HANNOVER, Germany, Oct. 7, 2002 (PRIMEZONE) -- Hannover Re (Other OTC:HVRRF) is calling an Extraordinary General Meeting on November 14, 2002. The principal item on the agenda is an amendment of the Articles of Association that will enable the company to utilize, as necessary, all currently available capital market instruments. In addition to providing for increased authorized capital, it is intended that for the first time a framework should be created for the issue of convertible and warrant bonds, dividend bonds and participation rights.
With this authorization, the company will be able, if and when required, to take quick and flexible action on the capital market.
Yet Wilhelm Zeller, Chairman of the Executive Board, emphasized: "This does not, however, mean that we are currently planning an equity increase. There is no need for such a step, nor is it attractive in the light of current developments on the capital markets." As Mr. Zeller explained: "Nevertheless, we want to keep all options open so as to ensure that in future we continue to be able to flexibly exploit market opportunities on the basis of our solid capital resources."
In the past 18 months Hannover Re has substantially reinforced its capital base. This was achieved through the creation of EUR 350 million in hybrid capital, an equity increase of around EUR 200 million, as well as a further risk securitization transaction representing an equity substitute of USD 230 million. In addition, with German business sharing in the very favourable development of the international markets, it is envisaged that the capital stock of 50.1% Hannover Re owned ES RuckversicherungsAG will be increased by EUR 300 million in the fourth quarter. These measures collectively strengthen the consolidated balance sheet of Hannover Re to the tune of approximately EUR 1 billion and put the company on a secure capital footing. Hannover Re expects the reinsurance markets to show further hardening in the 2003 renewal season. Whether, when and in what form this may trigger an additional capital requirement in 2003 cannot currently be foreseen.
Hannover Re further stressed that the expansion of its capital market options is in no way connected with a possible interest in parts of Gerling Global Re. As Mr. Zeller explained: "We are merely interested in certain attractive segments of Gerling Re's European life portfolio. Any acquisition of such portfolios would be done in the form of a routine reinsurance transaction that would not, under any circumstances, give rise to capital measures."
In the first half of 2002, Hannover Re generated remarkable growth of 36% in gross premium income with the increase in property and casualty reinsurance even surpassing 90%. For the 2002 year as a whole, the company expects growth of around 20% across all business groups. Despite the strains associated with major losses, such as the flood damage during the summer of 2002, and the depressed state of the capital market, Hannover Re currently anticipates an operating profit (EBIT) in excess of EUR 600 million and net income of around EUR 300 million for the year as a whole.
Hannover Re, with gross premiums of approx. EUR 12 bn., is the fifth-largest reinsurer in the world. It transacts all lines of property/casualty, life/health and financial/finiterisk reinsurance as well as program business. It maintains business relations with more than 2,000 insurance companies in over 100 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 19 countries. The American rating agencies Standard & Poor's and A.M. Best have awarded Hannover Re a rating of AA ("Very Strong") and A ("Superior"), respectively.