Annual Report 2010 - Hannover Re

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Management report of the Hannover Re Group The 2010 financial year was a very pleasing one for Hannover Re. We generated vigorous growth and our highest Group net income to date of EUR 749 million. Although our operational business was impacted by a heavy major loss incidence and the sale of our US subsidiary Clarendon Insurance Group, this was more than offset by a special effect associated with the release of provisions for tax proceedings that have now been resolved. We accomplished our goals for the year under review and are confident of doing so in 2011 as well.
Macroeconomic climate The global economic recovery continued in 2010. Yet after initially vigorous increases in the winter half-year of 2009/2010, the pace of the economic upturn slowed somewhat. The picture varied widely, however, in the individual economic regions and countries. In emerging markets – especially in Asia – the expansion began to flatten out even as the year got underway; by this time, though, growth levels were for the most part already back to those seen in past years. The industrialised nations only began to lose impetus in the middle of the year, although they did not quite manage to regain precrisis levels. Persistent structural problems in the financial and real estate sectors as well as strong pressure to consolidate prevented a swift return to earlier heights. USA The economic recovery in the United States weakened appreciably as the year progressed. Key factors in this change of pace were, in the first place, foreign trade – which delivered a clearly negative growth contribution – and, secondly, the declining impetus from economic stimulus programmes. Against this backdrop, the structural problems remained considerable: the level of debt carried by private households was and still is high; what is more, the crisis in the real estate sector continued unabated. The state of the labour market consequently showed no signs of easing; the unemployment rate of 9.8% was exceptionally high, reaching a historic record level among the long-term unemployed. Private consumption, one of the mainsprings of the US economy, was therefore muted, and a sustained return to economic growth failed to materialise. Overall, gross domestic product – after contracting in 2009 – moved back into growth in the year under review, albeit only to the tune of 2.9%. Europe The pace of economic growth in the Eurozone returned to normal. Gross domestic product for 2010 climbed by 1.8%. The speed of the economic recovery varied widely in the individual member states, however. Export-oriented countries with relatively healthy public finances, such as Germany, the Netherlands, Finland and Austria, profited from the upswing in world demand. Their growth rate was above-average by Eurozone standards. The situation in Greece, Ireland, Portugal and Spain was quite different. In response to their borrowing difficulties these countries were obliged to adopt stringent austerity measures, which proved to be a drag on business activity. France, Italy and Belgium, on the other hand, recorded economic growth in line with the Eurozone average. While the employment situation in Germany, Finland and the Netherlands continued to improve, jobless figures elsewhere – including Spain and Ireland – rose sharply. Germany In Germany the economic upturn continued at a rapid tempo in the year under review. Real gross domestic product grew by 3.6% in the full year. Having been the tailender for many years in the Eurozone, the German economy thus delivered aboveaverage growth contributions to gross domestic product within the area of the single currency. The most significant growth engine in the year under review was the domestic economy. This can be attributed to the greater incentive to invest that resulted from the historically low interest rate level. Private consumption rose for the third time in succession in the summer quarter, although public-sector consumption surged even more strongly. Thanks to the economic upturn the state of the labour market continued to ease in 2010. Asia China continued to see very vigorous expansion, although the pace slowed somewhat in the course of the year. This was likely due first and foremost to the government’s efforts to prevent overheating of the real estate market and counter excessive lending with a considerably more restrictive monetary policy. Gross domestic product nevertheless grew by 10.3%. All in all, growth prospects remain positive. In Japan the recovery that followed the sharp economic downturn associated with the financial market crisis was sustained. The pace of growth nevertheless slowed appreciably over the course of the year. This was due in part to the ending of government assistance measures; as a further factor, the economic slowdown in major export markets and the stronger yen led to a decline in exports. Capital markets Against the backdrop of the after-effects of the financial and economic crises, the market climate for equities was still characterised by considerable volatility and uncertainty. Among other things, the overextended state of national budgets in several European countries prompted marked fluctuations during the year. Yet despite this volatile climate European equity markets remained relatively stable. The German market, in particular, was able to divorce itself from the broader con- Management report Hannover Re Group annual report 2010 Macroeconomic climate Management report 17
Page 1 and 2: Annual Report 2010
Page 3 and 4: The Hannover Re Group America Europ
Page 5 and 6: Contents For our investors 2 - 15 L
Page 7 and 8: Our operational business was impact
Page 9 and 10: Our life and health reinsurance bus
Page 11 and 12: years will generate increasing inco
Page 13 and 14: For our investors Seated from left
Page 15 and 16: The market capitalisation of the Ha
Page 17 and 18: Basic information Securities identi
Page 19: Strategic objectives 1. Profitable
Page 23 and 24: Business development We are thoroug
Page 25 and 26: Non-life reinsurance Accounting for
Page 27 and 28: Along with the aforementioned natur
Page 29 and 30: The establishment of the Federal In
Page 31 and 32: The Die beste volatility Volatilit
Page 33 and 34: Credit and surety Breakdown of gros
Page 35 and 36: Thanks not least to a new branch of
Page 37 and 38: The insurance sector continues to b
Page 39 and 40: have enlarged our portfolio. In the
Page 41 and 42: anch in Shanghai concentrates on bu
Page 43 and 44: Ageing macht creates Märkte market
Page 45 and 46: Key figures for life and health rei
Page 47 and 48: new business. Against this backdrop
Page 49 and 50: The rating agency Standard & Poor
Page 51 and 52: Rating of fixed-income securities
Page 53 and 54: In 2009 Hannover Re launched anothe
Page 55 and 56: Solvency For our company II heißt
Page 57 and 58: Social commitment Hannover Re’s c
Page 59 and 60: Opportunity and risk report Overrid
Page 61 and 62: Available capital and required risk
Page 63 and 64: Internal risk management and contro
Page 65 and 66: The table below lists the catastrop
Page 67 and 68: Sensitivity analysis of the Market
Page 69 and 70: events. Further significant risk ma
Page 71 and 72:
Gross written premium retained in %
Page 73 and 74:
Strategic risks derive from the ris
Page 75 and 76:
Performance Excellence Check The PE
Page 77 and 78:
Financial position Asset / liabilit
Page 79 and 80:
Financing and Group debt In additio
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Financial strength ratings of subsi
Page 83 and 84:
Naturkatastrophen Natural catastrop
Page 85 and 86:
Corporate Governance The principles
Page 87 and 88:
for orderly performance of their ta
Page 89 and 90:
in question. With the aim of making
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The Annual General Meeting of Hanno
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Measurement bases/conditions of pay
Page 95 and 96:
Individual remuneration received by
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motivation, customer satisfaction,
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eversal. Nevertheless, we anticipat
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of demand and the diversification o
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Profit and growth targets for 2011
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as at 31 December 2010 Liabilities
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Consolidated statement of comprehen
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Consolidated cash flow statement 20
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Figures in EUR thousand 1.1.- 31. 1
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as at 31 December 2010 Life/health
Page 115 and 116:
as at 31 December 2010 Life/health
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1. Company information The parent c
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Standards Applicable to financial y
Page 121 and 122:
Impairments: as at each balance she
Page 123 and 124:
asis of a five-year detailed plan a
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come. Currency translation differen
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The projections, which cover variou
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The following list of shareholdings
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Name and registered office of the c
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Name and registered office of the c
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Investments Within the scope of its
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5. Notes on the individual items of
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The stated maturities may in indivi
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Amortised cost, unrealised gains an
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Carrying amounts before impairment
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Breakdown of investments by currenc
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In addition, we held indirect real
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Development of level 3 financial in
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Development of deferred acquisition
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This item principally consists of t
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Technical provisions in EUR thousan
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Net loss reserve and its run-off in
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Liabilities in liability and motor
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From 1997 onwards it has been possi
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The recognised provision for pensio
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in EUR thousand Other reclassificat
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Debt and subordinated capital in EU
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Furthermore, a long-term unsecured
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6.2 Investment income Investment in
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6.3 Reinsurance result Reinsurance
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Tax-relevant bookings on the Group
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The following table presents a reco
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Maturity structure of derivative fi
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Business assumed and ceded in Germa
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last twenty trading days prior to t
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On this basis the aggregate provisi
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7.7 Contingent liabilities and comm
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7.11 Events after the balance sheet
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Responsibility statement To the bes
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ated by a reinsurance subsidiary do
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- in each case drawn up as at 31 De
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Branch offices and subsidiaries of
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Spain United Kingdom USA HR Hannove
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Corporate Governance: serves to ens
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Life and health (re-)insurance: col
Page 205 and 206:
Segmental reporting: presentation o
Page 207 and 208:
Financial calendar 2011/2012 9 Marc
Page 209 and 210:
Contact information Corporate Commu
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Annual Report 2010 - Hannover Re

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