Hannover Rueck SE — Earnings Release 2016

Mar 9, 2017

Welcome to Hannover Re's Analysts' Conference Annual Results 2016

London, 9 March 2017

Hannover Re posts fifth consecutive record result Dividend proposal increased to EUR 5.00 in total

	
	
	
	RoE 	remains well above our minimum target
	BVPS +11.5%, driven by strong earnings EUR 74.61 
		Investments
EUR 1,340 m. EBIT:	EUR 343 m.	NII: RoI from AuM:
 Strong EBIT margin of 16.8% driven by favourable U/W result (C/R: 93.7%)  Major losses of EUR 627 m. higher than 2015 but below expected level Premium development in line with  selective underwriting approach		RoI above full-year target of 2.9%  Ordinary investment income  current interest environment AuM increased by 6.2% 
		EUR 16,354 m. (-4.2%) EUR 14,418 m. (-1.2%) EUR 1,689 m. EUR 1,171 m. 13.7% EUR 3.50 + 1.50 230% Life & Health R/I EBIT in line with expectation; 2015 Strong profit contribution from financial solutions; technical result F/x-adj. GWP -4.3% mainly due to discontinuation of large-volume	GWP in line with guidance (f/x adjusted -2.1%) NPE f/x-adj. growth of +1.0% Good performance in U/W result and net investment income EUR 1,550 m. 3.0% benefited from positive one-off effect remains at attractive level in view of from US mortality below expectation treaties

Continued increase in AuM (+6.2%) ... ... supported by positive cash flow

Shareholders' equity up by 11.5% Higher dividend payment offset by strong earnings and increasing OCI

Growth in ordinary dividend reflects strong earnings power Payout: EUR 3.50 ordinary dividend + EUR 1.50 special dividend per share

Dividend per share									in EUR
Payout ratio: [38%]	[-]	[35%]	[37%]	[42%]	[43%]	[40%]	[52%]	[50%]	[51%]
								4.75	5.00*
							4.25		1.50
							1.25	1.50
					3.00	3.00
2.30		2.10	2.30	2.10	0,40
0,50					2.60	3.00	3.00	3.25	3.50
1.80	1.80
2007	2008	2009	2010	2011	2012	2013	2014	2015	2016

Dividend per share Special dividend per share

* Subject to consent of AGM

RoE on very attractive level, despite continued capital growth Continuous outperformance of minimum RoE target

* After tax; target: 900 bps above 5-year rolling average of 10-year German government bond rate ("risk free")

Hannover Re is one of the most profitable reinsurers

	2012		2013			2014	2015			2016	2012 - 2016
Company	RoE	Rank	RoE	Rank	RoE	Rank	RoE	Rank	RoE	Rank	avg. RoE	Rank
Peer 5, Bermuda, Property & Casualty	17.5%	1	17.1%	2	16.6%	1	13.0%	3	12.7%	2	15.4%	1
Hannover Re	15.4%	3	15.0%	3	14.7%	2	14.7%	1	13.7%	1	14.7%	2
Peer 8, Bermuda, Property & Casualty	15.9%	2	18.0%	1	13.7%	3	9.5%	7	10.0%	5	13.4%	3
Peer 3, Switzerland, Composite	13.4%	5	13.7%	4	10.5%	7	13.7%	2	10.6%	3	12.4%	4
Peer 2, Germany, Composite	12.6%	6	12.5%	5	11.3%	5	10.2%	6	8.3%	7	11.0%	5
Peer 7, Bermuda Property & Casualty	8.8%	9	11.8%	6	13.2%	4	10.3%	5	7.7%	8	10.4%	6
Peer 6, France, Composite	9.1%	8	11.2%	7	9.6%	9	10.7%	4	9.3%	6	10.0%	7
Peer 1, US, Property & Casualty	15.2%	4	9.4%	9	9.4%	10	7.5%	10	5.9%	10	9.5%	8
Peer 4, US, Life & Health	9.9%	7	6.5%	10	10.6%	6	7.6%	9	10.6%	4	9.0%	9
Peer 9, Bermuda Property & Casualty	4.9%	10	10.0%	8	10.4%	8	7.7%	8	6.8%	9	8.0%	10

List shows the Top 10 of the Global Reinsurance Index (GloRe) Data based on company data, own calculation

Group net income at record level Favourable earnings contribution from both underwriting and investments

Group figures in m. EUR	Q4/2015	Q4/2016	2015	2016
Gross written premium	4,123	3,900	17,069	16,354
Net premium earned	3,763	3,651	14,593	14,418
Net underwriting result	167	71	94	116
- Incl. funds withheld	269	154	489	448
Net investment income	440	404	1,665	1,550
- From assets under own mgmt.	338	322	1,270	1,218
- From funds withheld	102	82	395	332
Other income and expenses	(42)	25	(4)	23
Operating profit/loss (EBIT)	565	500	1,755	1,689
Interest on hybrid capital	(18)	(18)	(84)	(72)
Net income before taxes	547	482	1,671	1,618
Taxes	(158)	(84)	(456)	(391)
Net income	389	398	1,215	1,226
- Non-controlling interests	24	17	64	55
Group net income	365	381	1,151	1,171
Retention	84.0%	88.2%	87.0%	89.3%
EBIT margin (EBIT/Net premium earned)	15.0%	13.7%	12.0%	11.7%
Tax ratio	29.0%	17.5%	27.3%	24.2%
Earnings per share (in EUR)	3.02	3.16	9.54	9.71

• YTD
• GWP f/x-adjusted growth -2.1%
• NPE f/x-adjusted growth +1.0%
• Satisfactory EBIT margin of 11.7%
• Decrease in outstanding hybrid capital leads to lower leverage and savings in interest
• Tax ratio within normal range

Underwriting result increased by 11% Premium development in line with selective underwriting approach

Property & Casualty R/I in m. EUR	Q4/2015	Q4/2016	2015	2016	YTD
Gross written premium	2,019	2,084	9,338	9,205	GWP f/x adjusted -0.2%; growth mainly from  structured R/I and US, reduced volume from
Net premium earned	2,134	2,060	8,100	7,985	China motor business and specialty lines NPE f/x-adjusted +0.0% 
Net underwriting result incl. interest on funds withheld	185	209	452	503	Major losses of EUR 627 m. below budget  Conservative reserving of the most recent U/Y 
Combined ratio incl. interest on funds withheld	91.3%	89.9%	94.4%	93.7%	leads to positive run-off; confidence level of loss reserves largely stable
Net investment income from assets under own management	268	253	925	877	Satisfactory ordinary investment income 
Other income and expenses	(48)	(15)	(36)	(40)	Other income and expenses within normal  range, decreased positive f/x effects
Operating profit/loss (EBIT)	405	447	1,341	1,340	EBIT margin of 16.8%  (2015: 16.6%), well above target (10%)
Tax ratio	29.9%	21.2%	27.5%	25.3%	Net income increased by 3.8% 
Group net income	264	336	915	950
Earnings per share (in EUR)	2.19	2.79	7.58	7.88

Diversified reinsurance portfolio outperforms the MtCR

	2016: Combined Ratio vs. MtCR							EBIT
								margin
Target	North America*		91.0%					26.1%
markets	Continental Europe*		94.3%					15.8%
	Marine		38.5%					73.5%
	Aviation		72.8%					43.1%
Specialty	Credit, surety and political risks		104.9%					1.4%
lines worldwide	UK, Ireland, London market and direct		95.6%					25.0%
	Facultative R/I		95.6%					10.8%
	Worldwide Treaty* R/I		103.9%					4.0%
Global R/I	Cat XL		55.9%					56.0%
	Structured R/I and ILS		97.3%					7.8%
Total			93.7%					16.8%
		0%	20%	40%	60%	80%	100%	120%

MtCR = Maximum tolerable Combined Ratio Combined Ratio

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

Major losses below budget

Natural and man-made catastrophe losses* in m. EUR

1,730 ^{724 627} 2008 2009 2010 2011 2012 2013 2014 2015 2016 Gross Net Expected large losses (net) Natural and man-made catastrophe losses in % of Property & Casualty premium 8 % 13% 5 % 14% 25% 9 % 9 % 7 % 8 % 9 % 6 % 11% 5 % 12% 16% 7 % 8 % 6 % 7 % 8 % Expected large losses (net) in m. EUR 428 450 500 530 560 625 670 690 825

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

Large losses above 2015 level

Catastrophe losses* in m. EUR	Date	Gross	Net
Earthquake, Taiwan	6 Feb	21.6	19.2
Storm / Hail, USA	10 - 16 Apr	11.4	8.4
Earthquake, Japan	14 Apr	21.7	20.3
Earthquake, Ecuador	16 - 17 Apr	59.3	58.3
Wildfires, Canada	30 Apr - 5 May	190.8	127.9
Storm "Elvira", Germany, France	27 - 28 May	18.5	11.9
Storm / Flood, China	1 Jun - 31 Jul	13.2	13.2
Storm / Hail, Netherlands, Germany	22 - 23 Jun	18.2	9.2
Hail, Canada	30 Jul	15.1	9.1
Typhoon "Meranti", Taiwan, China	13 - 14 Sep	12.2	12.2
Hurricane "Matthew" Caribbean, USA	3 - 8 Oct	91.3	70.3
Earthquake, New Zealand	13 Nov	85.2	56.3
12 Natural catastrophes		558.3	416.4
4 Marine claims		124.6	66.5
4 Property claims		116.0	97.3
1 Aviation claim		12.3	11.1
1 Credit claim		35.2	35.2
22 Major losses		846.5	626.6

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

Favourable earnings contribution from L&H business Lower EBIT mainly due to positive one-off effect in previous year

Life & Health R/I in m. EUR	Q4/2015	Q4/2016	2015	2016	YTD
Gross written premium	2,104	1,816	7,731	7,149	GWP f/x adj. -4.3%, decrease in premium due  to discontinued large-volume treaties in
Net premium earned	1,628	1,591	6,492	6,432	Australia and China; reduced volume from UK annuities; NPE f/x-adjusted growth +2.2%
Net underwriting result incl. interest on funds withheld	83	(55)	35	(55)	Negative impact from legacy US mortality  business masks positive underlying trend
Net investment income from assets under own management	68	67	334	331	Ordinary investment income in line with  expectation
Other income and expenses	8	41	36	67	Improved other income mainly driven by  positive f/x effects and reduced LoC costs
Operating profit/loss (EBIT)	159	53	405	343	EBIT margins: 
EBIT margin	9.8%	3.3%	6.2%	5.3%	• Financial solutions: 18.5% (target: 2%)
Tax ratio	27.3%	15.6%	27.1%	25.2%	• Longevity: 2.2% (target: 2%) • Mortality/Morbidity 3.4% (target: 6%)
Group net income	112	44	290	253
Earnings per share (in EUR)	0.93	0.37	2.40	2.10

Strong increase in Value of New Business ... ... mainly driven by Financial Solutions business

1) Based on MCEV principles and post-tax reporting (in 2015 cost of capital already increased from 4.5% to 6% in line with Solvency II) 2) Based on Solvency II principles and pre-tax reporting

RoI target outperformed

Equities, RE and realisations largely compensate for lower ordinary income from FIS

in m. EUR	Q4/2015	Q4/2016	2015	2016	RoI
Ordinary investment income*	351	317	1,273	1,171	2.9%
Realised gains/losses	12	53	136	206	0.5%
Impairments/appreciations & depreciations	(14)	(15)	(38)	(76)	-0.2%
Change in fair value of financial instruments (through P&L)	10	(3)	1	26	0.1%
Investment expenses	(21)	(29)	(101)	(109)	-0.3%
NII from assets under own mgmt.	338	322	1,270	1,218	3.0%
NII from funds withheld	102	82	395	332
Total net investment income	440	404	1,665	1,550

Unrealised gains/losses of investments	31 Dec 15	31 Dec 16
On Balance-sheet	1,146	1,355
thereof Fixed income AFS	636	728
Off Balance-sheet	497	509
thereof Fixed income HTM, L&R	411	370
Total	1,643	1,864

YTD

• Decrease in ordinary income due to challenging yield environment and last year´s one-off effect from L&H business; higher contribution from dividends and real estate
• Realised gains up mainly due to private equity and last year´s oneoff burden from inflation swaps
• Increasing impairments driven by listed equities as well as regular depreciation on real estate
• Valuation reserves up year-on-year – driven by equities as well as narrowing credit spreads

* Incl. results from associated companies

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

Asset allocation

Investment category	31 Dec 16
Fixed-income securities	87%
- Governments	28%
- Semi-governments	17%
- Corporates	33%
Investment grade	28%
Non-investment grade	4%
- Pfandbriefe, Covered Bonds, ABS	9%
Equities	4%
- Listed Equity	2%
- Private Equity	2%
Real estate/real estate funds	5%
Others	1%
Short-term investments & cash	4%
Total market values in bn. EUR	42.3

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

Barbell strategy visible in fixed income composition Moderate increase in listed equities and real estate portfolios

Asset allocation1)

Investment category	2012	2013	2014	2015	2016
Fixed-income securities	92%	90%	90%	87%	87%
- Governments	19%	19%	21%	26%	28%
- Semi-governments	23%	20%	19%	17%	18%
- Corporates	33%	36%	36%	34%	33%
Investment grade	30%	33%	33%	30%	28%
Non-investment grade3 )	3%	3%	3%	4%	4%
- Pfandbriefe, Covered bonds, ABS	17%	15%	14%	10%	2) 9%
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%	5%
Others3 )	1%	1%	1%	1%	1%
Short-term investments & cash	3%	4%	4%	5%	4%
Total market values in bn. EUR	32.5	32.2	36.8	39.8	42.3

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 1,036.8 m. (EUR 837.1 m.) as at 31 December 2016

2) Of which Pfandbriefe and Covered Bonds = 76.3%

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

Solvency II reporting as at 31 December 2016

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

in m. EUR	31.12.2016 economic		31.12.2016 Solvency II	31.12.2015 Solvency II
Available Economic Capital / Own Funds		13,485	12,859*	11,983
Confidence Level	99.97%	99.5%	99.5%	99.5%
Required Capital / Solvency Capital Requirements	10,382	5,150	5,586	5,433
Excess Capital	3,103	8,335	7,273	6,549
Capital Adequacy Ratio	130%	262%	230%	221%
Minimum Target Ratio (Limit)	100%	200%	180%	180%
Minimum Target Ratio (Threshold)	110%	n/a	200%	200%

* The figure is based on the Solvency II reporting as of 31 December 2016. The related audits are at present (not fully) completed.

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 VaR 99.97%	13,485	10,382	130%
		-5,232
Internal Model at VaR 99.5%	13,485	5,150	262%
Haircut for Minority Interests1)	-626
	12,8592)	5,150	250%
Add-On, Standard Formula OpRisk		+436
Regulatory View at VaR 99.5%	12,8592)	5,586	230%

• Economic view: internal target confidence level at 99.97%, full internal model
• Regulatory view: partial internal model with standard formula for operational risk, confidence level at 99.5%, transferability restrictions on minority interests

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

2) The figures are based on Solvency II reporting as of 31 December 2016. The related audits are at present (not fully) completed

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 2016

1) Operational risk according to standard formula

2) Including differences stemming from diversification effects considered in the full internal model

High-quality capital base

Own funds largely dominated by Tier 1 capital supplemented by hybrid capital

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

As at 31 December 2016

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

Target Matrix 2016 Profit targets largely achieved

Business group	Key figures	Strategic targets for 2016	2016
Group	Return on investment1)	≥2.9%	3.0%
	Return on equity2)	≥9.9%	13.7%
	Earnings per share growth (y-o-y)	≥6.5%	1.8%
	Value creation per share3)	≥7.5%	18.6%
Property & Casualty R/I	Gross premium growth	3% - 5%4)	-0.2%
	Combined ratio	≤96%5)	93.7%
	EBIT margin6)	≥10%	16.8%
	xRoCA7)	≥2%	7.1%
Life & Health R/I	Gross premium growth	5% - 7%8)	-4.3%
	Value of New Business (VNB)9)	≥ EUR 220 m.	EUR 893 m.
	EBIT margin6) Financial solutions/Longevity	≥2%	9.4%
	EBIT margin6) Mortality/Morbidity	≥6%	3.4%
	xRoCA7)	≥3%	3.5%

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%)

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

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

Outlook 2017

Overall profitability still above margin requirements Property & Casualty reinsurance: mixed picture by line of business

	Lines of business	Volume1)	Profitability2)
Target markets	North America3)		+
	Continental Europe3)		+/-
Specialty lines worldwide	Marine		+/-
	Aviation		-
	Credit, surety and political risks		+/-
	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

Improving profitability driven by Financial Solutions business Life & Health reinsurance: stable to promising outlook

	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)

Guidance for 2017

Hannover Re Group

• Gross written premium1) low single-digit increase
• Return on investment2) 3) ~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)

• 2) Subject to no major distortions in capital markets and/or major losses in 2017 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

¹⁾ At unchanged f/x rates

Increasing earnings in the medium term Short-term stable earnings and payment of extraordinary dividends

Appendix

Our strategic business groups at a glance 2016 vs. 2015

	Property & Casualty R/I		Life & Health R/I			Total
in m. EUR	2015	2016	Δ	2015	2016	Δ	2015	2016	Δ
Gross written premium	9,338	9,205	-1.4%	7,731	7,149	-7.5%	17,069	16,354	-4.2%
Net premium earned	8,100	7,985	-1.4%	6,492	6,432	-0.9%	14,593	14,418	-1.2%
Net underwriting result	432	479	+10.8%	(340)	(363)	+6.7%	94	116	+23.6%
Net underwritung result incl. funds withheld	452	503	+11.2%	35	(55)	-	489	448	-8.3%
Net investment income	945	901	-4.7%	709	639	-9.9%	1,665	1,550	-6.9%
From assets under own management	925	877	-5.2%	334	331	-1.1%	1,270	1,218	-4.1%
From funds withheld	20	24	+19.2%	375	308	-17.8%	395	332	-15.9%
Other income and expenses	(36)	(40)	+10.6%	36	67	+86.9%	(4)	23	-
Operating profit/loss (EBIT)	1,341	1,340	-0.1%	405	343	-15.3%	1,755	1,689	-3.8%
Interest on hybrid capital	0	(0)	-	(0)	0	-	(84)	(72)	-15.0%
Net income before taxes	1,341	1,340	-0.1%	405	343	-15.3%	1,671	1,618	-3.2%
Taxes	(368)	(339)	-8.0%	(110)	(87)	-21.1%	(456)	(391)	-14.2%
Net income	973	1,001	+2.9%	295	257	-13.1%	1,215	1,226	+1.0%
Non-controlling interest	58	51	-11.8%	6	4	-33.3%	64	55	-13.7%
Group net income	915	950	+3.8%	290	253	-12.7%	1,151	1,171	+1.8%
Retention	89.3%	88.5%		84.2%	90.4%		87.0%	89.3%
Combined ratio (incl. interest on funds withheld)	94.4%	93.7%		99.5%	100.8%		96.7%	96.9%
EBIT margin (EBIT / Net premium earned)	16.6%	16.8%		6.2%	5.3%		12.0%	11.7%
Tax ratio	27.5%	25.3%		27.1%	25.2%		27.3%	24.2%
Earnings per share (in EUR)	7.58	7.88		2.40	2.10		9.54	9.71

Our strategic business groups at a glance Q4 stand-alone

	Property & Casualty R/I		Life & Health R/I			Total
in m. EUR	Q4/2015	Q4/2016	Δ	Q4/2015	Q4/2016	Δ	Q4/2015	Q4/2016	Δ
Gross written premium	2,019	2,084	+3.2%	2,104	1,816	-13.7%	4,123	3,900	-5.4%
Net premium earned	2,134	2,060	-3.5%	1,628	1,591	-2.3%	3,763	3,651	-3.0%
Net underwriting result	181	204	+12.5%	(15)	(132)	-	167	71	-
Net underwritung result incl. funds withheld	185	209	+13.1%	83	(55)	-	269	154	-
Net investment income	272	258	-5.0%	166	144	-13.2%	440	404	-8.3%
From assets under own management	268	253	-5.7%	68	67	-0.9%	338	322	-4.9%
From funds withheld	4	5	+39.3%	98	77	-21.8%	102	82	-19.5%
Other income and expenses	(48)	(15)	-	8	41	-	(42)	25	-
Operating profit/loss (EBIT)	405	447	+10.5%	159	53	-	565	500	-11.5%
Interest on hybrid capital	0	(0)	-	(0)	(0)	-	(18)	(18)	-0.2%
Net income before taxes	405	447	+10.5%	159	53	-	547	482	-11.8%
Taxes	(121)	(95)	-	(43)	(8)	-	(158)	(84)	-
Net income	284	353	+24.1%	115	45	-61.4%	389	398	+2.4%
Non-controlling interest	20	16	-20.6%	4	1	-83.8%	24	17	-30.1%
Group net income	264	336	+27.6%	112	44	-60.6%	365	381	+4.5%
Retention	91.1%	89.1%		77.2%	87.2%		84.0%	88.2%
Combined ratio (incl. interest on funds withheld)	91.3%	89.9%		94.9%	103.5%		92.9%	95.8%
EBIT margin (EBIT / Net premium earned)	19.0%	21.7%		9.8%	3.3%		15.0%	13.7%
Tax ratio	29.9%	21.2%		27.3%	15.6%		29.0%	17.5%
Earnings per share (in EUR)	2.19	2.79		0.93	0.37		3.02	3.16

Well balanced international portfolio

1) Japan 2% 2) CEE and Russia 2%

Property & Casualty reinsurance: selective growth

* All lines of business except those stated separately

Life & Health reinsurance: a well diversified portfolio

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

Portfolio	Scenario	Change in market value in m. EUR	Change in OCI before tax in m. EUR
Equity (listed and private equity)	-10%	-169	-169
	-20%	-339	-339
	+50 bps	-903	-808
Fixed-income securities	+100 bps	-1,760	-1,575
Credit spreads	+50%	-865	-832
	-10%	-194	-73
Real estate	+10%	194	44

As at 31 December 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	76.8%	65.7%	1.0%	67.1%	-	45.8%
A A	11.4%	27.9%	13.4%	14.1%	-	15.7%
A	6.2%	2.3%	35.5%	5.4%	-	16.1%
BBB	4.1%	1.2%	41.6%	9.4%	-	17.8%
<bbb< td="">	1.4%	3.0%	8.5%	4.0%	-	4.6%	1.4%	3.0%	8.5%	4.0%	-	4.6%
Total	100.0%	100.0%	100.0%	100.0%	-	100.0%
Germany	10.1%	49.5%	3.9%	27.3%	38.1%	18.5%
UK	5.4%	2.7%	7.8%	9.4%	3.6%	6.1%
France	1.9%	2.3%	7.8%	7.0%	1.0%	4.5%
GIIPS	1.2%	0.9%	4.6%	4.2%	0.0%	2.6%
Rest of Europe	4.4%	15.9%	16.7%	23.4%	2.7%	12.7%
USA	61.0%	5.0%	36.0%	5.4%	14.7%	33.9%
Australia	3.7%	8.0%	6.9%	11.8%	6.4%	6.6%
Asia	7.6%	4.6%	4.8%	0.0%	21.4%	5.9%
Rest of World	4.7%	11.0%	11.5%	11.5%	12.1%	9.3%
Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%
Total b/s values in m. EUR	11,655	7,173	12,977	3,666	1,688	37,158

IFRS figures as at 31 December 2016

Currency allocation matches liability profile of balance sheet Investment portfolio adjusted to increased duration of liabilities

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 31 December 2016: 5.0

Partial inflation hedge: inflation expectation still low... ...but especially in US higher inflation trend anticipated from 2018 onwards

Average hedged inflation levels:

• 1.44% EUR p.a.
• 2.12% USD p.a.
• 2.34% AUD p.a.

Sensitivity to inflation

in m. EUR	Inflation-linked bonds: Change in market value through OCI
Inflation expectation*: +100 bps	+94
Inflation expectation*: -100 bps	-87
Inflation expectation*: +400 bps	+423

Bond volume

Nominal value of inflation-linked bonds

• USD: EUR 1,146 m.
• EUR: EUR 347.9 m.
• AUD: EUR 124.0 m.
• Total amount: EUR 1,618.2 m.

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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