Obligation Hannover Rückversicherung SE 1.125% ( XS1808482746 ) en EUR

Hannover Rückversicherung SE

95.51 % ▲

Allemagne

XS1808482746 ( en EUR )

1.125% par an ( paiement annuel )

17/04/2028

Prospectus brochure de l'obligation Hannover Rückversicherung SE XS1808482746 en EUR 1.125%, échéance 17/04/2028

100 000 EUR

750 000 000 EUR

18/04/2025 ( Dans 337 jours )

L'Obligation émise par Hannover Rückversicherung SE ( Allemagne ) , en EUR, avec le code ISIN XS1808482746, paye un coupon de 1.125% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 17/04/2028

Prospectus dated 13 April 2018

Hannover Rück SE
(a European Company (Societas Europaea SE) incorporated in Hannover,
Federal Republic of Germany)
750,000,000 1.125 per cent. Notes due 2028
ISIN XS1808482746, Common Code 180848274, WKN A2LQ42
Issue price: 99.195 per cent.
Hannover Rück SE (the "Issuer") will issue on or about 18 April 2018 (the "Issue Date") 750,000,000 1.125 per cent. Notes due
2028 (the "Notes") in the denomination of 100,000 each.
The Notes will be governed by the laws of the Federal Republic of Germany ("Germany").
The Notes will be redeemed at par on 18 April 2028. The Notes will bear interest from and including the Issue Date to, but excluding
18 April 2028 (the "Maturity Date") at a rate of 1.125 per cent. per annum, payable annually in arrear on 18 April of each year (each
such date, an "Interest Payment Date"), commencing on 18 April 2019.
Unless previously redeemed or repurchased and cancelled, the Notes will be redeemed at par on the Maturity Date.
The Notes will be represented by a Global Note (as defined in the section Terms and Conditions of the Notes) without interest
coupons.
This prospectus in respect of the Notes (the "Prospectus") constitutes a prospectus within the meaning of Article 5.3 of Directive
2003/71/EC of the European Parliament and of the Council of 4 November 2003 (as amended, inter alia, by Directive 2014/51/EU)
(the "Prospectus Directive"). This Prospectus will be published in electronic form together with all documents incorporated by
reference on the website of the Luxembourg Stock Exchange (www.bourse.lu).
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier, Luxembourg ("CSSF") in its capacity
as competent authority under the Luxembourg Act dated 10 July 2005 relating to prospectuses for securities (Loi du 10 juillet 2005
relative aux prospectus pour valeurs mobilières, the "Luxembourg Prospectus Law"). By approving this Prospectus, the CSSF
gives no undertaking as to the economic and financial opportuneness of the transaction and the quality or solvency of the Issuer in
line with the provisions of article 7 (7) of the Luxembourg Prospectus Law. The Issuer may request CSSF to provide competent
authorities in other host Member States within the European Economic Area with a certificate of approval attesting that the Prospectus
has been drawn up in accordance with the Luxembourg Prospectus Law.
Application has been made to the Luxembourg Stock Exchange for the Notes to be listed on the official list of the Luxembourg Stock
Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's regulated market "Bourse de
Luxembourg", appearing on the list of regulated markets issued by the European Commission. The Luxembourg Stock Exchange's
regulated market is a regulated market for the purposes of Directive 2014/65/EU (as amended, "MiFID II").
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and
subject to certain exceptions, the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S.
persons.
Prospective purchasers of the Notes should ensure that they understand the nature of the Notes and the extent of their exposure to
risks and that they consider the suitability of the Notes as an investment in the light of their own circumstances and financial condition.
Investing in the Notes involves certain risks. Please review the section entitled "Risk Factors" beginning on page 5 of this Prospectus.
Joint Lead Managers
ABN AMRO Bank
BNP PARIBAS
Deutsche Bank
UniCredit Bank
Co-Lead Manager
Landesbank Baden-Württemberg

RESPONSIBILITY STATEMENT
The Issuer with its registered office in Germany accepts responsibility for the information contained in this Prospectus
and hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in this
Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.
The Issuer further confirms that (i) this Prospectus contains all relevant information with respect to the Issuer (also
"Hannover Re") and its consolidated subsidiaries taken as a whole (the "Hannover Re Group" or the "Group") and to
the Notes which is material in the context of the issue and the offering of the Notes, including all relevant information
which, according to the particular nature of the Issuer and of the Notes is necessary to enable investors and their
investment advisers to make an informed assessment of the assets and liabilities, financial position, profits and losses,
and prospects of the Issuer and the Hannover Re Group and of the rights attached to the Notes; (ii) the statements
contained in this Prospectus relating to the Issuer, the Hannover Re Group and the Notes are in every material respect true
and accurate and not misleading; (iii) there are no other facts in relation to the Issuer, the Hannover Re Group or the Notes
the omission of which would, in the context of the issue and offering of the Notes, make any statement in the Prospectus
misleading in any material respect; and (iv) reasonable enquiries have been made by the Issuer to ascertain such facts and
to verify the accuracy of all such information and statements.
NOTICE
No person is authorised to give any information or to make any representation other than those contained in this Prospectus
and, if given or made, such information or representation must not be relied upon as having been authorised by or on
behalf of the Issuer or ABN AMRO Bank N.V., BNP Paribas, Deutsche Bank AG, London Branch and UniCredit Bank
AG (together, the "Joint Lead Managers") and Landesbank Baden-Württemberg (the "Co-Lead Manager" and together
with the Joint Lead Managers, the "Managers").
This Prospectus should be read and understood in conjunction with any supplement hereto and with all documents
incorporated herein or therein by reference.
This Prospectus contains certain forward-looking statements, including statements using the words "believes",
"anticipates", "intends", "expects" or other similar terms. This applies in particular to statements under the caption
"General Information on the Issuer and the Hannover Re Group" and statements elsewhere in this Prospectus relating to,
among other things, the future financial performance, plans and expectations regarding developments in the business of
the Hannover Re Group. These forward-looking statements are subject to a number of risks, uncertainties, assumptions
and other factors that may cause the actual results, including the financial position and profitability of the Hannover Re
Group, to be materially different from or worse than those expressed or implied by these forward-looking statements. The
Issuer does not assume any obligation to update such forward-looking statements and to adapt them to future events or
developments.
Each investor contemplating purchasing any Notes should make its own independent investigation of the financial
condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. This Prospectus does not constitute an
offer of Notes or an invitation by or on behalf of the Issuer or the Managers to purchase any Notes. Neither this Prospectus
nor any other information supplied in connection with the Notes should be considered as a recommendation by the Issuer
or the Managers to a recipient hereof and thereof that such recipient should purchase any Notes.
This Prospectus reflects the status as at its date. The offering, sale and delivery of the Notes and the distribution of the
Prospectus may not be taken as an implication that the information contained herein is accurate and complete subsequent
to the date hereof or that there has been no adverse change in the financial condition of the Issuer since the date hereof.
To the extent permitted by the laws of any relevant jurisdiction, neither any Manager nor any of its respective affiliates
nor any other person mentioned in the Prospectus, except for the Issuer, accepts responsibility for the accuracy and
completeness of the information contained in this Prospectus or any other document incorporated by reference and
accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none of these persons accept any
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responsibility for the accuracy and completeness of the information contained in any of these documents. The Managers
have not independently verified any such information and accept no responsibility for the accuracy thereof.
This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer
or solicitation.
The distribution of this Prospectus and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted
by law. Persons into whose possession this Prospectus comes are required to inform themselves about and to observe any
such restrictions. For a description of the restrictions see "Subscription and Sale of the Notes Selling Restrictions". In
particular, the Notes have not been and will not be registered under the Securities Act and are subject to United States tax
law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States
of America or to U.S. persons as defined in Regulation S under the Securities Act ("Regulation S").
Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the
Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients
only, each as defined in MiFID II; and (ii) all channels for distribution of the Notes to eligible counterparties and
professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a
"distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject
to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or
refining the manufacturers' target market assessment) and determining appropriate distribution channels.
The legally binding language of this Prospectus is English. Any part of the Prospectus in German language constitutes a
translation, except for the Terms and Conditions in respect of which German is the legally binding language.
In this Prospectus, all references to "", "EUR" or "Euro" are to the currency introduced at the start of the third stage of
the European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May
1998 on the introduction of the Euro, as amended.
IN CONNECTION WITH THE ISSUE OF THE NOTES, DEUTSCHE BANK AG, LONDON BRANCH (THE
"STABILISING MANAGER") (OR ANY PERSON ACTING ON BEHALF OF ANY STABILISING MANAGER)
MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET
PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER,
STABILISATION MAY NOT NECESSARILY OCCUR. ANY STABILISATION ACTION MAY BEGIN ON OR
AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE
NOTES IS MADE AND, IF BEGUN, MAY CEASE AT ANY TIME, BUT IT MUST END NO LATER THAN THE
EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE
ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE
CONDUCTED BY THE STABILISING MANAGER (OR ANY PERSON ACTING ON BEHALF OF THE
STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
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TABLE OF CONTENTS
RISK FACTORS................................................................................................................................................................. 5
TERMS AND CONDITIONS OF THE NOTES .............................................................................................................. 26
USE OF PROCEEDS ....................................................................................................................................................... 46
GENERAL INFORMATION ON THE ISSUER AND THE HANNOVER RE GROUP................................................ 47
TAXATION ...................................................................................................................................................................... 62
SUBSCRIPTION AND SALE OF THE NOTES ............................................................................................................. 66
GENERAL INFORMATION ........................................................................................................................................... 68
DOCUMENTS INCORPORATED BY REFERENCE .................................................................................................... 70

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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Notes. Factors which
the Issuer believes may be material for the purpose of assessing the market risks associated with the Notes are also
described below. All of these factors are contingencies which may or may not occur and the Issuer is not in a position to
express a view on the likelihood or the extent of any such contingency occurring. Additional risks not currently known to
the Issuer or the Hannover Re Group that are now immaterial may result in material risks in the future.
The Issuer believes that the factors described below represent the principal risks inherent in investing in the Notes, but
the Issuer may be unable to pay interest, principal or other amounts on or in connection with the Notes for other reasons
than those described below, and the Issuer does not represent that the statements below are exhaustive. Prospective
investors should also read the detailed information set out elsewhere in this Prospectus (including any documents
incorporated by reference herein) and reach their own views prior to making any investment decision.
Words and expressions defined in the "Terms and Conditions of the Notes" below shall have the same meanings in this
section.
Risks relating to the Issuer and the Hannover Re Group
Set out below are risks associated with the Issuer and the Hannover Re Group which may have a material impact on its
business operations and/or the level and volatility of its profitability, and therefore its ability to perform its obligations
under the Notes, including:
Hannover Re Group's business-related risks
Business relations with primary insurers
Within the scope of its reinsurance business, the Hannover Re Group underwrites the business of primary insurers, which
means that facts and circumstances in the insurers' environment may also indirectly influence the Hannover Re Group.
These circumstances include, in particular, the risk that insurers may write less business as a result of which a smaller
volume is also reinsured , the risk that insurers may write business, the quality of which is incorrectly assessed by the
Hannover Re Group as more favourable than it actually is, and the risk that the credit status of insurers may develop worse
than the Hannover Re Group had anticipated at the time when the reinsurance treaties in question were written. The
materialisation of each of these individual circumstances could detrimentally affect the assets, financial position and net
income of the Hannover Re Group.
In life and health reinsurance, a particular risk arises because some capital investment portfolios are not directly under
the control of the reinsurer. This applies to certain U.S. life insurance policies ("modified coinsurance"). Under these
contracts, the cedant retains securities in a securities account that secure the risks that it has ceded to the reinsurer.
Payments to the reinsurer are rendered only at a later point in time and contain a portion of the gross premium collected
from the cedant and the income on the securities. Accordingly, the Hannover Re Group has to rely on third parties for the
proper administration of the related investment portfolio. In such circumstances, it is common for the reinsurer to mitigate
this risk by having agreed investment guidelines with the cedant which specify the risk limits to which the underlying
portfolio is to be managed to. Changes in the value of such investment portfolios can detrimentally influence the net
income of the Hannover Re Group.
Business relations with retrocessionaires and counterparty risks
The Hannover Re Group systematically uses retrocessions and protection covers or transfers risks from reinsurance
business to the capital markets to smooth results and optimise its net income; in this context it attaches considerable
importance to the quality and credit status of its retrocessionaires or the providers of a security. The assets, financial
position and net income of the Hannover Re Group could therefore be adversely affected if the market conditions for
retrocession deteriorate to the detriment of reinsurers in the future, if certain protection covers especially catastrophe
5

excess of loss covers are no longer available or if individual retrocessionaires should become unable or unwilling to
pay.
The Hannover Re Group has monetary and securities claims under numerous transactions against retrocessionaires, ceding
companies, brokers and other debtors. An economic downturn, negative developments of capital markets, a decline in
real estate values and several other comparable influencing factors may lead to an increased default by debtors
(counterparty risk). This increased default would mean that value adjustments above and beyond the extent already
covered by provisions would have to be made on assets of the Hannover Re Group; this could have a detrimental effect
on the assets, financial position and net income of the Hannover Re Group.
Risks from insurance and reinsurance contracts, failure to identify material risks
The business conducted by the Hannover Re Group is founded on the deliberate assumption of risks through the
conclusion of insurance and reinsurance contracts. The Hannover Re Group constantly assesses and monitors these risks
and reviews their probability of occurrence. This also includes ongoing monitoring of legal, demographic, macroeconomic
and environmental developments being outside the influence of the Hannover Re Group. As a general principle, the
Hannover Re Group concludes insurance contracts only if the premiums (including the investment income generated from
these premiums) are sufficient in view of the underlying risk and it establishes actuarially determined provisions for the
occurrence of claims.
Furthermore, the Hannover Re Group makes use of risk quantification models based on simplified assumptions that cannot
fully reflect actual circumstances. If the premiums calculated upon contract closing do not suffice to fund the resulting
losses, if the premium calculations are based on inaccurate assumptions, if the companies belonging to the Hannover Re
Group fail to (fully) identify or correctly evaluate developments, if unexpected developments occur on the claims side or
if retrocessionaires with which the Hannover Re Group has, for its part, reinsured risks default on payment, this could
detrimentally affect the assets, financial position and net income of the Hannover Re Group.
Cyclical business
Non-life reinsurance is essentially a cyclical business. The same is true to a lesser extent of life reinsurance. The cycles
in the reinsurance business are periods characterised by intense price competition and less restrictive underwriting
standards followed by periods of higher premium rates and more selective underwriting standards. This means that the
business volume of the Hannover Re Group does not develop in a linear manner. In past years the volume of reinsurance
business has therefore been subject to considerable fluctuations, which can be attributed to a broad range of factors. These
factors, which cannot always be foreseen and/or influenced, include inter alia competition among reinsurers, the
frequency and scale of catastrophic events, the availability of reinsurance capacities, the volatility of capital markets, the
occurrence of new risks (for example as a result of new technologies) and the general economic conditions. Furthermore,
these factors have also brought about changes in treaty conditions and hence profit margins in the past. A slowdown or
decline in the business development could detrimentally affect the assets, financial position or net income of the Hannover
Re Group.
Loss of distribution network via intermediaries
The Hannover Re Group markets its insurance products to a substantial extent through a network of intermediaries, like
reinsurance brokers or MGAs (managing general agencies). Its commercial success therefore depends on its ability to
retain a sufficient number of qualified, reliable and successful distribution intermediaries. Hannover Re Group's business
volume could materially decline if its distribution strategy is unsuccessful or if its relationship with its distributors
deteriorates. Failure to maintain or expand certain distribution relationships could lead to a decline in Hannover Re
Group's business, as could the acquisition of Hannover Re Group's distribution partners by a third party who does not
intend to maintain the same level of cooperation with Hannover Re and may adversely affect Hannover Re Group's
business volume and though adversely affect the assets, financial position and net income of the Issuer and of the
Hannover Re Group.
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Loss of a number of key clients
At the moment, the Hannover Re Group is not materially dependent on one single client but the Hannover Re Group
works with large cedants which generate a high volume of premiums. If the Hannover Re Group loses a certain number
of important customers, for example because competing reinsurance companies or new competing market entrants such
as hedge funds or other financial sponsors make better offers to these customers or because the customers forgo insurance
protection or increasingly obtain coverage from their own internal insurance companies, it could have a detrimental effect
on the assets, financial position and net income of the Hannover Re Group.
Competition
Overall, competition has increased in recent years in the reinsurance markets, especially as a result of market entry by
new competitors, a general high availability of capital and thus capacities and as a result of large customers attempting to
bear standard risks themselves or cover them through their own captive insurance companies. A continuation of this trend
could reduce the volume of reinsurance and premiums in this segment. The competitiveness of the Hannover Re Group
is influenced by numerous factors. They include, inter alia, the Hannover Re Group's financial strength, rating,
experience, local presence and reputation, the quality of its client relationships, the type, scope and conditions of its
offered products and services, the efficiency of its receivables management as well as its ability to respond appropriately
to changing customer requirements and the behaviour of its competitors. The Hannover Re Group constantly monitors
changing customer requirements and the behaviour of its competitors, and it adjusts its range of products and services
accordingly. Should, however, the Hannover Re Group be unable to respond appropriately to new developments, this
could detrimentally affect the assets, financial position and net income of the Hannover Re Group.
Information by ceding companies
The Hannover Re Group systematically covers risk underwritten by primary insurers and reinsurers. In deciding on
whether such reinsurance or retrocession agreements are entered into and which technical provisions are to be provided
the Hannover Re Group relies on the provision of correct and sufficient risk information by the respective ceding company.
Should the Hannover Re Group, on the basis of incorrect or incomplete information, wrongfully assess the covered risks,
this may result in additional expenses. Even if the Hannover Re Group would have recourse claims against the ceding
company it cannot be assured that these claims are fully valuable and enforceable. Inaccurate or inadequate information
could result in the underwriting of unprofitable or loss-making reinsurance or retrocession contracts, which, if it occurs
on a significant scale, could detrimentally affect the Hannover Re Group's assets, financial position and net income.
Uncertainties about impact of new International Financial Reporting Standards (IFRS)
IFRS 4 "Insurance Contracts" applicable for the accounting of insurance contracts as at the date of this Prospectus is a
transitional provision which remains in place until the International Accounting Standards Board ("IASB") has adopted
a finalised standard regarding the valuation of insurance contracts. IFRS 4 currently permits the retention of previously
applied accounting rules. The Hannover Re Group has made use of this option and currently accounts for technical
insurance line items in the consolidated financial statements in accordance with U.S. GAAP as at time of initial application
of IFRS on 1 January 2005 provided IFRS 4 contains no special provisions to the contrary.
On 18 May 2017 the IASB issued IFRS 17 "Insurance Contracts" which provides for a transition period of three years for
application of the new accounting rules. The IASB agreed that an entity would apply IFRS 17 for annual periods beginning
on or after 1 January 2021. IFRS 17 is based on a measurement model consisting of four components: Expected present
value of future cash flows, discounted time value of money, risk adjustment for cash flow uncertainties and a contractual
service margin (profitability that the entity expects the contract to generate). According to IFRS 17, the valuation of
insurance contracts will be made in the future on the basis of the components above. The first three components must be
determined and recalculated anew as at the date of the financial statements on the basis of the then current valuation
factors by discounting the expected future cash flows under the insurance contract. The contractual service margin is
amortised and adjusted for changes in cash flows and risk margins related to future coverage and services. Changes in
valuation criteria, such as the discount rate, could cause material changes in valuation, which on the one hand would be
reflected directly in the Group's statement of other comprehensive income and on the other hand would - regarding other
7

changes - (e.g. risk adjustment for cash flow uncertainties) be reflected directly in the Group's statement of profit and
loss, which could cause the Group's revenues and equity capital to be substantially more volatile. This increase in volatility
might lead to various disadvantages for the Hannover Re Group, above all an increase in the cost of capital and a
corresponding decrease in the share price. It might also be necessary to account for the capital investments used to cover
the technical insurance reserves at the fair market value pursuant to IFRS 9 in order to avoid an "accounting mismatch".
Adjustments in the structure of the insurance and reinsurance products offered by the Hannover Re Group and the
structuring of the premiums could also be necessary. Changes in the valuation of insurance contracts could also impose
substantial new demands on the internal data processing and accounting systems and could lead to significant additional
strain on various group functions within the Hannover Re Group. A change in the accounting rules could also prove
challenging to the management of the Issuer, because key numbers in Group's reporting prior to the change would no
longer be completely comparable with the corresponding key numbers after the change is implemented.
The IASB has also developed new rules for accounting and valuing financial instruments. IFRS 9 "Financial Instruments",
which was published on 24 July 2014, supersedes the existing guidance in IAS 39 "Financial Instruments: Recognition
and Measurement". IFRS 9 contains revised guidance for the classification and measurement of financial instruments,
including a new model for impairing financial assets that provides for expected credit losses, and the new general hedge
accounting requirements. It also takes over the existing guidance on recognising and derecognising financial instruments
from IAS 39. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. However, the IASB has issued
amendments to IFRS 4 "Application of IFRS 9 and IFRS 4", which allow certain insurance companies to postpone the
obligatory application of IFRS 9 until 2021. Due to the major significance of IFRS 9, the Group set up a project to examine
the impact of the standard on the consolidated financial statements and to take the necessary steps towards
implementation. However, it is already evident that the new classification requirements will affect the accounting for
financial assets in the Hannover Re Group.
The IASB issued its amendments to IFRS 4 "Application of IFRS 9 and IFRS 4" in September 2016. The adjustments
relate to the initial application of IFRS 9 for insurers. Without these amendments, the various dates of coming into force
for IFRS 9 and the new standard for insurance contracts will lead to increased volatility in the results and duplicated
transition expenses during a transition period. The amendments propose two optional solutions. The Group chose the
option to postpone the initial application of IFRS 9. As a result, it is permitted to continue applying IAS 39 instead of
IFRS 9 for the financial years that begin prior to 1 January 2021. The amendment, which is not yet endorsed by the EU,
must be applied to financial years beginning on or after 1 January 2018. As with the IFRS 17 standard discussed above,
these changes could lead to an increase in the volatility of the Group results. In addition, the changes could place additional
demands on the existing IT infrastructure and products as well as processes within the Hannover Re Group. Each material
change in the accounting rules applicable to insurance companies could also require products and premium structures in
the reinsurance business of the Hannover Re Group to be adapted, and could cause additional costs.
Technical provisions and actuarial appraisals of reinsured risks
The Hannover Re Group calculates the amount of technical provisions that are to be established for insured events in
accordance with relevant actuarial methods that reflect assumptions and empirical values. The level of provisions
constituted is regularly adjusted in the context of normal run-off with the aid of the latest information available to
management. The adequacy of the provisions initially constituted and subsequently adjusted as necessary cannot be
assured. These actuarial calculations are based on past experience with similar policies, forecasts regarding the future,
and actuarial models (for example, mortality, longevity and morbidity models and lapse assumptions used to calculate
premiums and reserves in respect of life reinsurance coverage). Over time, these assumptions could prove to be inaccurate
and might therefore necessitate additional expenditures. Despite efforts to minimise such risk, deviations can occur if data
is interpreted incorrectly or external factors outside the influence of the Hannover Re Group change. A price determination
which appropriately reflects the previously mentioned risk is also complicated in the property and casualty reinsurance
due to the increasing complexity and long-term nature of the run-off. In the insurance and reinsurance market this was
demonstrated in the past, for example, by claims connected with asbestos and claims from the attack on the World Trade
Center. If, on the basis of the actual future development especially with respect to risks that have currently not even
been recognised as such or as a consequence of the inaccurate selection or application of methods to calculate the
8

constituted provisions, the Hannover Re Group were to be compelled to increase the provisions or if the liabilities of the
Hannover Re Group in connection with the events that it has insured were to be higher than the constituted provisions,
this could detrimentally affect the assets, financial position and net income of the Hannover Re Group.
Asset management performance
The premiums and the capital position of the Hannover Re Group are invested to a large extent in different types of assets.
Thereby, the Hannover Re Group pursues a defined investment policy, which focuses on required liquidity of assets,
adequate issuer diversification as well as on asset liability management measures in terms of duration, currencies and risk
budgeting. It may, however, not be excluded that performance fluctuations or inadequate decision making related to the
selection of assets and the respective trading activities or other misconducts occur (including wilful breaches of mandatory
law and/or investment guidelines of the Hannover Re Group). This could result in losses to the investment portfolio and
in a divergence to the value of the liabilities from the (re)insurance business detrimentally affecting the Hannover Re
Group's assets, financial position and net income.
Recruiting and retaining of qualified staff
The Hannover Re Group is to a significant extent dependent on qualified executives and personnel. The Hannover Re
Group's success has depended and will continue to depend on recruiting and retaining qualified employees. In the event
that the Hannover Re Group experiences high rates of employee turnover, it is also possible that the Hannover Re Group
may not be able to recruit new employees from the labor market immediately and that this may result in additional costs.
The loss of qualified employees or ongoing difficulties in the hiring of suitable employees could lead to a situation in
which the Hannover Re Group cannot successfully implement key decisions, measures and developments, which would
adversely affect the business operations of the Hannover Re Group.
Rating of the Issuer
The business result of the Hannover Re Group is influenced by its ability to acquire new insurance business at
advantageous conditions, to expand existing profitable business relationships and to raise capital on the financial markets.
Of particular significance to this ability is the evaluation of the financial strength and creditworthiness and hence also
indirectly of the competitiveness of the Hannover Re Group and its individual companies by specialised agencies
(hereinafter referred to as its "rating"). The most important rating for the Hannover Re Group is the Insurer Financial
Strength Rating, which evaluates the financial strength of the Issuer on the basis of the factors that are relevant to
policyholders and ceding companies. These factors include, most notably, the capital adequacy, market positioning, risk
management and earnings outlook.
The current Insurer Financial Strength Rating for the Issuer from Standard & Poor's Credit Market Services Europe
Limited, branch office Germany ("S&P") is "AA-" ("Very strong", stable outlook), while that of A.M. Best Europe -
Rating Services Limited ("A.M. Best") is "A+" ("Superior", stable outlook).1 Rating agencies review their ratings and
assessment methods continuously and could downgrade the Issuer's ratings, whether on the basis of changes in the results
of operations and financial condition of the Issuer, of the Hannover Re Group or as a result of changes in the assessment
of the reinsurance industry. A downgrade in the rating can have significant adverse implications for the conditions of new
and existing business, impair competitiveness, limit access to the capital markets and increase the costs of financing for
the Issuer. In addition, a downgrade can result in the materialisation of new or accelerated maturity of existing liabilities
that are contingent upon maintenance of a particular rating. Each downgrade of the rating could therefore detrimentally
affect the assets, financial position and net income of the Hannover Re Group.

1
The office issuing and elaborating the rating was a registered branch of S&P and A.M. Best each of which is, to the Issuer's
belief, registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council of
16 September 2009 on credit rating agencies (see "List of registered and certified credit rating agencies" which can be
accessed under www.esma.europa.eu).
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Risks arising from Financial Markets
Global economic conditions also affect the value of the investment portfolio managed by the Hannover Re Group.
Economic downturns often lead to a decline in value for investments in securities (in particular stocks), real estate and
real estate funds. Furthermore, since the Hannover Re Group has invested a substantial portion of its investment portfolio
in fixed income securities, the returns the Hannover Re Group generates have been adversely affected by the current very
low level of interest rates.
Impact from stock market volatilities
Equity risks derive from the possibility of unfavourable changes in the value of equities, equity derivatives or equity index
derivatives in our portfolio. Their relevance to our portfolio, however, sharply decreased in 2017 as companies belonging
to the Hannover Re Group liquidated their holdings of non-strategic listed equities and equity funds at the end of the third
quarter responding to the hurricane events in the Caribbean and the United States as well as the earthquakes in Mexico.
In this way the Hannover Re Group not only has made use of the favorable state of the market, but also reduced its general
risk position and freed up capital for potential risk reallocations. As at 31 December 2017 the total exposure of listed
equity securities amounts to merely EUR 37.4 million. Besides that, Hannover Re Group held investments in various
kinds of alternative investments totaling EUR 1,507.6 million as per the same date. Unlisted equities (Private Equity)
count for roughly a half of this exposure. Although these investments are not as directly related to stock markets as listed
equities, there is a certain degree of influence from stock market movements on them. However, changes in fair value
here tend to be prompted less by general market conditions but more by entity-specific assessments. The risks are
associated principally with the business model and profitability and less so with the interest rate component in the
consideration of cash flow forecasts. If Hannover Re sees corrections to the current valuation levels of listed equities, it
is ready to enter the market on a moderate scale. Therefore, stock market volatility could have a detrimental effect on the
assets, financial position and net income of the Hannover Re Group.
Impact from exchange rate fluctuations
The Hannover Re Group writes (re)insurance business worldwide in numerous international currencies and prepares
annual and interim financial statements in Euro, as a consequence of which the Group is exposed to exchange rate
fluctuations. As a result, the Hannover Re Group is subject to certain currency exchange risks.
Currency transaction risks arise primarily if there is a currency mismatch between liabilities and investments. The
Hannover Re Group reduces the resulting currency risks through the use of matching currency coverage as much as
possible as well as derivative financial instruments. This does not, however, make definitive hedging possible, and an
exchange rate risk, especially with respect to the Euro/U.S. dollar exchange rate, consequently remains.
In addition to currency transaction risks, the Hannover Re Group is subject to currency translation risks due to the fact
that the financial statements of some of its foreign subsidiaries, associated companies, special purpose entities and special
funds, are prepared in non-euro currencies, the most important of which are the U.S. Dollar, the British Pound, the
Australian Dollar, the Canadian Dollar and the South African Rand. Furthermore, the Hannover Re Group receives
dividends, profit transfers and interest payments from its foreign subsidiaries, associated companies, special purpose
entities and special funds, partly in currencies other than Euro.
Adverse changes in the exchange rates used to convert a foreign currency into Euro can therefore have a detrimental effect
on the assets, financial position and net income of the Hannover Re Group.
Impacts from interest rate fluctuations and sustained low interest rates
In past years fluctuations in the level of both short- and long-term interest rates have influenced the amount of gains and
losses on securities held among the Hannover Re Group's financial assets as well as the point in time when such gains or
losses were realised. The majority of the Hannover Re Group's holdings are invested in fixed-income securities; the bulk
of which are denominated in Euro and U.S. Dollar. An increase in the interest rate level could therefore reduce the market
price of the financial assets. If the market price were to fall below amortised cost for a sustained period, this could have
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