Hannover Re Announces Launch of Hybrid Capital Issue

Along with its earnings announcement (See previous article), Germany’s Hannover Re said it intends to place a subordinated debt offering on the European capital market via its subsidiary Hannover Finance (Luxembourg) S.A.

The subordinated debt issue will be offered as of Friday, May 13 to institutional investors in several European financial marketplaces. J.P.Morgan is handling placement. “This new subordinated debt offering will be perpetual and may be redeemed after ten years at the earliest ” said the bulletin.

As part of this transaction Hannover Re also said it “plans to replace as far as possible a subordinated debt of 350 million euros [$447 million] issued in 2001. The holders of the issue, which matures in 2031, will have the opportunity to exchange their existing subordinated debt for holdings in the new offering.”

Commenting on the initiative, CEO Wilhelm Zeller explained: “Hannover Re is taking advantage of the current low level of interest rates to raise additional, even longer-dated hybrid capital in order to further optimize its capital base.”

The announcement noted that “the present hybrid capital offering will further strengthen Hannover Re’s very good capital base. Both the rating agencies and the Federal Financial Supervisory Authority (BaFin) will recognize the capital raised by the transaction as solvency capital.”