Sustainability Report 2015
Equity story
Going about things differently to others – that is exactly what sets us apart. And it has done from the very outset. With lean structures and an efficient organisation, it has taken the company just 50 years to grow into a well-diversified, globally operating reinsurer of above-average profitability.
Hannover Re, with gross premium of around EUR 17 billion, is the third-largest Reinsurer in the world. It transacts all lines of proPERty & casualty and life & health reinsurance and is present on all continents with around 2,500 staff. Established in 1966, the Hannover Re Group today has a network of more than 100 subsidiaries, branches and representative offices worldwide. The Group’s German business is written by the subsidiary E+S Rück.
Somewhat different
Right from its earliest days Hannover Re was a somewhat different reinsurer: it had to secure a footing in a market dominated by long-standing players; it operated with tight capital resources and recruited its staff on a thin labour market. Drawing on our quick, flexible and undogmatic business approach, we evolved into a professional reinsurer with extensive specialist expertise. To this day we still operate with the lowest administrative expense ratio in the industry – a competitive edge that enables us to persevere even in protracted soft market phases. Long embodied in our daily practice, the claim to be "somewhat different" has served as an expression of the entire Hannover Re Group’s self-image since 2005.
In order to grow Hannover Re had no choice but to break new ground. It took on a pioneering role in many areas. It was one of the first companies in Europe to receive an S&P rating and the first German reinsurer to adopt capital-market-oriented accounting principles in its financial reporting. In 1994 it was the first reinsurer to securitise natural catastrophe risks for the capital market.
In 2015 the Hannover Re Group received approval from the Federal Financial Supervisory Authority (BaFin) to calculate its solvency requirements on the basis of its internal capital model upon implementation of Solvency II. In contrast to a standard model, our internal capital model enables us to optimally map the risk structure of our reinsurance business. We are thus in a position to identify attractive business while at the same time optimally allocating capital to business groups, regions and lines and leveraging potential avenues for diversification. In so doing, we remain able to efficiently fulfil our supervisory capital requirements under Solvency II.
Our ideas and know-how make it possible for our partners to open up new markets. Energy-saving warranties in building rehabilitation and bonus programmes for a healthy lifestyle may be cited as just two examples.
A highly profitable reinsurer
A special hallmark of our business philosophy is that we do not fall back on standardised reinsurance solutions. We offer our clients financing solutions and customised concepts designed to provide relief for capital and reserves that are individually tailored to their needs.
For the benefit of our clients and shareholders we achieve competitive advantages by transacting our insurance business with lower management expenses than our peers. This enables us to deliver a profit that is above the average for the sector, while at the same time providing our clients with reinsurance protection on competitive terms.
By assuming risks through the largely uncorrelated activities of our Property & Casualty and Life & Health business groups in all lines of business and based on our global presence, we enjoy optimal diversification. Besides our capital management, this is the key to our comparatively low cost of capital.
In order to ensure our long-term financial strength, we steer our business towards maintaining a capital base in line with our long-term business opportunities. We achieve this goal by managing the annual volatility of our earnings through the practice of vigorous risk management.
Long-term success in a competitive business
Hannover Re's vision is "Long-term success in a competitive business". In this context, we ensure a long-term economic orientation and successful realisation of our vision through our strategy. Ten principles form the basis of our strategic actions. We are supported in operational implementation by our holistic management system Performance Excellence 2.0. We use key indicators in our target matrix to map the status of goal accomplishment. Details are published in the respective chapters of the Sustainability Report 2015 and in our Strategy Brochure.