Hannover Re Completes Its Programme of Protection Cover On the Capital Market

Hannover, GERMANY


HANNOVER, Germany, March 6, 2007 (PRIME NEWSWIRE) -- In the first transaction of its type Hannover Re has placed on the capital market an aggregate XL cover of US$200 million on its worldwide natural catastrophe business. The company has thus further improved its risk management and rounded off its programme of protection cover.

'Kepler Re,' the special purpose entity set up for this transaction, protects Hannover Re's retention of roughly 58 percent from the natural catastrophe business included in its 'K5' capital market transaction. The cover attaches for an aggregated 83-year event; it is exhausted if a 250-year accumulation is reached. Within this spread 'Kepler Re' assumes approximately 48% of losses incurred for the 'K5' natural catastrophe portfolio, while the remaining 10% are retained by Hannover Re. It is of no relevance here whether the events in question involve numerous small or just a few large losses. 'Kepler Re' is funded in an amount of US$200 million by capital contributions from investors.

Under 'K5' Hannover Re cedes to investors roughly 42% of its worldwide natural catastrophe business included in the transaction. The upper range of the remaining retention is now also protected at an attractive price. "We have thus protected our portfolio better than ever against expensive catastrophe losses and basic claims," Chief Executive Officer Wilhelm Zeller explained. "As a result, we enjoy unprecedented independence from the traditional retrocession market."

The 'Kepler Re' investors receive a quarterly return on their invested capital that is commensurate with the risks. There is no credit risk for Hannover Re because the capital contributions are collateralised.

The transaction came into effect on 1 March 2007 and runs until December 2008.

Hannover Re, with a gross premium of approximately EUR 10 billion, is one of the leading reinsurance groups in the world. It transacts all lines of property/casualty, life/health and financial reinsurance as well as specialty insurance. It maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in around 20 countries with a total staff of roughly 2,000. The rating agencies most relevant to the insurance industry have awarded Hannover Re very strong insurer financial strength ratings (Standard & Poor's AA- "Very Strong" and A.M. Best A "Excellent").

Disclaimer:

Some of the statements in this press release may be forward-looking statements or statements of future expectations based on currently available information. Such statements are naturally subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. Hannover Re does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such statements. Therefore, in no case whatsoever will Hannover Re and its affiliate companies be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages.


        

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