Annual Report 2010 - Hannover Re

Investments
Within the scope of its asset management activities Hannover
Re has participated since 1988 in numerous special purpose
entities – predominantly funds –, which for their part transact
certain types of equity and debt capital investments. On the
basis of our analysis of our relations with these entities we
concluded that the Group does not exercise a controlling influence
in any of these transactions and a consolidation requirement
therefore does not exist.
Hannover Re participates – primarily through the companies
Secquaero ILS Fund Ltd. and Hannover Insurance-Linked Securities
GmbH & Co. KG – in a number of special purpose
entities for the securitisation of catastrophe risks by investing
in “disaster bonds” (or “CAT bonds”). Since Hannover Re does
not exercise a controlling influence in any of these transactions
either there is no consolidation requirement.
4.3 Major acquisitions and new formations
On 18 January 2010 Funis GmbH & Co. KG, a wholly owned
subsidiary of Hannover Re, acquired an interest of 28.5% in
Energi Holdings, Inc., based in Peabody/United States, for a
purchase price equivalent to EUR 2.4 million. The business
object of Energi Holdings, Inc. and its three other wholly
owned subsidiaries is the mediation of risk management and
insurance brokerage services for companies in the energy
industry.
In addition, effective 16 March 2010 Funis GmbH & Co. KG
participated with a capital contribution of EUR 8.0 thousand
(corresponding to 75.2% of the shares) in the newly established
Foco 146 AB, which is based in Stockholm, Sweden.
The company began trading under the name Svedea AB with
effect from the balance sheet date. The company‘s business
object consists principally of writing liability insurance for motor
vehicles and yachts.
With effect from the second quarter Inter Hannover (No. 1)
Limited, London, was included in the consolidated financial
statement for the first time. All shares in the company are held
by International Insurance Company of Hannover Ltd., Bracknell.
The object of the company, which is a corporate member
of Lloyd’s of London with limited liability, is to participate in
the business of one or more Lloyd’s syndicates.
On 9 December 2010 Funis GmbH & Co. KG acquired a participation
of around 25% of the shares in XS Direct Holdings,
based in Dublin/Ireland, by subscribing to newly issued
shares. The interest amounts to EUR 2.5 million. The company
held three further participations – in each case with all shares
– as at the balance sheet date. The business object of the
company consists principally of the development and sale of
financial services in Ireland and the United Kingdom.
4.4 Major disposals
On 21 December 2010 Hannover Re reached agreement
on the sale of its US subgroup Clarendon Insurance Group,
Inc., Wilmington (CIGI), to Enstar Group Ltd., Hamilton, a
Bermuda-based company specialising in the run-off of insurance
business. Hannover Re holds all shares of CIGI indirectly
through the intermediate holding company Hannover Finance,
Inc., Wilmington (HFI), which is also included in full in the
consolidated financial statement. The buyer is to acquire all
shares of CIGI at a purchase price equivalent to EUR 162.5
million before final price determination, which will take place
upon adoption of the local annual financial statement as at
31 December 2010. As at the balance sheet date the transaction
was still subject to the customary regulatory approvals.
Closing of the transaction and the associated deconsolidation
from Hannover Re are anticipated in the second quarter of 2011.
Pursuant to IFRS 5 “Non-current Assets Held for Sale and
Discontinued Operations” CIGI was classified as at the balance
sheet date as a disposal group, which is to be measured at the
lower of the carrying amount and fair value less costs to sell.
This measurement gave rise to the recognition of impairment
losses in an amount of EUR 10.2 million, which were carried
in other income and expenses.
In addition, a miscellaneous liability of EUR 4.1 million was
recognised for selling expenditures and a sundry provision of
EUR 54.9 million was constituted for expenses in connection
with measurement of the disposal group. The corresponding
expenses were recognised in other income and expenses.
The cumulative other comprehensive income of –EUR 28.8
million arising out of the currency translation of the assets
Notes
Hannover Re Group annual report 2010
4.4 major disposals Notes
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