Good morning, and a very warm welcome to the virtual press conference to present the annual results 2020 of Hannover Re. The phone conference for journalists and the webcast into the internet are being simultaneously translated into English, and you will find the presentation on our website. Our speakers today are our CEO, Jean-Jacques Henchoz, our CFO, Clemens Jungsthöfel, Dr. Michael Pickel for property and casualty reinsurance, and Dr. Klaus Miller for health, life and health reinsurance. First, we'll talk about the figures 2020 and then give you an outlook for 2021, and after that, there will be time for Q&A. Now the floor is yours, Mr. Henchoz.
Yeah, [Foreign language] .
Good morning, ladies and gentlemen, and thank you for joining our annual results press conference. We're looking back on a year where the pandemic has dramatically restricted our lives, and our sympathy is extended to all those who have suffered personally from this pandemic. Hannover Re is making its contribution to fight against the impact of the pandemic by sharing our expertise when it comes to insurance concepts in these kind of extreme situations. As one of the biggest and most solvent reinsurance, we remain a reliable partner on the side of our customers. All that would not be possible without the great commitment of the Hannover Re employees. These employees, despite all the challenges, despite all the efforts they had to take in their private life, did a great job, and I would like to express my deepest gratitude to them.
Now let's come to the figures for the fiscal year 2020, as you can see them on page 3. You can see that in the pandemic year 2020, we achieved a net result of EUR 838 million, and this is a proof for our excellent risk-coping activity and our broad diversification. Due to our positioning, we profit mainly from the sustainable improvement of prices and conditions in the market. In order to fully seize the opportunities given in the business environment, we decided to waive paying out a special dividend in 2020, but we are going to increase the ordinary dividend to EUR 4.50.
Our return on equity of 8.2% against the background of the negative interest environment and the strong equity position is very satisfying, and the same is true for the Solvency II ratio, which amounted at the year-end 2020 to 235%. As you can see, especially in P&C, we could experience a strong growth. However, we were burdened by the pandemic in the amount of EUR 900 million. The reserves were increased in order to make sure that we can cope with further risks and that we're able to reduce these risks. The combined ratio amounted to 101.6%. In the previous year, it was lower. When it comes to L&H, the growth was slightly lower. Here, the pandemic burden amounted to EUR 261 million.
Both business segments, against this backdrop, delivered very good results. The same is true for our capital investments, where the return amounted to 3% and exceeds our target of 2.7%. In addition to that, in 2020, we profited from exchange rate effects. On slide 4, you can see the development of our payout ratio. We are proposing to the AGM to pay out EUR 4.50 per share. This is 61% of the net earnings of the company. The payout ratio is comparable to the previous year. However, it is higher than our target aim, which is the basis dividend in the range of 35%-45%. If you take the year-end price of the Hannover Re share, we come to a dividend ratio of 3.5%.
And this brings me already to slide 5, our return on equity of 8.2%.... which is lower than our business target of 9%, but against, against the backdrop of the challenges caused by the pandemic, it's still highly satisfactory. If you take a look at our peers presented on page 6, we are in position number 1 when it comes to the 5-year average, and on position number 2, when it comes to the previous year. And now I would like to pass the floor to Dr. Michael Pickel, who's going to give you an overview of the property and casualty business.
Thank you very much. Ladies and gentlemen, I'd like to briefly talk about the property and casualty reinsurance business, and I've put together the figures here for you. In my explanations when talking about the comparison 2019 versus 2020, I would focus on that particular aspect and not so much refer to the quarter figures for the fourth quarter standalone. Objective of my explanations here is that I want to show you that we had a difficult year because of COVID, which, however, we managed rather well and also were positioned rather well for the future, and actually will emerge strengthened out of the COVID crisis rather than weakened. Let's quickly go to the top line. You can see here we have an increase in the gross written premium of almost 16%, so that is EUR 2 billion for life and health reinsurance.
The driver of those EUR 2 billion are, first of all, underlying premium growth, simply because our customers have already repaired and restructured their business, and therefore, in our proportionate business, we grew along with them. On the other hand, of course, there are a great many areas, and I'll talk about natural catastrophes of the past in a minute. We, of course, have already increased the rates. If you take this EUR 2 billion premium, rounded off, we are quite proud that we've also grown our strategic business fields. I'll give you the rounded figures. Let's say EUR 520 million are due to the North American business. That is, about one quarter of the growth stems from North America.
And also, we, at roughly a bit over EUR 600 million, have strongly grown in the Asian business as well, following our strategy of participating in the general growth of that region. About 6% of the further growth out of those EUR 2 billion can be allocated to specialty divisions, especially agro, where we also were able to use some of the market opportunities. Let's proceed the next important line item, which is EBIT. Of course, we've seen a decline here of about EUR 455 million, and that is quite clearly due to the fact that we had a major loss year, which was a bit of a black swan year, really. But still, let me go into forecasts and prognosis.
Of course, we can't rule out and take out the COVID effects, but we've got to see it separate from the regular course of our portfolio. We had a major loss burden of EUR 970 million that we'd planned for, and if you see that EUR 950 million were net losses due to COVID situations, we clearly exceeded that budget. But I would offer a calculation stating that 101.6% is the combined ratio here, and taking out COVID-related effects, that would be 97.2% as a combined ratio, so we'd be fully on target. So we've got to say that the underlying business, in our case, seems to be pretty much intact. Then briefly, a few words about, obviously, loss provisions that we attach great importance to.
At a first glance, I'd say that the confidence level of our loss provisions has been strengthened, which, again, undermines my argument that we are going to emerge strengthened from the crisis. Other than that, in terms of investment income and capital ratio, everything is pretty much in order, also due to the drop in interest rate, and also exchange rates helped us quite a bit. Now, since it was such a dominant factor in that year, I would like to talk about the major losses for a minute. This chart here is the usual show of major losses, major losses qualifying as over EUR 10 million. Here you see the gross result, so the original ratio, say, and then in net terms, how they act retrocessively. Quite clearly, you can see here that gross losses have increased quite substantially.
That is why we're able to implement rate increases. But you can also see on the far right for the year 2020, that at EUR 1.5 billion, we are, of course, above the EUR 975 million net losses, which led to these EUR 950 million due to, for which the EUR 950 million out of COVID losses were largely accountable. With that, I'd move over to the next chart, just to illustrate that we actually made it rather well through all of the natural catastrophes. The year 2020 was a particular year insofar as there was quite a large frequency of losses and catastrophes, and there were just a few exceptions here with other developments, and still we made it smoothly through the year.
The year kicked off with the events in Australia, which, of course, led to substantial loss events, but also you have to take into account that we managed the cycle rather well. The natural catastrophe events in the US, we went through pretty unscathed. You'll remember in the alphabet, the names have actually, or the letters, the capital, the starting letters have actually run out, so much hurricanes last season. The major large event here was Laura, which hit us because of the strength of our US business, Hurricane Laura. But at $153 million, or net $87 million, it's still manageable. And now, again, the black swan last year, that was something that the public pretty much missed. Derecho, which hit us pretty hard with most of the companies in the Midwest.
That was the ice front covering the Midwest of the United States, and I have to say, pretty much destroyed everything out there in terms of buildings and infrastructure. That was a pretty tragic event, and that, of course, was a burden for us. But if you look at our natural catastrophe loss list, it really didn't destroy us either. Last of my charts, that is simply to, once again, illustrate the man-made losses. And you can see fewer listings than in recent or previous years. Man-made, of course, is the explosion at the harbor of Beirut and some major fires. But in total, it is still a manageable magnitude, which meant that our major loss budget without the COVID losses would have been underachieved. But with Corona, of course, we've exceeded the budget.
With that, I close my remarks and hand over to my colleague to report on life and health. Mr. Miller?
[Foreign language]
Thank you very much. I would like to talk about the P&L business. When it comes to the top-line side, we haven't been so successful as our non-life colleagues, but with the 4.7%, we are in the range of the 3%-7% increase. You need to know that each and every year, around 5% of our premium business is determined by the termination of contracts and by losses, which means EUR 400 million need to be generated newly before we can even think of growing. In addition to that, the reorganization efforts taken in the US had to be strengthened two years ago, and here we're talking about EUR 200 million of premium, which are missing and which have to be replaced.
Which means when it comes to the +EUR 200 million on the top line, we are satisfied with. When it comes to the results, we are also affected by COVID. The EUR 261 million, you can see here, are figures which two-thirds belong to losses, to claims which have to be paid, and one-third is found in the field of losses, which were claimed but not reported yet. And in 2021, there will be further burdens as the pandemic is not over yet. And I'm not in favor of very optimistic outlooks. It's very difficult to say how a pandemic will impact a society. You might have good calculations, but in a situation where we're doing the vaccination at the moment, all the figures we calculated last year are no longer applicable.
We hope that the impact of the pandemic on our portfolio will get over, will get lost in the second and third quarter. If you take a look at the net investment income from assets under own management, you can see that the situation was characterized last year by a billion revaluation in the amount of EUR 100 million. This year, we had an at equity consolidation of our minority shareholding of, in Monument Re, in the amount of EUR 180 million, which had a very positive impact. Our main earnings factor is financial solutions or financial solutions contract, and some of them are being booked under deposit accounting. Here we had a pleasing increase of EUR 50 million, which can be reported, and something which is probably going to continue in the next years to come.
If we take a look at the next slide, the new business, we can say that last year we created EUR 778 million in business value, which means the company's value increased by that, and this is three times as much as we paid for COVID claims or the COVID provisions we made last year. Which means you can have the idea that COVID had something like a helping effect in our business. What is the reason? Well, the reason is that our customers had problems with the pandemic, maybe not only with the claims settlement, and this is what all reinsurers know, but the impact on the financial market is substantial. And supporting reinsurance contracts in this sector, Financial Solutions, were highly requested, especially in the last quarter.
In that new value business in the first quarter, and in the third quarter and fourth quarter, a lot of business was done. These figures are, of course, very volatile... let me guess, more than 80% of the VNB business comes from a dozen contracts. So these are supporting the balance sheet very much. This brings me to the next speaker, to the solvency reporting. Good morning, ladies and gentlemen. Let me start with the capital results, and Mr. Henchoz has already mentioned it. We can be very satisfied with the result. We have a net return of 3%, and this is below the good previous year, but above the target value of 2.7%, so it's a very pleasing picture.
What you see here on that slide is the composition of our results, and you can see when it comes to the ordinary investment income, we have a decline. There are two special effects which need to be mentioned. We have, for example, declining returns from private equity, which are being used to cover our liabilities. The inflation was lower, and this is why we have lower ordinary investments in that portfolio. And the second effect was already mentioned by Dr. Miller. It is a slightly higher at equity investment. When it comes to the realized gains and losses, you can see that they are above the previous year's figures. This is due to the portfolio adjustments and the hidden reserves, which increased in the course of the year due to the interest environment.
Portfolio adjustments had to be made, and this had an impact on the realized gains and losses. Impairments, appreciations, and depreciations were moderate due to the turbulent market environment and result from our private equity and real estate bonds valuations. The hidden results can be seen at the bottom of the page. Very impressive figures, especially the results and the development of the loans business is remarkable. The hidden reserves are on an all-time high in the amount of EUR 3.5 billion, and this is also due to the dynamically decreasing interest, especially in the U.S. dollar segment, where we have a different exposure. If we take a look at the next slide, you can see on the left-hand side the composition of our asset allocation, and on the right-hand side, you can see the ordinary income split of our capital and investments.
You can see that the situation is quite stable. We have a very well-balanced return situation, and we have different kind of assets which are managed on the basis of changes in the markets. And we have private equity, we have real assets, we have short-term investment in cash, we have investments in government bonds, in corporates, which means this is all part of our returns. In the course of the year, the portfolio had to be adjusted slightly, but the remainder remained stable. Our position was risk-averse. EUR 250 million were invested in registered bonds, shares. And something I also want to mention is that we have taken further steps in the course of the year to make sure that the sustainability quality in our portfolio is further improved. You know that we have introduced a sustainability strategy where investments are playing an important role.
Among others, we set the target, the framework of this strategy, to make sure to reduce the CO₂ footprint by 10% by the end of 2023. Another target was, for example, to sign the UN Principles for Responsible Investment, and this is something which is being done very ambitiously, as it is typical for the Hannover Re. The UN principles were signed in 2020 already, and when it comes to the CO₂ output, our footprint in this respect, we set even more ambitious targets. We said by the year 2025, we would like to reduce our CO₂ footprint by 30%. And let me also mention, the sustainability targets will be monitored very thoroughly in your portfolio. And not only Mr. Suess and his team will be pleased if you take a look at our separate sustainability report. You can find it in the internet.
So all in all, we can say it is a very pleasing picture given by our returns. We are very resilient as far as the portfolio is concerned. And now let's talk about the equity position of the Hannover Re. Here you can see our equity ratio, which shows how risk resilient we are. This is measured on the basis of solvency, too. And this ratio compares our own funds and the business we have, and it amounted to 235%, and exceeds our limit of 180%, the threshold we have set ourselves, and is also much higher than the official threshold of 200%. And this is very pleasing and shows how resilient we are on the financial side. So even in the course of a very turbulent year, 2020, we were able to exceed the thresholds.
This brings me to the end of my brief presentation. I would like to pass the floor to my colleague.
Thank you very much, Clemens. Let me now take a look back and make a brief summary of the past financial year. As you can see from our target matrix, which is on the next chart, our targets for 2020 haven't all been achieved by us, and that was mostly due to the effect of the pandemic. But for the future, we are very well positioned, as you can see from the gross written premium increase and also our coverage ratio. As for the outlook on the current financial year, that's on chart 23, depending on region and division and category, it's a bit of a mixed picture.
Although there is a lasting and broad-based improvement of prices and terms and conditions for reinsurances, our success is nevertheless based on the know-how and the discipline of our underwriters, and that is one of the major strengths of Hannover Re. As for individual markets and regions in terms of, non-life reinsurance or property and casualty, structured reinsurance stands out. We offer customized reinsurance solutions here, for example, to optimize capital cost, and also, again, given the background of the pandemic and the increased risk awareness, we expect a clear increase of business overall. However, I would ask you to understand that the margin in the structured reinsurance business tends to be quite a bit lower than in traditional reinsurance, and therefore, we expect higher combined loss ratios.
Then again, the return on equity or capital invested is better than in the traditional reinsurance field, and therefore, that segment in economic terms is more profitable. In facultative reinsurance for the next 12 to 18 months, we expect a stable continuation of the, so far, rather positive market developments and also quite substantial demand. Reinsurance markets across Europe and North and South America, we continue to believe will be positive. In Asia, however, the situation differs from one country to another. In particular, for Japan and Australia, given the losses due to hurricanes and bushfires, we expect for the renewal rounds as of April 1, quite substantial price increases. Moving on to the next chart, that is where you find our taking of life and health reinsurance, where we still believe that there will be good business opportunities.
The low interest rate environment stresses the capital investment results more and more of all insurers, and for capital-strong reinsurers, such as Hannover Re, this results in additional business opportunities, for example, when it comes to financial solutions. But also, the topic longevity is becoming more and more of a focus point. Apart from the decline in interest rate, the high capital requirements for that kind of business with first-line insurers and pension funds are an important driver. As for mortality and morbidity solutions, the pandemic-related losses will, of course, also have a negative effect and continue to do so through 2021 in the life and health segment. The additional burdens, however, should be counteracted by a positive one-off effect from the U.S. mortality business, as was explained just recently by Mr. Miller.
The background of this is a restructuring of the reinsurance structure for the portfolio that we bought in 2009 from ING, ING. What all of this means for our guidance for 2021, that's summarized on the next chart. Our guidance or outlook since publication in November remains unchanged. Given the lasting improvement in prices and terms and conditions for first line and also reinsurance for our overall business, we expect a currency-adjusted gross written premium of about 5% growth, and the return on investment guidance for 2021 is about 2.4%.
The pandemic, of course, continues to be a factor of uncertainty, but I still remain confident that we can and will reach our objectives for the financial year 2021, and we'll keep it, or rather, return to the very good financial result of the year 2019. And also for 2021, we continue to expect a group net income ranging from EUR 1.15 billion-EUR 1.25 billion. A precondition for this, of course, is that major losses are in keeping with expectations of EUR 1.1 billion, not exceeding it in any major way, and also, of course, that there are no unforeseeable negative developments in the capital markets. The dividend payout ratio for the ordinary dividend is stable at 35%-45%. That is our objective.
That's out of the IFRS group result, of course, and the special dividend, provided the capitalization is comfortable and the profit target is reached from the group level, that will then be expressed in the payout of a special dividend. And that takes me to the end of my explanations, and we are now looking forward to your questions.
[Foreign language]
Ladies and gentlemen, let us start with Q&A. If you would like to ask a question, please push zero and one on your phone, and then you will get the opportunity to ask your question. In order to withdraw the question, please press the zero and two keys on your telephone. If you're listening to the annual press results conference via the loudspeaker, please use your microphone on the phone. And now I'm waiting for your question. The first question comes from Klaus Brüne, PLATOW. The line is yours.
Hello, everybody. Can you hear me?
We can hear you well.
Wonderful. Thank you very much, Mr. Hencho. I'm interested in the explanation why you are paying out the special dividend. You said that you are profiting from the sustainable development of conditions and prices in the market, and that you would like to seize all the sustainability profits from that. This means that the ordinary dividend is not going to be paid out, the special dividend is not going to be paid out. So what can we expect, further investments, or what is your plan?
Thank you very much for your question. Well, different criteria have been discussed when it comes to the dividend payout.
One aspect was the performance in 2020, which was an extraordinary year, that's for sure, with a year-end result which was good, but of course, not that positive in a historical context. Another point of view, which needs to be mentioned, is that the conditions in the market, especially in P&C, are very good. We have reached much better prices on Europe whole one month ago, and we can also see a momentum in the market which can be seized and where our market, our capital is being invested. And the same is true in the private and health system. This is why we said we would like to make everybody profit from the good performance, and we would like to increase the basis dividend. But we would like to waive, we would like to omit the payout of the special dividend.
The outlook is positive, and this is why we decided to structure the dividend payout as we did.
May I ask another question? But still, you haven't mentioned all the aspects of my question. You said the money you would have invested in a dividend should be invested in the business, and here, I would like to hear a little bit more. What is your plan? Where would you like to invest?
[Foreign language]
Well, basically, we can see growth in all kind of geographical markets, and this is due to the price developments. When it comes to property, for example, in the contract reinsurance business, we're doing very well in Europe, in Asia, and in America. And when it comes to the facultative insurance, I mentioned that already, this is also doing well with a lot of requests.
The structured reinsurance here, we have a big pipeline, too, and I can see lots of opportunities to grow. So this is true for P&C and also for life and health.
Thank you very much.
Mr. Brüne, may I add something to your question? The focus is laid on the organic growth. This is the focus in P&C.
The next question comes from Friederike Krieger from the Versicherungsmonitor. The line is yours.
Hello. Hello. Now, I would like to hear from you, what do you expect as impacts from the pandemic on your business? You mentioned the major loss expenditure in the amount of EUR 1.1 billion. How much is reserved for the pandemic, for corona? And then another topic, there was a very fierce winter at the beginning of the year in America, in Texas, which will also have a major impact on the reinsurers.
So what about your impact of that? And then I have a question on the effect on the life and health insurance business, which might lead to further mortality adjustments. I did not get that, and maybe you could elaborate on that.
Thank you very much for your question. Your question on the expectations for 2021, and we believe that our reserves in the property and casualty business are high enough to cover the exposure. At the moment, we do not expect any significant developments in this respect. We think that we can cover everything, and at the same time, I would like to underline that the renewal round of contracts was also affected by some contract terminations due to the pandemic. But we believe the pandemic as such will not have the same impact on the business as last year.
We believe that the provision of EUR 950 million for our net result will be enough for the year 2021. When it comes to life and health, the situation depends very much on the vaccination programs worldwide, how they will develop. The U.S. is in the focus, and Mr. Miller will say a few words on that. Here, in the first six months of the year, and probably also in the third quarter, we will have an exposure, and this is also mapped in our figures and in our guidance for 2021. We hope that our guidance is in the framework of these developments we foresee. Mr. Miller, maybe you can say a little bit about these compensation effects for 2021, in the first quarter, and then you might also say a few words about the exposure for Texas. Maybe Mr. Pickel can give us an update.
[Foreign language].
This compensation component has nothing to do with COVID. This is first. We restructured a contract, and in doing so, we gathered more fees of incidence and the assets which were invested in another account and which were not officially part of our balance sheet. These assets were brought back, and this is something which had to be done at market value, and this is how further earnings were generated, amounting to EUR 130 million, which had a positive impact on the Q1 result. So this has nothing to do with COVID. However, it is, of course, a welcomed earning position because we will have further COVID impacts in the course of the next months. The worst month in the U.S. were December, January and February.
The situation is improving, and you can also see it in Germany, where, from the insurance point of view, we don't have a problem with COVID at all. The infection rates are going up, however, the mortality is going down, and this is something which can be expected as the vaccination program has just begun for the vulnerable group of people at the age of 80 and plus, which means we will have less mortality in this respect, and this is why we are optimistic. The EUR 130 million will not compensate for everything. I believe we will see more COVID impacts or damages in the first half year, but we have a pandemic provision which will also help us in covering these kind of damages.
Ms. Krieger, thank you for the follow-up question on the Texas loss. We are, of course, still in the process of clarifying the matter, and it's not really that easy to give a figure, but conservatively speaking, we'd call it a high two million digit amount. Let me elaborate why it's difficult. Our market share in Texas is at 0.2% to start with. We did some calculations on that, so it's not significant at all. But of course, in Texas, all of the large insurers have original and homeowners business that they underwrite. And the problem of this Texas wind freeze event is that we have not yet corrected for any individual loss case. So it wasn't one single big industrial plant or so, but it was a massive number of households that were affected, that froze over.
There we'll have to see what the deep freezing is going to look like. We are going about this very carefully, saying the construction style in Texas is not made for wind and ice and winter conditions. Would be different in Chicago, for example, and therefore we'd rather be conservative in our estimations and be ready to correct it if needed over the year, and then see how we end up. As I said, it's not an incident to completely toss over the first quarter, but it is a substantial loss given the climate conditions that were surprising.
Thank you very much.
The next question, that's Alexander Hübner of Reuters, your line is open.
Yes, hello, and good morning. I also have two questions. The first is, again, on the dividend payout. Looking ahead, I was listening carefully, Mr. Hauchow, when you said the increase of the base dividend or ordinary dividend, that'll be our new normal, if I may express it like that. Does this mean this automatic effect or that investors can bid goodbye to this automatic, special dividend payout that we've had since 2014, 2015? Is that, those times are over? I mean, if business opportunities don't deteriorate, maybe you could elaborate a bit more closely what your strategy is and what has changed.
And the second thing I would want to ask, the losses in the U.S. in life insurance, life reinsurance, of course, life and health, as a part of COVID, what's the automatic, mechanism there? You gave us two explanations. One is that it's mostly Financial Solutions business, but it also had to do with the higher mortality, quite apparently. Maybe you could also elaborate a bit on that, please. Thank you.
Yes, thank you for those questions. Mr. Miller will take the question on life and health in the U.S. As for the dividend policy, that is not changing for 2021. We have not made any changes here, and it is clear that with this decision of increasing the ordinary dividend, that that will be seen as the yardstick. And, if our forecast for 2021 holds out, and holds true, that then we can reach that, same level for the next dividend round. The special dividend remains active part of our dividend policy. There are no changes there. We are not bidding farewell to the idea of a special dividend.
And if and when the outlook and guidance confirms, and is confirmed to be true, then there's certainly potential for a special dividend for 2021. Mr. Miller? I'll be happy to try and elaborate on the U.S. life and health reinsurance losses. I'm not 100% sure if I've understood your question correctly. Of course, in the U.S., we have the highest amount of COVID-related losses. That is due to two factors. One is the U.S. is our largest market when it comes to net amount at risk, so the risk amount in our books there. And secondly, in the U.S., just like in the U.K., and to a lesser extent, also in some other countries, there are these so-called permanent policies or all of life policies.
So in Germany, we have this active virus, COVID pandemic, but we've got hardly any insured damages or losses because the age group affected, 80 or 80 plus, even in many cases, has virtually no mortality insurance in Germany, with a very few minor exceptions. And that's different in the U.S. They have whole of life policies, permanent policies, and that's where we are affected. There's about EUR 130 million worth of losses that we paid out, or claims that we paid out. There's a total of $211 million, I think it was, in the U.S., if I remember correctly, $211 million worth of COVID claims and losses.
Either because the death certificate reads COVID as the cause or that we take as suspected COVID causes because it was either suicide or because there were health issues with which people did not go see a doctor. They might have died from a heart infarction, but four weeks previously, they might have witnessed heart problems, but didn't go to see a doctor in order to not get infected with COVID. About 20% of the excess mortality in the U.S. is something we cannot directly attribute to COVID, but which is likely to be indirectly attributable to it. That is certainly the most important market in that respect. I believe you weren't referring to the EUR 130 million I mentioned earlier. That's an entirely separate business, which has nothing to do with COVID at all.
And what I also mentioned, our pandemic coverage, which possibly will also help us through this year to better handle COVID losses. If I haven't answered your question with that, then please, rephrase your question and ask again. Question: These whole of life policies, that simply means that life insurance covers until the date of death? Answer, yes, correctly. It covers until you die, and in other words, you know you've got to pay at some stage. And that affects mostly or goes for elderly people who now, in the COVID pandemic, of course, are particularly affected. Question. Okay, to put it cynically, it is just a time shift, if you want. I mean, if you pay out anyhow, then it's only the question, do you pay out in 2020 or say, 2023 or 25, if we're looking at that age group?
... answer. That is correct, but if people all die too early, prematurely, you, of course, run a loss. In your calculations and computations, you expect people to reach a certain age on average, the ordinary pension age that you calculate with. Question, yes, understood. Thank you.
The next question comes from Christian Schnell from Handelsblatt. The line is yours.
Good morning. I have the following question. Apart from the pandemic and natural catastrophes, we are also dealing with the Greensill Bank and the financial problems. Is Hannover Re involved in any way with the Greensill Bank or affected by any major damage?
Thank you very much, Mr. Schnell. This is not the case, but I would like to pass the floor to my colleague, who's going to give you further details. Good morning, Mr. Schnell. On the investment side, we're not affected by that. Short and sweet, and as far as the underwriting is concerned, when it comes to loans and provisions, I mean, this is not a top exposure, and we haven't had any other significant exposure in our portfolio. I don't believe that we will find anything like that in the future as well.
The next question comes from Marc Surminski from Die Zeitschrift für Versicherungswesen. The line is yours.
Good morning. I have two questions. One question on the pandemic concept. It is being discussed worldwide, how the pandemic risk can reduced by a public-private partnership, by governmental initiatives. And what do you think about the idea to get the capital market also involved with nat cat involvement, for example? And the second question, one-third of your capital investments are loans. Do you expect more insolvencies as a result of the pandemic, and also a change in the situation due to the fact that many businesses are decreasing their activities?
Thank you very much for the question on the pandemic complex. Indeed, we are in a situation where the financial insurances and reinsurances will not be able to cope with such an exposure alone. The figures are huge. And as an industrial segment, we cannot diversify these kind of things.
We don't have the capital bases to cover that either. So it's a systemic risk, and it is a necessity of a dialogue. It requires a dialogue with governments, with companies, and I think the idea of a public-private partnership is a good one. There were very good discussions in several markets in Europe, and when it comes to the Hannover Re, we are all very much in favor to get committed. However, the risk coping ability in this segment is too low to organize that independently in the commercial sector. Capital market is one option. Capital market solutions will be possible, I think, in the future, at least to a certain degree. And I believe that the problem of a systemic risk is still given, and this is what I see in the life and health segment. There might be some possibilities in the future.
When it comes to insolvencies, I would like to pass the floor to Mr. Jungsthöfel. Well, the credit risk depends to a large extent on the subsidies and the support given. We have seen a lot of that in the year 2020, and it depends now how far-reaching these kind of programs are. There will be some default situations, but this is something we expect in the range of smaller and mid-sized companies. In our portfolio, we don't have that much exposure, and this is why we don't expect this in our portfolio. At the moment, we haven't seen any valuation adjustment in our credit portfolio as we have a high quality there.
So the next question is from Ben Dyson of S&P Global Market Intelligence. Your line is now open.
Okay, thank you very much for taking my question. Yeah, I've just got a couple of follow-ups from answers from earlier, really. I just wanted to, for the U.S. winter storms, I just wanted to make sure I'd understood properly that the exposure there was in the $ double-digit millions, although obviously that's an early estimate. But, yeah, if you could clarify that, that would be great.
And just also on the question about Greensill exposure, I just wondered if there might be a wider effect on Hannover Re's trade credit portfolio, if the failure of that company had a wider impact and triggered, you know, further failures, whether that could lead to an exposure there and what that might be. Thank you.
Oh, thank you very much for the question. Michael Pickel will take the U.S. windstorm exposure question.
Yes, thank you for the question and the clarification. I think we will come up with the number when we announce our Q1 figures exactly, because I think then we know as well, much more in details from our clients, what they expect. We have the issue that we have no direct involvement. I think that's marginal, but I think the issue is that we are writing cat business from all larger groups, and then you have to sum up all the homeowners claims, and then you have to figure in whether this is over the attachment point or below the attachment point. And this is a very difficult question, and therefore we could only make a market and loss estimation.
Therefore, my indication is it's a significant double digit number to be on the conservative side. And that we will announce in the first quarter. Greensill, I do not know you, you... I think, with regards to this issue, I would like to remind you that we are not in the financial guarantee business, in the credit business. And I think that's category where the claim comes from, is financial guarantees, and I therefore say, there we are absolutely not involved to a larger extent, and this could be only a marginal claim. We have checked our exposures and absolutely no issue for the moment to be concerned.
Okay, thank you very much.
As a reminder, if you would like to ask a question, please press zero and one.
For the time being, there are no further questions. I return the floor to the speakers in the room. Thank you, says Oliver Suess. At that point, let me say thank you for taking an interest in Hannover Re. This afternoon at 2:00 P.M., there's going to be our analyst telephone conference that will also be webcast live on our website. And our next stage is then the quarter, Q1 figures and our equally virtual annual general meeting on 5th May. Stay safe, all the best and goodbye.