Annual Report 2003 - Hannover Re

Notes
other notes
6.4 Mortgages and loans
Employees who are not members of the Executive Board or Supervisory Board were granted mortgages
and mortgage loans to finance residential property. These loans are all secured by a first charge
on property. Bad debt losses did not exist and are not anticipated.
7. Other notes
7.1 Lawsuits
In connection with the acquisition of Lion Insurance Company, Trenton/USA by Hannover Finance,
Inc., Wilmington/USA – a subsidiary of Hannover Re – a legal dispute exists with the former owners
of Lion Insurance Company regarding the release of a portion of the purchase price at that time
which is held in trust as well as a commitment to pay further portions of the purchase price and incentive
compensation under management contracts.
Apart from the aforementioned litigation, no significant court cases were pending during the year
under review or as at the balance sheet date – with the exception of isolated out-of-court proceedings
within the scope of ordinary insurance and reinsurance business activities.
7.2 Contingent liabilities
Hannover Re has secured by guarantee a surplus note in the amount of USD 400.0 million issued
in the 1999 financial year by Hannover Finance, Inc., Wilmington/USA.
Hannover Re has also provided security for subordinated debt in the amount of EUR 350 million
issued by Hannover Finance (Luxembourg) S.A.
The guarantees given by Hannover Re for the subordinated debts attach if the issuer in question
fails to render payments due under the bonds. The guarantees cover the relevant bond volumes as well
as interest due until the repayment dates. Given the fact that interest on the bonds is partly dependent
on the capital market rates applicable at the interest payment dates (floating rates), the maximum
undiscounted amounts that can be called cannot be estimated with sufficient accuracy. Hannover Re
does not have any rights of recourse outside the Group with respect to the guarantee payments.
As security for our technical liabilities to our US clients, we have established a master trust in the
USA. As at the balance sheet date this master trust amounted to EUR 1,664.2 million (EUR 1,491.9
million). The securities held in the master trust are shown as available-for-sale investments.
As security for our technical liabilities, various financial institutions have furnished sureties for
our company in the form of letters of credit. The total amount of the letters of credit as at the balance
sheet date was EUR 2,950.5 million.
119