As one of the leading reinsurers in the world, Hannover Re bears a dual responsibility with regard to its core business: firstly, for its reinsurance activities and, secondly, for the management of its investments. Hannover Re's range of reinsurance products and services is geared to the needs of the market and its clients. In the process of evaluating and protecting against risks, the company finds itself confronted with increasing complexity due to the growing importance of various aspects of sustainability. These include not only the proliferation of geopolitical and economic uncertainties, but also developments such as shifting demographics, changing human mobility patterns, increasingly widespread digitalisation and the resulting cyber risks as well as climate changes and the associated debates in relation to food and water security.
Some of these considerations also have direct strategic and operational relevance to Hannover Re's reinsurance products. In light of these changing challenges facing society, the company will increasingly offer solutions designed to protect against emerging economic, social and environmental risks. In this context special importance attaches to protecting against risks that result from climate change as well as to insurance coverage for socially deprived groups. With this in mind, safeguarding agricultural production is particularly important for the development of poor regions. Against this backdrop, for example, the InsuResilience initiative of the G7 nations launched at the instigation of the German federal government has set itself the goal of offering insurance protection against climate risks to 400 million poor and at-risk individuals in developing countries by the year 2020. Hannover Re is already supporting selected projects currently being conducted as part of this initiative that are intended to strengthen the resilience of various countries.
Hannover Re’s investment policy is geared to the generation of stable and risk-commensurate returns while at the same time safeguarding liquidity and solvency. In so doing, the company ensures high diversification of risks and limits currency exposures and maturity risks through matching currencies and maturities. The modified duration of the bond portfolio is therefore guided largely by the insurance-side liabilities. In addition, Hannover Re incorporates environmental, social and governance criteria (ESG criteria) into its investment policy. This is guided in particular by the ten principles of the United Nations Global Compact, which reflect values relating to human rights, working conditions, the environment and anti-corruption. The investments are reviewed half-yearly with an eye to compliance with these ESG criteria. Exclusion from the investment universe is provided for in the event of failure to comply with the criteria. Furthermore, investments in correspondingly identified securities are also prospectively avoided. In developing and continuously reviewing the investment strategy, Hannover Re works together with a service provider that specialises in sustainability.