Hannover Rueck SE · XETR:HNR1
Hannover Rueck — Hannover Re — German Investment Conference 2006
29 slides from Hannover Rueck's conference presentation, Sep 27, 2006
Slide 1: Hannover Re - The somewhat different reinsurer
Hannover Re - The somewhat different reinsurer Elke A. König Member of the Executive Board German Investment Conference ® Munich, 27 September 2006 hannover re
Slide 2: Disclaimer
HR Overview Profit Drivers Monte Carlo 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 o
Slide 3: We are among the top reinsurers in the world
HR HR Overview Overview Profit Drivers Monte Carlo Outlook League table (premium) WE ARE AMONG THE TOP REINSURERS IN THE WORLD (2005 figures in million USD1)) Rank Group Country GWP NPW 1 Munich Re D 26,482 22,606 2 Swiss Re CH 23,151 21,229 3 Berkshire Hathaway2) USA 12,486 11,646 4 Hannover Re D 1
Slide 4: Unique group structure
HR HR Overview Overview Profit Drivers Monte Carlo Outlook Shareholdings UNIQUE GROUP STRUCTURE Majority owner, but operational and financial independence Talanx AG* Free Float 50.2% 49.8% hannover re ® 55.8% 8 German 42.7% Mutuals >100 Subsidiaries, e+s rück Branch/Rep. Offices in 18 countries Othe
Slide 5: The somewhat different reinsurer
HR HR Overview Overview Profit Drivers Monte Carlo Outlook THE SOMEWHAT DIFFERENT REINSURER Hannover Re Group Æ Focus on profitability, not on premium, league tables or market share • We have no premium growth targets, only for earnings Æ Diversification • Four (largely) uncorrelated business groups
Slide 6: Strong premium growth
HR HR Overview Overview Profit Drivers Monte Carlo Outlook Top line STRONG PREMIUM GROWTH Gross and net premium tripled within 10 years 12,500 in m. EUR 12,463 11,507 11,343 10,000 9,567 9,669 8,320 8,156 7,688 7,739 7,575 7,500 6,706 6,496 5,210 5,000 4,505 3,960 4,180 3,272 3,338 3,549 2,569 2,500
Slide 7: "KRW" disrupts profit trend
HR HR Overview Overview Profit Drivers Monte Carlo Outlook Earnings per share 1) "KRW" DISRUPTS PROFIT TREND Long-term upward trend remains intact 4.937) in EUR 3.856) 3.56 3.60 3,5 3.24 3.03 3 2.525) 2.75 2.61 4.13 2,5 2.37 2.29 2.35 2.32 2.14 2 1.94 1,5 1.15 1.01 1.04 1 0.89 0.92 0,5 0.41 0.11 0 1
Slide 8: Over ten years minimum target overachieved
HR HR Overview Overview Profit Drivers Monte Carlo Outlook Profitability OVER TEN YEARS MINIMUM TARGET OVERACHIEVED Despite "WTC" and "KRW" 18.0% 26.0% 18% 17.1% 17.1% 15.9% 15.7% 14.3% 13.9% 14.0% 13.8% 13.5% 13.1% 12.7% 12.5% 12.3% 12.8% 12.2% 12.1% 11.5% 11.7% 9% 1.9% 0.7% 0% 5 96 97 98 99 00 01
Slide 9: HNR1 consistently among most profitable reinsurers
HR HR Overview Overview Profit Drivers Monte Carlo Outlook RoE league table HNR1 CONSISTENTLY AMONG MOST PROFITABLE REINSURERS 2001 2002 2003 2004 20051) 2001 - 2005 Company avg.- RoE Rank RoE Rank RoE Rank RoE Rank RoE Rank Rank RoE Renaissance Re 18% 1 26% 1 31% 1 5% 10 (11%) 9 14% 1 Hannover Re 1
Slide 10: Key profit drivers
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook KEY PROFIT DRIVERS 7 important determinants to safeguard our profitability targets 1) Optimal diversification 2) Consistent cycle management 3) Efficient capital management 4) Proactive rating & security management 5) Prudent investment m
Slide 11: From a mere P/C R/I to the world's most diversified R/I
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Diversification FROM A MERE P/C R/I TO THE WORLD'S MOST DIVERSIFIED R/I 1990 2005 Life/Health R/I 6% Specialty Insurance 18% Property/ Casualty R/I 48% Financial R/I 9% Life/Health R/I Property/ 25% Casualty R/I 94% Total GWP: Total GWP:
Slide 12: Our portfolio structure
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Diversification OUR PORTFOLIO STRUCTURE A reflection of the world R/I market, slightly based towards Germany 2005 Latin Africa America Asia 2% 2% 4% Germany Australia 13% 4% Other European countries North 30% America 45% Total GWP EUR 9,6
Slide 13: Diversification at work
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Diversification DIVERSIFICATION* AT WORK Earnings from all business groups balance the portfolio 500 in m. EUR 280 400 355 42 89 300 267 38 43 99 200 40 47 30 271 49 100 11 154 167 18 49 46 60 0 23 4 (2) (76) (91) (62) -100 (27) -200 2001
Slide 14: Reduces capital requirements by ~50%
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Diversification REDUCES CAPITAL REQUIREMENTS BY ~50% Due to lower charges for non-P/C business and low intra group correlation 1,00 13% 7% 18% 9% 16% 13% 20% 0,50 100% 81% 83% 69% 65% 57% 57% 50% 0,00 P/C R/I P/C R/I and P/C R/I and P/C R
Slide 15: Market share gains in "hard" markets only
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Cycle management MARKET SHARE GAINS IN "HARD" MARKETS ONLY We grow our book when others commit new money to R/I market (BDA start-ups) in m. EUR Post 9/11: 6,000 Market share increased 140,000 from 3.3% to 4.2% 120,000 5,000 Post hurrican
Slide 16: Our capital structure consists not only of equity
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Capital management OUR CAPITAL STRUCTURE CONSISTS NOT ONLY OF EQUITY Use of hybrids, securitisations etc. lowers cost of capital, increases RoE Æ Our risk modelling (risk-based capital) determines our capital basis Æ Equity capital is by
Slide 17: Steady increase supports financial strength & rating
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Capital management STEADY INCREASE SUPPORTS FIN'L STRENGTH & RATING Intelligent combination of equity, hybrid capital & minorities in m. EUR 5,000 4,5963) 4,580 4,1722) 938 936 4,000 1) 3,680 1,116 500 500 784 3,000 2,959 531 557 584 492
Slide 18: Risk-management strategy: capital protection
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Rating & security management RISK-MANAGEMENT STRATEGY: CAPITAL PROTECTION Æ Our risk management is meant to Approaches to • protect our capital risk management • stabilise and optimise results • allow us to profit fully from hard markets
Slide 19: Group risk management at Hannover Re
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Rating & security management GROUP RISK MANAGEMENT AT HANNOVER RE Position further improved Æ For years centralised approach for • reserve monitoring • risk modelling (especially natural catastrophes) • aggregate control • Dynamic Financi
Slide 20: Risk committee monitors risk situation
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Rating & security management RISK COMMITTEE MONITORS RISK SITUATION Board decides on risk appetite Æ New risk committee • CEO, CFO, CEO Life, COO Non-Life, Chief Controller, CRO • Quarterly meetings Æ Transparency of risk situation • Quan
Slide 21: Strategic asset allocation
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Investment management STRATEGIC ASSET ALLOCATION Efficient frontier determined by sophisticated ALM model High Each point represents an asset allocation Efficient frontier Current allocation Return Return Risk-minimal allocation Low Risk
Slide 22: Tactical asset allocation
HR Overview Profit Drivers Profit Drivers Monte Carlo Outlook Investment management TACTICAL ASSET ALLOCATION Almost unchanged Investment category 2002 2003 2004 2005 30 Jun 06 Fixed income securities 75% 81% 81% 82% 81 % • Governmentals 26% 25% 25% 26% 24 % • Semi-governmentals 20% 21% 21% 20% 21 %
Slide 23: First snapshot on 2007 renewals
First snapshot on 2007 renewals ® hannover re
Slide 24: Rendez-vous de Septembre 2006
HR Overview Profit Drivers Monte Monte Carlo Carlo Outlook RENDEZ-VOUS DE SEPTEMBRE 2006 Present state of reinsurance market Æ Trading conditions in property/casualty reinsurance market continue to be risk adequate and therefore attractive Æ Capacity is available in most lines at reasonable prices,
Slide 25: Hannover Re's positioning
HR Overview Profit Drivers Monte Monte Carlo Carlo Outlook HANNOVER RE'S POSITIONING Æ Strict focus on profitability instead of growth, especially in softening markets Æ Reserving policy to remain cornerstone of P/C business group strategy • Excellent track record for adequate reserving Æ Peak expos
Slide 26: Outlook on 2006
alent Outlook on 2006 hannover re’
Slide 27: Guidance for 2006 largely unchanged
HR Overview Profit Drivers Monte Carlo Outlook Outlook GUIDANCE FOR 2006 LARGELY UNCHANGED Gross written premium (calendar year)1) Æ Group > 5% • Property/Casualty R/I + 3 - 5% • Life/Health R/I + 12 - 15% • Financial R/I > 10% • Specialty Insurance + 10 - 15% Æ Group RoE at least 15% Æ Dividend pay
Slide 28: Further information
HR Overview Profit Drivers Monte Carlo Outlook FURTHER INFORMATION Æ For further company information please contact our IR-team or get a copy of our group presentation from our website! ® hannover re
Slide 29: Our investor relations team
HR Overview Profit Drivers Monte Carlo Outlook OUR INVESTOR RELATIONS TEAM Hannover Re Karl-Wiechert-Allee 50 30165 Hannover, Germany Tel. + 49/5 11/56 04 - 0 (Switchboard) Fax: + 49/5 11/56 04 - 16 48 (direct line) Eric Schuh Gabriele Bödeker Associate Director Senior IR Manager Corporate Communica