Performance

The general downslide at the start of the year also impacted the Hannover Re share, which slipped to its lowest point of the year on 27 January 2009 with a closing price of EUR 20.64. However, it was subsequently able to decouple itself from the broad downward trend: initially, the share profited greatly from the outcome of our treaty renewals as at 1 January, and it then enjoyed lively demand following its surprising inclusion in Germany's bellwether DAX index. Even at the time, though, it was evident that inclusion in the DAX was due not only to our own strength, but more to the weakness of many major stocks as a consequence of the economic crisis.

In early May the publication of very good figures for the first quarter prompted another sharp upward surge, which was then followed by a period of consolidation. The unremarkable third quarter of 2009 – especially with an eye to hurricane events – as well as the very pleasing figures for the second quarter, which were published in early August, ultimately led to higher price targets for our share. Our share price climbed vigorously, reaching EUR 34.65 on 14 October – its high for the year. The exit from the DAX on 21 September, which was only to be expected after the general economic recovery, had no significant effect on the share price.

Many analysts anticipated difficult treaty renewals at year-end, prompting a consolidation of the Hannover Re share in the range of EUR 32 to 34. Closing at EUR 32.71 on 30 December 2009, our share posted a performance of EUR 10.21 or 45% in the year under review, hence comfortably outperforming the DAX and MDAX. The price decline of the previous year was thus more than offset.

In a three-year comparison (see chart) the Hannover Re share including reinvested dividends delivered a performance of +4.5%. It thus clearly surpassed the DAX and MDAX. We fell only marginally short of our strategic objective of outperforming the weighted ABN Amro Global Reinsurance Index in a three-year comparison.

The market capitalisation of the Hannover Re Group totalled EUR 3,945 million as at year-end. With a free float market capitalisation of EUR 1,945 million our company ranked eighth in the MDAX at the end of December, while our share came in at number 5 according to the criterion “Trading volume over the past 12 months” with a volume of EUR 3,586 million for the year. According to both criteria the Hannover Re Group thus ranks among the 40 largest listed companies in Germany.

With a book value per share of EUR 30.78 the Hannover Re share showed a price-to-book (P/B) ratio of 1.1 as at year-end 2009; compared to the average MDAX P/B ratio of 1.4 the share is thus quite moderately valued.

As far as the dividend for the 2009 financial year is concerned, we intend to propose to our shareholders at the Ordinary General Meeting on 4 May 2010 that an amount of EUR 2.10 per share be distributed. Based on the yearend closing price of EUR 32.71, this produces a dividend yield of 6.4%.