Hannover Re 2005 Pretax Net Income Down 89.8% to $57.78 Million

March 27, 2006

Germany’s Hannover Re managed to eke out a small profit in 2005, despite over a billion dollars in hurricane losses, due to investment income. The company posted pretax profits of €48 million ($57.78 million) an 89.9 percent drop from the €471 million ($570 million) it achieved in 2004. The Group’s combined ratio rose to 106.4 percent for the year.

Other earnings highlights, as given in the Group’s press release included the following:
— Net burden of catastrophe losses in property and casualty reinsurance unchanged from Q3/2005
— Life and health reinsurance shows vigorous growth and strong profitability
— Financial reinsurance highly profitable despite sharply reduced premium volume
— Restructuring of specialty insurance progressing entirely as planned [i.e. the ongoing makeover at U.S. subsidiary Clarendon]
— Policyholders’ surplus +10.1 percent
— Investments (excluding funds held by ceding companies) +19.4 percent
— Net investment income (excluding interest on deposits) +11.8 percent
— Very good earnings prospects for 2006

As the bulletin notes, however, “The hallmark of the 2005 financial year for international reinsurers was an unparalleled burden of natural catastrophe losses. For Hannover Re these events produced historically unprecedented major loss expenditure in excess of 1 billion euros for net account.

“Hurricanes ‘Katrina’, ‘Rita’ and ‘Wilma’ alone inflicted a net loss on the company of almost 800 million euros. The total strain thus remained in line with the amount already estimated at the end of the third quarter.”

CEO Wilhelm Zeller observed at the press briefing on the annual results held in Hannover: “The fact that we were able to close this difficult financial year without depletion of our capital – unlike most of our competitors – is a testament to our strong profitability and good portfolio diversification.”

The full report and the analysts’ presentation may be obtained on the Group’s Website at: www.hannover-re.com.

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