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Hannover Re monetises EUR 100 million of Life Embedded Value

Hannover, 16 February 2006:

Hannover Re has completed a transfer of life insurance risks into the international financial market with effect from 31 December 2005. Labelled "L6 securitisation", the transaction covers individual unit-linked policies from Germany and Austria and has been placed through a private placement with a leading European bank.

Through this transaction Hannover Re has monetised EUR 100 million of "embedded value" and converted a future earnings stream into a current liquidity position, thereby promoting greater financial flexibility and capital efficiency.

"This transaction, which follows five life transactions in the late 1990s and early 2000s – the so-called L1 - L5 securitisations –, enables Hannover Re to optimise its capital efficiency, improve its exposure profile and provide internal funding to support growth in international life business. What is more, it clearly demonstrates that "embedded value" is more than just an actuarial stipulation but constitutes a tangible asset that can be monetised under attractive terms and conditions in today's financial market", Wolf S. Becke, CEO of Hannover Life Re, explained.

Since 2000 the Hannover Re Group has managed its worldwide portfolio in life, health and annuities under the common brand name of 'Hannover Life Re'. Using a systematic CRM approach, this business group enjoys a substantial growth potential, and the financing of new business acquisition expenses has for many years been one of its core activities.

Hannover Re has pioneered the transfer of insurance risks into the capital market, completing the first securitisation of natural disaster risks in 1994. Including the life securitisations mentioned above, the Group has already successfully launched 12 securitisations to date. It can be expected that further life securitisation will follow in due course.