Letter from the Chairman of the Executive Board

Dear Shareholders, Ladies and Gentlemen

Jean-Jacques Henchoz,
Chairman of the
Executive Board

As I write these words the world still finds itself facing an exceptional situation. Our sympathies go out to all those who have lost family or friends to the coronavirus or been otherwise impacted. With the vaccine roll-out now underway, there are nevertheless clear signs of hope in the fight against the pandemic.

At Hannover Re, we play our part in mitigating the consequences of Covid-19 by supporting clients in our accustomed role as a partner and by quickly and reliably living up to our coverage commitments. The 2020 financial year with its very particular challenges has once again demonstrated just how robust Hannover Re is. Our business model is designed to manage extreme events. We ensure this through our highly diversified portfolio, excellent risk management, disciplined underwriting policy and successful strategies in the areas of investments and retrocessions. What is more, our outstanding capital strength enables us to support our clients around the world with tailor-made reinsurance solutions.

All of this is backed by our employees, who not only need to deal with the changeover to largely remote working from home but also have to cope with various challenges in their family lives as well. On behalf of the entire Executive Board, I would therefore like to take this opportunity to express even more deeply my gratitude for the enormous dedication shown by my colleagues. It is thanks to them that Hannover Re was able to demonstrate not only its special focus on the customer but also its exceptionally strong profitability and risk-carrying capacity in this extraordinary financial year. Despite considerable payments made to our clients, we were able to report good Group net income of EUR 883 million and even increased our shareholders’ equity.

In the property and casualty reinsurance renewals at 1 January 2021, which are particularly important for our company, we were also able to write appreciably more business at significantly better prices and conditions. After a protracted soft market phase and with interest rates coming under added pressure, we anticipate sustained improvement in prices and conditions on both the insurance and reinsurance markets and for some time now we have already been seeing rising demand for highquality reinsurance protection. Hannover Re is superbly positioned to benefit from these market dynamics.

For this reason, we have decided to omit payment of a special dividend for 2020 and instead make maximum use of the opportunities opening up in the market. For the 2020 financial year the Executive Board and Supervisory Board of Hannover Re will propose to the Annual General Meeting that an increased ordinary dividend of EUR 4.50 per share should be paid out. The resulting payout ratio, at 61 percent of Group net income, is well above the ratio of 35 to 45 percent that we normally aim for.

With a view to ensuring that Hannover Re continues to enjoy above-average profitability, we revised our Group strategy as part of the regular review cycle. In this context, we shall preserve and build on the company’s existing strengths. For our 2021 to 2023 strategy cycle we have identified a number of topics, such as in the areas of talent management, customer-centricity and innovation as well as in the systematic expansion of our footprint in Asia. Through prudent investments we shall thereby ensure that Hannover Re is able to fully leverage its competitive advantages going forward, as it has in the past.

The theme of sustainability will also feature prominently in our new strategy. In this respect, we want to take further actions over the next three years by supporting the expansion of climate-friendly technologies on the underwriting side and in our investments and by scaling back our exposure to technologies that are harmful to the climate. Furthermore, we have set ourselves the goal of increasing our efforts to close the protection gap in developing countries and bringing greater diversity to Hannover Re, especially on the management level.

As the Executive Board of Hannover Re, we would like to thank you most sincerely for the trust that you, our valued shareholders as well as our clients and business partners, place in us each and every day. In times of crisis such as these trust is a precious commodity, and we shall do everything in our power to live up to the trust placed in us by leading Hannover Re securely and with the necessary foresight into a profitable future.

Yours sincerely,

Jean-Jacques Henchoz
Chairman of the Executive Board