Outlook for the full 2018 financial year

In the current financial year we anticipate a very good overall result for the Hannover Re Group. Bearing in mind the developments in property and casualty as well as life and health reinsurance, we are looking to book single-digit percentage growth in gross premium – based on constant exchange rates.

In property and casualty reinsurance we expect a good increase in premium volume in light of the outcome of the treaty renewals as at 1 January 2018. The principal driver here is higher premium income in Asia and Australia, Western and Eastern Europe as well as North America, coupled with strong demand in structured reinsurance business. We shall nevertheless stand by our selective underwriting policy, under which in large part we write only business that satisfies our margin requirements. Looking ahead to the subsequent rounds of renewals during the year, the situation is expected to be similar to the one at the start of the year. Thanks to our good ratings, long-standing stable customer relationships and low expense ratio, a solid outcome should be attainable. We anticipate a good underwriting result, provided the burden of large losses is within our expectations. In terms of our targeted combined ratio, we continue to aim for a figure under 96%. The EBIT margin for property and casualty reinsurance should amount to at least 10%.

In the context of our Group strategy cycle we partially modified the key performance indicators for our worldwide life and health reinsurance. This is especially true of the growth target for gross premium, with average organic growth now expected to come in between 3% and 5% from 2018 onwards (at constant exchange rates; over a 3-year period, aligned with the 3-year Group strategy cycle). Going forward, we shall dispense with target EBIT margins for each reporting category. Instead, the new target that we have set ourselves is EBIT growth of more than 5% on average over a 3-year period. The targeted level for the Value of New Business remains unchanged at a minimum of EUR 220 million per year.

With regard to the IVC targets that we use to map economic value creation, we anticipate a minimum 2% xRoCA both for property and casualty reinsurance and for life and health reinsurance.

In view of the expected positive cash flow that we generate from the technical account and our investments, and assuming roughly stable exchange rates and interest rate levels, our asset portfolios should continue to grow. We are looking to deliver a return on investment of 2.7%.

For 2018 we anticipate Group net income of more than EUR 1 billion. This is subject to the proviso that large loss expenditure does not significantly exceed the budgeted level of EUR 825 million and that there are no unforeseen distortions on capital markets.