HANNOVER, Germany, Feb. 18, 2004 (PRIMEZONE) -- Hannover Re has successfully placed a subordinated debt issue of EUR 750 million in the European capital markets today via its guaranteed subsidiary Hannover Finance (Luxembourg) S.A. The bond - which was several times oversubscribed - was placed predominately with institutional investors in Europe by the lead managers Deutsche Bank and JPMorgan.
The bond was priced at a spread of 163 basis points over the 10-year mid-swap rate and has a final maturity of 20 years. It may be redeemed by Hannover Re after 10 years at the earliest. If the bond is not called at the end of year 10, the coupon will step-up by 100 basis points to a floating rate yield of quarterly EURIBOR + 263 basis points.
"We are highly satisfied with the placement of the bond. By issuing additional hybrid capital we are utilising the current low interest rate environment and optimising our capital base", Wilhelm Zeller, Chairman of the Executive Board, explained. This transaction further strengthens Hannover Re's position in the international reinsurance markets.
As already announced, the company also intends to buy back its USD 400 million subordinated debt deal issued in 1999 by Hannover Finance Inc., Wilmington, USA, so as to take advantage of the currently highly advantageous EUR/USD exchange rate. Given the fact that Hannover Re will also repay the surplus debenture of approximately EUR 120 million due in November 2004, the net interest burden will only marginally increase.
The present hybrid issue not only helps boost Hannover Re's capital base for only a negligible increase in interest burden, but also enhances its market appeal. It also benefits the shareholders of Hannover Re, as there will be no dilution of earnings per share.
For further information, please contact Eric Schuh (tel. +49/511/56 04-15 00; fax +49/511/56 04-16 48, e-mail eric.schuh@hannover-re.com).
Hannover Re, with gross premiums of EUR 12.5 billion, is one of the five largest reinsurance groups in the world. It transacts all lines of property/casualty, life/health and financial/finite-risk reinsurance as well as program business. It maintains business relations with more than 3,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 19 countries. 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").