Dividend per share in EUR 1.00 +5.3% 0.95 0.85 – 1.211)
The unweighted “Reactions” World Reinsurance Index combines all listed reinsurers worldwide. Our strategic objective is to achieve an increase in the share price which on a three-year moving average surpasses the performance of this benchmark.
In addition to these activities we attach considerable importance to keeping all our shareholders and analysts constantly updated on significant news affecting Hannover Re. Upon publication of each quarterly financial statement as well as on special occasions we hold telephone
USA American Depositary Receipts (Level 1 ADR Program), OTC (over-the-counter market)
Annual General Meeting: 14 June 2005, 10:30 a.m. Hannover Congress Centrum Kuppelsaal Theodor-Heuss-Platz 1–3 30175 Hannover, Germany
• Accounting systems that satisfy internal and external reporting requirements and support our business processes 8. Human resources policy • Attractive jobs for ambitious, performanceminded employees who identify with our corporate objectives
There can be no doubt that the year under review was one of the most eventful in recent memory: all four of our business groups had to cope with exceptional events, most notably the four hurricanes in the Caribbean and the United States with associated heavy losses for the insurance and reinsurance industries. Many market players spoke of the heaviest year of losses in reinsurance history. Market estimates put the strains from natural catastrophe events alone at around EUR 30 billion.
The year under review progressed highly successfully in our domestic market for both insurers and reinsurers alike. Scarcely any appreciable major losses were recorded in Germany.
As a further step, we analysed the rate movements and claims trends in all segments and parted with business in those segments that no longer satisfied our profitability criteria. These include, inter alia, property risks of large enterprises, treaties in the energy sector and directors' and officers' liability covers.
• Development of the risk associated with the persistency of the business in force and the credit risk
Our Sydney-based subsidiary Hannover Life Re Australasia is the largest reinsurer on the Australian continent.
Towards the middle of the year we concluded a sizeable block assumption transaction with a prominent South African life insurer that is one of the market leaders for term life policies.
Hannover Life Re Africa defends its position as Africa's second-largest life reinsurer
Hannover Life Re America specialises in the acquisition of block assumption transactions (BATs)
Gross premiums grew by 19.7% to EUR 240.7 million. Thanks to a highly gratifying claims experience in the life and critical illness lines as well as a markedly improved experience in the traditionally difficult disability pension line, the company reported an impressive underwriting profit. However, a non-recurring charge of around EUR 4 million was taken as a consequence of the reorganisation and simplification of a quota share retrocession treaty. The resulting operating profit (EBIT) amounted to EUR 13.8 million (EUR 12.2 million).
Equity investments were made predominantly in index-tracking investment instruments from the Eurozone and the USA. By using targeted option strategies we exploited market volatilities for the purposes of portfolio optimisation.
In accordance with the accounting principles prescribed by the Securities and Exchange Commission (SEC) for enterprises that draw up US GAAP-compliant financial statements, we test for impairment on a quarterly basis all securities listed at more than 20% under their book value. With an eye to our cautious positioning vis-à-vis the equity markets, we wrote these securities down to fair value almost without exception. Total write-downs taken on exchange-listed equities in this way amounted to EUR 13.3 million in the year under review, compared to EUR 65.3 million in the previous year. The balance of unrealised gains on our equity portfolio totalled a gratifying EUR 85.4 million (EUR 59.0 million) as at the end of the reporting period. We realised net gains of EUR 67.7 million on the sale of shares in the year under review.
Technical operating risks here may be incorrect pricing assumptions, inaccurate estimations of the claims experience and an associated failure to establish adequate reserves or shortcomings in accumulation control.
Risks in the investment sector consist most notably of market, credit and liquidity risks. The Hannover Re Group has adopted detailed investment guidelines applicable Group-wide, compliance with which is constantly monitored. On the basis of an asset/liability management approach and making allowance for the overall entrepreneurial risk, the basic parameters for the weighting of assets are defined in the investment guidelines valid throughout the Group.
Government bonds Securities issued by Corporate bonds Asset-backed semi-governmental entities securities * Securities from investment funds were allocated to the appropriate categories with their specific rating.
The overriding goal of our human resources development is to ensure that the Group continues to function and remain competitive within a constantly changing environment. The following measures enable us to achieve this objective: • needs-oriented enhancement of employee skills,
In view of the expected development of our business groups and the economic climate, we are optimistic that we can substantially increase our profitability. We expect to generate consolidated net income of EUR 430 to 470 million in 2005, or earnings of between EUR 3.60 and 3.90 per share. As always, this projection is subject to the proviso that major loss expenditure remains within the bounds of the multi-year average and there are no unexpected downturns on capital markets.
Reinsurance recoverables on benefit reserve 5.2 95 004 206 717 206 717
Change in cash and cash equivalents according to cash flow statement 94 676 (285 732) (286 710)
In December 2004 the FASB published SFAS 123 (revised 2004) "Share-Based Payment" (SFAS 123R). SFAS 123R provides rules for the accounting of transactions in which a company issues its own equity instruments as compensation for goods or services. In addition, SFAS 123R provides rules for the accounting of transactions in which a company incurs liabilities from the procurement of goods or services, the amount of which depends on the fair value of its own equity instruments or which can be paid for through the issuance of its own equity instruments. This standard does not give rise to any significant implications for the consolidated financial statement. The reader is referred to our remarks in section 6.3 "Stock appreciation rights".
International Insurance Company of Hannover Ltd., Virginia Water/United Kingdom 2) 100.00 GBP 73 475 2 293
Reserve as at 31 December of year under review (gross) 18 246 946 18 703 170
Expenditures on personnel The expenditures on insurance business, claims expenses (claims settlement) and expenditures on the administration of investments include the following personnel expenditures:
As security for our technical liabilities, various financial institutions have furnished sureties for our company in the form of letters of credit. The total amount of the letters of credit as at the balance sheet date was EUR 2,663.7 million.
Outstanding capital commitments with respect to special investments exist in the amount of EUR 88.8 million (EUR 62.8 million) for E+S Rückversicherung AG and EUR 232.4 million (EUR 115.4 million) for Hannover Re. These involve primarily private equity funds and venture capital firms in the form of private limited companies.
Our audit, which also extends to the group management report prepared by the Company's management for the business year from 1 January to 31 December 2004, has not led to any reservations. In our opinion on the whole the group management report provides a suitable understanding of the Group's position and suitably presents the risks of future development. In addition, we confirm that the consolidated financial statements and the group management report for the business year from 1 January to 31 December 2004 satisfy the conditions required for the Company's exemption from its duty to prepare consolidated financial statements and the group management report in accordance with German law.
In 2004, as in previous years, we devoted special attention to the areas of Investor Relations and financial communication. Thus, a broad range of activities were undertaken, including: • We again organised six international teleconferences for analysts and institutional investors for the purpose of explaining our quarterly financial statements, discussing the underlying financial data as well as our business policy and answering questions. The accompanying presentations were broadcast live over the Internet.
• In what has already become a regular fixture, our one-day seminar for analysts and investors was held in London to meet the demands of the financial market for basic background information.
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