Transaction relates to life and annuity reinsurance business
Hannover Re has transferred a portfolio of life and annuity reinsurance to the international capital market. The transaction - designated "L7" - encompasses a financing volume of €100m and covers unit-linked life and annuity business of several European clients.
This transfer enables Hannover Re to convert a future earnings steam into a current liquidity position and monetise an embedded value of €100m as at year-end 2008.
The company has thereby not only secured greater financial flexibility with an eye to the further enlargement of its life and health portfolio, but also improved its risk diversification.
"What is more, this successful placement demonstrates that the market is still open to high-quality business despite the difficult situation on capital markets,” Wolf Becke, chief executive officer of Hannover Life Re, said.
The Hannover Re Group manages its worldwide portfolio in the life, health and annuity lines - the business group with the strongest growth potential - under the brand name Hannover Life Re. Over many years it has built up special problem-solving expertise in the financing of new business acquisition costs from life portfolios and the monetisation of embedded values in its clients' life portfolios - a field of activity conducted globally under the "Financial Solutions" label.
Following on from the first-ever securitisation of natural catastrophe risks in 1994, Hannover Re delivered another pioneering contribution in 1998 with the transfer of acquisition costs from life reinsurance contracts to the capital market; by 2006 six of these so-called "L" transactions had already been completed.