Hannover Re records gratifying interim result

Hannover Re records gratifying interim result

* Net premium climbs 24.6% due to acquisition of the ING life
portfolio, an increased retention and effects of the hardening
market
* Burden of catastrophe losses within the expected bounds
* Combined ratio 95.0%
* Operating profit (EBIT) + 24.5%
* Group quarterly net income + 42.7%
* One-off profit contribution from acquisition of the ING
life portfolio amounting to roughly 80 million euro after tax
* Market Consistent Embedded Value in life and health
reinsurance virtually unchanged at 1.7 billion euro
* Forecast for the full financial year:
Return on equity of at least 18% including one-off effect from ING
life portfolio

Hannover, 5 May 2009: Hannover Re expressed satisfaction with its
start to the new financial year. "For our company the adverse effects
of the financial market crisis are largely behind us. We are now in a
position to profit from the positive developments in both non-life
reinsurance and life/health reinsurance. Our quarterly result puts in
place a good platform for achieving our ambitious profit target for
2009 - namely a return on equity of at least 18 percent after tax",
Chief Executive Officer Wilhelm Zeller explained. The positive
one-off effect of 80.2 million euro resulting from the acquisition of
the US ING life reinsurance portfolio is included in the forecast.

The operating profit (EBIT) as at 31 March 2009 increased by 24.5%
relative to the comparable period of the previous year to reach
305.8 million euro (245.6 million euro). Group net income similarly
grew by an appreciable 42.7% to 216.1 million euro (151.5 million
euro) owing to the positive one-off effect. This corresponds to
earnings of 1.79 euro (1.26 euro) a share.

The gross written premium booked by the Hannover Re Group as at 31
March 2009 increased sharply by 17.0% to 2.7 billion euro
(2.3 billion euro) due to the favourable environment in non-life
reinsurance and the acquisition in life and health reinsurance. The
effects of exchange rate movements were only marginal. With the level
of retained premium rising to 91.7% (88.7%), net premium climbed by
an even more substantial 24.6% to 2.1 billion euro (1.7 billion
euro).

Hannover Re was thoroughly satisfied with the development of non-life
reinsurance. The situation on the international reinsurance markets
is broadly favourable since the soft market has come to an end sooner
than expected. The capital shortage triggered throughout the global
insurance industry by the financial market crisis has stimulated
appreciable additional demand for reinsurance, hence prompting rates
to rise - sometimes by double-digit percentages, such as in credit
and surety reinsurance. In catastrophe business, too, and especially
in regions that had suffered losses, price increases were obtained.
"Nevertheless, we still consider the rate increases in US catastrophe
business to be far from sufficient", Mr. Zeller noted. The company
has consequently scaled back its involvement in this area.

Hannover Re was highly satisfied with the development of business in
the countries of Central and Eastern Europe. Given a sharp surge in
demand, it was able to enlarge shares in existing business and
acquire new clients. This is also true of the domestic German market,
where the company was able to extend its position as one of the
leading reinsurers.

Gross premium in non-life reinsurance grew to 1.7 billion euro
(1.5 billion euro) as at 31 March 2009, an increase of 9.9% relative
to the same period of the previous year. At constant exchange rates,
especially against the US dollar, growth would have come in at 6.7%.
The level of retained premium climbed from 88.6% to 92.4% on the back
of considerably lower retrocessions. Net premium earned consequently
rose even more sharply by 18.5% to 1.2 billion euro (1.0 billion
euro).

The incidence of catastrophe losses and major claims in the first
quarter was higher than in the corresponding quarter of the previous
year. The largest individual loss was winter storm "Klaus", which
swept across southwest France and northern Spain and caused a burden
of 63.3 million euro for net account; the bushfires in Australia
produced loss expenditure of 12.5 million euro for Hannover Re. Only
minimal strains resulted from the collapse of the Cologne City
Archive as well as a satellite failure and plane crash. All in all,
the total net burden of catastrophe losses and major claims came in
at 98.8 million euro (68.1 million euro). This is equivalent to 8.4%
of net premium in non-life reinsurance and is hence within
expectations. On the basis of the overall very favourable
developments in non-life reinsurance, a combined ratio of 95.0%
(99.5%) was achieved.

Against this backdrop the net underwriting result improved
substantially on the comparable quarter of the previous year from
-3.3 million euro to 53.6 million euro. The operating profit (EBIT)
in non-life reinsurance moved 3.4% higher to 187.6 million euro
(181.5 million euro) despite the decline in investment income. Group
net income increased by 11.1% to 126.1 million euro (113.5 million
euro), producing earnings of 1.05 euro (94 cents) a share.

The most striking development in the life and health reinsurance
business group in the first quarter was the acquisition of the ING
life portfolio in the United States effective 1 January 2009. "We
have thus taken a decisive step towards accomplishing our global
objectives for the life reinsurance sector and, what is more, we have
improved still further the diversification of our revenue streams
since life reinsurance business - a hallmark of which is its greater
stability - will account for an even larger share of the total
portfolio going forward", Mr. Zeller emphasised.

Hannover Re, which operates in this business group under the Hannover
Life Re brand, has a particular strategic focus on the so-called BRIC
markets (Brazil, Russia, India and China). Yet Korea too - the
largest life reinsurance market in Asia - offers good growth
prospects. The principal drivers of Hannover Life Re's business
nevertheless continue to be the developed insurance markets of the
United Kingdom, United States, Germany and Australia.

Gross written premium increased by 30.6% as at 31 March 2009 to 1.0
billion euro (770.1 million euro). Of this total growth, an amount of
193.0 million euro was attributable to the acquisition of the US ING
life reinsurance portfolio. At constant exchange rates growth would
have reached 36.7%. This effect, which is the opposite of that seen
in non-life reinsurance, was caused above all by movements in the
pound sterling. The level of retained premium rose by two percentage
points to 90.6 %. Net premium earned surged by 33.5% to 910.4 million
euro (681.8 million euro).

The operating profit (EBIT) climbed sharply to 117.5 million euro
(47.9 million euro). The EBIT margin of 12.9% therefore comfortably
surpassed the target range of 6.5% to 7.5%. Group net income
increased to 98.0 million euro (38.3 million euro). This includes the
one-off effect from our life transaction in an amount of 80.2 million
euro. This was equivalent to earnings of 81 cents (32 cents) a share,
hence putting in place a solid platform for achieving our annual
target.

As in the previous year, Hannover Re is also reporting on the Market
Consistent Embedded Value (MCEV) in the context of its interim report
on the first quarter. This consists of a valuation of the life and
health reinsurance portfolio as well as the allocated capital and
hence provides a good basis for assessing long-term profitability.
Bearing in mind the present state of the capital markets, the MCEV
developed favourably as at 31 December 2008: it remained almost
unchanged at 1.7 billion euro (1.7 billion euro). The value of new
business was again boosted substantially and now stands at 150.5
million euro (106.4 million euro).

Hannover Re was largely satisfied with the development of its
investments, even though conditions on the international capital
markets are still difficult. The portfolio of assets under own
management increased relative to the volume as at 31 December 2008 to
reach 21.0 billion euro, a gain of 4.0%. Ordinary income excluding
interest on deposits fell only slightly short of the corresponding
quarter of the previous year at 199.3 million euro (211.3 million
euro), a testament to the fact that the company is on the right track
with its investment policy geared to generating stable ordinary
income. Interest on deposits climbed 6.0% to 57.9 million euro (54.6
million euro). After very high realised gains of 133.8 million euro
in the corresponding quarter of the previous year due to tactical
shortening of durations in the bond portfolio, they returned to a
normal level of 45.9 million euro as at 31 March 2009. This
contrasted with realised losses of 8.1 million euro (26.1 million
euro). The volume of write-downs totalling altogether 50.3 million
euro (85.7 million euro) was attributable chiefly to private equity
investments. Write-downs of 2.6 million euro (65.1 million euro) were
taken on equities and 13.8 million euro (20.5 million euro) on
fixed-income securities. The unrealised losses amounted to
33.7 million euro (11.9 million euro). In light of these
developments, net investment income contracted by 24.5% to 198.2
million euro (262.6 million euro).

Outlook
Based on its strategic orientation and the available market
opportunities in non-life and life/health reinsurance, Hannover Re
anticipates a good result for 2009. At constant exchange rates the
net premium volume should grow by approx. 25%.

Market conditions in non-life reinsurance are broadly satisfactory.
The pleasing outcome of the round of treaty renewals concluded on 1
January 2009 carried over into the treaty negotiations conducted as
at 1 April in Japan and South Korea. Here, too, prices rose on the
back of the repercussions of the financial market crisis. In Japan,
however, these increases were in some areas still inadequate;
Hannover Re responded by reducing its peak exposures here. Rates for
casualty business were commensurate with the risks, enabling the
company to book higher premiums. "We enjoyed especially gratifying
treaty renewals in South Korea. Rate increases in non-proportional
property business prompted us to enlarge our shares. In the casualty
sector, too, it was possible to obtain price increases sometimes
running into the double digits", Mr. Zeller explained.

The company expects net premium in total non-life reinsurance
business to grow by approx. 20% in 2009. "Provided the burden of
catastrophe losses and major claims does not significantly exceed the
anticipated level of 10% of net premium, we are looking forward to a
very healthy profit contribution", Mr. Zeller emphasised.

The general environment in life and health reinsurance is also
favourable. Here, too, the financial and economic crisis has
delivered marked growth stimuli worldwide. The solvency position of
primary insurers - especially in the United States - has been visibly
weakened, hence fanning demand for both risk- and financially
oriented reinsurance solutions. Hannover Re expects this to result in
an appreciable rise in cession ratios. What is more, the increasing
size of the upper levels of the age pyramid in industrial nations
will continue to drive growth in annuity and health insurance. The
rapid emergence of a middle class in threshold and developing markets
should also foster lasting growth.

Net premium in life and health reinsurance is likely to increase by
approx. 35% in the current financial year on account of the
acquisition of the US ING life reinsurance portfolio as at 1 January
2009. The EBIT margin should comfortably beat the target corridor of
6.5% to 7.5%. Against this backdrop, Hannover Re expects a very good
profit contribution to total business.

On the investments side the anticipated positive cash flow which the
company generates from its technical account and asset holdings
should - subject to stable exchange rates - result in further growth
in the investment portfolio. In the area of fixed-income securities
Hannover Re continues to stress high quality and the diversification
of its portfolio. "Having reduced our exposure to listed equities to
almost zero, volatility on the stock markets does not have any
implications for our investment income", Mr. Zeller affirmed.

In light of its strategic orientation and the available market
opportunities in non-life and life/health reinsurance, Hannover Re is
looking to post a good result for the full 2009 financial year.
Assuming that the burden of catastrophe losses and major claims does
not significantly exceed the expected level of 10% of net premium in
non-life reinsurance, and as long as there are no further adverse
movements on capital markets, Hannover Re anticipates a minimum
return on equity of at least 18% and earnings per share of at least 5
euro for the 2009 financial year. The one-off effect from the
acquisition of the ING life reinsurance portfolio is factored into
these expectations. It remains Hannover Re's goal to pay a dividend
in the range of 35% to 40%.

For further information please contact:

Press and Public Relations / Investor Relations:
Stefan Schulz (tel. +49 511 5604-1500,
e-mail: stefan.schulz@hannover-re.com)

Press and Public Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick@hannover-re.com)

Investor Relations:
Klaus Paesler (tel. +49 511 5604-1736,
e-mail: klaus.paesler@hannover-re.com)

Please visit: www.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 1,900. 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.

This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
Copyright © Hugin AS 2009. All rights reserved.