Annual Report 2010 - Hannover Re

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Development of policyholders’ surplus in EUR million 6,987 7,000 1,385 5,621 1 6,000 5,295 484 4,878 885 4,708 5,000 897 609 898 480 476 898 542 4,000 474 573 479 609 501 3,000 4,509 2,000 2,898 3,349 3,714 2,830 1,000 0 2006 2007 2008 2009 2010 Shareholders‘ equity Hybrid capital, no maturity Minority interest Hybrid capital, limited maturity 1 Adjusted on the basis of IAS 8 Hannover Re is guided in its capital management by the requirements and expectations of the rating agencies that assess the Group with an eye to its targeted rating. Furthermore, while making appropriate allowance for business policy considerations and factors that influence market presence, the allocation of capital to the Group’s operational companies is based upon the economic risk content of the business group in question. Some Group companies are subject to additional national capital and solvency requirements. All Group companies met the applicable local minimum capital requirements in the year under review. Adherence to these capital requirements is continuously monitored by the responsible organisational units at the parent company on the basis of the latest actual figures as well as the corresponding planned and forecast figures. If, despite the capital allocation mechanisms described above, a scenario occurs in which there is a danger of minimum capital requirements being undershot, suitable options are immediately discussed and measures set in motion to counteract such an eventuality. From the Group perspective we manage Hannover Re’s solvency using our internal capital model, which is described in greater detail on page 57 et seq. of the risk and opportunity report. value per share increased accordingly by 21.4% to EUR 37.39. The changes in shareholders’ equity were shaped chiefly by the following movements: The Group net income for 2010 attributable to the shareholders of the Hannover Re Group climbed to EUR 748.9 million (EUR 733.7 million). Net unrealised gains on investments recognised in the other reserves reached EUR 372.1 million, a figure EUR 130.5 million higher than at the beginning of the year under review. This rise derived in particular from the positive development of markets for alternative investments and the decline in yields, especially on US treasuries and some non-EU government bonds. The reserve for currency translation adjustment improved appreciably by EUR 171.1 million to –EUR 53.0 million as a consequence of exchange rate fluctuations of foreign currencies against the euro in the year under review. The rise in the reserve for currency translation adjustment resulted above all from the appreciation of the Australian dollar (AUD) and US dollar (USD). Minority interests in Group shareholders’ equity grew by EUR 66.8 million to EUR 608.9 million as at 31 December 2010. This increase derived primarily from the minority interest in profit of EUR 82.0 million generated in the year under review. Development of Group shareholders’ equity in EUR million 6,000 5,117.9 5,000 4,256.6 1 3,921.9 4,000 3,506.5 3,331.5 3,000 2,000 1,000 Group shareholders’ equity In view of the thoroughly favourable result, the development of the shareholders’ equity of the Hannover Re Group was highly gratifying. Compared to the position as at 31 December 2009, it increased by EUR 861.3 million in the year under review to EUR 5.1 billion. After adjustment for minorities, it increased by EUR 794.5 million to EUR 4.5 billion. The book 2006 2007 2008 2009 2010 Minorities Group net income (loss) Retained earnings excluding Group net income (loss) Cumulative other comprehensive income Common shares and additional paid-in capital 1 Adjusted on the basis of IAS 8 0 74 Management report Financial position Hannover Re Group annual report 2010
Financing and Group debt In addition to the financing effect of the changes in shareholders’ equity described above, debt financing on the capital market is a key component of Hannover Re’s financing. It was essentially composed of subordinated bonds issued to ensure lasting protection of our capital base in observance of rating requirements. The total volume of debt and subordinated capital stood at EUR 2,056.8 million (EUR 1,481.3 million) as at the balance sheet date. Our subordinated loans and bonds supplement our equity with the aim of reducing the cost of capital and also help to ensure liquidity at all times. In the 2010 financial year we again placed subordinated debt of nominally EUR 500.0 million on the European capital market through our subsidiary Hannover Finance (Luxembourg) S.A. It has a term of 30 years and carries a fixed coupon of 5.75% p.a. in the first ten years. The bond has a first scheduled call option after ten years, after which the coupon steps up to a floating rate of three-month EURIBOR +4.235%. In addition, unsecured syndicated guarantee facilities exist with a number of financial institutions as collateral for our technical liabilities as letters of credit. For detailed information on existing contingent liabilities please see the notes, Section 5.12 “Debt and subordinated capital” and 7.7 “Contingent liabilities and commitments”. Furthermore, several Group companies have taken up longterm debt – principally in the form of mortgage loans – amounting to EUR 187.6 million (EUR 116.2 million). For further explanatory information please see our remarks in the notes to this report, Section 5.12 “Debt and subordinated capital” and 5.13 “Shareholders’ equity, minority interests and treasury shares”. Analysis of the consolidated cash flow statement Liquidity We generate liquidity primarily from our operational reinsurance business, investments and financing measures. Regular liquidity planning and a liquid investment structure ensure that Hannover Re is able to make the necessary payments at all times. Hannover Re’s cash flow is shown in the consolidated cash flow statement on page 105 et seq. Hannover Re does not conduct any automated internal cash pooling within the Group. Liquidity surpluses are managed and created by the Group companies. Various loan relationships exist within the Hannover Re Group for the optimal structuring and flexible management of the short- or longterm allocation of liquidity and capital. Management report The table below summarises the carrying amounts of our subordinated bonds. Subordinated bonds in EUR million Issue date Coupon in % 2010 2009 Hannover Finance (Luxembourg) S.A., subordinated debt, EUR 350 million; 2001/2031 1,2 14.03.2001 6.25 138.1 137.9 Hannover Finance (Luxembourg) S.A., subordinated debt, EUR 750 million; 2004/2024 26.02.2004 5.75 746.9 746.1 Hannover Finance (Luxembourg) S.A., subordinated debt, EUR 500 million; 2005/undated 01.06.2005 5.00 484.1 481.1 Hannover Finance (Luxembourg) S.A., subordinated debt, EUR 500 million; 2010/2040 14.09.2010 5.75 500.0 – Total 1,869.1 1,365.1 1 This bond was exchanged in an amount of EUR 211.9 million in 2005 2 Repayment of the outstanding volume of this debt in an amount of EUR 138.1 million is planned for 14 March 2011 Hannover Re Group annual report 2010 Financial position Management report 75
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Annual Report 2010
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The Hannover Re Group America Europ
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Contents For our investors 2 - 15 L
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Our operational business was impact
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Our life and health reinsurance bus
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years will generate increasing inco
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For our investors Seated from left
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The market capitalisation of the Ha
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Basic information Securities identi
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Strategic objectives 1. Profitable
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Macroeconomic climate The global ec
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Business development We are thoroug
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Non-life reinsurance Accounting for
Page 27 and 28: Along with the aforementioned natur
Page 29 and 30: The establishment of the Federal In
Page 31 and 32: The Die beste volatility Volatilit
Page 33 and 34: Credit and surety Breakdown of gros
Page 35 and 36: Thanks not least to a new branch of
Page 37 and 38: The insurance sector continues to b
Page 39 and 40: have enlarged our portfolio. In the
Page 41 and 42: anch in Shanghai concentrates on bu
Page 43 and 44: Ageing macht creates Märkte market
Page 45 and 46: Key figures for life and health rei
Page 47 and 48: new business. Against this backdrop
Page 49 and 50: The rating agency Standard & Poor
Page 51 and 52: Rating of fixed-income securities
Page 53 and 54: In 2009 Hannover Re launched anothe
Page 55 and 56: Solvency For our company II heißt
Page 57 and 58: Social commitment Hannover Re’s c
Page 59 and 60: Opportunity and risk report Overrid
Page 61 and 62: Available capital and required risk
Page 63 and 64: Internal risk management and contro
Page 65 and 66: The table below lists the catastrop
Page 67 and 68: Sensitivity analysis of the Market
Page 69 and 70: events. Further significant risk ma
Page 71 and 72: Gross written premium retained in %
Page 73 and 74: Strategic risks derive from the ris
Page 75 and 76: Performance Excellence Check The PE
Page 77: Financial position Asset / liabilit
Page 81 and 82: Financial strength ratings of subsi
Page 83 and 84: Naturkatastrophen Natural catastrop
Page 85 and 86: Corporate Governance The principles
Page 87 and 88: for orderly performance of their ta
Page 89 and 90: in question. With the aim of making
Page 91 and 92: The Annual General Meeting of Hanno
Page 93 and 94: Measurement bases/conditions of pay
Page 95 and 96: Individual remuneration received by
Page 97 and 98: motivation, customer satisfaction,
Page 99 and 100: eversal. Nevertheless, we anticipat
Page 101 and 102: of demand and the diversification o
Page 103 and 104: Profit and growth targets for 2011
Page 105 and 106: as at 31 December 2010 Liabilities
Page 107 and 108: Consolidated statement of comprehen
Page 109 and 110: Consolidated cash flow statement 20
Page 111 and 112: Figures in EUR thousand 1.1.- 31. 1
Page 113 and 114: as at 31 December 2010 Life/health
Page 115 and 116: as at 31 December 2010 Life/health
Page 117 and 118: 1. Company information The parent c
Page 119 and 120: Standards Applicable to financial y
Page 121 and 122: Impairments: as at each balance she
Page 123 and 124: asis of a five-year detailed plan a
Page 125 and 126: come. Currency translation differen
Page 127 and 128: The projections, which cover variou
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The following list of shareholdings
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Name and registered office of the c
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Name and registered office of the c
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Investments Within the scope of its
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5. Notes on the individual items of
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The stated maturities may in indivi
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Amortised cost, unrealised gains an
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Carrying amounts before impairment
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Breakdown of investments by currenc
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In addition, we held indirect real
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Development of level 3 financial in
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Development of deferred acquisition
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This item principally consists of t
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Technical provisions in EUR thousan
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Net loss reserve and its run-off in
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Liabilities in liability and motor
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From 1997 onwards it has been possi
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The recognised provision for pensio
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in EUR thousand Other reclassificat
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Debt and subordinated capital in EU
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Furthermore, a long-term unsecured
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6.2 Investment income Investment in
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6.3 Reinsurance result Reinsurance
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Tax-relevant bookings on the Group
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The following table presents a reco
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Maturity structure of derivative fi
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Business assumed and ceded in Germa
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last twenty trading days prior to t
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On this basis the aggregate provisi
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7.7 Contingent liabilities and comm
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7.11 Events after the balance sheet
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Responsibility statement To the bes
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ated by a reinsurance subsidiary do
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- in each case drawn up as at 31 De
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Branch offices and subsidiaries of
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Spain United Kingdom USA HR Hannove
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Corporate Governance: serves to ens
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Life and health (re-)insurance: col
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Segmental reporting: presentation o
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Financial calendar 2011/2012 9 Marc
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Contact information Corporate Commu
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Annual Report 2010 - Hannover Re

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