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Repositioning of life and health reinsurance

  • Organizational restructuring;
  • Creation of a new trademark;
  • Partial relocation of activities to Dublin;

Hannover, 20 October 1999:

As explained by Wilhelm Zeller, Chairman of Hannover Re's Executive Board, the enormous growth of life and health reinsurance within the Hannover Re Group with a fourty-fold increase in the nineties and growth of 50 % in the current year alone necessitates the organizational restructuring of what is already the Group's second-largest strategic business segment. Worldwide life and health reinsurance activities (comprising subsidiaries, branch offices and representative offices in thirteen countries* on all five continents) are therefore to be reorganized with effect from January 1st, 2000 and combined to form an independent division headed by Executive Board member Dr. Wolf Becke.

Furthermore, in future it is envisaged that life and health reinsurance activities will be conducted under a new uniform trademark: "Hannover Life Re" has been registered as a trademark with the European Office for Harmonization on the E.U. Domestic Market in Alicante as well as with the United States Patent and Trademark Office in Arlington, Virginia as a trademark and service mark. In addition, the subsidiaries in South Africa (Hollandia Life Re) and the USA (Reassurance Company of Hannover) are to be renamed Hannover Life Re.

As a further step, Hannover Life Re (Ireland) was established in Dublin at the beginning of the month. It has been equipped with start-up capital of EUR 100 million, an amount which will be boosted to EUR 150 million as the volume of business increases. "In the medium-term Dublin will become our competence centre for financing transactions", commented Dr. Becke. Crucial factors in this decision were not primarily the favourable tax situation, but also and above all Irish accounting rules, which permit the deferral of acquisition costs something which is not possible in Germany. As Dr. Becke explained: "This will enable us to free ourselves from the growth restrictions imposed on the parent company in its international operations due to German accounting principles".

Hannover Life Re sees its role as that of a specialty reinsurer. Less than one-quarter of gross premium worldwide is attributable to traditional risk transfer products. More than three-quarters of the worldwide premium volume is generated by financing agreements as well as so-called block assumption transactions (under which closed blocks of business are assumed en bloc) and product partnerships. As of the end of 1999, Hannover Life Re anticipates depending on the exchange rates of key foreign currencies a consolidated gross premium income of about EUR 2.1 billion (almost one-third of the total premium volume of the Hannover Re Group). Dr. Becke is thus already able to claim Hannover Life Re's position among the five largest life and health reinsurers in the world. In the medium to long-term, his goal is to rise to number three in the world ranking. This is to be achieved through sustained organic growth of at least 20 % a year.

Mr. Zeller has nevertheless made it clear that property and casualty reinsurance would continue to be the Hannover Re Group's most important strategic segment. In this segment, the Group as a global player maintains reinsurance relationships with around 2,000 insurance companies in more than 100 countries and transacts all lines of business and types of reinsurance. "It is simply because of the current desolate state of the market that we have adopted a markedly cautious stance in property and casualty reinsurance", Mr. Zeller added. Further strategic segments of the Hannover Re Group are financial/finite-risk reinsurance, which is transacted from the International Financial Services Centre in Dublin, as well as so-called program business, an expanding segment written by the recently acquired Clarendon Insurance Group, New York.

* Australia, China, France, Germany, Ireland, Italy, Malaysia, Mexico, South Africa, Spain, Sweden, the United Kingdom and the USA.