Conference Call on Q1/2018 results

Hannover, 7 May 2018

Favourable start to 2018 EBIT increase of +8.5% outperforms NPE growth

Figures in EUR

Strong growth in both business groups and pleasing NII ... ... produces favourable Group net income

Group figures in m. EUR	Q1/2017	Q1/2018	Δ
Gross written premium	4,547	5,345	+17.6%
Net premium earned	3,738	3,999	+7.0%
Net underwriting result	(23)	37	-
- Incl. funds withheld	49	96	+93.7%
Net investment income (NII)	393	391	-0.4%
- From assets under own mgmt.	320	333	+4.0%
- From funds withheld	73	59	-19.5%
Other income and expenses	30	5	-82.5%
Operating profit/loss (EBIT)	400	434	+8.5%
Interest on hybrid capital	(18)	(18)	+0.1%
Net income before taxes	382	416	+8.9%
Taxes	(96)	(117)	+21.9%
Net income	286	299	+4.5%
- Non-controlling interests	22	26	+20.3%
Group net income	265	273	+3.3%
Retention	89.6%	91.3%
EBIT margin (EBIT/Net premium earned)	10.7%	10.8%
Tax ratio	25.1%	28.1%
Earnings per share (in EUR)	2.20	2.27

Favourable operating cash flow in Q1/2018 Valuation reserves and f/x effects dampen increase in AuM

3 Conference Call on Q1/2018 results

Shareholders' equity down due to reduced OCI

Significant top and bottom line growth Increased underwriting result and strong investment income

Property & Casualty R/I in m. EUR	Q1/2017	Q1/2018	Δ
Gross written premium	2,815	3,579	+27.1%
Net premium earned	2,166	2,425	+12.0%
Net underwriting result incl. interest on funds withheld	96	100	+4.0%
Combined ratio incl. interest on funds withheld	95.6%	95.9%	+0.3%p
Net investment income from assets under own management	238	260	+9.2%
Other income and expenses	(24)	(21)	-14.0%
Operating profit/loss (EBIT)	310	339	+9.4%
Tax ratio	24.7%	23.3%	-1.4%p
Group net income	215	235	+9.0%
Earnings per share (in EUR)	1.79	1.95

YTD

GWP f/x-adjusted +38.8%; particularly strong growth in Structured R/I and Worldwide treaty; further growth in other business lines
NPE f/x-adjusted +22.4%
Major losses of EUR 73 m. below budget for Q1/2018 (3.0% of NPE)
Unchanged policy regarding setting of loss reserves
Satisfactory ordinary investment income and positive contribution from realised gains
EBIT margin of 14.0% (Q1/2017: 14.3%), well above target (10%)

Major losses below budget of EUR 167 m. for Q1/2018

* Up to 2011 claims over EUR 5 m. gross, from 2012 onwards claims over EUR 10 m. gross

Overall benign large loss experience in Q1/2018

Catastrophe losses* in m. EUR	Date	Gross	Net
Storm "Friederike", Europe	17. - 18. Jan	47.9	31.5
1 Natural catastrophe		47.9	31.5
1 Property claim		19.1	19.0
1 Credit claim		22.9	22.9
3 Major losses		89.9	73.4

* Natural catastrophes and other major losses in excess of EUR 10 m. gross

Diversified portfolio delivers C/R below MtCR

	2018: Combined Ratio vs. MtCR			margin
Target	North America*	105.9%		11.6%
markets	Continental Europe*	83.9%		26.7%
	Marine	57.5%		54.7%
	Aviation	105.2%		8.0%
Specialty lines	Credit, surety and political risks	82.9%		25.9%
worldwide	UK, Ireland, London market and direct	112.2%		2.5%
	Facultative R/I	99.0%		8.3%
	Worldwide Treaty* R/I	99.6%		9.3%
Global R/I	Cat XL	17.2%		104.7%
	Structured R/I and ILS	98.6%		4.7%
Total		95.9%		14.0%
		0% 20% 40% 60%	80% 100% 120%	140% 160%

MtCR = Maximum tolerable Combined Ratio Combined Ratio

* All lines of Property & Casualty reinsurance except those stated separately

EBIT

Pleasing EBIT growth of 6.9% US mortality results better than expected

Life & Health R/I in m. EUR	Q1/2017	Q1/2018	Δ
Gross written premium	1,732	1,766	+2.0%
Net premium earned	1,572	1,574	+0.1%
Net underwriting result incl. interest on funds withheld	(46)	(4)	-91.9%
Net investment income from assets under own management	81	72	-10.7%
Other income and expenses	55	28	-50.0%
Operating profit/loss (EBIT)	90	96	+6.9%
EBIT margin	5.7%	6.1%	+0.4%p
Tax ratio	28.4%	45.9%	+17.5%p
Group net income	61	51	-15.7%
Earnings per share (in EUR)	0.50	0.42

YTD

GWP f/x-adj. +9.2%, mainly from Asia and United Kingdom
NPE f/x-adjusted growth +7.4%
Improved technical result driven by better morbidity experience
Stable ordinary investment income
Other income lower due to f/x effects; contribution from deposit accounted treaties of EUR 45 m. (Q1/2017: EUR 47 m.)
Targeted EBIT growth of +5% achieved
Tax ratio above long-term average due to changes in business set-up linked to the US tax reform

Net investment income well above 2.7% target for 2018 Unrealised gains lower due to higher interest rates and credit spreads

in m. EUR	Q1/2017	Q1/2018	RoI
Ordinary investment income*	323	317	3.2%
Realised gains/losses	24	49	0.5%
Impairments/appreciations & depreciations	(11)	(11)	-0.1%
Change in fair value of financial instruments (through P&L)	11	6	0.1%
Investment expenses	(28)	(28)	-0.3%
NII from assets under own mgmt.	320	333	3.3%
NII from funds withheld	73	59
Total net investment income	393	391

Unrealised gains/losses of investments	31 Dec 17	31 Mar 18
On-balance sheet	1,159	740
thereof Fixed income AFS	706	334
Off-balance sheet	489	438
thereof Fixed income HTM, L&R	315	290
Total	1,648	1,177

* Incl. results from associated companies

YTD

Ordinary income from fixed income, private equity and real estate exactly at last year´s level; slight decrease due to last year´s dividends from listed equities
Result from realisations out of slightly changed investment strategy
Impairments only taken on private equity; major portion still due to regular depreciation on real estate
Decrease in unrealised gains due to higher USD and GBP interest rate levels as well as higher risk spreads on European and US corporates

Barbell strategy stopped and slight risk reduction ... ... reflected at government bonds and corporates

Asset allocation

Investment category	31 Mar 18
Fixed-income securities	87%
- Governments	32%
- Semi-governments	17%
- Corporates	30%
Investment grade	26%
Non-investment grade	4%
- Pfandbriefe, Covered Bonds, ABS	8%
Equities	2%
- Listed Equity	<1%
- Private Equity	2%
Real estate/real estate funds	5%
Others	1%
Short-term investments & cash	5%
Total market values in bn. EUR	40.9

Economic view based on market values as at 31 March 2018 * Before real estate-specific costs

Target Matrix

Business group	Key figures	Strategic targets for 2018	Q1/2018
Group	Return on investment1)	≥ 2.7%	3.4%
	Return on equity2)	≥ 9.5%	13.0%
	Earnings per share growth (y-o-y)	≥ 5%	3.3%
	Economic value creation3)	≥ 6.5%	n.a.
	Solvency ratio4)	≥ 200%	260.0%
Property & Casualty R/I	Gross premium growth5)	3% - 5%	38.8%
	Combined ratio6)	≤ 96%	95.9%
	EBIT margin7)	≥ 10%	14.0%
	xRoCA8)	≥ 2%	n.a.
Life & Health R/I	Gross premium growth9)	3% - 5%	9.2%
	Value of New Business (VNB)10)	≥ EUR 220 m.	n.a.
	EBIT growth	≥ 5%	6.9%
	xRoCA8)	≥ 2%	n.a.

5-year average return of 10-year German government bonds 5) On average throughout the R/I cycle; at constant f/x rates

6) Incl. expected net major losses 7) EBIT/net premium earned

10) Based on Solvency II principles and pre-tax reporting

1) Excl. effects from ModCo derivatives 2) After tax; target: 900 bps above 5-year average return of 10-year German government bonds

3) Growth in economic equity + paid dividend; target: 600 bps above 4) According to our internal capital model and Solvency II requirements; as of 31 December 2017

8) Excess return on allocated economic capital 9) Organic growth only; annual average growth (5-year period), at constant f/x rates

Outlook

Strong increase in premium mainly due to new business Property & Casualty treaty renewals: 2 January 2018 - 1 April 2018

UY figures at unchanged f/x rates (31 December 2017)

North America

Overall premium slightly increased whilst we reduced the casualty premium due to our conservative approach to the market
Property business continues the firming trend seen at 1 Jan
− Favourable new business opportunities realized
Casualty business still competitive, but original rates stabilising

Japan

Active portfolio management led to reduction in premium
We maintained a very disciplined underwriting approach regarding terms and conditions for Casualty XL treaties

The Caribbean

Significant improvements in proportional and non-prop. treaties
− Reduction in commissions of up to 4%p
− Wide range of price increases in non-proportional from 5% to 60% (risk-adj.)
Cat XL
Ample R/I capacity has stalled the trend of a hardening market seen at 1 Jan renewal
Loss-impacted treaties saw rate increases (+20% to +40%), otherwise flat to +6% risk adjusted
Agricultural business
Successful expansion of Indian book (premium doubled)

Revised guidance for 2018

Hannover Re Group

	Gross written premium1)	more than 10% growth

Return on investment2) 3) at least 2.7%
Group net income2) more than EUR 1 bn.
Dividend payout ratio4) 35% 40% (If comfortable level of capitalisation remains unchanged, this ratio will increase through payment of another special dividend)

1) At unchanged f/x rates

2) Subject to no major distortions in capital markets and/or major losses in 2018 not exceeding the large loss budget of EUR 825 m.

3) Excluding effects from ModCo derivatives

4) Relative to group net income according to IFRS

Overall profitability above margin requirements Good growth opportunities in several lines of business

	Lines of business	Profitability2)
Target	North America3)	+
markets	Continental Europe3)	+
	Marine	+/-
Specialty lines	Aviation	-
	Credit, surety and political risks	+
worldwide	UK, Ireland, London market and direct	+/-
	Facultative reinsurance	+
Global reinsurance	Worldwide treaty3) reinsurance	+/-
	Cat XL	+/-
	Structured reinsurance and ILS	+/-

1) In EUR, development in original currencies can be different

2) ++ = well above CoC; + = above CoC; +/- = CoC earned; - = below Cost of Capital (CoC)

3) All lines of business except those stated separately

Good underlying profitability in L&H business Further strains from legacy US mortality business expected in 2018

	Reporting categories	Profitability2)
Financial solutions	Financial solutions	++
	Longevity	+/-
Risk solutions	Mortality	-
	Morbidity	+/-

1) In EUR, development in original currencies can be different

2) ++ = well above CoC; + = above CoC; +/- = CoC earned; - = below Cost of Capital (CoC)

Rationale for our short- and medium-term outlook

P&C reinsurance L&H reinsurance Investments

Improved rates should support C/R target ≤96% without the need to significantly reduce confidence level of the loss reserves
Strong market position and financial strength enable us to outgrow the market
Attractive earnings contribution from US Financial solutions business
Inforce management in US mortality business could impact EBIT contribution in 2018 due to recaptures
EBIT expectation for 2018: ~EUR 200 m.
Above-target VNB development and inforce management are the basis for IFRS profit growth from 2019 onwards
Normalised ordinary investment income expected at absolute level on average of past 5 years
Medium-term growth expected due to increase in AuM supported by positive cash flow and increasing reinvestment yields

Increasing profits (EBIT) in the medium term

Stable Return on Investment in a low yield environment Positioned to outperform

Appendix

Our strategic business groups at a glance Q1/2018 vs. Q1/2017

		Property & Casualty R/I			Life & Health R/I			Total
in m. EUR	Q1/2017	Q1/2018	Δ	Q1/2017	Q1/2018	Δ	Q1/2017	Q1/2018	Δ
Gross written premium	2,815	3,579	+27.1%	1,732	1,766	+2.0%	4,547	5,345	+17.6%
Net premium earned	2,166	2,425	+12.0%	1,572	1,574	+0.1%	3,738	3,999	+7.0%
Net underwriting result	91	92	+1.2%	(114)	(55)	-52.1%	(23)	37	-
Net underwritung result incl. funds withheld	96	100	+4.0%	(46)	(4)	-91.9%	49	96	+93.7%
Net investment income	243	268	+10.1%	148	123	-17.2%	393	391	-0.4%
From assets under own management	238	260	+9.2%	81	72	-10.7%	320	333	+4.0%
From funds withheld	5	8	+52.7%	68	51	-25.0%	73	59	-19.5%
Other income and expenses	(24)	(21)	-14.0%	55	28	-50.0%	30	5	-82.5%
Operating profit/loss (EBIT)	310	339	+9.4%	90	96	+6.9%	400	434	+8.5%
Interest on hybrid capital	0	0	-	0	(0)	-	(18)	(18)	+0.1%
Net income before taxes	310	339	+9.4%	90	96	+6.9%	382	416	+8.9%
Taxes	(77)	(79)	+3.0%	(25)	(44)	+73.1%	(96)	(117)	+21.9%
Net income	233	260	+11.5%	64	52	-19.4%	286	299	+4.5%
Non-controlling interest	18	25	+41.0%	4	1	-79.7%	22	26	+20.3%
Group net income	215	235	+9.0%	61	51	-15.7%	265	273	+3.3%
Retention	88.6%	91.6%		91.3%	90.7%		89.6%	91.3%
Combined ratio (incl. interest on funds withheld)	95.6%	95.9%		102.9%	100.2%		98.7%	97.6%
EBIT margin (EBIT / Net premium earned)	14.3%	14.0%		5.7%	6.1%		10.7%	10.8%
Tax ratio	24.7%	23.3%		28.4%	45.9%		25.1%	28.1%
Earnings per share (in EUR)	1.79	1.95		0.50	0.42		2.20	2.27

Barbell strategy stopped and slight risk reduction... ...reflected at government bonds and corporates

Asset allocation1)

Investment category	2014	2015	2016	2017	31 Mar 18
Fixed-income securities	90%	87%	87%	87%	87%
- Governments	21%	26%	28%	30%	32%
- Semi-governments	19%	17%	18%	17%	17%
- Corporates	36%	34%	33%	32%	30%
Investment grade	33%	30%	28%	27%	26%
Non-investment grade	3%	4%	4%	5%	4%
- Pfandbriefe, Covered bonds, ABS	14%	10%	9%	8%	2) 8%
Equities	2%	3%	4%	2%	2%
- Listed equity	<1%	1%	2%	<1%	<1%
- Private equity	2%	2%	2%	2%	2%
Real estate/real estate funds	4%	4%	5%	5%	5%
Others	1%	1%	1%	1%	1%
Short-term investments & cash	4%	5%	4%	4%	5%
Total market values in bn. EUR	36.8	39.8	42.3	40.5	40.9

1) Economic view based on market values without outstanding commitments for Private Equity and Alternative Real Estate as well as fixed-income investments

of EUR 1.271,9 m. (EUR 1,201.9 m.) as at 31 March 2018

2) Of which Pfandbriefe and Covered Bonds = 78.8%

Stress tests on assets under own management

Unchanged focus on yields and credit spreads; reduced relevance of equities

Portfolio	Scenario	Change in market value in m. EUR	Change in OCI before tax in m. EUR
Equity (listed and private equity)	-10%	-80	-80
	-20%	-161	-161
Fixed-income securities	+50 bps	-855	-775
	+100 bps	-1,665	-1,509
Credit spreads	+50%		-590

As at 31 March 2018

Fixed-income book well balanced Geographical allocation mainly in accordance with our business diversification

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	Governments	Semi governments	Corporates	Pfandbriefe, Covered bonds, ABS	Short-term investments, cash	Total
AAA	78.6%	64.1%	1.1%	67.2%	-	48.9%
AA	11.7%	23.7%	14.5%	17.2%	-	15.6%
A	5.3%	5.9%	33.5%	6.4%	-	14.9%
BBB	2.5%	1.5%	43.0%	6.7%	-	16.2%
<bbb< td="">	1.9%	4.7%	7.8%	2.4%	-	4.5%	1.9%	4.7%	7.8%	2.4%	-	4.5%
Total	100.0%	100.0%	100.0%	100.0%	-	100.0%
Germany	13.5%	49.4%	4.4%	26.1%	29.3%	19.4%
UK	8.4%	2.3%	8.1%	11.0%	9.6%	7.4%
France	1.1%	1.4%	7.8%	6.3%	0.1%	3.6%
GIIPS	1.0%	1.0%	4.5%	5.4%	0.0%	2.4%
Rest of Europe	2.7%	14.3%	16.0%	18.4%	4.2%	10.5%
USA	59.4%	6.7%	34.4%	9.8%	14.8%	34.9%
Australia	4.0%	7.7%	8.6%	10.9%	7.1%	6.9%
Asia	5.8%	6.3%	5.2%	0.7%	21.1%	6.1%
Rest of World	4.3%	10.8%	11.1%	11.4%	13.8%	8.8%
Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%
Total b/s values in m. EUR	13,038	6,966	11,500	2,989	2,052	36,545

IFRS figures as at 31 March 2018

Currency allocation matches liability profile of balance sheet Duration-neutral strategy applied

Currency split of investments

Modified duration of fixedincome mainly congruent with liabilities
GBP's higher modified duration predominantly due to life business

Modified duration

2017	4.8
2016	5.0
2015	4.4
2014	4.6
2013	4.4
2012	4.5

Modified duration as at 31 March 2018: 4.8

Disclaimer

This presentation does not address the investment objectives or financial situation of any particular person or legal entity. Investors should seek independent professional advice and perform their own analysis regarding the appropriateness of investing in any of our securities.

While Hannover Re has endeavoured to include in this presentation information it believes to be reliable, complete and up-to-date, the company does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such information.

Some of the statements in this presentation may be forward-looking statements or statements of future expectations based on currently available information. Such statements naturally are subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements.

This presentation serves information purposes only and does not constitute or form part of an offer or solicitation to acquire, subscribe to or dispose of, any of the securities of Hannover Re.

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