DGAP-News: Hannover Rück SE / Key word(s): Half Year Results Hannover Re very satisfied with the first half of 2014 06.08.2014 / 07:30 --------------------------------------------------------------------- Press release Hannover Re very satisfied with the first half of 2014 - Group net income +4.9%: EUR 444.4 million (EUR 423.5 million) - Income from assets under own management +6.2%: EUR 532.6 million (EUR 501.4 million) - Return on equity: 14.5% - Net burden of major losses low at EUR 104.7 million - Gross premium income: currency-adjusted +0.4% - Combined ratio: 95.0% (94.4%) Hannover, 6 August 2014: Hannover Re is very satisfied with the course of business in the first half of 2014 and well on track to achieve its demanding profit target of around EUR 850 million for the full year. "Once again our non-life reinsurance business delivered a pleasing result, showing that with our proven cycle management we are optimally placed to face up to the soft market conditions", Chief Executive Officer Ulrich Wallin emphasised. "We were also able to substantially boost profitability in life and health reinsurance, enabling both business groups to make the forecast contributions to our overall performance. What is more, investment income also fully lived up to all our expectations." Currency-adjusted gross premium slightly higher Gross written premium for the Hannover Re Group contracted by 2.2% as at 30 June 2014 to EUR 7.1 billion (EUR 7.2 billion). At constant exchange rates growth would have come in at 0.4%. The company is thus within its target corridor of generating stable to slightly higher gross premium for the full year. The level of retained premium retreated to 87.7% (90.0%). Net premium earned consequently fell by a somewhat more marked 5.7% to EUR 5.8 billion (EUR 6.2 billion). Adjusted for exchange rate effects, the decrease would have been 3.1%. Group net income climbs 4.9% The operating profit (EBIT) of EUR 683.7 million as at 30 June 2014 fell somewhat short of the previous year's figure (EUR 693.0 million), in part due to reduced gains on currency translation. Owing to lower interest charges and a drop in the tax ratio, Group net income improved by a further 4.9% on the good level of the comparable period to reach EUR 444.4 million (EUR 423.5 million). Earnings per share stood at EUR 3.69 (EUR 3.51). Non-life reinsurance posts good result Supply substantially exceeds demand in global non-life reinsurance, as a consequence of which competition has continued to intensify sharply in 2014. A key factor here - aside from the absence of market-changing large losses - is that healthy levels of capitalisation are enabling many clients to retain more risks for their own account. Furthermore, the increased capacities from the market for insurance-linked securities (ILS), especially in the area of US natural catastrophe covers, are leading to appreciable price erosion. This state of affairs was also reflected in the treaty renewals as at 1 April 2014, resulting in a modest premium decline for Hannover Re. Total gross premium for non-life reinsurance contracted by 0.5% as at 30 June 2014 relative to the comparable period to stand at EUR 4.1 billion (EUR 4.1 billion). An increase of 2.0% would have been recorded at constant exchange rates. This was due in particular to the writing of a new high-volume reinsurance treaty from China as well as the successful expansion of activities in Southeast Asia. The retention rose slightly to 91.1% (90.2%). Net premium earned fell by 1.0% to EUR 3.4 billion (EUR 3.4 billion); adjusted for exchange rate effects, a gain of 1.6% would have been booked. As had been the case in the first three months of 2014, major loss expenditure in the second quarter was again slight. The largest single loss was due to a storm front that swept across the west of Germany in early June, causing thunderstorms, strong winds and hail. The resulting net loss for Hannover Re was EUR 33.3 million. Altogether, the net burden of major losses for the first half-year amounted to EUR 104.7 million (EUR 259.5 million) and was thus well below the company's expected level of EUR 276 million. As in past years, the unused part of the budget was allocated to the reserves, thereby creating an additional buffer for any major losses that may occur in the second half of the year. The underwriting result was again pleasing at EUR 158.3 million (EUR 183.6 million). The combined ratio of 95.0% (94.4%) was better than the envisaged target level. The operating profit (EBIT) for non-life reinsurance as at 30 June 2014 came in at EUR 521.0 (EUR 549.1 million) and is thus in line with expectations. It is slightly lower than the figure for the comparable period, although this was influenced inter alia by positive exchange rate effects. Group net income totalled EUR 347.9 million (EUR 362.1 million). Earnings per share stood at EUR 2.89 (EUR 3.00). Life and health reinsurance delivers improved result Profitability in life and health reinsurance in the first half of 2014 showed a pleasing improvement on the comparable period of the previous year. The risk diversification of the portfolio was further profitably extended in the second quarter through the successful closing of another block transaction for longevity risks in the United Kingdom. Financial Solutions business in the United States delivered another very positive profit contribution. Business activities in France, the Scandinavian countries as well as Central and Eastern Europe also developed more favourably than forecast. In addition, US Mortality business improved in the second quarter, as a consequence of which expectations for the first half-year were slightly exceeded overall. The fact that gross premium for life and health reinsurance nevertheless contracted by 4.6% as at 30 June 2014 to EUR 3.0 billion (EUR 3.1 billion) was attributable above all to the discontinuation of certain large-volume treaties in US health business. Despite this, Hannover Re continues to see considerable underlying growth potential. Adjusted for exchange rate effects, gross premium would have decreased by 1.8%. In view of a reduced retention of 83.1% (89.6%), net premium earned retreated more sharply by 11.4% to EUR 2.5 billion (EUR 2.8 billion); this is equivalent to a reduction of 8.9% after adjustment for exchange rate effects. The operating profit (EBIT) in life and health reinsurance climbed to a pleasing EUR 154.8 million (EUR 133.8 million) as at 30 June 2014. Group net income improved by a substantial 15.9% to EUR 115.4 million (EUR 99.6 million). Earnings per share reached EUR 0.96 (EUR 0.83). Very good investment income The portfolio of assets under own management totalled EUR 32.4 billion as at 30 June 2014. That this figure did not beat the level as at 31 December 2013 (EUR 31.9 billion) more comfortably can be attributed principally to repayment of the EUR 750 million bond issued in 2004 as well as distribution of the dividend amounting to around EUR 360 million. Ordinary investment income excluding interest on funds withheld and contract deposits remained virtually stable at EUR 490.1 million (EUR 503.6 million) despite lower interest rates. The primary factors here are expansion of the corporate bonds asset class and increased exposure to the real estate sector. Interest on funds withheld and contract deposits fell slightly to EUR 174.9 million (EUR 187.5 million). Realised gains on the sale of investments stood at EUR 88.5 million (EUR 84.5 million). Changes in the fair values of financial assets measured at fair value through profit or loss - the so-called ModCo derivatives and the inflation swaps are included here - were positive as at 30 June 2014 in the amount of EUR 10.0 million (-EUR 37.5 million). Impairments of EUR 10.3 million (EUR 8.4 million) were taken in the period under review. Investment income from assets under own management grew by a highly gratifying 6.2% as at 30 June 2014 to EUR 532.6 million (EUR 501.4 million). The resulting annualised return on investment (excluding effects from derivatives) of 3.3% was slightly higher than the targeted 3.2%. Net investment income including interest on funds withheld and contract deposits closed at altogether EUR 707.5 million (EUR 689.0 million), a pleasing 2.7% higher than the level of the comparable period. Shareholders' equity remains strong Hannover Re's shareholders' equity grew by 8.9% as at 30 June 2014 to reach a record high of EUR 6.4 billion (31 December 2013: EUR 5.9 billion). Despite this increase the annualised return on equity stood at a pleasing 14.5% (31 December 2013: 15.0%). The book value per share rose to EUR 53.17 (31 December 2013: EUR 48.83). Outlook 2014 With the results reported for the second quarter Hannover Re is well on track to achieve its full-year targets for 2014. Based on constant exchange rates, the company continues to expect stable to slightly higher gross premium and net income after tax in the order of EUR 850 million for the full 2014 financial year. This is conditional on major loss expenditure not significantly exceeding the anticipated level of EUR 670 million and assumes that there are no unforeseen adverse developments on capital markets. The continued challenging state of the general business environment in non-life reinsurance was further demonstrated by the treaty renewals as at 1 June and 1 July 2014, when parts of the North American portfolio, agricultural risks and business from Latin America traditionally come up for renewal. In US property business rate declines of between 5% and 10% were the norm under programmes that had been spared losses; on the other hand, price increases of up to 30% were obtained for loss-impacted treaties in some areas. Prices in US property catastrophe business softened appreciably, albeit less sharply than in the renewals of 1 January 2014. Competition in US casualty business was also fiercer. All in all, the premium volume for North American business contracted slightly. Hannover Re is satisfied with the outcome of the renewals in Latin America. Growth in this market remains strong, even though modest rate declines were also recorded in Central and South America. The oversupply of reinsurance capacity was similarly evident in the renewal of part of the portfolio of agricultural risks. Hannover Re was nevertheless able to maintain its good positioning in this market. In view of the soft market conditions Hannover Re is concentrating solely on preserving the profitability and quality of its portfolio in non-life reinsurance. The premium volume for 2014 should remain broadly stable after adjustment for exchange rate effects. The improved profit trend in life and health reinsurance should be sustained in the second half of the year. For the full 2014 financial year profitability is expected to improve substantially on the previous year. Hannover Re's targeted full-year return on investment remains unchanged at 3.2%. The company is not currently planning to make any significant adjustments to the allocation of its investments to individual asset classes. The focus is primarily on stability while maintaining an adequate risk/return profile. As for the dividend, the company continues to aim for a payout ratio in the range of 35% to 40% of its IFRS Group net income after tax. For further information please contact: Corporate Communications: Karl Steinle (tel. +49 511 5604-1500, e-mail: [email protected]) Media Relations: Gabriele Handrick (tel. +49 511 5604-1502, e-mail: [email protected]) Investor Relations: Julia Hartmann (tel. +49 511 5604-1529, e-mail: [email protected]) Please visit: www.hannover-re.com Hannover Re, with a gross premium of EUR 14.0 billion, is the third-largest reinsurer in the world. It transacts all lines of non-life and life and health reinsurance and is present on all continents with around 2,400 staff. 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+ "Superior"). Please note the disclaimer: www.hannover-re.com/misc/disclaimer-pr-050811 Key figures of the Hannover Re Group (IFRS basis)

in EUR million                  H1/2014   +/- previous  H1/2013(1)  2013
                                          year
Hannover Re Group
Gross written premium            7,064.9         (2.2%)   7,226.7
Net premium earned               5,839.4         (5.7%)   6,191.5
Net underwriting result             14.5        (14.0%)      16.9
Net investment income              707.5          +2.7%     689.0
Operating profit (EBIT)            683.7         (1.4%)     693.0
Group net income                   444.4          +4.9%     423.5
Earnings per share in EUR           3.69          +4.9%      3.51
Retention                          87.7%                    90.0%
Tax ratio                          24.5%                    27.3%
EBIT margin(2)                     11.7%                    11.2%
Return on equity                   14.5%                    14.6%

in EUR million                  H1/2014   +/- previous    H1/2013   2013
                                          year
Policyholders' surplus           8,563.5         (2.3%)             8,767.9
Investments (excl. funds held   32,382.7          +1.6%            31,875.2
by ceding companies)
Total assets                    55,435.4          +2.8%            53,915.5
Book value per share in EUR        53.17          +8.9%               48.83

Non-life reinsurance
in EUR million                  H1/2014   +/- previous    H1/2013   2013
                                          year
Gross written premium            4,078.1         (0.5%)   4,097.1
Net premium earned               3,370.2         (1.0%)   3,403.9
Net underwriting result            158.3        (13.8%)     183.6
Operating profit (EBIT)            521.0         (5.1%)     549.1
Group net income                   347.9         (3.9%)     362.1
Retention                          91.1%                    90.2%
Combined Ratio(3)                  95.0%                    94.4%
EBIT margin(2)                     15.5%                    16.1%

Life and health reinsurance
in EUR million                  H1/2014   +/- previous  H1/2013(1)  2013
                                          year
Gross written premium            2,986.9         (4.6%)   3,129.7
Net premium earned               2,469.0        (11.4%)   2,787.3
Operating profit (EBIT)            154.8         +15.7%     133.8
Group net income                   115.4         +15.9%      99.6
Retention                          83.1%                    89.6%
EBIT margin(2)                      6.3%                     4.8%

1) Adjusted on the basis of IAS 8
2) Operating result (EBIT)/net premium earned
3) Including funds withheld

Key figures of the Hannover Re Group (IFRS basis)

in EUR million               Q2/2014   +/- previous year  Q2/2013(1)  2013
Hannover Re Group
Gross written premium          3,440.5              (0.8%)   3,468.8
Net premium earned             2,926.6              (5.9%)   3,110.7
Net underwriting result           12.0                        (14.5)
Net investment income            346.4               +3.6%     334.3
Operating profit (EBIT)          334.1               +2.3%     326.5
Group net income                 211.5              +10.0%     192.3
Earnings per share in EUR         1.75              +10.0%      1.59
Retention                        87.1%                         90.1%
Tax ratio                        29.8%                         29.0%
EBIT margin(2)                   11.4%                         10.5%
Return on equity                 13.3%                         12.9%

Non-life reinsurance
in EUR million                 Q2/2014   +/- previous year   Q2/2013  2013
Gross written premium          1,970.4               +3.7%   1,899.5
Net premium earned             1,738.6               +1.6%   1,712.0
Net underwriting result           70.7             (17.3%)      85.5
Operating profit (EBIT)          240.5             (17.2%)     290.4
Group net income                 150.1             (19.8%)     187.2
Retention                        91.1%                         90.8%
Combined Ratio(3)                95.6%                         94.8%
EBIT margin(2)                   13.8%                         17.0%

Life and health reinsurance
in Mio. EUR                  Q2/2014   +/- previous year  Q2/2013(1)  2013
Gross written premium          1,470.2              (6.3%)   1,569.4
Net premium earned             1,187.9             (15.1%)   1,398.5
Operating profit (EBIT)           89.2             +183.9%      31.4
Group net income                  72.0             +193.5%      24.5
Retention                        81.7%                         89.3%
EBIT margin(2)                    7.5%                          2.2%

1) Including funds withheld
2) Operating result (EBIT) / net premium earned
3) Annualised

--------------------------------------------------------------------- 06.08.2014 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: Hannover Rück SE Karl-Wiechert-Allee 50 30625 Hannover Germany Phone: +49-(0)511-5604-1500 Fax: +49-(0)511-5604-1648 E-mail: [email protected] Internet: www.hannover-re.com ISIN: DE0008402215 WKN: 840 221 Indices: MDAX Listed: Regulierter Markt in Frankfurt (Prime Standard), Hannover; Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart; Terminbörse EUREX End of News DGAP News-Service --------------------------------------------------------------------- 280926 06.08.2014