feb
Slide 13: Attractive premium growth and significantly improved results
Group Property & Casualty R/I Life Life & Health Health R/I R/I Investments Outlook 2016 Appendix Attractive premium growth and significantly improved results Net income increased by 41.3% Life & Health R/I in m. EUR Q4/2014 Q4/2015 2014 2015 YTD GWP growth +19.7% (f/x adjusted +9.5%), Gross writt
Slide 14: Striking increase in Value of New Business
Group Property & Casualty R/I Life Life & Health Health R/I R/I Investments Outlook 2016 Appendix Striking increase in Value of New Business Value of New Business development1) in m. EUR Target ≥ EUR 180 m. 581 543 448 314 309 241 2011 2012 2013 2014 2015 2015 2) 1) Based on the MCEV principles of t
Slide 15: Significant investment income growth despite lower realisations
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook 2016 Appendix Significant investment income growth despite lower realisations in m. EUR Q4/2014 Q4/2015 2014 2015 RoI YTD 2015 Ordinary investment income* 272 351 1,069 1,273 3.4% Significant rise in ordinary income Re
Slide 16: Ordinary income: supported by asset classes with higher risk
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook 2016 Appendix Ordinary income: supported by asset classes with higher risk Low interest rate environment reflected by income from governments Ordinary income split Total: EUR 1,273 m. Asset allocation Short-term Investme
Slide 17: Increase in Governments and HY-bonds at expense of covereds
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook 2016 Appendix Increase in Governments and HY-bonds at expense of covereds Moderate and diversified re-entry into listed equity Tactical asset allocation 1) Investment category 2011 2012 2013 2014 2015 Fixed-income securi
Slide 18: Corporate exposure well diversified
Group Property & Casualty R/I Life & Health R/I Investments Investments Outlook 2016 Appendix Corporate exposure well diversified Oil and gas sector represents 6% Sector split* EUR 13.5 bn. Oil and gas exposure, rating split* EUR 0.8 bn. Basic Insurance AAA industry 3% High Yield 7% 1% Services 4% 5
Slide 19: 2015 target matrix reflects record result
Group Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix 2015 target matrix reflects record result Strategic targets Business group Key figures 2015 for 2015 Group Return on investment 1) ≥3.0% 3.5 % Return on equity 2) ≥10.2% 14.7% Earnings per share growth (y-o-y) ≥6
Slide 20: Outlook 2016
somewhat diyerent Outlook 2016 hannover re”
Slide 21: Portfolio quality should still enable us to earn the cost of capital
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2016 2016 Appendix Portfolio quality should still enable us to earn the cost of capital Property & Casualty R/I: financial year 2016 Lines of business Volume1) Profitability2) Target North America3) + markets Continental E
Slide 22: Increasing earnings expected on a normalised basis
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2016 2016 Appendix Increasing earnings expected on a normalised basis Life & Health R/I: financial year 2016 Reporting categories Volume1) Profitability2) Financial solutions Financial solutions ++ Longevity +/- Risk sol
Slide 23: Guidance for 2016
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2016 2016 Appendix Guidance for 2016 Hannover Re Group Gross written premium1) stable to modest reduction Return on investment 2) 3) ~2.9% Group net income2) at least EUR 950 m. Dividend payout ratio4) 35% - 40% (The
Slide 24: Rationale for the 2016 profit guidance
Group Property & Casualty R/I Life & Health R/I Investments Outlook Outlook 2016 2016 Appendix Rationale for the 2016 profit guidance Long-term success in a competitive business We expect further increased profits from our Life & Health business excluding 2015 termination fees Despite further rate r
Slide 25: Appendix
somewhat diyerent Appendix hannover re”
Slide 26: Our strategic business groups at a glance
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Our strategic business groups at a glance 2015 vs. 2014 Property & Casualty R/I Life & Health R/I Total in m. EUR 2014 2015 Δ 2014 2015 Δ 2014 2015 Δ Gross written premium 7,903 9,338 +18.2% 6,459 7,731 +19.7%
Slide 27: Our strategic business groups at a glance: Q4 stand-alone
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Our strategic business groups at a glance Q4 stand-alone Property & Casualty R/I Life & Health R/I Total in m. EUR Q4/2014 Q4/2015 Δ Q4/2014 Q4/2015 Δ Q4/2014 Q4/2015 Δ Gross written premium 1,843 2,019 +9.5%
Slide 28: Well balanced international portfolio
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Well balanced international portfolio Gross written premium (Group) in m. EUR 9,289 8,259 8,121 10,275 11,429 12,096 13,774 13,963 14,362 17,069 3% 3% Africa 4% 6% 3% 6% 5% Australia 18% 17% 1) Latin America 1
Slide 29: Property & Casualty reinsurance: selective growth
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Property & Casualty reinsurance: selective growth GWP split by line of business in m. EUR GWP split by regions 9,338 Cat XL 4% Australia Latin Africa 4% 2% 14% America 3% Structured R/I 7,717 7,818 7,903 and I
Slide 30: Life & Health reinsurance: a well diversified portfolio
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Life & Health reinsurance: a well diversified portfolio GWP split by reporting categories in m. EUR GWP split by regions 7,731 Africa Latin Germany 3% 3% 18% America Morbidity 6,459 North 4% 6,058 6,145 Other
Slide 31: Stress tests on assets under own management
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Stress tests on assets under own management Unchanged focus on yields and spreads while relevance of equities rises Change in shareholders' Change in market value Portfolio Scenario equity before tax in m. EUR
Slide 32: Fixed-income book well balanced
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix Appendix Fixed-income book well balanced Geographical allocation mainly in accordance with to our business diversification Pfandbriefe, Short-term Semi- Governments Corporates Covered bonds, investments, Total governme
Slide 33: Currency allocation matches liability profile of balance sheet
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 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 6.6% income mainl
Slide 34: Disclaimer
Group Property & Casualty R/I Life & Health R/I Investments Outlook 2016 Appendix 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