Hannover Rueck SE

Investor Presentation • May 10, 2016

Conference Call on Interim Report 1/2016

Hannover, 10 May 2016

Excellent start to 2016 RoE remains well above strategic target

	Group
 	Gross written premium: Net premium earned:	EUR 4,264 m. (-3.1%) EUR 3,542 m. (+3.2%)	GWP f/x adjusted (-2.1%); within range of  full-year guidance for 2016
 	EBIT: Group net income:	EUR 407 m. EUR 271 m.	Favourable EBIT driven by improved underwriting  result in both business groups; investment income in line with target
  	RoE: Book value per share: Shareholders' equity:	13.2% EUR 69.42 EUR 8,372 m.	Attractive RoE despite further capital growth  Shareholders' equity up by 3.8%, mainly driven by  strong earnings

Property & Casualty R/I		Life & Health R/I		Investments
EBIT:	EUR 300 m.	EBIT:	EUR 106 m.	NII: RoI from AuM:	EUR 366 m. 2.9%
EBIT growth 17.4% driven by  favourable underwriting result (C/R of 94.7%) Net major losses of EUR 55 m.  (2.8% of NPE) well below budget Premium development in line with  selective underwriting approach		Strong profitability driven by  favourable underwriting result  previous year  with expectation	EBIT decreased due to positive one off effect and currency gains in F/x-adjusted growth of 0.3% in line	RoI in line with full-year target of  2.9% Ordinary investment income lower  due to positive one-off effect in L&H in previous year AuM  strengthening of EUR	decreased by -0.7%, driven by

Net profit growth +12.7% excluding last year's one-off effect

Group figures in m. EUR	Q1/2015	Q1/2016	Δ
Gross written premium	4,400	4,264	-3.1%
Net premium earned	3,432	3,542	+3.2%
Net underwriting result	(6)	36	-
- Incl. funds withheld	93	120	+28.9%
Net investment income	416	366	-11.9%
- From assets under own mgmt.	317	283	-10.7%
- From funds withheld	99	84	-15.6%
Other income and expenses	20	4	-77.5%
Operating profit/loss (EBIT)	429	407	-5.2%
Interest on hybrid capital	(25)	(18)	-28.6%
Net income before taxes	404	389	-3.8%
Taxes	(126)	(102)	-18.9%
Net income	278	287	+3.1%
- Non-controlling interests	(1)	16	-
Group net income	280	271	-3.1%
Retention	88.6%	89.0%
EBIT margin (EBIT/Net premium earned)	12.5%	11.5%
Tax ratio	31.1%	26.2%
Earnings per share (in EUR)	2.32	2.25

	YTD

• GWP f/x adjusted: -2.1%
• NPE f/x adjusted: +4.5%
• Overall EBIT margin reaches a very satisfying level of 11.5%
• Decrease in outstanding hybrid capital leads to lower leverage and savings in interest
• Tax ratio back to normal

Shareholders' equity up by 4% driven by strong earnings Increasing valuation reserves offset negative impact from currency translation in OCI

Continued positive cash flow

AuM slightly down due to appreciation of EUR against USD and GBP

1) Excluding approx. EUR 500 m. from financial solutions treaties with an expected cash outflow in 2016 2) Including approx. EUR 300 m. cash outflow from financial solutions treaties with cash inflow in 2015

Favourable underwriting result in a competitive environment Premium development in line with selective underwriting approach

Property & Casualty R/I in m. EUR	Q1/2015	Q1/2016	Δ	YTD
Gross written premium	2,617	2,502	-4.4%	GWP f/x adjusted: -3.7%; growth mainly from US,  reduced volume from China motor business
Net premium earned	1,882	1,961	+4.2%	NPE f/x adjusted: +5.2% 
Net underwriting result incl. funds withheld	80	104	+29.7%	Major losses of EUR 55 m. (2.8% of NPE) well below  budget of EUR 189 m. for Q1/2016
Combined ratio incl. interest on funds withheld	95.7%	94.7%	-1.0%p	Conservative reserving policy unchanged, reserve run-off  unremarkable
Net investment income from assets under own management	191	203	+6.2%	Ordinary investment income in line with expectation 
Other income and expenses	(16)	(8)	-52.6%	Other income mainly improved due to positive currency  effects
Operating profit/loss (EBIT)	255	300	+17.4%	EBIT margin of 15.3% (Q1/2015: 13.6%) well above  target
Tax ratio	32.3%	26.9%	-5.4%p
Group net income	171	204	+19.2%
Earnings per share (in EUR)	1.42	1.69

Diversified portfolio outperforms the MtCR

Q1/2016: Combined Ratio vs. MtCR

GWP growth

Target	North America*	93.5%		+13.5%
markets	Continental Europe*	88.9%		+12.7%
	Marine	54.8%		-12.4%
Specialty	Aviation	154.4%		-34.3%
lines	Credit, surety and political risks	103.7 %		-5.4%
worldwide	UK, Ireland, London market and direct	97.7%		-16.9%
	Facultative R/I	106.1%		-25.2%
	Worldwide Treaty* R/I	91.9%		-0.4%
Global R/I	Cat XL	15.2%		-10.2%
	Structured R/I and ILS	100.1%		-12.2%
Total		94.7%		-4.4%
		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

Major losses well below budget for Q1/2016

2) 2006 adjusted to new segmentation

Benign large loss experience in Q1/2016

Catastrophe losses* in m. EUR	Date	Gross	Net
Earthquake, Taiwan	6 Feb	16.2	15.6
1 Natural catastrophe		16.2	15.6
3 Property claims		41.0	39.9
4 Major losses		57.2	55.5

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

Strong result of our Life & Health business EBIT decreased due to positive one-off and currency gains in Q1/2015

Life & Health R/I in m. EUR	Q1/2015	Q1/2016	Δ	YTD
Gross written premium	1,783	1,761	-1.2%	GWP f/x-adjusted growth +0.3%, mainly from UK  Longevity BATs, reduced volume from Australia
Net premium earned	1,550	1,581	+2.0%	NPE f/x-adjusted growth +3.6% 
Net underwriting result incl. funds withheld	12	15	+20.1%	Favourable underwriting result reflects underlying  profitability
Net investment income from assets under own management	124	78	-37.1%	Ordinary investment income in line with expectation  (Q1/2015 affected by positive one-off of EUR 39 m.)
Other income and expenses	37	13	-65.8%	Decreased other income and expenses due to  significantly reduced positive currency effects
Operating profit/loss (EBIT)	173	106	-39.1%	EBIT margins 
EBIT margin	11.2%	6.7%	-4.5%p	• Financial solutions business: 17.9% (target 2.0%) • Longevity business: 3.2% (target 2.0%)
Tax ratio	28.0%	25.4%	-2.6%p	• Mortality and Morbidity business: 5.3% (target 6.0%)
Group net income	128	78	-38.9%
Earnings per share (in EUR)	1.06	0.65

Investment income in line with expectations

in m. EUR	Q1/2015	Q1/2016	RoI
Ordinary investment income*	315	269	2.7%
Realised gains/losses	45	44	0.4%
Impairments/appreciations & depreciations	(8)	(14)	-0.1%
Change in fair value of financial instruments (through P&L)	(11)	10	0.1%
Investment expenses	(24)	(27)	-0.3%
NII from assets under own mgmt.	317	283	2.9%
NII from funds withheld	99	84
Total net investment income	416	366

Unrealised gains/losses of investments	31 Dec 15	31 Mar 16
On Balance-sheet	1,146	1,497
thereof Fixed income AFS	636	1,066
Off Balance-sheet	497	538
thereof Fixed income HTM, L&R	411	451
Total	1,643	2,035

YTD

• Decrease in ordinary income mostly due to last year's one-off effect from L&H business and lower results from fixed-income securities
• Realisations mainly from Private Equity, overall stable
• Positive change in fair value of financial instruments; no impact from terminated inflation swaps (Q1/2015: EUR -15 m.) as well as positive result from technical derivatives
• Valuation reserves increased from year-end levels due to decreasing interest rates

* Incl. results from associated companies

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

Total: EUR 269 m.	Asset allocation	Market values: EUR 39.6 bn.
	Investment category	31 Mar 16
	Fixed-income securities	86%
Governments 15%	- Governments	26%
	- Semi-governments	17%
Semi	- Corporates	33%
governments	Investment grade	29%
16%	Non-investment grade	4%
	- Pfandbriefe, Covered Bonds, ABS	10%
	Equities	4%
	- Listed Equity	2%
	- Private Equity	2%
	Real estate/real estate funds	4%
	Others	1%
Corporates	Short-term investments & cash	5%

Economic view based on market values as at 31 March 2016 * Before real estate-specific costs

Target Matrix 2016

Business group	Key figures	Strategic targets for 2016	Q1/2016
Group	Return on investment1)	≥2.9%	2.9 %
	Return on equity2)	≥10.0%	13.2%
	Earnings per share growth (y-o-y)	≥6.5%	-3.1%
	Value creation per share3)	≥7.5%	n.a.
Property & Casualty R/I	Gross premium growth	3% - 5%4)	-3.7%
	Combined ratio	≤96%5)	94.7%
	EBIT margin6)	≥10%	15.3%
	xRoCA7)	≥2%	n.a.
Life & Health R/I	Gross premium growth	5% - 7%8)	0.3%
	Value of New Business (VNB)9)	≥EUR 220 m.	n.a.
	EBIT margin6) Financial solutions/Longevity	≥2%	9.2%
	EBIT margin6) Mortality/Morbidity	≥6%	5.3%
	xRoCA7)	≥3%	n.a.

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

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 book value per share + paid dividend 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

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

Solvency II reporting as at 31 December 2015

Hannover Re Group maintains comfortable capital position Capital adequacy above target with substantial excess capital

in m. EUR	Internal	Metrics	Solvency II
Available Economic Capital / Own Funds		12,609	11,983
Confidence Level	99.97%	99.5%	99.5%
Required Capital / Solvency Capital Requirements	9,773	5,166	5,433
Excess Capital	2,836	7,443	6,549
Capital Adequacy Ratio	129%	244%	221%
Minimum Target Ratio (Limit)	100%	200%	180%
Minimum Target Ratio (Threshold)	110%	n/a	200%

As at 31 December 2015

Hannover Re Group is well capitalised under Solvency II From economic view to regulatory view

in m. EUR	Available Capital	Required Capital	CAR
Internal Model at VaR1) 99.97%	12,609	9,773	129%
		-4,607
Internal Model at VaR 99.5%	12,609	5,166	244%
Interests2) Haircut for Minority	-626
	11,983	5,166	232%
Add-On, Standard Formula OpRisk		+267
Regulatory View at VaR 99.5%	11,983	5,433	221%

Economic view: internal target confidence level at 99.97%, full internal model, full transferability of capital

Regulatory view: partial internal model with standard formula for operational risk, confidence level at 99.5%, transferability restrictions on minority interests

As at 31 December 2015

1) Value-at-Risk

2) Non-available minority interests mostly consist of non-controlling interests in E+S Rückversicherung AG

Capital efficiency supported by high diversification Breakdown of Solvency II capital requirements

Risk capital for the 99.5% VaR (according to Solvency II) in m. EUR

As at 31 December 2015 * Operational risk according to standard formula

High quality capital basis

Own funds largely constituted by Tier 1 capital supplemented with hybrid capital

Reconciliation (IFRS Shareholders' Equity/Solvency II Own Funds) in m. EUR

As at 31 December 2015

1) Adjustments for technical provisions incl. risk margin

2) Foreseeable dividends and distributions refer to Hannover Rück SE dividend as well as dividends to minorities within Hannover Re Group

Development of MCEV in 2015 Once Again Excellent Value of New Business

* Based on old CoC factor of 4.5% (new CoC factor of 6.0% is compliant with Solvency II)

• • Traditional, financial solution and Long Term Care business in the US
• Block assumption transactions in the UK
• New business written by the branches
• New business under existing treaties

Reconciliation of L&H technical provisions; MCEV vs. Solvency II L&H valuation differences largely based on different risk margin approaches

in m. EUR

MCEV reporting will be fully substituted by SII Pillar 3 reporting going forward

Outlook 2016

Hannover Re in demand: 9% increase in premium Property & Casualty treaty renewals: 2 January 2016 - 1 April 2016

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 may 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 markets	North America3)		+
	Continental Europe3)		+/-
	Marine		+
	Aviation		-
Specialty lines worldwide	Credit, surety and political risks		+
	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)

Rationale for the 2016 profit guidance Long-term success in a competitive business

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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.

We are confident of achieving the guidance

Appendix

Our strategic business groups at a glance Q1/2016 vs. Q1/2015

	Property & Casualty R/I		Life & Health R/I		Total
in m. EUR	Q1/2015	Q1/2016	Δ	Q1/2015	Q1/2016	Δ	Q1/2015	Q1/2016	Δ
Gross written premium	2,617	2,502	-4.4%	1,783	1,761	-1.2%	4,400	4,264	-3.1%
Net premium earned	1,882	1,961	+4.2%	1,550	1,581	+2.0%	3,432	3,542	+3.2%
Net underwriting result	77	100	+31.0%	(83)	(65)	-21.9%	(6)	36	-
Net underwritung result incl. funds withheld	80	104	+29.7%	12	15	+20.1%	93	120	+28.9%
Net investment income	195	207	+6.2%	219	158	-28.2%	416	366	-11.9%
From assets under own management	191	203	+6.2%	124	78	-37.1%	317	283	-10.7%
From funds withheld	4	4	+4.8%	95	79	-16.4%	99	84	-15.6%
Other income and expenses	(16)	(8)	-52.6%	37	13	-65.8%	20	4	-77.5%
Operating profit/loss (EBIT)	255	300	+17.4%	173	106	-39.1%	429	407	-5.2%
Interest on hybrid capital	0	0	-	0	0	-	(25)	(18)	-28.6%
Net income before taxes	255	300	+17.4%	173	106	-39.1%	404	389	+3.8%
Taxes	(82)	(81)	-2.3%	(49)	(27)	-44.8%	(126)	(102)	+18.9%
Net income	173	219	+26.9%	125	79	-36.9%	278	287	+3.1%
Non-controlling interest	1	15	-	(3)	1	-132.4%	(1)	16	-
Group net income	171	204	+19.2%	128	78	-38.9%	280	271	-3.1%
Retention	88.9%	87.9%		88.1%	90.5%		88.6%	89.0%
Combined ratio (incl. interest on funds withheld)	95.7%	94.7%		99.2%	99.1%		97.3%	96.6%
EBIT margin (EBIT / Net premium earned)	13.6%	15.3%		11.2%	6.7%		12.5%	11.5%
Tax ratio	32.3%	26.9%		28.0%	25.4%		31.1%	26.2%
Earnings per share (in EUR)	1.42	1.69		1.06	0.65		2.32	2.25

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

Asset allocation1)

Investment category	2012	2013	2014	2015	31 Mar 16
Fixed-income securities	92%	90%	90%	87%	86%
- Governments	19%	19%	21%	26%	26%
- Semi-governments	23%	20%	19%	17%	17%
- Corporates	33%	36%	36%	34%	33%
Investment grade	30%	33%	33%	30%	29%
Non-investment grade	3%	3%	3%	4%	4%
- Pfandbriefe, Covered Bonds, ABS	17%	15%	14%	10%	2) 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%
Others	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	39.6

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 807.3 m. (EUR 837.1 m.) as at 31 March 2016

2) Of which Pfandbriefe and Covered Bonds = 80.0%

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 shareholders' equity before tax in m. EUR
Equity (listed and private equity)	-10%	-153	-153
	-20%	-306	-306
	+50 bps	-759	-664
Yield curves	+100 bps	-1,484	-1,300
Credit spreads	+50%	-929	-880

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	73.5%	65.2%	1.3%	69.4%	-	44.2%
A A	13.2%	30.0%	13.6%	13.2%	-	16.7%
A	7.8%	2.6%	38.4%	7.3%	-	18.2%
BBB	4.6%	1.3%	38.5%	6.2%	-	16.9%
<bbb< td="">	0.9%	0.9%	8.1%	3.8%	-	4.0%	0.9%	0.9%	8.1%	3.8%	-	4.0%
Total	100.0%	100.0%	100.0%	100.0%	-	100.0%
Germany	8.9%	44.6%	4.5%	28.6%	31.2%	17.3%
UK	7.4%	3.3%	8.3%	9.7%	4.1%	7.0%
France	1.7%	2.7%	6.2%	6.5%	3.3%	4.1%
GIIPS	1.4%	1.0%	4.7%	4.6%	0.0%	2.8%
Rest of Europe	5.6%	19.6%	16.7%	25.7%	2.9%	14.2%
USA	58.8%	6.2%	36.5%	4.7%	13.9%	32.9%
Australia	3.2%	8.9%	7.4%	10.8%	5.6%	6.7%
Asia	8.7%	2.4%	5.0%	0.0%	29.4%	6.4%
Rest of World	4.4%	11.2%	10.8%	9.5%	9.7%	8.8%
Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%
Total b/s values in m. EUR	10,387	6,510	12,480	3,741	1,852	34,970

IFRS figures as at 31 March 2016

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

Currency split of investments

• Modified duration of fixed income 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 31 March 2016: 4.4

Hannover Re is well diversified within each risk category and has a well balanced asset and liability portfolio

Background: Solvency II vs. IFRS Market-consistent valuation under Solvency II

• Hannover Re calculates the economic equity as the difference between the marketconsistent value of the assets and the market-consistent value of the liabilities. While fair values are available for most investments, we establish the market-consistent value of technical items as the present value of projected future cash flows using state-of-the art actuarial methods.
• Revaluation effects from technical provisions for P&C business are mainly driven by discounting, the transition to an economic ultimate view and the consideration of a risk margin.
• For L&H business, valuation differences are mainly based on using current best estimate assumptions (as opposed to locked-in assumptions for IFRS) and the reflection of all expected future cash flows (recognition of expected future profits), partly offset by the consideration of a risk margin.
• For the discounting of future cash flows we use the risk-free basic yield curves calculated in accordance with Solvency II rules without volatility adjustment or matching adjustment.
• Hybrid capital is recognised at market-consistent value as required by Solvency II, with changes in own credit risk not being included in the valuation.
• Dated outstanding hybrid bonds are classified as Tier 2, undated hybrid bond as restricted Tier 1 based on own interpretation of grandfathering rules.

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.

© Hannover Rück SE. All rights reserved. Hannover Re is the registered service mark of Hannover Rück SE.