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TWST: Can we start with an introduction to Hannover Re(DE:840221), as you see the company positioned today?

Mr. Gräber: Yes. The way I look at the company, Hannover Re: it’s the best-diversified company in the world as far as reinsurance is concerned. We operate through basically four business groups, which we describe as P&C, Life and Health, Program Business and Financial reinsurance. These business groups offer the diversification we desire to stabilize our bottom line result and at the same time we also try to keep our cost of capital low so that we offer our shareholders good ROEs. That’s how we try to develop a kind of out-performance strategy that has also been acknowledged by S&P. Hannover Re does not get the same negative outlook compared to the industry.

TWST: Can you give a quick account of the reinsurance space as you see it today and how you’ve navigated what has to have been a pretty turbulent year?

Mr. Gräber: Yes, I mean it all started in the late 90s -- 97, 98 and 99 -- when markets became soft. So Hannover Re shrunk the P&C volume because we felt it wouldn’t pay us adequately. So when the accumulation of large claims occurred -- natural catastrophes in 1998 and 1999 and of course World Trade Center in 2001 -- we were at the lowest of our long-term commitments, i.e. at a relatively low market share in the P&C segment but had grown our life portfolio. What happened thereafter was that right after World Trade Center we established about three working teams: one that we called our hospital team taking care of the claims; one that took on the window of opportunity and just wrote attractive business; and one team that basically adjusted our long-term tools. Right after World Trade Center we were able to write about $400 million of very attractive premium and the same occurred then on the January 1, 2002.

TWST: If you look forward over the next 12 to 24 months how would you describe the company’s strategic direction?

Mr. Gräber: The target as such is that we want to bring the combined ratio in P&C about 10 combined ratio points below what is an acceptable long-term average; so a target must be between 93-95 combined. Whether we show it on the fiscal year is a different story but that must be the target and in an attempt to achieve this we are moving away from say less profitable pro rata business into excess of loss. We purposefully expand in the US and in the London market and the aviation business and we try to walk away from the low-risk, low-return businesses such as the agricultural business in the US. We purposefully shrink that account. As far as the optimization of the writing in the cyclical market is concerned, we try to expand our property book first. And now that the rate increases filter through into the casualty book we have started to grow our casualty book. So it’s two waves in which we try to achieve the out-performance strategy. And it’s the other way around when we phase it out again, we will reduce property first and casualty second.