Annual Report 2010 - Hannover Re

Development of the unearned premium reserve
in EUR thousand
2010 2009
gross retro net gross retro net
Net book value at 31 December of the
previous year 1,512,840 47,651 1,465,189 1,333,856 29,733 1,304,123
Currency translation at 1 January 116,463 3,994 112,469 11,558 1,624 9,934
Reserve at 1 January of the year
under review 1,629,303 51,645 1,577,658 1,345,414 31,357 1,314,057
Reclassifications pursuant to IFRS 5 (108) (85) (23)
Changes 287,536 33,300 254,236 227,161 18,658 208,503
Portfolio entries/exits (3,351) (1,221) (2,130) (35,038) (189) (34,849)
Currency translation at 31 December (2,958) (415) (2,543) (24,697) (2,175) (22,522)
Net book value at 31 December of
the year under review 1,910,422 83,224 1,827,198 1,512,840 47,651 1,465,189
The adequacy of the technical liabilities arising out of our
reinsurance treaties is reviewed as at each balance sheet date.
As part of the adequacy test for technical liabilities the anticipated
future contractual payment obligations are compared
with the anticipated future income. Hannover Re adopts the
“loss recognition” method set out under US GAAP. Should the
result of the test indicate that the anticipated future income
will not be sufficient to fund future payments, the entire shortfall
is recognised in income by first writing off capitalised acquisition
costs corresponding to the shortfall. Any remaining
difference is constituted as an additional provision.
5.8 Funds withheld (liabilities)
The funds withheld under reinsurance treaties totalling EUR
1,187.7 million (EUR 857.4 million) represent the cash and
securities deposits furnished to our company by our retrocessionaires
that do not trigger any cash flows and cannot
be realised without the consent of our retrocessionaires. The
maturities of these deposits are matched to the corresponding
shares of the reinsurers in the technical provisions. If such a
share no longer exists the corresponding funds withheld are
reduced to the same extent.
5.9 Contract deposits (liabilities)
The contract deposits on the liabilities side increased by EUR
665.9 million in the year under review from EUR 4,038.4
million to EUR 4,704.3 million. The contract deposits item
encompasses balances deriving from non-traditional life
insurance contracts that are to be carried as liabilities. The
rise was due principally to growth in new business in the area
of life reinsurance.
5.10 Provisions for pensions and other post-employment benefit obligations
Pension commitments are given in accordance with the relevant
version of the pension plan as amended. The 1968 pension
plan provides for retirement, disability, widows’ and
orphans’ benefits. The pension entitlement is dependent on
length of service; entitlements under the statutory pension insurance
scheme are taken into account. The pension plan was
closed to new participants with effect from 31 January 1981.
On 1 April 1993 (1 June 1993 in the case of managerial staff)
the 1993 pension plan came into effect. This pension plan
provides for retirement, disability and surviving dependants’
benefits. The scheme is based upon annual determination of
the pension contributions, which at 1% up to the assessment
limit in the statutory pension insurance scheme and 2.5%
above the assessment limit of the pensionable employment
income are calculated in a range of 0.7% to 1% and 1.75%
to 2.5% respectively depending upon the company’s performance.
The pension plan closed as at 31 March 1999.
156 Notes 5.10 Provisions for pensions and other post-employment benefit obligations Hannover Re Group annual report 2010