HANNOVER, Germany, Feb. 11, 2004 (PRIMEZONE) -- Hannover Re:
-- Take advantage of the current attractive interest rate
environment
-- Repurchase US dollar debt at highly advantageous exchange
rate
-- Repayment of surplus debenture will help avoid significant
increase in interest cost
Hannover Re intends to issue subordinated debt in the European capital markets via its subsidiary Hannover Finance (Luxembourg) S.A. The issue is expected to have a 20 year final maturity, and be of benchmark size, thus granting it a listing in the main credit indices. The bonds will be offered to institutional investors in several European financial centres from tomorrow onwards. The transaction is being lead managed by Deutsche Bank and JPMorgan.
"Hannover Re is utilising the current low interest rate environment to raise additional hybrid capital and further optimise its capital base. In this way we shall continue to strengthen our position in the international reinsurance markets," Wilhelm Zeller, Chairman of the Executive Board, explained.
As part of the transaction Hannover Re will also offer to buy back its USD 400 million subordinated debt issued in 1999 by Hannover Finance Inc., Wilmington, USA, so as to profit from the currently highly advantageous EUR/USD exchange rate. Hannover Re will also repay the surplus debenture of approximately EUR 120 million due in November 2004. As a result, the net interest burden will only marginally increase.
The proposed hybrid issue will not only help to boost Hannover Re's capital base for only a negligible increase in the interest load, as well as enhancing its market appeal, it will also directly benefit the shareholders of Hannover Re, as there will be no dilution of earnings per share.
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").