Being successful in the current market environment

Transcrição

Being successful in
the current market environment
Roland Vogel
CFO
UBS - 13th Annual Global Financial Services Conference
New York, 10 May 2011
Group 2010 | Group Q1/2011 | Diversification | Opportunistic and cycle mgmt. | Life and health R/I | Innovation | Admin. expense ratio | 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 of investing in any of our securities.
While Hannover Re has endeavoured to include in this presentation information it believes to be reliable,
complete and up-to-date, the company does not make any representation or warranty, express or implied,
as to the accuracy, completeness or updated status of such information.
Some of the statements in this presentation may be forward-looking statements or statements of future
expectations based on currently available information. Such statements naturally are subject to risks and
uncertainties. Factors such as the development of general economic conditions, future market conditions,
unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the
actual events or results to be materially different from those anticipated by such statements.
This presentation serves information purposes only and does not constitute or form part of an offer or
solicitation to acquire, subscribe to or dispose of, any of the securities of Hannover Re.
© Hannover Rückversicherung AG. All rights reserved.
Hannover Re is the registered service mark of Hannover Rückversicherung AG.
We are among the top 3 reinsurers in the world
Premium ranking 2009 in m. USD
Rank Group
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Munich Re
Swiss Re
Hannover Re
Lloyd's
Berkshire Hathaway Re
SCOR
RGA Re
Transatlantic
Everest Re
Partner Re
China Re
Korean Re
London Re
Mapfre
XL Capital
Source: A.M. Best (September 2010)
1
Country
D
CH
D
GB
USA
F
USA
USA
BDA
BDA
CHN
ROK
CDN
E
BDA
GWP
NPW
34,333
27,647
14,728
12,723
12,048
9,143
6,244
4,204
4,129
3,993
3,803
3,750
3,687
2,943
2,435
32,462
22,892
13,341
9,732
11,399
8,314
5,725
3,986
3,929
3,942
3,719
2,554
3,533
2,006
2,003
Hannover Re consistently among most profitable reinsurers
Even on after-tax basis, in spite of strong Bermuda competition
2006
2007
Rank
RoE
2008
Rank
RoE
2009
Rank
RoE
2010
Company
RoE
Odyssey Re
28.3%
1
25.8%
1
20.5%
1
12.1%
6
9.2%
8
19.2%
1
Renaissance Re
27.5%
2
16.9%
4
(0.4%)
7
24.4%
2
18.1%
2
17.3%
2
Hannover Re
18.7%
4
23.1%
2
(4.1%)
9
22.4%
3
18.2%
1
15.7%
3
Partner Re
21.8%
3
17.7%
3
1.1%
5
25.9%
1
11.5%
3
15.6%
4
Everest Re
18.2%
6
15.6%
5
(0.4%)
6
14.6%
4
9.9%
6
11.6%
5
Munich Re
13.5%
9
14.9%
7
6.5%
3
11.8%
7
10.7%
4
11.5%
6
Transatlantic Re
15.6%
8
15.4%
6
3.1%
4
13.2%
5
9.7%
7
11.4%
7
SCOR
12.7%
10
13.8%
8
8.9%
2
10.2%
8
10.1%
5
11.1%
8
Swiss Re
16.5%
7
13.3%
9
(3.3%)
8
2.3%
10
3.6%
10
6.5%
9
XL Re1)
18.5%
5
3.6%
10
(31.8%)
10
2.7%
9
5.8%
9
(0.2%)
10
Ranking among shown peer group, based on company data, own calculation
1) Based on XL Capital group figures

We aim to be one of the top 3 R/I in terms of RoE
2
Rank
RoE
2006 - 2010
Rank avg. RoE
Rank
Strong topline growth and all-time high in earnings
Driven by solid technical and investment income and positive tax one-off
Favourable
reinsurance
markets
High
catastrophe
frequency

Strong growth in non-life reinsurance
+10.3%, supported by sound pricing

Growth within expectations in life and health
+12.4%, most notably from enhanced
annuities and emerging markets
Result 2010
GWP:
+11.2%
NPE:
+7.9%
Net income:


Increase of net investment income
by 12.4%
Large losses at EUR 662 m.
well above budget (EUR 500 m.)
EPS:
6.21 EUR
RoE:
18.2%
Equity:

Stable
capital
markets
3
One-offs 2010:
Sale of Clarendon (EUR -69 m.) and
tax effect from BFH decision (EUR +112 m.)
EUR 749 m.
+21.4%
Proposed dividend
increase to:
2.30 EUR
Record net income despite high burden of major losses in 2010
Net (major) losses* vs. net income
in m. EUR
1,070
750
749
734
722
665
662
600
514
458
450
365
355
300
225
377
285
280
267
240
164
150
107
60
49
11
(127)
0
-150
2000
Net loss
2001
2002
2003
2004
2005
2006
2007
2008
Group net income
* Claims over EUR 5 m. gross
4
Being successful in the current market environment
2009
2010
Natural catastrophes set the tone of Q1/2011
But net income still positive
Very high
catastrophe
burden

Strong growth in non-life reinsurance
+11.8%
Result 1Q/2011

Growth within expectations in life and health
+8.1%
GWP:
+10.3%
NPE:
+8.8%

Stable
capital
markets



Favourable life
reinsurance
markets
5
Strong increase of net investment income
by 40.5%, helped by inflation swaps
Net major losses of EUR 572 m.,
EUR 452 m. above Q1 budget (EUR 120 m.)
Extraordinary reserve run-offs in the region
of EUR 150 m.
EUR +113.5 m. tax refund from Federal
Fiscal Court
Net income:
EPS:
RoE (annualised):
Equity:
BPS:
EUR 52 m.
0.43 EUR
4.7%
-3.6%
EUR 36.05
Our 5 major success drivers
Diversification
Opportunistic and
cycle management
Somewhat different
in life/health reinsurance
Innovation
Low administrative
expense ratio
6
Life and health reinsurance continuous growth
Gross written premium
in m. EUR
11,429
10.000
EBIT
1.200
1,174
1.000
25%
9,317
8,320
26%
8.000
45%
25%
800
6.000
600
75%
4.000
3,067
2,135
6%
2.000
75%
74%
55%
400
11%
89%
200
94%
0
0
1990
Non-life reinsurance

1995
2000
2005
2010
Life and health reinsurance
Reduction of group volatility due to improved diversification
7
2010
Well diversified reinsurer

Life and health and non-life reinsurance on a same capital basis
reduce volatility and ensure more consistent profitability

We have a wide diversification by line of business and territory within the groups
• Non-life R/I

3 divisions

10 business centres
• Life and health R/I

5 pillars

9 regions

We have reduced our property-catastrophe exposure compared to the
financial capacity and profitability

We have broadened our customer base in North America
at unchanged volume and exposure
8
Well balanced international portfolio
GWP 2010
EUR 11,429
Australia
4%
Africa
4%
Latin
America
6%
North
America
30%
Asia
8%
Germany
10%
Other
European
countries
16%
9
Great
Britain
21%
Here you may add the title of the presentation
Diversification reduces capital requirements by a third
Risk capital for the 99.97% VaR (according to internal risk model)
in m. EUR
8,382
407
8.000
7,714
34%
diversification
2,440
7.000
6.000
1,962
5.000
2,905
3.000
5,096
2.000
Effective
capital
requirement*
4.000
1.000
0
Non-life
reinsurance
Life and health
reinsurance
Assets
Credit
The risk categories have been adapted to the Solvency II requirements
Calculation according to economic valuation principles
As at December 2010
* Excluding operational risks
10
HR Group
required capital
HR Group
available economic
capital
Hannover Re is well positioned. . .
. . .to compete in the prevailing non-life market conditions

Majority of business written via brokers
 Flexibility to exercise cycle management

Centralised underwriting safeguards underwriting discipline

Our U/W tools & margin requirements are based on the CoC allocated
 Selection of business that achieves our profitability targets

We have a strong rating
 Offers a broad cross-section of available business

Risk-based solvency regimes such as Solvency II will support the development
towards rational buying and writing of reinsurance
Growth in developed markets by seizing market opportunities

11
Well diversified and grown in selective areas
Non-life reinsurance
GWP Split
2010: EUR 6,339 m.
Global cat.
XL
5%
North America
North
America
13%
Global
facultative
11%
Global treaty
19%
Global R/I
Marine
4%
Aviation
6%
Target
markets
UK, London
market &
direct
8%
in m. EUR
-18
Germany
Structured R/I
Specialty
lines
12
GWP Growth (+10.3%)
Credit, surety & pol. risk
Germany
15%
Structured
R/I
10%
Credit, surety
& political
risks
9%
UK, London market & direct
-2.2%
34
+3.9%
-96
-13.0%
97
+20.7%
77
+17.9%
Aviation
48
+14.3%
Marine
12
+4.4%
Global treaty
229
Global facultative
Global cat XL
207
2
+23.2%
+42.6%
+0.9%
New markets' share driven by demand for longevity solutions
Life and health reinsurance
5 strategic pillars GWP
2010: EUR 5,090 m.
Financial
Solutions
8%
Conventional
R/I
43%
Growth GWP (+12.4%)
Financial
Solutions
in m. EUR
+10.0%
39
New markets
285
New Markets
28%
Bancassurance
+14.0%
65
Bancassurance
11%
Multinationals
10%
-4.9%
Multinationals -26
Conventional
R/I
13
+24.7%
173
+10.0%
Hannover Re's positioning in life and health reinsurance

Decentralised structure in order to support our direct marketing and underwriting
without utilising intermediaries or brokers

Intensive partnership with our clients looking for win-win situations rather than
zero sum games

Developing of attractive new products together with our cedents allow to provide
value adding propositions

Positioning in emerging markets enables us to benefit from the underlying
growth

We do consider acquisitions
• But only if strategic fit/complement
• No strategic prices
Growth in developed & emerging markets
 due to new products and a continued increase of population
14
From a "nobody" to a "Major League player"
Looking back over the last 20 years
Gross written premium
in m. EUR
5,090
5.000
4,529
4.000
3,083
3,134
2007
2008
2,794
3.000
2,472
2.000
1,403
1.000
142
0
1)
1)
1991
1998
2002
Growth
1) German-GAAP basis
2)
3)
2006
Consolidation
2) US-GAAP basis
3) Since 2006 IFRS basis
Growth
4) Compound annual growth rate
With a CAGR4) of ~21%, Hannover Re has become
one of the leading global life and health players

15
2009
2010
Hannover Re's life and health growth drivers
Our worldwide presence and expertise is in demand

Pioneer for generation 60+ products
e. g. enhanced annuities, accident insurances, long-term care & health insurance

New customer group:
protection of longevity risks of European pension funds via longevity swaps

Significant improvement in the US term market in connection with the purchase
of a US life reinsurance portfolio

Expansion of infrastructure in the growth markets Brazil, China, India and
South Korea

Investments in the Islamic insurance market (Takaful) and microinsurance
Hannover Re has several growth potentials

16
Hannover Re: an innovative reinsurer
New products/markets
Equity substitutes

Enhanced annuities

Energy savings

Retakaful

We pioneered securitisations
• For risk-management purposes
• ILS

The expertise and experience of our underwriters has allowed us to develop
leading positions in a variety of specialty markets

Our superior market positioning and local knowledge allow us to grow in
emerging markets
17
Enhanced annuities: an innovative market
Net premium earned
in m. EUR
646
600
500
408
400
277
300
208
200
150
100
63
0
2005
18
2006
2007
2008
2009
2010
Hannover Re remains the absolute cost leader
Our overhead ratio is less than half of the industry average
Administrative-expense ratio1)
7.5%
0
0
0
0
3.6%
3.2%
3.1%
2006
2007
2008
3.2%
3.2%
0
0
Own calculation
1) Administrative expenses – other technical expenses (in % of net premium earned)
2) Munich Re, SCOR, Swiss Re, Transatlantic Re, Partner Re, Everest Re
19
2009
2010
Peer average2)
2010
Lowest administrative expense ratio within our peer group*
How?
Why?


To be competitive

To have a better choice of business

To have better access to niches

To be profitable

Lean, efficient infrastructure
with no underwriting authority in USA
High exposure to broker biz to be
able to execute strict cycle mgmt

No unbundled services

Lead positions
only in carefully selected areas

No attempt to offer everything to
everyone, but rather concentrate on
market segments in which we have a
particular expertise
* Munich Re, SCOR, Swiss Re, Transatlantic Re, Partner Re, Everest Re
20
Outlook
Updated guidance for 2011
After Q1/2011 results reduced from EUR 650 m. to EUR 500 m.

Hannover Re Group
• Gross written premium (GWP)1) ……………………………………~ +7% - +8%
• Net premium earned (NPE)1) ……………………………………… ~ +7% - +8%

Non-life reinsurance (NPE)1) …………………………………………………. ~ +5%

Life and health reinsurance (NPE)1) ………………………………. ~ +10% - +12%

Return on investment2)3) ……………………………….........….................... ~ 3.5%

Net income2) …………………………………………………………… ~ EUR 500 m.

Dividend pay-out ratio4) …………………………………………….......... 35% - 40%
1) At unchanged f/x rates
2) Subject to no major distortions in capital markets and/or large losses in Q2-Q4/2011 not exceeding EUR 410 m.
3) Excluding effects from inflation swaps
4) Related to group net income according to IFRS
21

Being successful in the current market environment

Transcrição

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