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Hannover Rück (Other OTC:HVRRF.PK) Hannover, 19 June 2008: Hannover Re has completed the first transaction as part of its extended Insurance-Linked Securities (ILS) activities. Property catastrophe risks of a number of US cedants have been pooled and transferred to the capital market in several tranches. In contrast to the company's previous securitisations, Hannover Re's interest here is not in protecting its own business but in directly transferring clients' business to the capital market.
"With this type of pooling and transformer function we enable ceding companies to access the capital market - even for risks that would not lend themselves to this on an independent basis", Chief Executive Officer Wilhelm Zeller explained.
The transferred portfolio consists exclusively of US catastrophe business, predominantly hurricane risks in Florida. The reinsurance intermediary Benfield brokered the relevant contracts and modelled the portfolio.
A special purpose entity named Globe Re was established in Bermuda for this transaction; it is capitalised at USD 133 million.
Globe Re is funded by an equity tranche of USD 33 million and a further USD 100 million in bonds. Benfield and Hannover Re have participated in the equity tranche in amounts of USD 20.5 million and USD 5 million respectively. The bonds - split into three tranches of "BBB-", "BB" and "B" according to Standard & Poor's rating categories - were placed with institutional investors primarily in North America. The investors receive an attractive coupon depending on the risk category. The term of the transaction is one year.
Hannover Re placed the world's first risk securitisation back in 1994 and has since gone on to realise altogether 15 innovative transactions for both non-life and life/health reinsurance. Globe Re is the first transaction to come out of the company's newly created Insurance-Linked Securities department. Set up at the turn of the year, this unit is tasked inter alia with pooling risks from primary insurers and transforming them into securities that can be placed on the capital market. In this context Hannover Re works together with international reinsurance brokers; the cooperation with the reinsurance intermediary Benfield is a first successful example of this approach.
For further information please contact:
Press and Public Relations / Investor Relations: Stefan Schulz (tel. +49 / 511 / 56 04-15 00, e-mail: stefan.schulz@hannover-re.com)
Press and Public Relations: Gabriele Handrick (tel. +49 / 511 / 56 04-15 02, e-mail: gabriele.handrick@hannover-re.com)
Hannover Re, with a gross premium of around 8 billion euro, is one of the leading reinsurance groups in the world. It transacts all lines of non-life and life and health reinsurance. 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 1,800. 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.
