Forecast

Group segment: Property/Casualty Primary Insurance

It is currently still too soon to reliably forecast the implications of the financial crisis in the current financial year for the insurance business written by the HDI-Gerling Property & Casualty Group. We nevertheless look to the current year with optimism. The first year of the crisis has already demonstrated that our insurance business is healthy to the core. With this in mind, we take a relaxed view of the situation: despite the difficult macroeconomic climate, virtually all companies belonging to the segment expect to further cement or even extend their positioning in their respective market segments in 2009. As far as premium income for 2009 is concerned, a modest decline is anticipated for the Property/Casualty Primary Insurance segment in Germany owing to the protracted difficult market conditions. In foreign markets we are again looking to moderate growth. Provided very large losses in industrial insurance do not exceed the average level and as long as there is no further turmoil on capital markets, we expect the operating profit (EBIT) to come in on a par with 2008.

Group segment: Life Primary Insurance

Although we are operating in a demanding environment, we anticipate positive business results for the Life Primary Insurance segment in the financial year that is already underway.

The Life Insurance division is superbly positioned with a range of innovative and flexible products. On the marketing side, too, the companies are very well placed. We have targeted a doubling of new business for the Life Group in Germany by 2012 as a concrete objective. In the Bancassurance division, too, based on our strong position in the market, the launch of new products and the further optimization of services for our partners, we expect to see a favorable development contrary to the general market trends.

Group segment: Non-Life Reinsurance

The treaty renewals as at 1 January 2009 presented a considerably improved picture in non-life reinsurance. Although the recession continues to spread, it will scarcely affect us as a reinsurer since its primary impact is on the income statement of companies and less on the fixed assets to be insured. Conditions for a financially strong reinsurer such as Hannover Re are good. The increased demand among insurers – triggered by diminished capital resources and greater risk awareness – is coming up against a reduced supply, hence prompting higher prices. A further positive factor is that the capital market’s interest in reinsurance products has faded. In view of this environment and our very healthy diversification, and thanks to our excellent rating, we are able to generate attractive business. In non-life reinsurance we continue to have a close eye on profitable niche business, as a consequence of which we are looking forward to a very positive development in the current financial year.

In the Group segment of Non-Life Reinsurance we are guided exclusively by profit rather than growth targets, although we anticipate a significant increase in gross premium purely as a consequence of movements in exchange rates. The favorable business development should – provided the burden of catastrophe losses does not significantly exceed the expected level – be reflected in a healthy profit contribution in the current year.

Group segment: Life/Health Reinsurance

The general environment for international life and health reinsurance remains favorable – not only in the short term but also from a medium-term perspective. Even against the backdrop of the current financial market crisis, the long-term demographic trends, heightened risk awareness among the urban middle classes, the opening up of the seniors’ market and the creative design of innovative types of products should generate sustained growth stimuli, especially in key emerging markets. In this context we believe that Hannover Life Re is very well positioned to share in these growth potentials to an above-average extent.