Annual Report 2016

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Property & Casualty reinsurance Life & Health reinsurance Investments Total result
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Total result

The gross premium in our total business decreased by 4.2% as at 31 December 2016 to EUR 16.4 billion (EUR 17.1 billion). At constant exchange rates the decline would have been 2.1%. This is in line with our expectation of a stable or slightly lower business volume. The level of retained premium climbed to 89.3% (87.0%). Net premium earned consequently fell by just 1.2% to EUR 14.4 billion (EUR 14.6 billion). At unchanged exchange rates growth of 1.0% would have been booked.

Despite the elimination of a non-recurring effect from the previous year in an amount of EUR 39 million, we generated an operating profit (EBIT) of EUR 1,689.3 million in the year under review. This was only narrowly below the level of the record result posted in 2015 (EUR 1,755.2 million). Group net income improved on the previous year to EUR 1,171.2 million (EUR 1,150.7 million), thereby clearly surpassing our guidance for Group net income of at least EUR 950 million. Earnings per share for the Hannover Re Group amounted to EUR 9.71 (EUR 9.54).

The equity position remains highly robust: the equity attributable to shareholders of Hannover Re increased to EUR 9.0 billion (EUR 8.1 billion) as at 31 December 2016. We nevertheless generated another pleasing return on equity of 13.7% (14.7%). The book value per share reached EUR 74.61, beating the previous year’s record high (EUR 66.90). All in all, Hannover Re largely achieved the forecasts provided for the 2016 financial year as shown in the following table “Business development in the year under review”.

The total policyholders’ surplus, consisting of shareholders’ equity, non-controlling interests and hybrid capital, amounted to EUR 11.2 billion (EUR 10.3 billion) as at 31 December 2016.

With the publication of the annual financial statement we are also releasing the capital adequacy ratio of the Hannover Re Group calculated in accordance with the requirements of Solvency II. It increased relative to the previous year to reach a level of 230% as at 31 December 2016 (30 September 2015: 221%).

Business development in the year under review
Forecast 2016Target attainment 2016
Gross premium growth (Group)stable to slightly lower1-2.1% at constant exchange rates
-4.2% not adjusted for currency effects
Gross premium growth for
Property & Casualty reinsurance		slightly lower1-0.2% at constant exchange rates
-1.4% not adjusted for currency effects
Gross premium growth for
Life & Health reinsurance		slight increase, stable1,2-4.3% at constant exchange rates
-7.5% not adjusted for currency effects
Return on investment3~ 2.9%3.0%
Group net income~ EUR 950 million4EUR 1,171.2 million
1 At constant exchange rates
2 Organic growth only
3 Excluding ModCo derivatives
4 Assuming stable capital markets and / or major loss expenditure in 2016 that does not exceed EUR 825 million
Investments
Overall assessment of the business position
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