2011 Annual Report - OTCIQ.com

Virtually all of the investments in debt instruments have an
external investment-grade rating.
At E.ON, liquid funds are normally invested at banks with good
credit ratings, in top-rated money market funds or in shortterm
securities (for example, commercial paper) of issuers
with strong credit ratings. Bonds of public and private issuers
are also selected for investment. Group companies that for
legal reasons are not included in the cash pool invest money
at leading local banks. Standardized credit assessment and
limit-setting is complemented by daily monitoring of CDS levels
at the banks and at other significant counterparties.
Asset Management
For the purpose of financing long-term payment obligations,
including those relating to asset retirement obligations (see
Note 25), financial investments totaling €4.9 billion (2010:
€4.7 billion) were held by German E.ON Group companies as
of December 31, 2011.
These financial assets are invested on the basis of an accumulation
strategy (total-return approach), with investments
broadly diversified across the money market, bond, real estate
and equity asset classes. Asset allocation studies are performed
at regular intervals to determine the target portfolio
structure. The majority of the assets is held in investment
funds managed by external fund managers. Corporate Asset
Management at E.ON AG, which is part of the Company’s
Finance Department, is responsible for continuous monitoring
of overall risks and those concerning individual fund managers.
Risk management is based on a risk budget whose usage is
monitored regularly. The three-month VaR with a 98-percent
confidence interval for these financial assets totaled €158 million
(2010: €107 million).
CEO Letter
E.ON Stock
Combined Group Management Report
Consolidated Financial Statements
Corporate Governance Report
Supervisory Board and Board of Management
Tables and Explanations
In addition, the mutual insurance fund Versorgungskasse
Energie VVaG (“VKE”) manages financial assets that are for
the most part dedicated to the coverage of employee retirement
benefits at E.ON Group companies in Germany; these
assets totaled €0.6 billion at year-end 2011 (2010: €0.6 billion).
The assets at VKE do not constitute plan assets under IAS 19
(see Note 24) and are shown as non-current and current assets
on the balance sheet. The majority of the diversified portfolio,
consisting of money market instruments, bonds, real estate
and equities, is held in investment funds managed by external
fund managers. VKE is subject to the provisions of the Insurance
Supervision Act (“Versicherungs aufsichts gesetz” or
“VAG”) and its operations are supervised by the German Federal
Financial Supervisory Authority (“Bundes anstalt für
Finanzdienst leistungs aufsicht” or “BaFin”). Financial investments
and continuous risk management are conducted within
the regulatory confines set by BaFin. The three-month VaR
with a 98-percent confidence interval for these financial assets
was €18.7 million (2010: €18.4 million).
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