Hannover Re satisfied with 1 January treaty renewals in non-life reinsurance

Tuesday, 05. February 2008 14:00
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Hannover Re satisfied with 1 January treaty renewals in non-life
reinsurance

* Premium volume virtually stable despite incipient market
softening
* Focus on selective underwriting and cycle management
* Market share boosted in Germany and
credit & surety business
* US property business largely stable with moderate rate
reductions
* Worldwide catastrophe business still highly profitable
* Return on equity target for 2008: at least 15%

Hannover, 5 February 2008: This year's treaty renewals in non-life
reinsurance passed off satisfactorily for Hannover Re. "Despite
discernible softening tendencies in the market the rate reductions
were largely smaller than anticipated. We are pleased to report that
we secured prices and conditions commensurate with the risks", Chief
Executive Officer Wilhelm Zeller asserted. More appreciable premium
reductions in some areas were almost offset by increases on the
German market and in worldwide credit/surety reinsurance. Assuming
constant exchange rates, the premium volume in non-life reinsurance
will therefore remain stable.

Hannover Re's outstanding ratings ("AA-" from Standard & Poor's and
"A" from A.M. Best) again had a favourable effect on the outcome of
the renewals. They are an essential prerequisite, particularly when
it comes to writing business that is highly sensitive to credit
status. Since Hannover Re is one of the few reinsurers to satisfy
this standard without reservations, it enjoys worldwide access to all
lines and segments and is in a position to profit disproportionately
strongly from attractive business opportunities.

Of the total premium volume written in the 2007 underwriting year in
traditional non-life reinsurance - i.e. excluding structured covers -
amounting to EUR 3,608 million, more than two-thirds of the treaties
worth altogether EUR 2,634 million (73%) were up for renewal as at 1
January 2008. Of this, treaties accounting for EUR 2,020 million were
renewed, while a volume of EUR 613 million was either cancelled or
restructured.

Including increases of EUR 605 million from new or restructured
treaties and thanks to improved prices in some areas, the total
renewed premium volume thus stood at EUR 2,625 million. Making
allowance for treaties with a later renewal date, gross premium in
non-life reinsurance is likely to come in virtually on a par with the
previous year at EUR 3,540 million.

The development of business in Germany was most gratifying: property
business in this market grew by a vigorous 21%. "Thanks to new client
relationships and increased treaty shares under existing accounts we
were able to further enlarge our already high market share and thus
extend our position as one of the leading reinsurers in the
profitable German market", Mr. Zeller asserted. As anticipated,
business with catastrophe covers developed favourably following the
heavy losses caused by winter storm "Kyrill" last year. Rates in this
segment climbed by as much as 15%.

Worldwide credit & surety reinsurance is another lucrative line of
business for Hannover Re. "Although rates and conditions came under
modest pressure due to the good results in 2007, we consolidated our
market position as ceding companies raised their retentions and
selectively enlarged our portfolio", Mr. Zeller emphasised. Premium
growth here amounted to 5%.

In US property business, the rate level outside catastrophe covers
remained broadly stable, with only modest price declines. The absence
of major losses in property catastrophe business, on the other hand,
was reflected in rate reductions averaging 9%; the minimum margins,
however, were still comfortably exceeded in this business. Original
rates in US casualty business have already been falling for some
time, and now the reinsurance market is softening appreciably.
Reinsurance terms and conditions were nevertheless still acceptable.
Workers' compensation business saw sharp rate reductions, although
here, too, business is still attractive overall. Even in the area of
directors' and officers' (D&O) covers, where consistently declining
rates are the hallmark of the original market, the reinsurance market
remained broadly stable.

As a consequence of the absence of major losses in both 2006 and
2007, rates in marine business decreased. With this in mind, we
substantially scaled back our exposure in natural-catastrophe-exposed
regions such as the Gulf of Mexico. Premium in this segment
consequently contracted by 9%. In aviation business, where Hannover
Re ranks among the global market leaders, the premium level remained
stable.

Risk management
Hannover Re's risk management activities remain focused on conserving
its capital. "In addition to traditional retrocessions, we continue
to make use of risk transfers to the capital market. As at 1 January
2008, we thus boosted the total volume of our capital market
transactions by USD 100 million to USD 1.123 billion", Mr. Zeller
explained. Hannover Re responded to the growing interest in such
transactions by setting up a dedicated department for
"Insurance-Linked Securities" (ILS) effective 1 January 2008. It is
to take on the role of transformer and aggregator for primary
insurers by designing appropriate transactions for the capital
market. Not only that, the department is also active as an ILS
investor.

Outlook for 2008
For the year's remaining renewal phases (1 April primarily in Japan
and South Korea, 1 June/July: second-most important renewal date in
the United States and 1 October) the adequate market conditions still
prevailing in non-life reinsurance should be sustained. The company
will respond to moderate softening tendencies in the market with
selective underwriting and cycle management as well as with
regrouping measures within the portfolio.

In light of the satisfactory treaty renewals as at 1 January Hannover
Re anticipates a good 2008 financial year. "We expect an increase of
around 5% in premium income for our total portfolio, with prices
remaining adequate. Our focus remains firmly fixed on profitability
rather than rankings and market shares", Mr. Zeller affirmed.
Assuming that the burden of major losses is in line with expectations
and provided there are no downturns on capital markets, another good
result should be attainable in the current year: Hannover Re
therefore anticipates a return on equity of at least 15%. As for the
dividend, the company is aiming for an unchanged distribution of 35%
to 40%.


For further information please contact:

Press and Public Relations / Investor Relations:
Stefan Schulz (tel. +49 / 511 / 56 04-15 00,
e-mail: stefan.schulz@hannover-re.com)

Press and Public Relations:
Gabriele Handrick (tel. +49 / 511 / 56 04-15 02,
e-mail: gabriele.handrick@hannover-re.com)

Investor Relations:
Gabriele Bödeker (tel. +49 / 511 / 56 04-17 36,
e-mail: gabriele.boedeker@hannover-re.com)


Hannover Re, with a gross premium of around 9 billion euro, is one of
the leading reinsurance groups in the world. It transacts all lines
of non-life and life and health reinsurance. It maintains business
relations with more than 5,000 insurance companies in about 150
countries. Its worldwide network consists of more than 100
subsidiaries, branch and representative offices in around 20
countries with a total staff of roughly 2,000. The rating agencies
most relevant to the insurance industry have awarded Hannover Re very
strong insurer financial strength ratings (Standard & Poor's AA-
"Very Strong" and A.M. Best A "Excellent").


Disclaimer:
Some of the statements in this press release may be forward-looking
statements or statements of future expectations based on currently
available information. Such statements are naturally 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. Hannover Re does not make
any representation or warranty, express or implied, as to the
accuracy, completeness or updated status of such statements.
Therefore, in no case whatsoever will Hannover Re and its affiliate
companies be liable to anyone for any decision made or action taken
in conjunction with the information and/or statements in this press
release or for any related damages.



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Hannover Rück
Karl-Wiechert-Allee 50 Hannover Germany

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Author:
Hugin
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