Hannover Rück (OTCPK:HVRR.Y) 2025 Capital Markets Day Transcript

Hannover Rück 2025 Capital Markets Day Summary Company Overview - Company: Hannover Rück (OTCPK:HVRR.Y) - Event: 2025 Capital Markets Day - Date: October 09, 2025 Key Points Industry Insights - The reinsurance industry is experiencing evolving needs due to geopolitical changes, climate change, and increasing loss trends, which heightens the demand for reinsurance protection and managing uncertainty [26][24][23] - Hannover Rück emphasizes its commitment to a lean operating model and pure-play reinsurance, which differentiates it from competitors [26][15] Financial Performance and Strategy - The company has successfully delivered on its financial ambitions for 2024 and is on track to meet targets for 2025, with strong results across all profit engines: Property & Casualty (P&C), life and health, and investments [10][11] - The net income target has been continuously increased, with only two missed guidance instances in the last ten years [11][12] - A robust balance sheet has been built, ensuring earnings growth even during softer market periods [12][10] Investment Strategy - Hannover Rück maintains a stable strategic asset allocation, focusing on high-quality fixed income, which constitutes over 85% of the portfolio [33] - The average book yield is expected to increase by approximately 10 basis points in the coming years due to the current interest rate environment [35] - Hidden losses on the balance sheet have been reduced significantly, with a proactive approach to realizing these losses to enhance book yield [36] Dividend Policy - The payout ratio will be increased to around 55%, reflecting a sustainable run rate while ensuring the ability to finance growth ambitions [25][64] - Special dividends will only be considered in extraordinary circumstances, not as a regular occurrence [68] Client Relationships and Market Position - Hannover Rück has a strong focus on deepening partnerships with clients, which has been a key driver of growth over the past 5 to 10 years [27][55] - The company has increased its risk appetite in natural catastrophe (NatCat) business, aligning with strong market demand [20] Currency Management - Approximately 45% of investments are US dollar-denominated, and the company employs a clear strategy to manage currency risks, aiming to protect economic value and limit volatility [43][44] - New hedge accounting measures have been implemented to reduce IFRS accounting volatility related to currency exchange rate changes [48] Future Outlook - Hannover Rück is confident in its ability to continue growing its book of business and earnings, even in softer market cycles, supported by a strong capitalization and balance sheet [27][23] - The company plans to provide guidance for 2026 in November, indicating ongoing growth opportunities in both P&C and life and health sectors [56][66] Additional Insights - The company’s culture emphasizes empowerment, accountability, and a strong sense of purpose, which is crucial for attracting and retaining talent [12][13] - The focus on simplicity in organizational setup and processes enhances decision-making speed and client satisfaction [14][15] This summary encapsulates the key insights and strategic directions discussed during the Hannover Rück 2025 Capital Markets Day, highlighting the company's robust performance, investment strategies, and commitment to client relationships in a changing market environment.