Hannover Rueck SE · XETR:HNR1

Hannover Rueck — Hannover Re — Investor Presentation (February 2016)

37 slides from Hannover Rueck's investor presentation, Feb 3, 2016

  1. Slide 1: 1 Jan 2016 Property & Casualty Treaty Renewals

    1 Jan 2016 Property & Casualty Treaty Renewals Hannover, 3 February 2016

  2. Slide 2: Important note

    R/I markets Our results Our portfolio Outlook Appendix 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 Financial-Year (FY) figures, which are the basis of quarterly and annual acc

  3. Slide 3: Reinsurance markets

    somewhat diyerent Reinsurance markets hannover re’

  4. Slide 4: Competition continued to be intense

    R/I markets markets Our results Our portfolio Outlook Appendix Competition continued to be intense Reinsurance market highlights  4th consecutive year with NatCat losses below expectation and very good results posted by almost all market participants  3rd consecutive year with rate reductions leav

  5. Slide 5: Our results

    somewhat diyerent Our results hannover re’

  6. Slide 6: Challenging renewals overall despite our selective U/W approach

    R/I markets Our Our results results Our portfolio Outlook Appendix Challenging renewals overall despite our selective U/W approach HR's position in line with the strategy "long-term success in a competitive business"  We continued to be a preferred reinsurer thanks to our superior rating, our excel

  7. Slide 7: Underwriting years

    R/I markets Our Our results results Our portfolio Outlook Appendix Time lag between underwriting year and financial year 2016 financial year reflects pricing quality for 2014, 2015 and 2016 underwriting year Premium distribution Financial years 2013 2014 2015 2016 2017 2018 10% 2016 40% 50% Underwri

  8. Slide 8: Our portfolio

    somewhat diyerent Our portfolio hannover re’

  9. Slide 9: 65% of treaty reinsurance renewed 1 January 2016

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix 65% of treaty reinsurance (R/I) renewed 1 January 2016 Equates to 49% of the total P&C premium Estimated premium income U/Y 2016 in m. EUR 10.000 9,042 4,422 9.000 Structured R/I and ILS 1,306 8.000 Facultative R/I 959 7.000 7.000

  10. Slide 10: Renewals split in 2016

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix 65% of treaty reinsurance (R/I) renewed 1 January 2016 Renewals split in 2016 Traditional treaty reinsurance (excl. structured R/I & ILS and facultative R/I) in m. EUR Various Other countries Latin countries 6% Australasia 4% Ameri

  11. Slide 11: Premium development overall rather stable

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Premium development overall rather stable ... ... but varies by line of business Property & Casualty reinsurance 1/1/2015 1/1/2016 Lines of business Premium1) Variance Premium1) North America2) 765 +8.5% 830 Target markets 2) Conti

  12. Slide 12: Persistent broad softening of non-proportional business

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Persistent broad softening of non-proportional business Non-proportional 1/1/2015 1/1/2016 Lines of business Of total premium1) Of total premium1) XL price changes North America2) 56% 52% -4.0% Target markets 2) Continental Europe

  13. Slide 13: Rating level for the first time below 2011 for non-prop. business

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Rating level for the first time below 2011 for non-prop. business XL price changes on 1 January renewals 110% +0.5% 105% +5.9% -3.8% 100.0% 100% -2.8% -4.8% 95.0% 95% 90% 2011 1/1/2011 2012 1/1/2012 2013 1/1/2013 2014 1/1/2014 2015

  14. Slide 14: Stabilising of proportional commissions

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Stabilising of proportional commissions ... ... but continued RoL decreases Number of proportional treaties1) Number of non-proportional treaties2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 100% 100% 80% 80% 60% 60% 40% 40% 20%

  15. Slide 15: We kept our premium largely stable due to diversification

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix As a leading reinsurer we kept our premium largely stable ... ... due to our diversification Change of Hannover Re shares: -2.5% Total treaty R/I Other changes (price & volume): +3.3% in m. EUR % on renewed: 7.500 [100.0%] [-9.5%]

  16. Slide 16: North America: continued opportunities for profitable growth

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Continued opportunities for profitable business allow for growt h Rate development in line with our expectation North America in m. EUR  Favourable macroeconomic development led to higher demand for primary insurance – we benefit

  17. Slide 17: Continental Europe: stable market position in a heterogeneous environment

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Stable market position in a heterogeneous environment More volume from long-term client relationships Continental Europe in m. EUR  Germany: market position further strengthened and  in share: -4.1% better diversified  in price

  18. Slide 18: Marine: continue to be a market leader for marine XL

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Continue to be a market leader for marine XL Market share marginally reduced due to our cycle management Marine in m. EUR  Softening of rates (down 10% - 15%) across all  in share: -0.3% territories and lines of business more pro

  19. Slide 19: Aviation: reduced involvement through cycle management

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix With regard to cycle management we reduced our involvement Another year in the soft stage of the cycle Aviation in m. EUR  Incurred large airline and space losses did not hold  in share: -12.6% against price erosion  in price &

  20. Slide 20: Credit, surety and political risks: maintained market share

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Maintained market share ... ... without giving up profitability requirements Credit, surety and pol. risks in m. EUR  Continued good showing and signing of business  in share: +1.4%  Signs of a slowdown in softening: commissions

  21. Slide 21: UK, London market & direct: pleasing 1/1 renewal outcome

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Pleasing 1/1 renewal outcome Business opportunities utilised in a competitive market UK, London market & direct in m. EUR  Stable UK motor XL rates for the second year after  in share: -3.9% three consecutive years of strong rate

  22. Slide 22: Worldwide treaty R/I: selective underwriting reduced premium

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Selective underwriting resulted in reduced premium overall Large volume (43%) will be renewed later Worldwide treaty R/I in m. EUR  Continued softening of terms and conditions in most markets  in share: -4.7%  China: marketing e

  23. Slide 23: Cat XL: oversupply in capacity puts pressure on catastrophe business

    R/I markets Our results Our Our portfolio portfolio Outlook Appendix Oversupply in capacity puts pressure on catastrophe business Strict adherence to technical underwriting approach Cat XL in m. EUR  Our excellent security was sought after to cover natural catastrophe risks  in share: -3.1%  in p

  24. Slide 24: Outlook

    Outlook Financial-year figures

  25. Slide 25: Portfolio quality should still enable us to earn the cost of capital

    R/I markets Our results Our portfolio Outlook Outlook Appendix Portfolio quality should still enable us to earn the cost of capital U/Y 2016 profitability clearly impacts financial year results Lines of business Volume1) Profitability2) Target North America3) + markets Continental Europe 3) +/- Mari

  26. Slide 26: Guidance for 2016

    R/I markets Our results Our portfolio Outlook Outlook Appendix Guidance for 2016 Hannover Re Group  Gross written premium1) stable to small reduction  Return on investment 2) 3) ~ 2.9%  Group net income2) ~ EUR 950 m.  Dividend pay-out ratio4) 35% - 40% (The ratio may increase in light of capita

  27. Slide 27: Rationale for the 2016 profit guidance

    R/I markets Our results Our portfolio Outlook Outlook 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 reductions on our P&C business th

  28. Slide 28: Disclaimer

    R/I markets Our results Our portfolio Outlook 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 own analysis regarding the appropria

  29. Slide 29: Appendix

    somewhat diyerent Appendix hannover re’

  30. Slide 30: Nearly unchanged volume in proportional business

    R/I markets Our results Our portfolio Outlook Appendix Appendix Nearly unchanged volume in proportional business Change of Hannover Re shares: -3.3% Treaty R/I - proportional Other changes (price & volume): +4.7% in m. EUR % on renewed: [100.0%] [-7.6%] [92.4%] [1.4%] [5.5%] [99.3%] 4.800 43 170 (23

  31. Slide 31: Share of non-prop. business decreases to 30% of our P&C book

    R/I markets Our results Our portfolio Outlook Appendix Appendix Share of non-prop. business decreases to 30% of our P&C book Change of Hannover Re shares: -0.7% Treaty R/I - non-proportional Change in price: -4.8% in m. EUR Change in volume: +4.8% % on renewed: 2.400 [100.0%] [-13.7%] [86.3%] [-0.7%

  32. Slide 32: North America: proportional business holds up comparatively better

    R/I markets Our results Our portfolio Outlook Appendix Appendix Proportional business holds up comparatively better North America Number of proportional treaties1) Number of non-proportional treaties2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 1

  33. Slide 33: Softening in Europe more pronounced in non-prop. business

    R/I markets Our results Our portfolio Outlook Appendix Appendix Softening in Europe more pronounced in non-prop. business Continental Europe Number of proportional treaties1) Number of non-proportional treaties2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 07 08 09 10 11 12 13 14 15 16 07 08 09 10

  34. Slide 34: Marine: continued rate deterioration

    R/I markets Our results Our portfolio Outlook Appendix Appendix Continued rate deterioration Marine Number of non-proportional treaties Comparison of Rate on Line (RoL) 100% 100% 80% 50% 60% 0% 40% -50% 20% -100% 0% 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 14 15 16 Net change (improvement

  35. Slide 35: The market has reached the pre-2001 RoL level

    R/I markets Our results Our portfolio Outlook Appendix Appendix The market has reached the pre-2001 RoL level Aviation RoL index in % 140 13.1 12.5 120 100 9.5 80 7.5 7.5 7.0 6.5 6.5 6.3 5.8 6.1 5.8 5.6 5.4 60 5.0 4.6 4.7 4.2 3.7 4.1 3.8 40 3.1 2.5 2.3 20 0 Assessment of market developments derived

  36. Slide 36: Proportional commissions stabilising

    R/I markets Our results Our portfolio Outlook Appendix Appendix Proportional commissions stabilising Worldwide treaty R/I Number of proportional treaties1) Number of non-proportional treaties2) 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 14 15 16

  37. Slide 37: RoL deterioration seems to be losing momentum

    R/I markets Our results Our portfolio Outlook Appendix Appendix RoL deterioration seems to be losing momentum Number of Cat XL treaties Comparison of Rate on Line (RoL) 100% 100% 80% 50% 60% 0% 40% -50% 20% -100% 0% 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 14 15 16 Net change (improvement

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