Annual Report 2010 - Hannover Re

Rating of fixed-income securities
2.6% < BBB
6.4% BBB
19.6% A
52.5% AAA
18.9% AA
Investment performance
Ordinary investment income surpassed the previous year at
EUR 880.5 million (EUR 810.5 million) even though interest
rates were lower overall. This was due to the growth in assets
under own management, which was attributable to both positive
cash flows from the technical account and the development
of the market.
Impairments of just EUR 16.6 million (EUR 141.4 million) had
to be taken on investments. They decreased sharply on fixedincome
assets to EUR 7.9 million (EUR 45.4 million). A volume
of EUR 7.7 million (EUR 92.6 million) was attributable to alternative
investments – principally private equity funds. Owing
to the broadly upward market trend, write-downs of a mere
EUR 0.6 (EUR 3.2 million) were taken on equities.
Thanks to increased fair values, these write-downs contrasted
with write-ups of EUR 24.1 million (EUR 9.3 million) on fixedincome
securities and funds that had been written down in
prior periods. The attractive market climate enabled us to realise
net gains of EUR 162.0 million (EUR 113.0 million) on
disposals. Unrealised losses on our asset holdings measured
at fair value through profit or loss amounted to EUR 39.9 million,
contrasting with an unrealised gain of EUR 100.6 million
in the previous year. The bulk of this amount (EUR 31.2 million)
derived from the performance of inflation swaps taken
out to hedge inflation risks associated with the loss reserves
in our technical account. The balance of our deposit interest
and expenses was sharply higher at EUR 316.4 million (EUR
276.8 million).
We were thus able to boost our net investment income by
12.4% to EUR 1.3 billion (EUR 1.1 billion) – first and foremost
thanks to the increased current investment income and the
considerably lower volume of write-downs.
The portfolio of fixed-income securities excluding short-term
investments climbed again to EUR 21.4 billion (EUR 19.7 billion),
principally due to inflows of cash from the technical account
and the market development. New investments were
made predominantly in corporate bonds and public-sector
covered bonds (Pfandbriefe) as well as asset-backed securities.
Hidden reserves for available-for-sale fixed-income securities
recognised in shareholders’ equity totalled EUR 268.4
million (EUR 252.3 million). The spread of asset classes shifted
as planned towards corporate bonds, while the share of
Management report
Net investment income
Figures in EUR million
2010
+/- previous
year
2009 2008 2007 2006
Ordinary investment income 1 880.5 +8.6% 810.5 829.8 859.0 792.6
Result from participations in associated
companies 3.9 –177.6% (5.0) 4.2 11.0 6.3
Realised gains/losses 162.0 +43.4% 113.0 (113.6) 174.3 217.4
Appreciation 27.2 +35.5% 20.1 – – –
Impairments on investments 2 23.8 –83.3% 142.5 480.4 72.0 19.0
Unrealised gains/losses 3 (39.9) –139.7% 100.6 (119.7) (18.8) 19.2
Investment expenses 67.4 +26.9% 53.1 41.4 52.0 49.5
Net investment income from
assets under own management 942.5 +11.7% 843.6 78.9 901.6 967.0
Net investment income from
funds withheld 316.4 +14.3% 276.8 199.6 220.1 221.9
Total investment income 1,258.9 +12.4% 1,120.4 278.5 1,121.7 1,188.9
1 Excluding expenses on funds withheld and contract deposits
2 Including depreciation/impairments on real estate
3 Portfolio at fair value through profit or loss and trading
Hannover Re Group annual report 2010
investments Management report
47