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Hannover Re's estimates remain firm

An increase in the estimated loss as a result of the terror acts in the USA will not be necessary


Hannover, 24 September 2001:

Contrary to the press announcements of our competitors on 20 September 2001, we see no reason to increase the loss estimate of Hannover Re resulting from the terror acts in the USA. Nearly two weeks after this unparalleled event for the insurance industry, the estimate of net loss exposure for the Hannover Re Group remains as previously stated at approximately EUR 400 million.

The current market speculation that Hannover Re will also publish increased loss estimates in the next few days is incorrect.

One of the main reasons for the very stable initial loss prognosis is due to the longer period of time Hannover Re allowed itself (in contrast to the above-mentioned companies) in piecing together its initial estimates. The extended time meant that losses arising from buildings neighbouring the World Trade Center could be incorporated in the total figure.

Furthermore, as it turns out, the more accurate loss estimate is also due to the fact that Hannover Re did not rely on initial forecasts of the total market loss when estimating its own losses. Rather, staff examined every individual contract and estimated losses per contract and line of business to calculate the total expected loss for Hannover Re.This procedure also led to the early realisation that not all retrocessionaires may be able to comply with all their obligations under retrocession contracts. Even this fact has already been taken into account by Hannover Re.

Even including the exposure from the terror acts in the USA and taking into account the current falls in the international stock markets, the financial strength of the company means that it will be able to benefit fully from the significantly improved market conditions for 2002. With this background, Hannover Re is confident that it will be possible to produce an extremely positive result next year.