Hannover Re reports gratifying interim result

Hannover Re reports gratifying interim result

*         Operating profit (EBIT) + 59.3%
*         Group quarterly net income + 22.6%
*         Non-life reinsurance: EBIT almost doubled
*         Combined ratio 99.5%
*         Life and health reinsurance: EBIT margin within the target
corridor
*         Net investment income stable despite difficult capital
markets
*         Return on equity 18.7%

Hannover, 6 May 2008: Hannover Re expressed satisfaction with its
start to the new financial year. "Despite some headwind due to the
difficult situation on the global capital markets, our quarterly
result puts in place a good foundation for achieving our defined 2008
profit target - namely a return on equity in excess of 15 percent
after taxes", Chief Executive Officer Wilhelm Zeller affirmed.

The operating profit (EBIT) as at 31 March 2008 improved on the
corresponding period of the previous year by 59.3% to reach
245.6 million euro (154.2 million euro). Group net income climbed
22.6% to 151.5 million euro (123.5 million euro), equivalent to
earnings of 1.26 euro (1.02 euro) a share.

The gross written premium booked by the Hannover Re Group contracted
as anticipated by 5.5% as at 31 March 2008 to 2.3 billion euro (2.4
billion euro). The decrease was attributable principally to the
weakness of the US dollar. At constant exchange rates the premium
volume would have remained virtually unchanged. The level of retained
premium increased to 88.7% (84.9%) as a consequence of significant
savings on the cost of the company's own protection covers, and net
premium therefore fell by a mere 3.3% to 1.7 billion euro (1.7
billion euro).

The development of non-life reinsurance gave Hannover Re grounds for
satisfaction. "Although many markets are exhibiting unmistakable
softening tendencies, we nevertheless obtained prices and conditions
largely commensurate with the risks in the 1 January renewals", Mr.
Zeller explained. In light of the softening markets the cycle
management practised by Hannover Re for many years is taking on
growing importance. In areas that offered attractive opportunities,
such as worldwide credit and surety reinsurance and German business,
Hannover Re enlarged its market share. Participations in particularly
cyclical markets such as North America, on the other hand, were
scaled back. Instead, the focus is on profitable market and product
niches, including for example Central and Eastern Europe as well as
reinsurance transacted according to Islamic principles - a segment
that has generated pleasing growth to date. Hannover Re also expanded
its facultative reinsurance portfolio, principally in the casualty
lines.

Gross premium in non-life reinsurance contracted by 9.5% as at 31
March 2008 relative to the comparative period of the previous year to
stand at 1.5 billion euro (1.7 billion euro). At constant exchange
rates, especially against the US dollar, the decrease would have been
only 4.2%. The level of retained premium increased from 83.8% to
88.6% as a consequence of significant savings on the cost of the
company's own protection covers. Net premium earned fell by 8.8% to
1.0 billion euro (1.1 billion euro).

The incidence of major losses was below average in the first quarter:
the largest single loss event was the European winter storm "Emma"
with a net strain of 26.3 million euro. Along with two other natural
catastrophe losses a number of fire claims and one marine loss were
recorded, although the burden for Hannover Re from these loss events
was relatively moderate. Total net expenditure on major losses
amounted to 68.1 million euro. This figure is equivalent to 6.8% of
net premium and was thus below the expected level of 10%. The
combined ratio came in at 99.5% (105.5%).

The underwriting result improved on the comparative quarter of the
previous year, which had been impacted by the heavy catastrophe loss
expenditure attributable to winter storm "Kyrill", from -66.2 million
euro to -3.3 million euro. The operating profit (EBIT) in non-life
reinsurance surged sharply by 94.5% to 181.5 million euro
(93.3 million euro). Group net income increased by 11.3% to
113.5 million euro (102.0 million euro), producing earnings of
94 cents (85 cents) a share.

Hannover Re was also highly satisfied with the performance of the
life and health reinsurance business group. Although premium growth
was relatively moderate owing to special effects in the same quarter
of the previous year as well as adverse movements in exchange rates,
the dynamic pace of growth is likely to be sustained in the course of
the financial year. Hannover Re, which operates in this business
group under the Hannover Life Re brand, transacts its business on the
basis of a five-pillar model. "With this positioning we can assure
ourselves of a promising portfolio and sustained organic growth going
forward", Mr. Zeller emphasised. In the first quarter the company
succeeded in closing its largest transaction to date - a so-called
block assumption transaction for US individual life business. In the
United Kingdom - the second-largest life reinsurance market in the
world - the company is positioned as a specialty provider for
enhanced annuities. In this area, as in the reinsurance of pension
funds, the company continues to see good business prospects.

Another special focus of Hannover Life Re is on the Asian markets:
"In China we expect to commence business operations by the end of May
through our newly established Shanghai branch. This will enable us to
tap into the advantages enjoyed by a local reinsurer in the
vigorously expanding Chinese market", Mr. Zeller noted. In South
Korea, Asia's largest life reinsurance market, the company had
already been granted a provisional business licence back in December
2007; by the middle of 2008 - if everything goes according to plan -
it should also be possible to commence business activities through
the newly established branch office in Seoul.

Gross written premium in life and health reinsurance climbed by 3.5%
as at 31 March 2008 to 770.1 million euro (744.1 million euro); at
constant exchange rates growth would have reached 10.0%. The level of
retained premium rose from 87.4% to 88.6%. Net premium earned grew by
5.8% to 681.8 million euro (644.2 million euro).

The operating profit (EBIT) totalled 47.9 million euro (51.8 million
euro). Whilst this figure was lower than in the comparative period of
the previous year, the first quarter of 2007 had been influenced by a
positive special effect in excess of 14 million euro. The claims
experience for both mortality and morbidity risks in the first
quarter was most gratifying at all operating units of the life and
health reinsurance business group. The EBIT margin of 7.0% was within
the target corridor of 6.5% to 7.5%. Group net income was boosted by
13.0% to 38.3 million euro (33.9 million euro); equivalent to
earnings of 32 cents (28 cents) a share, this constitutes a good
basis for achieving the targets for the full financial year.

As in the previous year, Hannover Re is also reporting on the
European Embedded Value in the context of its first interim report.
This consists of a valuation of the life and health reinsurance
portfolio as well as of the allocated capital and hence provides a
good opportunity to assess its long-term profitability. For the 2007
financial year the EEV for life and health reinsurance was for the
first time calculated entirely on the basis of market-consistent
assumptions. The Market Consistent Embedded Value determined for the
life and health reinsurance portfolio increased by 12.3% to
1.7 billion euro (1.5 billion euro). The Value of New Business
improved from 64.2 million euro to 106.4 million euro. The Operating
Embedded Value Earnings from both new and in-force business surged by
a pleasing 50.9% to 280.0 million euro (185.6 million euro).

Hannover Re was very largely satisfied with the development of its
investments, although the protracted turmoil on capital markets of
course had repercussions for the portfolio. The continuing slide in
the US dollar caused the assets under own management to contract
relative to the level of 31 December 2007 to 19.0 billion euro
(19.8 billion euro). Ordinary income excluding interest on deposits
grew by 6.5% to 211.3 million euro (198.3 million euro). This is
attributable to the slightly higher average yield in the portfolios
as well as to the marginally increased average portfolio relative to
the corresponding quarter of the previous year.

As part of its proactive approach to portfolio management the company
used the market upheavals in January and February primarily as an
opportunity for tactical shortening of durations in its USD
portfolios: in this context profits of 133.8 million euro
(40.2 million euro) were realised on the disposal of investments, as
against realised losses of 26.1 million euro (11.5 million euro). In
view of the difficult situation on capital markets write-downs of
85.6 million euro were taken on securities, thereof 65.1 million euro
on equities. Net income from assets under own management decreased
slightly by 1.6% to 208.0 million euro (211.5 million euro). This
effect was, however, offset by a 16.8% increase in income from
interest on deposits, as a consequence of which net income from total
investments improved on the same period of the previous year by 1.7%
to 262.6 million euro (258.2 million euro).

Outlook
In view of its strategic orientation and the available market
opportunities in non-life and especially life/health reinsurance,
Hannover Re anticipates another good result in 2008.

Both the gross and net premium should come in on a par with the
previous year.

Prices and conditions are for the most part still acceptable in the
non-life reinsurance market despite perceptible softening tendencies.
"In areas where the business failed to satisfy our profitability
standards we pulled back and reshuffled our portfolio in favour of
other segments - such as German business or the worldwide credit and
surety line", Mr. Zeller emphasised. The increased market shares here
will have correspondingly favourable implications for the year-end
result. Furthermore, as a result of significant savings with respect
to expenses for retrocession, EBIT for 2008 in non-life reinsurance
is expected to increase.

The treaty renewals as at 1 April in Japan and South Korea were again
notable for softening reinsurance markets. In Japan the picture was a
mixed one across the various segments. In general property business
Hannover Re obtained stable prices; the portfolio here was modestly
enlarged. Windstorm and earthquake covers, on the other hand, saw
appreciable rate reductions as expected due to the absence of losses.
Prices for Japanese casualty business were largely stable, enabling
the company to maintain its portfolio. "Overall, the treaty renewals
in Japan were still acceptable; in the event of further rate
reductions, however, we shall scale back our involvement
accordingly", Mr. Zeller affirmed. The Korean market witnessed more
intense competition prompted by the arrival of new providers. In
light of significant pressure on prices Hannover Re consolidated its
portfolio in Korea and is concentrating on its core clients.

Following the abolition of the reinsurance monopoly in Brazil
Hannover Re intends to establish a representative office in Rio de
Janeiro. Approval to launch business operations in Latin America's
largest insurance market should be received from the Brazilian
regulator in the coming weeks.

"For non-life reinsurance we expect a reduction of our net premium by
5% due to the weaker US dollar. Provided the burden of catastrophe
losses and major claims is within the expected level of 10% of net
premium, a very healthy profit contribution can be anticipated", Mr.
Zeller stated.

The prospects in life and health reinsurance continue to be very
favourable. The increasing size of the upper levels of the age
pyramid in industrial nations should drive further growth in annuity
and health insurance. Hannover Re anticipates positive growth impetus
in the United States in the areas of special health covers for senior
citizens and block assumption transactions. In Germany the company
concentrates primarily on products aimed at senior citizens and
unit-linked policies, with above all long-term care annuities likely
to enjoy growing popularity. Yet the rapid formation of a middle
class in emerging and developing nations should also ensure that the
company is able to enjoy sustained growth. "With our newly
established branches in China and South Korea we can maximise the
current and future potentials offered by these life insurance markets
better than we have to date. For 2008 we expect continued favourable
profitability and double-digit premium growth", Mr. Zeller affirmed.

On the investments side we are concerned that due to the continuing
weakness of the US dollar our investment portfolio will grow only
moderately despite the anticipated positive cash flow that Hannover
Re generates from its technical account and asset holdings. Assuming
a normalisation of the capital markets during the course of 2008,
Hannover Re is looking to a stable income from investments under own
management. In the area of fixed-income securities the focus
continues to be on high quality and good diversification of the
portfolio. In combination with the equity holdings, the investments
should be able to deliver a stable profit contribution.

Given the adequate conditions still prevailing on the reinsurance
markets and the company's broad diversification - both in terms of
its reinsurance business and investment portfolio -, Hannover Re
anticipates another good result for the full 2008 financial year.
"Provided the burden of major losses does not significantly exceed
the expected level of 10% of net premium in non-life reinsurance and
assuming a normalisation of the capital markets, we expect to
generate a return on equity of more than 15 percent and earnings per
share of around 5 euro in the 2008 financial year", Mr. Zeller
explained.

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:
Daniela Gissinger (tel. +49 / 511 / 56 04-15 29,
e-mail: daniela.gissinger@hannover-re.com)

Hannover Re, with a gross premium of around 8 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 1,800. 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.