Annual Report 2018

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10 year overview
Stock markets Share performance Dividend Annual General Meeting Investor relations activities Sustainability reporting and ratings Shareholding structure Analyst ratings Share data
Foundations of the Group
Business model Management system
Value-based management Operational management system
Research and development
Report on economic position
Macroeconomic environment
Macroeconomic climate Industry-specific environment
Business development
Property & Casualty reinsurance Life & Health reinsurance Investments Total result
Overall assessment of the business position Results of operations
Property & Casualty reinsurance Life & Health reinsurance Investments
Financial position and net assets
Investment policy Investments Analysis of the capital structure Management of policyholders’ surplus Group shareholders’ equity Financing and Group debt Analysis of the consolidated cash flow statement Financial strength ratings Information pursuant to § 315
Information on Hannover Rück SE
Results of operations Development of the individual lines of business Assets and financial position Risks and opportunities Other information Outlook
Combined non-financial information statement
Introduction Description of the business model Group and sustainability strategy Responsible corporate governance Compliance Risk management Stakeholder dialogue Risk expertise and risk assessment Sustainable insurance solutions ESG criteria in asset management Customer orientation and satisfaction Executive development / Employee advancement Employee retention Diversity Operational environmental protection Supplier management
Opportunity and risk report
Risk report
Strategy implementation Major external factors Risk capital Risk management Risk management system Internal control system Risk landscape of Hannover Re Internal risk assessment Underwriting risks in property and casualty reinsurance Underwriting risks in life and health reinsurance Market risks Counterparty default risks Operational risks Other risks
Opportunity report
Overall assessment by the Executive Board
Enterprise management
Declaration on Corporate Governance
Corporate Governance Declaration of Conformity Further enterprise management principles Working practice of the Executive Board and Supervisory Board Compliance Risk monitoring and steering Diversity concept
Remuneration report
Remuneration Executive Board Remuneration Supervisory Board Loans to members of the management boards and contingent liabilities Securities transactions and shareholdings Remuneration of staff and senior executives
Outlook
Forecast
Economic developments Property & Casualty reinsurance Life & Health reinsurance Investments Outlook 2019
Consolidated balance sheet Statement of income Statement of comprehensive income Statement of changes in shareholders’ equity Cash flow statement Notes Independent Auditor's Report Report by the independent auditor Responsibility statement
Report of the Supervisory Board Supervisory Board Members
Global presence Strategic business groups

Results of operations

The 2018 financial year was a pleasing one for Hannover Rück SE. The gross premium of Hannover Rück SE in total business grew by 10.1% to EUR 14.6 billion (previous year: EUR 13.3 billion). The level of retained premium retreated from 78.4% to 71.8%. Net premium earned increased by 2.0% to EUR 10.4 billion (EUR 10.2 billion).

Condensed profit and loss account of Hannover Rück SE
in EUR thousand20182017
Earned premiums, net of retrocession10,412,94110,208,864
Allocated investment return transferred from the non-technical account, net of retrocession203,602185,841
Other technical income, net of retrocession174–
Claims incurred, net of retrocession7,787,3527,636,262
Changes in other technical provisions, net of retrocession(144,470)(177,799)
Bonuses and rebates, net of retrocession(50)(139)
Operating expenses, net of retrocession2,685,1182,593,164
Other technical charges, net of retrocession23277
Subtotal(196)(12,658)
Change in the equalisation reserve and similar provisions25,270165,944
Net technical result25,074153,286
Investment income1,450,0181,302,933
Investment charges218,338105,401
Allocated investment return transferred to the technical account(204,465)(186,558)
Other income162,730176,862
Other charges345,311373,123
Profit or loss on ordinary activities before tax869,708967,999
Taxes on profit and income and other taxes204,353124,599
Profit for the financial year665,355843,400
Profit brought forward from previous year671,014431,014
Allocations to other retained earnings369414
Disposable profit1,336,0001,274,000

The underwriting result (before changes in the equalisation reserve) improved in the year under review from EUR -12.7 million to EUR -0.2 million. Following a withdrawal of EUR 165.9 million in the previous year, an amount of EUR 25.3 million was withdrawn from the equalisation reserve and similar provisions in the year under review.

After a thoroughly moderate major loss experience in the first half of 2018, the volume of losses incurred in the third and especially the fourth quarter was significantly higher. The burden of large losses consequently came in slightly above the large loss budget that we had set aside. The total net expenditure on major losses incurred by Hannover Rück SE was EUR 536.6 million (EUR 689.8 million).

Ordinary investment income including deposit interest was clearly higher than in the previous year at EUR 1,234.0 million (EUR 1,002.9 million), principally due to increased distributions from our investment holding companies as well as stronger ordinary income from fixed-income securities. Despite the continued low level of interest rates, the latter showed a pleasing rise to EUR 458.6 million (EUR 419.0 million) based on the substantial asset volume. Net gains of EUR 140.9 million (EUR 247.9 million) were realised on disposals. The sharp decline can be attributed for the most part to the liquidation of our portfolio of non-strategic listed equities in the previous year. Write-downs of EUR 88.4 million (EUR 20.7 million) were taken on investments, primarily on bearer debt securities held as current assets. The write-downs contrasted with write-ups of EUR 1.2 million (EUR 13.7 million) that were made on assets written down in previous periods in order to reflect increased fair values.

All in all, the net investment result climbed to EUR 1,231.7 million (EUR 1,197.5 million). The balance of other income and charges changed from EUR -196.3 million to EUR -182.6 million.

The profit on ordinary activities decreased to EUR 869.7 million (EUR 968.0 million). The year under review closed with a profit for the year of EUR 665.4 million (EUR 843.4 million).

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