Strategy implementation

Strategy implementation

The risk strategy derived from the corporate strategy constitutes the basis for our handling of opportunities and risks. The strategy is implemented on multiple levels. Our corporate strategy encompasses ten basic strategic principles, which safeguard across divisions the accomplishment of our mission “Growing Hannover Re profitably”. The orientations of the different business groups are guided by these principles and thus contribute directly to attainment of the overarching goals. Key strategic points of departure for our Group-wide risk management are the principles of active risk management, an adequate capital base and sustained compliance. The risk strategy specifies more concretely the goals derived from our corporate strategy with respect to risk management and documents our understanding of risk. With a view to achieving these goals, we have defined ten overriding principles:

  1. We keep to the risk appetite defined by the Executive Board.
  2. We integrate risk management into value-based management.
  3. We promote an open risk culture and the transparency of the risk management system.
  4. We aspire to each rating agency’s highest risk management rating and we seek approval of our internal capital model for Solvency II.
  5. We define a materiality limit for our risks.
  6. We use appropriate quantitative methods.
  7. We apply suitable qualitative methods.
  8. We practise risk-based allocation of our capital.
  9. We ensure the necessary separation of functions in our organisational structure.
  10. We evaluate the risk content of new business areas and new products.

The risk strategy is specified with an increasing degree of detail on the various levels of the company, for example down to the adoption and testing of contingency plans in the event of an emergency or the underwriting guidelines of our treaty and regional departments. The risk strategy and the guidelines derived from it, such as the Framework Guideline on Risk Management and the central system of limits and thresholds, are reviewed at least once a year. In this way, we ensure that our risk management system is kept up-to-date.

We manage our total enterprise risk such that we can expect to generate positive Group net income with a probability of 90% and the likelihood of the complete loss of our economic capital and IFRS shareholders’ equity does not exceed 0.03% p. a. These indicators are monitored using our internal capital model and the Executive Board is informed quarterly about adherence to these key parameters. The necessary equity resources are determined according to the requirements of our economic capital model, solvency regulations, the expectations of rating agencies with respect to our target rating and the expectations of our clients. Above and beyond that, we maintain a capital buffer in order to be able to act on new business opportunities at any time.

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