Hannover Rueck SE

Earnings Release • Aug 4, 2016

Conference Call on Half-yearly Report 2016

Hannover, 4 August 2016

Half-year results in line with full-year targets ... ... but Q2/2016 performance weaker than previous quarters

Group
Gross written premium:  Net premium earned: 		EUR 8,284 m. (-3.5%) EUR 7,167 m. (+2.1%)	GWP slightly down in line with expectations (f/x  adjusted -1.5%); NPE f/x-adj. growth of 4.3%
EBIT:  Group net income: 		EUR 745 m. EUR 486 m.	EBIT and net income benefitting from good  investment income and solid results from L&H as well as acceptable P&C underwriting results
RoE: 		11.8%	RoE 	remains above our minimum target
Book value per share: 		EUR 69.83		Shareholders' equity up by 4.4%, despite
Shareholders' equity: 		EUR 8,421 m.		dividend payment in Q2/2016 driven by net income and strong increase in valuation reserves
Property & Casualty R/I		Life & Health R/I		Investments
EBIT:	EUR 561 m.	EBIT:	EUR 179 m.	NII: RoI from AuM:	EUR 745 m. 2.9%
Underlying underwriting affected by  high level of claims in Q2/2016 Net major losses of EUR 353 m.  (9.2% of NPE) at expected level Premium development in line with 	 from UK Longevity EBIT in line with full-year  expectation Positive underlying earnings 	F/x-adjusted growth of 4.2% mainly	RoI in line with full-year target  (2.9%) Ordinary investment income lower  due to positive one-off effect in L&H in previous year

development but recurring adverse claim experience from older U/Y of

US mortality business

AuM increased by 1.0%

Premium development in line with selective underwriting approach

Satisfactory results in a challenging market environment Favourable earnings contribution from both business groups

Group figures in m. EUR	Q2/2015	Q2/2016	1H/2015	1H/2016
Gross written premium	4,186	4,020	8,587	8,284
Net premium earned	3,588	3,625	7,019	7,167
Net underwriting result	(34)	(39)	(40)	(3)
- Incl. funds withheld	65	53	158	173
Net investment income	383	379	799	745
- From assets under own mgmt.	285	286	601	569
- From funds withheld	98	92	197	176
Other income and expenses	11	(1)	31	3
Operating profit/loss (EBIT)	360	339	789	745
Interest on hybrid capital	(23)	(18)	(48)	(36)
Net income before taxes	337	320	741	709
Taxes	(58)	(93)	(184)	(195)
Net income	278	228	557	514
- Non-controlling interests	26	13	25	28
Group net income	252	215	532	486
Retention	88.0%	90.6%	88.3%	89.8%
EBIT margin (EBIT/Net premium earned)	10.0%	9.3%	11.2%	10.4%
Tax ratio	17.4%	29.0%	24.9%	27.5%
Earnings per share (in EUR)	2.09	1.78	4.41	4.03

YTD

• GWP f/x-adjusted growth of -1.5%
• NPE f/x-adjusted growth of +4.3%
• Satisfactory EBIT margin of 10.4%
• Decrease in outstanding hybrid leads to lower leverage and savings in interest
• Tax ratio negatively impacted by decreased Bermuda profits from high catastrophe burden

Shareholders' equity increased despite dividend payment Driven by increasing valuation reserves and earnings

Continued positive cash flow AuM +1.0%; increasing valuation reserves more than offset negative f/x effects

Q1 Q2 Q3 Q4

1) Affected by a financial solutions treaty with approx. EUR 500 m. cash inflow in Q4/2015 and approx. EUR 300 m. cash outflow in Q1/2016 (reported figure for 1H/2016: EUR 747 m.)

Acceptable underwriting result in a competitive environment Satisfactory investment income despite challenging capital markets

Property & Casualty R/I in m. EUR	Q2/2015	Q2/2016	1H/2015	1H/2016	YTD
Gross written premium	2,355	2,125	4,972	4,627	GWP f/x adjusted -5.6%; growth mainly from  US and structured R/I, reduced volume from
Net premium earned	2,012	1,877	3,894	3,838	China motor business and specialty lines NPE f/x adjusted stable 
Net underwriting result incl. funds withheld	101	74	181	178	Major losses of EUR 353 m. in line with budget  High frequency of basic losses and negative 
Combined ratio incl. interest on funds withheld	95.0%	96.1%	95.4%	95.4%	run-off of single claims in Q2 offset by positive run-off, overall confidence level slightly down
Net investment income from assets under own management	224	201	415	405	Favourable ordinary investment income 
Other income and expenses	4	(14)	(12)	(22)	Other income and expenses around expected  level
Operating profit/loss (EBIT)	329	261	584	561	EBIT margin of 14.6% (1H/2015: 15.0%) well  above target
Tax ratio	18.0%	29.9%	24.3%	28.3%
Group net income	247	172	418	376
Earnings per share (in EUR)	2.05	1.43	3.47	3.12

Major losses in line with expectation Remaining budget for second half-year of EUR 472 m.

1) Up to 2011 claims over EUR 5 m. gross, from 2012 onwards claims over EUR 10 m. gross 2) 2006 adjusted to new segmentation

Loss activity increased remarkably in Q2/2016

Catastrophe losses* in m. EUR	Date	Gross	Net
Earthquake, Taiwan	6 Feb	20.0	18.8
Earthquake, Japan	14 Apr	24.4	23.1
Earthquake, Ecuador	16 - 17 Apr	58.7	56.9
Wildfire, Canada	30 Apr - 8 May	204.9	131.6
Storm "Elvira", Germany, France	27 - 30 May	18.3	11.8
5 Natural catastrophes		326.3	242.1
2 Marine claims		71.7	34.3
3 Property claims		81.0	62.3
1 Credit claim		14.0	14.0
11 Major losses		493.0	352.7

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

Diversified portfolio outperforms the MtCR Marine Combined Ratio affected by reserve releases

1H/2016: Combined Ratio vs. MtCR

GWP growth

Target	North America *	89.8%	+5.7%
markets	* Continental Europe	94.3%	-3.8%
	Marine	12.1%	-9.7%
Specialty	Aviation	94.5%	-29.8%
lines	Credit, surety and political risks	103.3%	-3.9%
worldwide	UK, Ireland, London market and direct	89.6%	-7.7%
	Facultative R/I	93.0%	-15.8%
	* Worldwide Treaty R/I	111.7%	-3.2%
Global R/I	Cat XL	91.9%	-1.3%
	Structured R/I and ILS	96.6%	-18.2%
Total		95.4%	-6.9%
	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

Solid results of our Life and Health business Earnings in line with full-year expectations

Life and health R/I in m. EUR	Q2/2015	Q2/2016	1H/2015	1H/2016	YTD
Gross written premium	1,831	1,895	3,615	3,656	GWP f/x-adjusted growth +4.2%, mainly from  UK Longevity, reduced volume from Australia
Net premium earned	1,575	1,747	3,125	3,328	NPE f/x-adjusted growth +9.7% 
Net underwriting result incl. funds withheld	(36)	(20)	(24)	(5)	Techn. result from US mortality below expec  tation, but mitigated by favourable Fin. Sol.
Net investment income from assets under own management	55	80	179	158	Ordinary investment income in line with  expectation (Q1/2015 affected by positive
Other income and expenses	8	13	44	26	one-off of EUR 39 m.) Reduced, but still positive currency effects 
Operating profit/loss (EBIT)	27	74	200	179	EBIT margins: 
EBIT margin	1.7%	4.2%	6.4%	5.4%	• Financial solutions: 16.3%, (target 2.0%) • Longevity: 2.1% (target 2.0%)
Tax ratio	17.6%	26.4%	26.6%	25.8%	• Mortality and Morbidity: 4.3% (target 6.0%)
Group net income	18	53	146	131
Earnings per share (in EUR)	0.15	0.44	1.21	1.08

Investment income fully in line with expectations RoI targets achieved, but reinvestment yields at record low

in m. EUR	Q2/2015	Q2/2016	1H/2015	1H/2016	RoI
Ordinary investment income*	289	301	603	570	2.9%
Realised gains/losses	22	36	67	80	0.4%
Impairments/appreciations & depreciations	(7)	(34)	(15)	(48)	-0.2%
Change in fair value of financial instruments (through P&L)	9	10	(2)	21	0.1%
Investment expenses	(28)	(26)	(52)	(52)	-0.3%
NII from assets under own mgmt.	285	286	601	569	2.9%
NII from funds withheld	98	92	197	176
Total net investment income	383	379	799	745
Unrealised gains/losses of investments	31 Dec 15	30 Jun 16

	31 Dec 15	30 Jun 16
On Balance-sheet	1,146	1,948
thereof Fixed income AFS	636	1,462
Off Balance-sheet	497	553
thereof Fixed income HTM, L&R	411	457
Total	1,643	2,502

YTD

• Decrease in ordinary income due to last year´s one-off effect from L&H business; decreased contribution from fixed-income securities compensated by higher income from Private Equity and Real Estate
• Realised gains slightly up mainly from Private Equity
• Increasing impairments driven by Listed and Private Equities
• Valuation reserves with remarkable increase compared to year-end levels as once more yields decrease significantly; credit spreads mostly stable at low level

* Incl. results from associated companies

Ordinary income supported by asset classes with higher risk Diverging contribution to investment income from the different asset classes

Asset allocation

Investment category	30 Jun 16
Fixed-income securities	87 %
- Governments	27 %
- Semi-governments	18 %
- Corporates	32 %
Investment grade	29 %
Non-investment grade	4 %
- Pfandbriefe, Covered Bonds, ABS	2) 10 %
Equities	4 %
- Listed Equity	2 %
- Private Equity	2 %
Real estate/real estate funds	4 %
Others	1 %
Short-term investments & cash	5 %
Total market values in bn. EUR	40.3

Economic view based on market values as at 30 June 2016

1) Before real estate-specific costs

2) of which Pfandbriefe and Covered Bonds = 78.1%

Target Matrix 2016

Business group	Key figures	Strategic targets for 2016	1H/2016
Group	Return on investment1)	≥2.9%	2.9%
	Return on equity2)	≥10.0%	11.8%
	Earnings per share growth (y-o-y)	≥6.5%	-8.6%
	Value creation per share3)	≥7.5%	n.a.
Property & Casualty R/I	Gross premium growth	3% - 5%4)	-5.6%
	Combined ratio	≤96%5)	95.4%
	EBIT margin6)	≥10%	14.6%
	xRoCA7)	≥2%	n.a.
Life & Health R/I	Gross premium growth	5% - 7%8)	4.2%
	9) Value of New Business (VNB)	≥ EUR 220 m.	n.a.
	EBIT margin6) Financial solutions/Longevity	≥2%	7.3%
	EBIT margin6) Mortality/Morbidity	≥6%	4.3%
	xRoCA7)	≥3%	n.a.
1) Excl. effects from ModCo derivatives 3) Growth in book value per share + paid dividend		2) After tax; target: 900 bps above 5-year average return of 10-year German government bonds 4) On average throughout the R/I cycle; at unchanged f/x rates

5) Incl. expected net major losses of EUR 825 m. 6) EBIT/net premium earned

9) Based on a cost of capital of 6% (until 2014: 4.5%)

7) Excess return on allocated economic capital 8) Organic growth only; annual average growth (5 years), at unchanged f/x rates

Outlook 2016

16% of treaty reinsurance (R/I) renewed in Q2/2016 Renewals split in 2016

8% premium growth largely achieved with existing clients Property & Casualty treaty renewals: 2 April - 1 July 2016

• Continuation of the renewal trends from Q1/2016, but moderating significance of rate pressure
• North America
• Significant increase in premium mainly due to expansion of existing relationships
• Placements are becoming more complex by broadening of scope and inclusion of additional business segments
• Global catastrophe
• Still ample capacity available but price discipline appears to get more focus depending on territory, e.g.
  • − US rates appear to have levelled out
  • − Europe (except UK) showed a slowdown of the rate reductions
• Continued trend for global/multi-territory and multi-year placements
• Credit, surety & political risks
• Good growth in premium at relatively stable terms
  • − Strengthened position within existing relationships
  • − Acquisition of new clients
• Agriculture
• Significant growth due to new business

U/Y figures at unchanged f/x rates (31 December 2015)

Guidance for 2016

Hannover Re Group

• Gross written premium1) stable to modest reduction
• Return on investment 2) 3) ~2.9%
• Group net income2) at least EUR 950 m.
• Dividend payout ratio4) 35% 40% (Payout likely to increase in light of capital management considerations)

1) At unchanged f/x rates

2) Subject to no major distortions in capital markets and/or major losses in 2016 not exceeding the large loss budget of EUR 825 m.

3) Excluding effects from ModCo derivatives

4) Related to group net income according to IFRS

Overall profitability still above margin requirements Property & Casualty R/I: financial year 2016

	Lines of business	Volume1)	Profitability2)
Target	North America3)		+
markets	Continental Europe3)		+/-
	Marine		+
Specialty	Aviation		-
lines	Credit, surety and political risks		+
worldwide	UK, Ireland, London market and direct		+/-
	Facultative R/I		+
	Worldwide treaty3) R/I		+/-
Global R/I	Cat XL		-
	Structured R/I and ILS		+/-

1) In EUR

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

3) All lines of business except those stated separately

Increasing earnings expected on a normalised basis Life & Health R/I: financial year 2016

	Reporting categories	Volume1)	Profitability2)
Financial solutions	Financial solutions		++
	Longevity		+/-
Risk solutions	Mortality		+/-
	Morbidity		+/-

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

We are confident of achieving the guidance

We expect further increased profits from our Life & Health business
excluding 2015 termination fees

• Despite further rate reductions on our P&C business the quality of our portfolio should still allow us to keep C/R at or below 96.0%
• Supported by continued high confidence level of our P&C reserves
• Better conditions of our increased retrocession coverage

We expect to achieve a largely stable absolute NII on the back of an increased investment volume (from a further positive cash flow) despite low interest rate environment

We are maintaining our competitive advantage of low admin expenses

Subject to no major distortions in capital markets and/or major losses in 2016 not exceeding the major loss budget of EUR 825 m.

Appendix

Our strategic business groups at a glance 1H/2016 vs. 1H/2015

		Property & Casualty R/I		Life & Health R/I		Total
in m. EUR	1H/2015	1H/2016	Δ	1H/2015	1H/2016	Δ	1H/2015	1H/2016	Δ
Gross written premium	4,972	4,627	-6.9%	3,615	3,656	+1.2%	8,587	8,284	-3.5%
Net premium earned	3,894	3,838	-1.4%	3,125	3,328	+6.5%	7,019	7,167	+2.1%
Net underwriting result	171	166	-4.1%	(211)	(169)	-19.9%	(40)	(3)	-93.2%
Net underwritung result incl. funds withheld	181	178	-1.7%	(24)	(5)	-79.2%	158	173	+9.8%
Net investment income	425	416	-2.1%	367	322	-12.1%	799	745	-6.8%
From assets under own management	415	405	-2.5%	179	158	-11.9%	601	569	-5.3%
From funds withheld	10	12	+13.9%	187	164	-12.4%	197	176	-11.1%
Other income and expenses	(12)	(22)	+73.6%	44	26	-41.5%	31	3	-89.8%
Operating profit/loss (EBIT)	584	561	-3.9%	200	179	-10.5%	789	745	-5.6%
Interest on hybrid capital	(0)	0	-	0	0	+0.0%	(48)	(36)	-25.9%
Net income before taxes	584	561	-3.9%	200	179	-10.5%	741	709	-4.3%
Taxes	(142)	(159)	+12.1%	(53)	(46)	-13.1%	(184)	(195)	+5.8%
Net income	442	402	-9.0%	147	133	-9.5%	557	514	-7.6%
Non-controlling interest	24	26	+10.2%	1	2	+88.8%	25	28	+14.1%
Group net income	418	376	-10.1%	146	131	-10.3%	532	486	-8.6%
Retention	89.6%	88.2%		86.5%	91.8%		88.3%	89.8%
Combined ratio (incl. interest on funds withheld)	95.4%	95.4%		100.8%	100.1%		97.8%	97.6%
EBIT margin (EBIT / Net premium earned)	15.0%	14.6%		6.4%	5.4%		11.2%	10.4%
Tax ratio	24.3%	28.3%		26.6%	25.8%		24.9%	27.5%
Earnings per share (in EUR)	3.47	3.12		1.21	1.08		4.41	4.03

Our strategic business groups at a glance Q2/2016 vs. Q2/2015

		Property & Casualty R/I Life & Health R/I		Total
in m. EUR	Q2/2015	Q2/2016	Δ	Q2/2015	Q2/2016	Δ	Q2/2015	Q2/2016	Δ
Gross written premium	2,355	2,125	-9.8%	1,831	1,895	+3.5%	4,186	4,020	-4.0%
Net premium earned	2,012	1,877	-6.7%	1,575	1,747	+10.9%	3,588	3,625	+1.0%
Net underwriting result	94	66	-30.0%	(128)	(104)	-18.6%	(34)	(39)	-
Net underwritung result incl. funds withheld	101	74	-26.8%	(36)	(20)	-45.2%	65	53	-17.6%
Net investment income	230	209	-9.2%	147	165	+11.7%	383	379	-1.2%
From assets under own management	224	201	+6.2%	55	80	+45.1%	285	286	+0.6%
From funds withheld	6	7	+19.6%	92	85	-8.2%	98	92	-6.5%
Other income and expenses	4	(14)	-52.6%	8	13	+73.5%	11	(1)	-109.1%
Operating profit/loss (EBIT)	329	261	+17.4%	27	74	+175.5%	360	339	-6.1%
Interest on hybrid capital	(0)	0	-	0	0	-	(23)	(18)	-23.0%
Net income before taxes	329	261	+17.4%	27	74	+175.5%	337	320	+3.8%
Taxes	(59)	(78)	-2.3%	(5)	(19)	-	(58)	(93)	+18.9%
Net income	269	183	-32.0%	22	54	+146.0%	278	228	-18.3%
Non-controlling interest	22	11	-	4	1	-63.4%	26	13	-
Group net income	247	172	-30.4%	18	53	+191.5%	252	215	-3.1%
Retention	90.3%	88.5%		85.0%	93.0%		88.0%	90.6%
Combined ratio (incl. interest on funds withheld)	95.0%	96.1%		102.3%	101.1%		98.2%	98.5%
EBIT margin (EBIT / Net premium earned)	16.3%	13.9%		1.7%	4.2%		10.0%	9.3%
Tax ratio	18.0%	29.9%		17.6%	26.4%		17.4%	29.0%
Earnings per share (in EUR)	2.05	1.43		0.15	0.44		2.09	1.78

Largely stable asset allocation throughout the quarter Moderate increase in diversified listed equities

Asset allocation1)

Investment category	2012	2013	2014	2015	30.06.2016
Fixed-income securities	92%	90%	90%	87%	87%
- Governments	19%	19%	21%	26%	27%
- Semi-governments	23%	20%	19%	17%	18%
- Corporates	33%	36%	36%	34%	32%
Investment grade	30%	33%	33%	30%	29% 2)
Non-investment grade3 )	3%	3%	3%	4%	4%
- Pfandbriefe, Covered Bonds, ABS	17%	15%	14%	10%	10%
Equities	2%	2%	2%	3%	4%
- Listed Equity	<1%	<1%	<1 %	1%	2%
- Private Equity	2%	2%	2%	2%	2%
Real estate/real estate funds	2%	4%	4%	4%	4%
Others3 )	1%	1%	1%	1%	1%
Short-term investments & cash	3%	4%	4%	5%	5%
Total market values in bn. EUR	32.5	32.2	36.8	39.8	40.3

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 885.6 m. (EUR 837.1 m.) as at 30 Juni 2016

2) Of which Pfandbriefe and Covered Bonds = 78.1%

3) Reallocation of High Yield Funds from "Others" to "Corporates – Non-investment grade"

Stress tests on assets under own management Unchanged focus on yields and spreads while relevance of equities rises

Portfolio	Scenario	Change in market value in m. EUR	Change in OCI before tax in m. EUR
	-10%	-155	-155
Equity (listed and private equity)	-20%	-310	-310
	+50 bps	-790	-698
Yield curves	+100 bps	-1,543 -1,363 +50% -807 -767
Credit spreads

As at 30 June 2016

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	75.4%	65.1%	1.3%	67.4%	-	45.3%
A A	12.2%	29.6%	13.9%	13.9%	-	16.5%
A	7.1%	2.6%	38.6%	6.8%	-	17.7%
BBB	4.6%	1.2%	39.1%	8.7%	-	17.0%
<bbb< td="">	0.8%	1.5%	7.1%	3.2%	-	3.5%	0.8%	1.5%	7.1%	3.2%	-	3.5%
Total	100.0%	100.0%	100.0%	100.0%	-	100.0%
Germany	8.6%	45.3%	4.5%	28.4%	33.0%	17.6%
UK	6.7%	3.1%	7.9%	9.4%	3.6%	6.5%
France	1.5%	2.6%	6.2%	6.2%	1.5%	3.9%
GIIPS	1.4%	1.0%	4.6%	4.5%	0.0%	2.7%
Rest of Europe	5.3%	18.9%	16.4%	24.4%	3.5%	13.7%
USA	61.2%	5.9%	36.4%	5.4%	11.5%	33.4%
Australia	2.7%	8.7%	7.4%	10.5%	6.9%	6.5%
Asia	7.9%	3.1%	5.3%	0.0%	29.7%	6.3%
Rest of World	4.8%	11.5%	11.3%	11.2%	10.3%	9.3%
Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%
Total b/s values in m. EUR	10,766	6,877	12,360	3,765	1,818	35,586

IFRS figures as at 30 June 2016

Currency allocation matches liability profile of balance sheet Active asset liability management ensures durational match

Currency split of investments

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

Modified duration

2015	4.4
2014	4.6
2013	4.4
2012	4.5
2011	4.2

Modified duration as at 30 June 2016: 4.5

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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Hannover Re is the registered service mark of Hannover Rück SE.