Despite the challenging business conditions facing the international (re)insurance industry and the protracted low level of interest rates, it is Hannover Re’s expectation that it can continue to operate with sustained success. Based on constant exchange rates, the company anticipates gross premium growth in the range of 5% to 10% for its total business in the current financial year.

In property and casualty reinsurance we expect to book increased premium income – adjusted for exchange rate effects – in the full 2015 financial year despite our systematically practised policy of selective underwriting. In view of our financial strength and very good positioning, we still see encouraging business potential: special mention should be made here of the Asia-Pacific markets, North and Latin America as well as business with agricultural risks. The areas of facultative and structured reinsurance also offer us good growth prospects.

For the upcoming round of treaty renewals on 1 January 2016 Hannover Re expects to see some easing in the pressure on prices and conditions. The indications of rising demand for high-quality reinsurance protection in mature markets as a consequence of the economic upturn in the United States should have favourable implications for the market development as a whole. Reinsurers with an excellent rating, in particular, should benefit from this tendency. Given the elevated frequency of man-made losses in the current financial year, reinsurance prices are likely to stabilise in some areas and room for rate increases should open up in some lines and markets.

Our targeted EBIT margin of at least 10% for our total Property & Casualty reinsurance business group remains unchanged. We are aiming for a combined ratio of less than 96%.

While business in life and health reinsurance has to some extent been volatile so far this year in certain regions, it has nevertheless fared satisfactorily overall. For the remaining fourth quarter of the year it is our expectation that this trend will continue and that the contribution made by life and health reinsurance to the company’s year-end result will increase.

The sustained low level of interest rates continues to pose a challenge for primary insurers: in Germany, for example, further providers have stopped writing new business with traditional life insurance policies offering a guaranteed interest rate. More and more insurers are contemplating selling blocks of life insurance that are closed for new business to professional consolidation platforms, inter alia with a view to saving on the costs of administration. Given our experience, we see potential business opportunities here. The implementation of Solvency II and changes to prudential regimes outside Europe are similarly generating stronger demand in the financial solutions segment for reinsurance concepts tailored to provide capital relief.

In Eastern European markets it is our expectation that demand in the bancassurance sector will remain strong. When it comes to innovative products that offer traditional life coverage with an extensive range of supplementary benefits and discounts for a sensible healthy lifestyle, we see interesting market opportunities around the world – and especially in Asian markets and on the North American continent. We also anticipate consistently growing demand worldwide for coverage of longevity risks. Thanks to our long-standing expertise in this field, we are a preferred partner among our clients for the assumption of longevity portfolios of any size.

For the remainder of 2015 our expectation of organic, currency- adjusted gross premium growth in our life and health reinsurance portfolio coupled with rising profitability remains unchanged. In addition, we continue to aim for a value of new business in excess of EUR 180 million. The target EBIT margins set for our reporting categories still apply, namely at least 2% for financial solutions and longevity business and at least 6% for our mortality and morbidity business.

The expected positive cash flow that we generate from the technical account and our investments should – subject to stable exchange rates and yield levels – lead to further growth in our asset portfolio. In the area of fixed-income securities our focus remains on the high quality and diversification of our portfolio. When it comes to the allocation of new investments resulting from cash flows and maturities, we are looking to gradually increase the shares of holdings in the BBB- and lower rating segments while at the same time investing proportionately more strongly in top-quality, highly liquid government bonds. The focus here remains primarily on stability while maintaining an adequate risk / return ratio. Similarly, we review any increased exposure to real estate and equities in light of these considerations and monitor market developments with an eye to opportunities that may present themselves. We are targeting a return on investment of 3.0% for 2015.

Group net income for the full 2015 financial year is expected to be in the order of EUR 950 million. This is based on the assumption that the burden of major losses does not significantly exceed the expected level of EUR 690 million and that there are no unforeseen downturns on capital markets.

Hannover Re envisages a payout ratio in the range of 35% to 40% of its IFRS Group net income for the dividend in the current financial year. This figure could increase in light of capital management considerations if the company’s comfortable level of capitalisation remains unchanged.



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