Hannover Rueck SE — Call Transcript 2023

Aug 9, 2023

Conference Call on Q2/2023 financial results

Hannover, 9 August 2023

Agenda

1	Group overview	2
2	Property & Casualty reinsurance	5
3	Life & Health reinsurance	9
4	Investments	12
5	Outlook 2023	14
6	Appendix	18

1H/2023 performance fully supports targets for the full year Strong contribution from L&H and investments, increased resiliency in P&C

All figures in m. EUR unless otherwise stated

1) At unchanged f/x rates

2) Subject to no major distortions in capital markets and/or major losses not exceeding the large loss budget of EUR 1.725 bn. in 2023 and no further significant impact from Covid-19 on L&H result

| 1 Group overview | 2 | 3 | 4 | 5 | 6 |

Dividend payment more than covered by net income in 1H/2023 CSM and RA will contribute to earnings over time

All figures in m. EUR unless otherwise stated

Agenda

1	Group overview	2
2	Property & Casualty reinsurance	5
3	Life & Health reinsurance	9
4	Investments	12
5	Outlook 2023	14
6	Appendix	18

Continued P&C margin improvement in favourable market environment Revenue and profit in line with expectations, C/R reflects increase in resiliency

Property & Casualty R/I	Q2/2022	Q2/2023		1H/2022 1H/2023
Reinsurance revenue (gross)	3,262	3,765	7,850	8,365
Reinsurance revenue (net)	2,763	3,082	7,104	7,183
Reinsurance service result	208	283	397	598
Reinsurance finance result	(55)	(155)	(149)	(285)
Investment result	333	327	548	625
Other result	(136)	(91)	(148)	(108)
Operating profit/loss (EBIT)	349	363	648	829
Combined ratio (net)	92.5%	90.8%	94.4%	91.7%
New business CSM (net)	183	374	1,261	1,829
New business LC (net)	(46)	(10)	(235)	(35)

YTD

• Reinsurance Revenue (RR) / New business CSM & LC (net)
  • Reinsurance revenue growth +6.6% (f/x-adjusted +7.8%);
  • Strong growth in New business CSM & LC of 1,794 m. (+75%); mainly from EMEA, Americas and Structured Reinsurance/ILS; Increased New business CSM & LC from APAC despite decreasing revenue
• Reinsurance service result (RSR)
  • RSR supported by strong margin increase, reflected in higher New business CSM and lower New business LC
  • Large losses of 607 m. within 1H budget of 751 m., however booked to budget
  • Discount effect of ~5%, higher than interest accretion in finance result
  • Increase in confidence level of reserves
• Investment result
  • Strong ordinary income supported by higher fixed income yields (including 74 m. contribution from inflation-linked bonds)

LC = Loss component All figures in m. EUR unless otherwise stated

P&C Reinsurance Service Result supported by strong margin increase

0

4000

Reinsurance Service Result 1H/2023 Contractual Service Margin (net)

• Regular CSM release in line with expectations, mainly reflecting successful renewals in 2022/2023
• Experience variance mainly driven by front loading of retro expenses and relatively low retrocession recovery due to benign large loss experience
• Run-off result of +168 m. reflects overall favourable reserve development across most lines of business and includes release of RA in LIC

• Strong new business CSM reflects successful 2023 renewals with attractive margins
• Changes in estimates reflects experience variance for premium and acquisition expenses
• Overall CSM growth expected to be lower in full year 2023, as renewal dates result in front loading of new business CSM in 1H/2023; CSM release more stable over the course of the year

All figures in m. EUR unless otherwise stated

Large losses below 1H/2023 budget of EUR 751 m.

Natural and man-made catastrophe losses1) in m. EUR

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

8 Conference Call on Q2/2023 financial results

Agenda

1	Group overview	2
2	Property & Casualty reinsurance	5
3	Life & Health reinsurance	9
4	Investments	12
5	Outlook 2023	14
6	Appendix	18

Strong operating performance in L&H reinsurance IFRS 17 with better reflection of value and earning power of business

Life & Health R/I in m. EUR	Q2/2022	Q2/2023		1H/2022 1H/2023
Reinsurance revenue (gross)	1,943	1,938	3,966	3,908
Reinsurance revenue (net)	1,805	1,775	3,697	3,544
Reinsurance service result	65	228	297	481
Reinsurance finance result	(28)	(20)	(57)	(58)
Investment result	99	142	276	225
Other result	36	(78)	(45)	(124)
Operating profit/loss (EBIT)	171	271	471	525
New business CSM (net)	110	67	229	151
New business LC (net)	1	2	(1)	(4)

YTD

• Reinsurance Revenue (RR) / New Business CSM & LC (net)

• Reinsurance revenue (gross) stable: -1.5% (f/x-adjusted +0.8%)
• Financial Solutions business increasing and fully captured in revenue, Longevity stable, slowdown in contribution from Mortality and Morbidity

• Reinsurance service result (RSR)

• Improvement in RSR largely driven by Mortality, favourable claims experiences and rate improvements after significant Covid losses in 2022; one-off from recapture of UK retrocession treaty (+23 m.)
• Financial Solutions with continued strong contribution
• Continued business growth combined with very strong CSM of 5.8 bn. and RA of 2.9 bn. support sustainable and stable earnings outlook

• Investment result

– Increase in ordinary income and higher result from fair value changes

All figures in m. EUR unless otherwise stated

Increasing CSM will contribute to future expected earnings

Reinsurance Service Result 1H/2023

• Higher than expected CSM release includes one-off from recapture (+23 m.) and is supported by positive changes in estimates
• Extraordinary high risk-adjustment release
• New business loss component of 4.4 m., change in LC driven by changes in estimates

Contractual Service Margin (CSM)

• Successful new business generation (new business not onerous plus extensions on existing contracts not recognized in new business CSM)
• Change in estimates mainly driven by updated assumptions for UK longevity business

All figures in m. EUR unless otherwise stated

Agenda

1	Group overview	2
2	Property & Casualty reinsurance	5
3	Life & Health reinsurance	9
4	Investments	12
5	Outlook 2023	14
6	Appendix	18

RoI well above target, driven by favourable ordinary income Resilient portfolio with minor impact from FVTPL valuation

in m. EUR 2016A	Q2/2022	Q2/2023	1H/2022	1H/2023	RoI
1) Ordinary investment income 1)	453	490	876	941	3.4%
Realised gains/losses	(36)	(31)	(57)	(44)	-0.2%
Depreciations Real Assets, Impairments	(12)	(14)	(23)	(27)	-0.1%
Change in ECL	26	6	(20)	9	0.0%
FVTPL2)- Valuation	35	61	122	57	0.2%
Investment expenses	(34)	(43)	(75)	(86)	-0.3%
Investment result	432	470	825	851	3.0%

Unrealised gains/losses on investments (OCI)	31 Dec 22	30 Jun 23
Fixed Income	(4,863)	(4,476)
Equities (non-recycling)	(0.1)	(0.1)
Real Assets	546	563
Others (Participations etc.)	275	282
Total	(4,042)	(3,632)

1) Incl. results from associated companies 2) Fair Value Through P/L of financial instruments All figures in m. EUR unless otherwise stated

YTD

• Increase in ordinary income predominantly due to higher locked-in yields, contribution from inflation-linked bonds (74 m.) based on inflation expectation for current year
• Realised gains/losses driven by normal portfolio maintenance with minor changes on asset allocation
• Result from change in fair value of financial instruments driven by insurance-related derivatives
• Slight increase in asset volume driven by strong operating cash flow and partially lower interest levels
• Unrealised losses decreasing predominantly due to natural amortisation effects (pull to par)

Agenda

1	Group overview	2
2	Property & Casualty reinsurance	5
3	Life & Health reinsurance	9
4	Investments	12
5	Outlook 2023	14
6	Appendix	18

Continued favourable market conditions increased P&C premium by 12.6% Overall risk-adjusted price increase of 4.8%

Americas1)

• US:
  • Property market holding at increased rates, capacity shortages in some areas remaining
  • Primary rate increases still meaningful except for some Special Casualty markets
  • Sustained underwriting discipline
• Latin America: continued hard market conditions across the region

Australia1)

• Continued discipline with rate increases and improved terms & conditions across direct and reinsurance markets
• Substantial rate increases on loss-affected NatCat programs

Asia1)

• Improved profitability supported by share reduction in lesser-performing treaties
• Markets mostly disciplined across the region

Credit & Surety

• Moderate premium growth mainly inflation-driven
• Stable commission levels and risk-adjusted price increases

Underwriting year figures at unchanged f/x rates (31 December 2022) 1) Excluding specialty business mentioned separately

Outlook for 2023

Hannover Re Group

•	Reinsurance revenue1)	≥ 5% growth
•	Return on investment 2)	≥ 2.4%
•	Group net income 2)	≥ EUR 1.7 bn.
•	Ordinary dividend	≥ prior year
•	Special dividend	if capitalisation exceeds capital requirements for future growth and profit targets are achieved

1) At unchanged f/x rates

2) Subject to no major distortions in capital markets and/or major losses not exceeding the large loss budget of EUR 1.725 bn. in 2023 and no further significant impact from Covid-19 on L&H result

| 1 | 2 | 3 | 4 | 5 Outlook 2023 | 6 |

2023 assumptions Expectations for business groups

	P&C	L&H
Reinsurance service result	91% - 92% Combined ratio	EUR 750 - 800 m.
Interest accretion	~ EUR 570 m.	~ EUR 140 m.
EBIT	≥ EUR 1,600 m.	≥ EUR 750 m.

Agenda

1	Group overview	2
2	Property & Casualty reinsurance	5
3	Life & Health reinsurance	9
4	Investments	12
5	Outlook 2023	14
6	Appendix	18

Our business groups at a glance 1H/2023 vs. 1H/2022

	Property & Casualty R/I			Life & Health R/I			Total
in m. EUR	1H/2022	1H/2023	∆-%	1H/2022	1H/2023	∆-%	1H/2022	1H/2023	∆-%
Reinsurance revenue (gross)	7,850	8,365	6.6%	3,966	3,908	-1.5%	11,816	12,273	3.9%
Reinsurance service expenses	(7,283)	(6,896)	-5.3%	(3,637)	(3,395)	-6.6%	(10,920)	(10,291)	-5.8%
Reinsurance service result (gross)	567	1,469	159.1%	329	513	55.8%	896	1,982	121.2%
Reinsurance result (ceded)	(171)	(872)	-	(32)	(32)	-1.2%	(203)	(903)	-
Reinsurance service result	397	598	50.7%	297	481	62.0%	694	1,079	55.5%
Reinsurance finance result	(149)	(285)	91.6%	(57)	(58)	1.6%	(205)	(342)	66.7%
Investment income	548	625	13.9%	276	225	-18.5%	825	851	3.2%
Currency result	(24)	59	-	(3)	(25)	-	(27)	34	-
Other income and expenses	(124)	(168)	34.9%	(42)	(98)	136.3%	(168)	(268)	59.9%
Operating profit/loss (EBIT)	648	829	28.0%	471	525	11.3%	1,118	1,353	21.0%
Net income before taxes							1,075	1,288	+19.8%
Taxes							(205)	(298)	+45.4%
Net income							870	990	+13.8%
Non-controlling interest							55	30	-46.1%
Group net income							815	960	+17.8%

Large losses within 1H/2023 budget of EUR 751 m. NatCat losses below budget, man-made losses above budget

Catastrophe losses1) in m. EUR	Date	Gross	Net
Floods, New Zealand	27 Jan - 6 Feb	89.3	45.3
Earthquake, Türkiye	6 Feb	262.8	257.0
Cyclone "Gabrielle", New Zealand	10 - 17 Feb	121.3	65.4
Hail / Storm, USA	01 - 03 Mar	20.9	6.2
Tornadoes, USA	24 - 27 Mar	11.5	11.4
Tornadoes / Storm, USA	30 Mar - 02 April	43.4	35.7
Rain / Flood, Italy	16 - 22 May	41.5	41.5
7 Natural catastrophes		590.6	462.5
5 Property losses		114.3	114.3
2 Credit losses		30.2	30.2
7 Man-made losses		144.5	144.5
14 Major losses		735.1	606.9

1) Natural catastrophes and other major losses in excess of EUR 10 m. gross Large loss budget 2023: EUR 1,725 m., thereof EUR 1,475 m. NatCat and EUR 250 m. man-made Large loss budget 1H/2023: EUR 751 m., thereof EUR 626 m. NatCat and EUR 125 m. man-made

Our business groups at a glance Q2/2023 vs. Q2/2022

		Property & Casualty R/I			Life & Health R/I			Total
in m. EUR	Q2/2022	Q2/2023	∆-%	Q2/2022	Q2/2023	∆-%	Q2/2022	Q2/2023	∆-%
Reinsurance revenue (gross)	3,262	3,765	+15.4%	1,943	1,938	-0.3%	5,205	5,702	+9.6%
Reinsurance service expenses	(2,806)	(2,978)	+6.2%	(1,852)	(1,705)	-8.0%	(4,658)	(4,683)	+0.5%
Reinsurance service result (gross)	456	786	+72.6%	91	233	156.3%	547	1,019	+86.5%
Reinsurance result (ceded)	(248)	(504)	+103.0%	(26)	(5)	-79.9%	(275)	(509)	+85.4%
Reinsurance service result	208	283	+36.2%	65	228	-	272	510	+87.6%
Reinsurance finance result	(55)	(155)	+180.0%	(28)	(20)	-27.5%	(83)	(176)	+110.5%
Investment income	333	327	-1.9%	99	142	44.3%	432	470	+8.8%
Currency result	(58)	12	-120.6%	43	(21)	-148.1%	(15)	(9)	-43.2%
Other income and expenses	(78)	(103)	+33.0%	(7)	(57)	-	(85)	(164)	+92.3%
Operating profit/loss (EBIT)	349	363	+4.0%	171	271	58.7%	520	632	+21.6%
Net income before taxes							499	600	+20.3%
Taxes							(87)	(128)	+46.8%
Net income							411	472	+14.6%
Non-controlling interest							24	(4)	-116.7%
Group net income							387	476	+22.9%

FY2022 IFRS 17/9 EBIT IFRS17 vs IFRS4

P&C

• Discounted presentation of technical results, including interest accretion, resulting in a net effect of about 150 m.
• Volume-driven change in currency result 116 m.

L&H

• IFRS4 contains +183 m. Covid-19 claims, which were already included at transition under IFRS17
• Unlocking of best estimate liabilities at transition +57
• Loss component (new business and change) -263 m.

Investment income

• Lower realised gains -714m (thereof transfer of private equity into joint venture -558m)
• Lower result from at-equity participations -174 m.
• Impact from valuation (of higher share) of assets at FVTPL -134 m.
• Allocation of embedded derivatives to liabilities +147m

FY2022 Group

Stand alone in m. EUR	Q1/2022	Q2/2022	Q3/2022	Q4/2022	2022
Reinsurance revenue (gross)	6,612	5,205	6,515	5,742	24,073
Reinsurance service expenses	(6,262)	(4,658)	(6,232)	(5,202)	(22,354)
Reinsurance service result (gross)	350	547	283	540	1,719
Reinsurance result (ceded)	72	(275)	87	(267)	(383)
Reinsurance service result	421	272	370	273	1,336
Reinsurance finance result	(122)	(83)	(113)	(264)	(583)
Investment income	393	432	368	(228)	965
Net currency result	(12)	(15)	21	24	18
Other income and expenses	(83)	(85)	(102)	49	(221)
Operating profit/loss (EBIT)	598	520	544	(146)	1,516
Net income before taxes	576	499	523	(173)	1,424
Taxes	(118)	(87)	(164)	(157)	(526)
Net income	458	411	359	(331)	898
Non-controlling interest	31	24	58	5	118
Group net income	428	387	301	(335)	781
Reinsurance revenue (net)	6,234	4,568	5,990	4,936	21,729

FY2022 P&C

Stand alone in m. EUR	Q1/2022	Q2/2022	Q3/2022	Q4/2022	2022
Reinsurance revenue (gross)	4,589	3,262	4,539	3,876	16,265
Reinsurance service expenses	(4,478)	(2,806)	(4,411)	(3,420)	(15,113)
Reinsurance service result (gross)	111	456	128	456	1,151
Reinsurance result (ceded)	78	(248)	81	(261)	(350)
Reinsurance service result	189	208	209	196	801
Reinsurance finance result	(93)	(55)	(80)	(247)	(475)
Investment income	216	333	285	(225)	608
Currency result	34	(58)	54	(4)	26
Other income and expenses	(47)	(78)	(90)	121	(93)
Operating profit/loss (EBIT)	299	349	378	(159)	867
Combined ratio (net)	95.6%	92.5%	95.0%	94.0%	94.5%
Reinsurance revenue (net)	4,342	2,763	4,154	3,239	14,497
New business CSM (net)					1,825
New business LC (net)					(236)

FY2022 L&H

Stand alone in m. EUR	Q1/2022	Q2/2022	Q3/2022	Q4/2022	2022
Reinsurance revenue (gross)	2,023	1,943	1,977	1,866	7,808
Reinsurance service expenses	(1,785)	(1,852)	(1,822)	(1,782)	(7,241)
Reinsurance service result (gross)	238	91	155	83	568
Reinsurance result (ceded)	(6)	(26)	6	(6)	(33)
Reinsurance service result	232	65	161	77	535
Reinsurance finance result	(29)	(28)	(33)	(18)	(108)
Investment income	177	99	83	(1)	357
Currency result	(46)	43	(33)	28	(9)
Other income and expenses	(34)	(7)	(12)	(72)	(126)
Operating profit/loss (EBIT)	300	171	166	13	650
Reinsurance revenue (net) New business CSM (net)	1,892	1,805	1,836	1,698	7,231 546
New business LC (net)					(4)

Economic asset allocation predominantly unchanged

Overall allocation in cautious manner with focus on decent liquidity to manoeuvre

Asset class	2018	2019	2020	2021	2022	Q2/2023
Fixed Income	87%	87%	85%	86%	83%	84%
Governments	44%	42%	42%	40%	42%	41%
Semi-governments	7%	8%	7%	8%	8%	9%
Corporates	29%	31%	30%	32%	27%	28%
Investment grade	25%	26%	25%	28%	23%	24%
Non-Investment grade	4%	4%	4%	4%	4%	4%
Covered Bonds	5%	4%	4%	4%	4%	4%
ABS/MBS/CDO	2%	2%	2%	2%	3%	3%
Equities	2%	3%	3%	4%	3%	4%
Listed	<0.1%	<0.1%	1%	1%	0%	0%
Private Equities	2%	2%	3%	3%	3%	4%
Real Assets (without Infra-Debt)	6%	5%	5%	5%	7%	7%
Others	1%	2%	3%	2%	3%	3%
Cash/STI	4%	3%	3%	3%	3%	2%
MV AuM in EUR bn. *	42.7	48.2	49.8	56.2	57.4	57.0

* 2018 – 2022 IAS 39 incl. Cash / >2023 IFRS9 excl. Cash

High-quality fixed-income book well balanced

High-quality fixed-income book well balanced Geographical allocation mainly in accordance with our broad business diversification
	Governments	Semi governments	Corporates	Pfandbriefe, Covered bonds, ABS	Short-term investments, cash	Total
AAA	75%	54%	0 %	57%	-	46%
A A	11%	23%	10%	13%	-	13%
A	9 %	8 %	34%	13%	-	17%
BBB	4 %	2 %	46%	15%	-	18%
<BBB	1 %	14%	10%	2 %	-	6 %
Total	100%	100%	100%	100%	-	100%
Germany	15%	25%	7 %	17%	38%	15%
UK	7 %	3 %	6 %	5 %	9 %	6 %
France	3 %	1 %	7 %	10%	0 %	4 %
GIIPS	0 %	1 %	5 %	3 %	0 %	2 %
Rest of Europe	3 %	15%	13%	28%	14%	10%
USA	54%	13%	33%	18%	3 %	37%
Australia	5 %	10%	7 %	9 %	1 %	6 %
Asia	10%	16%	9 %	1 %	28%	11%
Rest of World	4 %	17%	14%	9 %	7 %	10%
Total	100%	100%	100%	100%	100%	100%
Total b/s values in m. EUR	20,187	8,177	15,188	3,580	1,309	48,440

IFRS figures as at 30 June 2023

27 Conference Call on Q2/2023 financial results

Currency allocation matches liability profile as much as possible Duration-neutral strategy intact; lower modified duration as result of market yields

Currency split of investments

• Modified duration of fixed-income mainly congruent with liability- and capital-driven targets
• GBP's higher modified duration predominantly due to life business

Modified duration
2023Q2	4.7
2022	4.9
2021	5.8
2020	5.8
2019	5.7

Bank exposure at average market share Mixed quality picture over the world

* Economic view based on market values as at 30 June 2023 / 2017-2022 IAS39 / 2023 IFRS9 incl. assets from discontinued operations (e.g. IH)

| 1 | 2 | 3 | 4 | 5 | 6 Appendix |

Spread and default risks in focus

Higher P/L volatility to be expected due to non-SPPI assets

Portfolio	Scenario	Change in market value in m. EUR	Change in market value through P&L in m. EUR
	+50 bps	-1,203	-20
Fixed-income securities	+100 bps	-2,344	-40
Equity (listed and private equity)	-10%	-202	-202

As at 30 June 2023

Individual events with limited impact on Solvency ratio Solvency ratio robust under stressed conditions

Sensitivities and stress tests

1) 250 year return period acc. to our internal model which is equivalent to an occurrence probability of 0.4%.

2) Average stress level of +50 bps, differing by corporate bond issuer rating. Excl. government bonds and incl. impact of changes in dynamic volatility adjustment.

IR calendar

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-todate, 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.