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Hannover Re's losses from flood catastrophe within the multi-year average

Hannover, 2 September 2002: Now that the situation in the flooded areas of Central and Eastern Europe is slowly returning to normal, our clients the primary insurers have also begun to analyse the resulting damage and to draw up initial estimates of the burden of losses.

The total economic loss produced by the flooding in Europe is currently estimated at approximately EUR 15 billion. Only a small portion of this total loss amount is insured, however. The losses for our company derive mainly from Germany and the Czech Republic, but also from Austria and Italy. Based on our initial insights we anticipate a gross loss burden in the order of EUR 150 million. Taking our own reinsurance into account the burden retained will be well below EUR 100 million before tax. After tax the loss is unlikely to exceed EUR 50 million.

While these losses are certainly significant, the strain for our account for the current year is still within the bounds of our multi-year expectation for natural catastrophe losses. Therefore, we continue to believe our goal for the 2002 financial year of generating EBIT of more than EUR 600 million and net income of around EUR 300 million to be attainable, provided that both capital market movements and any further losses remain within normal bounds.