. Net premium rises by 7.9%
. Major loss burden still higher than the expected level
. Satisfactory Group net income: EUR 310.6 million
. Shareholders' equity grows by 14.1%
. Return on equity: 15.6%
. Forecast for the full financial year confirmed: Group net income of around EUR 600 million expected.

Hannover Re is satisfied with the development of business in the first half-year. "Despite a disproportionately heavy burden of major losses in the first half-year we generated net income after taxes in excess of EUR 300 million. This offers a good platform for achieving our 2010 profit target – namely Group net income of around EUR 600 million", Chief Executive Officer Ulrich Wallin explained.

Further premium growth in the first half of 2010
The gross written premium booked by the Hannover Re Group totalled EUR 5.7 billion (EUR 5.3 billion) as at 30 June 2010, an increase of 8.2% relative to the corresponding period of the previous year. At constant exchange rates, especially against the US dollar, growth would have come in at 5.7%. The level of retained premium decreased to 90.3% (93.0%). Net premium earned climbed by 7.9% to EUR 4.8 billion (EUR 4.5 billion).

The operating profit (EBIT) as at 30 June 2010 totalled EUR 490.7 million (EUR 603.3 million). The comparable period had, however, been influenced by positive special effects amounting to around EUR 161 million. These derived from the acquisition of the ING life reinsurance portfolio as well as the reversal of unrealised losses on deposits held by US clients on behalf of Hannover Re (ModCo derivatives). Adjusted for these special effects, EBIT would have grown by EUR 48.4 million or 11%. Group net income in the first half-year came in at EUR 310.6 million. The result for the corresponding period of the previous year in an amount of EUR 433.5 million included positive special effects of roughly EUR 144 million; after factoring out these special effects, Group net income would have grown by 7% as at 30 June 2010. Earnings per share amounted to EUR 2.58 (EUR 3.59); the annualised return on equity stood at 15.6% (28.8%).

Pleasing development of non-life reinsurance despite exceptional burden of major losses
Prices on non-life reinsurance markets were for the most part adequate. In keeping with its policy of active cycle management, Hannover Re enlarges its portfolio only in markets and segments that promise a return in line with its margin requirements. The premium volume in the non-life reinsurance business group as at 30 June 2010 improved on the comparable period by 6.2% to reach EUR 3.3 billion (EUR 3.1 billion). At constant exchange rates, especially against the US dollar, growth would have been 4.6%. Net premium earned climbed 6.3% to EUR 2.6 billion (EUR 2.5 billion).

While the burden of major losses in the second quarter of 2010 was lower than in the first quarter, it again exceeded the expected level for the second quarter. The loss of the "Deepwater Horizon" drilling rig in the Gulf of Mexico in April resulted in substantial environmental damage as well as corresponding strains for the insurance industry. Given the considerable uncertainty surrounding possible liability claims, the total loss expenditures are still difficult to forecast at the present time. "The loss reserves that we have established – giving rise to a net strain of EUR 89 million – reflect all concrete and potential exposures of our portfolio from this loss complex that are currently known to us", Mr. Wallin emphasised. Altogether, the net burden of major losses in the first half-year stood at EUR 407.6 million (EUR 163.3 million), a figure appreciably higher than the expected level. The combined ratio amounted to 99.5% (97.1%).

The net underwriting result declined from EUR 57.3 million in the comparable period to EUR 7.2 million. The operating profit (EBIT) in non-life reinsurance increased by 5.3% as at 30 June 2010 to EUR 333.8 million (EUR 317.1 million). Group net income contracted by 3.6% to EUR 215.1 million (EUR 223.2 million), equivalent to earnings per share of EUR 1.78 (EUR 1.85).

Further organic growth in life and health reinsurance
Hannover Re is thoroughly satisfied with the further development of its life and health reinsurance business group. The company generated organic growth across a broad front in the first half of 2010. In addition to continued expansion in developed markets such as the United Kingdom, United States and Germany, Hannover Re recorded further disproportionately strong percentage gains inter alia in the growth markets of East Asia, and here most notably in China.

Gross written premium posted another double-digit increase of 11.2% as at 30 June 2010 to EUR 2.4 billion (EUR 2.2 billion). At constant exchange rates growth would have totalled 7.2%. Net premium earned climbed 10.0% to EUR 2.2 billion (EUR 2.0 billion).

Profitability as at 30 June 2010 was also highly gratifying: the operating profit (EBIT) amounted to EUR 145.5 million (EUR 269.3 million). The result for the comparable period included positive special effects of around EUR 161 million. EBIT growth would have been as much as 34% if these effects were factored out. The EBIT margin of 6.7% is comfortably within the target corridor of 6% to 7%. Group net income reached EUR 113.8 million (EUR 227.0 million). If the special effects in the comparable period of around EUR 144 million for net account were eliminated, Group net income would have risen by 37%. Earnings per share stood at 94 cents (EUR 1.88).

Satisfactory investment income
Thanks to another rise in ordinary income and lower write-downs – and despite unrealised losses –, net investment income came in virtually on a par with the previous year, totalling EUR 551.4 million as at 30 June 2010 (EUR 569.2 million). Assisted by the inflow of cash from the technical account, but primarily due to interest and exchange rate movements on the markets, the portfolio of assets under own management grew to EUR 25.4 billion (31 December 2009: EUR 22.5 billion).

Further pleasing growth in shareholders' equity
The shareholders' equity of the Hannover Re Group improved on the level of 31 December 2009 (EUR 3.7 billion) by EUR 524.9 million or 14.1% to reach EUR 4.2 billion. The return on equity still came in at 15.6% despite the enormous surge in shareholders' equity. The book value per share amounted to EUR 35.15 (31 December 2009: EUR 30.80).

Outlook
In view of its very good market position and the overall satisfactory conditions prevailing on international reinsurance markets, Hannover Re anticipates a good result for 2010. The net premium volume booked by the Group should show growth in the region of 5%.

By and large, markets in non-life reinsurance are still seeing adequate prices. There is, however, no mistaking the fact that the substantial capacity offered by reinsurers relative to the demand for their products is leading to more intense competitive pressure. Consequently, rate increases can now only be obtained in loss-impacted sectors of the business. In view of the drilling rig disaster in the Gulf of Mexico, Hannover Re expects significant price increases in the offshore insurance market. The treaty renewals for some North American business as well as for the portfolio in Australia and New Zealand were completed on 1 July. Given that the capacity available in the American market is entirely sufficient, rate increases were for the most part recorded only under programmes that had suffered losses. Treaties in property catastrophe business were predominantly renewed after rate reductions. Prices in casualty business remained stable. In Australia moderate premium erosion could be observed – even under loss-affected programmes.

Hannover Re continues to expect net premium in non-life reinsurance to grow by around 4% in 2010.

In life and health reinsurance Hannover Re stands by its assumption that net premium will increase by around 10% in 2010. The EBIT margin is expected to come in within the target range of 6% to 7%.

The company is aiming for a return on investment of 3.5% on its asset portfolio in 2010.

Hannover Re confirms that it expects to achieve its profit forecast – namely Group net income of around EUR 600 million – for the 2010 financial year. "We are fully on track to build on the good 2009 result – adjusted for positive one-off effects", Mr. Wallin affirmed. This is subject to the premise that the major loss burden in the second half-year does not exceed the expected level of around EUR 280 million and also assumes that there are no drastically adverse movements on capital markets. As for the dividend, Hannover Re continues to aim for a payout ratio in the range of 35% to 40% of its IFRS Group net income.