Hannover Rück (OTCPK:HVRR.Y) 2025 Earnings Call Presentation

Financial Performance and Targets - Hannover Re is on track to achieve its targets for the current strategy cycle, with an ordinary dividend exceeding the prior year, CSM growth exceeding 2%, EBIT growth exceeding 5%, Return on Equity exceeding 14%, and a solvency ratio exceeding 200%[8] - The company's SII ratio stood at 261% in 1H/2025, indicating a strong balance sheet[36] - Hannover Re's average Return on Investment (RoI) demonstrates industry-leading performance compared to its peers[11, 12] Strategic Focus and Competitive Advantages - The company emphasizes a lean operating model as a competitive advantage, reflected in a cost ratio of 32% in 2024[17, 18] - Revenue per employee in 2024 was 68 million EUR, outperforming peers[19, 20] - Hannover Re focuses on reinsurance to streamline IT infrastructure and drive automation[23] Growth and Market Position - The company's strong client relationships provide an excellent basis for further growth, with a 10-year average top-line growth of 10% and bottom-line growth of 9%[28] - In P&C, the company sees continued attractive market conditions, increased appetite for NatCat, and low exposure to pricing cycle[33] - In L&H, the company is further leveraging its strong position in Financial Solutions and Longevity[31] Investment Strategy and Currency Management - The company's resilient portfolio provides reliable and low-volatile investment returns across market cycles[46] - The fixed-income book yield is expected to benefit from higher reinvestment yields by approximately 10 bps per annum[53] - Currency risks are well managed to protect net asset value and Solvency II ratio, with a diversified currency mix in investments as of June 30, 2025, including 45% in USD and 28% in EUR[60, 62] P&C Reinsurance Insights - Diversification is key to reducing the cost of capital and earnings volatility, with a 34% diversification on main risk categories[76, 77] - The company's market share reduces from 80% to 34% in the 250-year US West Coast earthquake scenario due to retrocessions[81] - The average large-loss experience from natural catastrophes is 12% below budget[103] L&H Reinsurance Insights - Consistently positive Reinsurance Service Result (RSR) demonstrates earnings strength and stability[121, 139] - Strong Contractual Service Margin (CSM) creation will lead to future earnings growth[140] - Change in Estimates and Exp Var overcompensating LC[133]