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Volatile performance

The Hannover Re share began 2011 at a price of EUR 40.135. The prospect of pleasing renewals and the expectation of a successful 2011 financial year were reflected in a positive performance at the beginning of the year – irrespective of the heavy loss expenditure incurred from the flooding in Brisbane, Australia, and the earthquake in Christchurch, New Zealand. On 18 February the Hannover Re share climbed to its highest point of the year at EUR 43.29. However, the devastating earthquake off the coast of Japan and the tsunami with the subsequent nuclear disaster in the middle of March then took a toll on the share’s performance. As the year progressed the Hannover Re share was unable to divorce itself from the marked price trend on international stock markets caused by concerns about the ability of some European countries to refinance and the stability of the single currency. On 12 September the share price ultimately fell to its lowest level of the year at EUR 29.31. Reporting on the likelihood of a gratifying 2012 renewal season and confirmation of the guidance for 2011 – in conjunction with the absence of any significant hurricane damage – prompted a substantial price rally in the fourth quarter.

Relative performance of the Hannover Re share

Relative performance of the Hannover Re share (Chart) enlarge zoom

At the end of the financial year the Hannover Re share was listed 4.5% lower at EUR 38.325. It thus comfortably outperformed the German DAX (–14.7%) and MDAX (–12.1%), but lagged behind our international benchmark, the Royal Bank of Scotland (RBS) Global Reinsurance Index (–0.9%).

In a three-year comparison (see chart) the Hannover Re share including reinvested dividends delivered a performance of 92.2%. It thus again clearly surpassed the DAX (22.6%) and MDAX (58.8%) as well as the RBS Global Reinsurance Index (36.5%).

Based on the year-end closing price of EUR 38.325, the market capitalisation of the Hannover Re Group totalled EUR 4.6 billion at the end of the 2011 financial year. According to the rankings drawn up by Deutsche Börse AG, the company placed ninth in the MDAX at the end of December with a free float market capitalisation of EUR 2.3 billion. The Hannover Re Group thus continues to rank among the 40 largest listed companies in Germany. Measured by trading volume over the past twelve months, the share came in at number 13 in the MDAX with a volume of EUR 3.3 billion.

Attractive valuation over the course of the year

With a book value per share of EUR 41.22 the Hannover Re share showed a price-to-book (P/B) ratio of 0.9 as at year-end 2011; compared to the average MDAX P/B ratio of 1.7 as at year-end the share is thus very moderately valued. A comparison of the price-to-earnings (P/E) ratios reveals a similar picture.

The Executive Board and Supervisory Board intend to propose to the Annual General Meeting on 3 May 2012 that a dividend of EUR 2.10 per share be distributed. While the proposed dividend therefore does not match up to the previous year’s amount of EUR 2.30 per share, the planned distribution of 41.8% nevertheless exceeds the payout ratio of 35% to 40% of Group net income after tax that has been targeted for a number of years now. Based on the year-end closing price of EUR 38.325, this produces a dividend yield of 5.5%.

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Volatile performance

The Hannover Re share began 2011 at a price of EUR 40.135. The prospect of pleasing renewals and the expectation of a successful 2011 financial year were reflected in a positive performance at the beginning of the year – irrespective of the heavy loss expenditure incurred from the flooding in Brisbane, Australia, and the earthquake in Christchurch, New Zealand. On 18 February the Hannover Re share climbed to its highest point of the year at EUR 43.29. However, the devastating earthquake off the coast of Japan and the tsunami with the subsequent nuclear disaster in the middle of March then took a toll on the share’s performance. As the year progressed the Hannover Re share was unable to divorce itself from the marked price trend on international stock markets caused by concerns about the ability of some European countries to refinance and the stability of the single currency. On 12 September the share price ultimately fell to its lowest level of the year at EUR 29.31. Reporting on the likelihood of a gratifying 2012 renewal season and confirmation of the guidance for 2011 – in conjunction with the absence of any significant hurricane damage – prompted a substantial price rally in the fourth quarter.

Relative performance of the Hannover Re share

Relative performance of the Hannover Re share (Chart) enlarge zoom

At the end of the financial year the Hannover Re share was listed 4.5% lower at EUR 38.325. It thus comfortably outperformed the German DAX (–14.7%) and MDAX (–12.1%), but lagged behind our international benchmark, the Royal Bank of Scotland (RBS) Global Reinsurance Index (–0.9%).

In a three-year comparison (see chart) the Hannover Re share including reinvested dividends delivered a performance of 92.2%. It thus again clearly surpassed the DAX (22.6%) and MDAX (58.8%) as well as the RBS Global Reinsurance Index (36.5%).

Based on the year-end closing price of EUR 38.325, the market capitalisation of the Hannover Re Group totalled EUR 4.6 billion at the end of the 2011 financial year. According to the rankings drawn up by Deutsche Börse AG, the company placed ninth in the MDAX at the end of December with a free float market capitalisation of EUR 2.3 billion. The Hannover Re Group thus continues to rank among the 40 largest listed companies in Germany. Measured by trading volume over the past twelve months, the share came in at number 13 in the MDAX with a volume of EUR 3.3 billion.

Attractive valuation over the course of the year

With a book value per share of EUR 41.22 the Hannover Re share showed a price-to-book (P/B) ratio of 0.9 as at year-end 2011; compared to the average MDAX P/B ratio of 1.7 as at year-end the share is thus very moderately valued. A comparison of the price-to-earnings (P/E) ratios reveals a similar picture.

The Executive Board and Supervisory Board intend to propose to the Annual General Meeting on 3 May 2012 that a dividend of EUR 2.10 per share be distributed. While the proposed dividend therefore does not match up to the previous year’s amount of EUR 2.30 per share, the planned distribution of 41.8% nevertheless exceeds the payout ratio of 35% to 40% of Group net income after tax that has been targeted for a number of years now. Based on the year-end closing price of EUR 38.325, this produces a dividend yield of 5.5%.