Annual Report 2003 - Hannover Re

Management report
risk report
Rating structure of our fixed-income securities*
Rating
Government bonds Securities issued by quasi- Corporate bonds Asset-backed
governmental entities
securities
in % in EUR million in % in EUR million in % in EUR million in % in EUR million
AAA 90.3 3 247.8 69.2 2 108.9 12.2 450.5 56.4 726.2
AA 7.1 255.5 26.6 809.8 20.2 742.7 26.8 345.3
A 0.6 21.5 3.5 107.5 44.9 1 654.9 8.8 112.8
BBB 1.7 61.8 0.4 12.6 16.5 606.7 0.7 9.5
< BBB 0.3 10.9 0.3 9.9 6.2 229.0 7.3 94.5
Total 100.0 3 597.5 100.0 3 048.7 100.0 3 683.8 100.0 1 288.3
* Securities from investment funds were allocated to the appropriate categories.
Operational risks
Operational risks refer to the risk of direct
or indirect losses attributable to the inadequacy
or failure of technical systems, human error or organisational
shortcomings. In particular, a failure
of the data processing infrastructure and the
associated unavailability of our IT applications
constitutes a major risk for our company. We invest
systematically in improving the security and
availability of our information technology in order
to minimise these risks. Group-wide guidelines
direct staff in the handling of information and
the secure use of information systems. A major
integral component of our safeguards is the Internal
Controlling System, which encompasses
all harmonised and interlinked checks, activities,
and rules. Adequate management of operational
risks has also taken on additional importance
in the light of supervisory developments. Within
the framework of Solvency II it is to be anticipated
that operational risks will in future have to
be backed by stockholders' equity. The controlling
of such risks will therefore become a crucial competitive
factor.
High employee satisfaction and low staff
turnover minimise the risk of losing know-how.
Reinsurance is a highly diverse financial service,
the success of which is crucially dependent on
the expertise, motivation and initiative of our
staff. It is absolutely vital that we know the type
of skills we will need in the future and understand
how we can recruit, motivate and retain
the right people. In order to accomplish these
goals, we use advanced working-time models
(e.g. telecommuting, part-time arrangements) as
well as personnel development and training activities
(e.g. management simulation game, executive
coaching, techniques for identifying potential,
personal discussions with employees) etc.
As a reinsurance enterprise we must be able
to conduct projects in a professional and timely
manner in order to realise new reinsurance products
and concepts, offer services and meet legal
requirements with a high quality standard. Multistage
project management ensures that all projects
are executed on time and on budget according
to their prioritisation. The changeover to
IFRS accounting standards is currently a major
project at Hannover Re. The EU Council of Ministers
adopted the Regulation on the Application
of International Accounting Standards at the
beginning of June 2002. This requires the application
of international standards (IAS/IFRS) in
the consolidated financial statements of capitalmarket-oriented
enterprises. In July 2003 Hannover
Re launched a project with the goal of
presenting information on the reconciliation
with International Financial Reporting Standards
(IFRS) from the first quarter of 2005 onwards –
Constant enhancement
of IT security and
availability
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