Dividend per share in EUR 2.102 –8.7% 2.30 2.10 – 1.80+0.503
Large losses as percentage of net premium earned (non-life reinsurance)5 16.5% 12.3% 4.6% 10.7% 6.3%
The volume of the assumed future pension commitments totalled around 800 million pounds sterling, which will accrue to our account plus the reinsurance margin as premium over the run-off of the block of business. The assumption of such longevity risks necessitates only a minimal use of capital because they have a negative correlation with mortality risks. This business consequently produces an attractive return on equity.
Turning to the current financial year, the market climate in non-life and life/health reinsurance is somewhat more favourable now than it was even in the previous year.
and 1.1 percentage points in the US to 23.6%. A clear shift from Belgium to Luxembourg was observed within the Benelux countries. The percentage share attributable to these three countries nevertheless remained virtually unchanged at 8.6%
“AA+”, the US profited from the dollar’s status as the global reserve currency and the perception of US treasuries as a safe haven investment.
land, Italy, Portugal and Spain) is relatively low at 1.3% of the total investment portfolio. Our portfolio does not contain any bonds of Greek issuers.
ance industry was nevertheless faced with extraordinarily heavy burdens in the year under review. The largest loss event for the insurance industry was the earthquake in Japan and the resulting tsunami. This event produced a net strain for our company of EUR 228.7 million. Yet the flooding in Thailand and the earthquake in New Zealand also resulted in a heavy major loss incidence. The associated expenditures incurred by Hannover Re amounted to EUR 195.7 million and EUR
Breakdown of gross written premium in Germany by line of business 37.4% Property 23.2% liability 5.1% Accident 34.3% Motor
factory. This segment of non­life reinsurance includes marine and aviation business, credit/surety, structured reinsurance products, ILS (Insurance­Linked Securities), the London Mar­
ous year, the major loss experience in the year under review proved to be even better than expected. The largest single loss was an accident during an air show in the United States, re­
Specially tailored solutions generate value­added for both contracting parties. Mutual benefit fosters the necessary trust and shapes the customer relation­
dom and the South African company Compass Insurance Ltd., a subsidiary of Hannover Re Africa, we write direct business that complements our principal business activity as a re­
Stockholm. Based on the reinsurance capacities that we are able to offer as well as a very good rating, we are one of the key providers of reinsurance coverage in this region.
ments. It remains the case that rates in the primary insurance sector are scarcely adequate in Southeast Asian markets, al­
Now that we have the status of local reinsurer, we are also able to write insurance business in the domestic currency.
The premium volume from facultative business decreased slightly in the year under review.
Kingdom, Germany, Scandinavia and France continued to be exceptionally pleasing. Our profit expectations were met and in some cases surpassed. Claims experiences in the emerging markets of Asia, Africa and Latin America similarly remained favourable.
Altogether, we booked total investment income of EUR 512.6 million (EUR 508.2 million); of this amount, EUR 188.3 million
Long­term care insurance also recorded premium gains, which can be attributed to the ageing of the population. We have long been prepared for this demographic trend and are working closely together with selected primary insurers in this area so as to offer attractive new (re)insurance solutions spe­
We also pressed ahead with our activities to acquire new busi­
Asian markets (excluding the Middle East) is crucially driven by the East Asian region. Here, too, we booked premium growth of around 50%, equivalent to a volume of EUR 334.4 million (EUR 223.0 million). The result for the year under re­
ever, a more depressed sentiment took hold again. Whereas the DAX recorded a loss of 15% for 2011, the US Dow Jones
After showing strength at the beginning of 2011, the euro remained virtually unchanged year­on­year against the US
in high­return bond funds and loans and altogether EUR 162.4 million (EUR 149.7 million) in structured real estate invest­
cast 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 65 et seq.
pared to the position as at 31 December 2010, it increased by
ous year (1.9%). The rate of absenteeism – at 3.4% – was slightly higher than in the previous year (3.0%). The turnover ratio and rate of absenteeism thus continued to be below the industry average.
siderable importance to superb personnel development and management activities. In this context, the work/life balance of our employees is especially significant. By way of flexible working­time models such as part­time employment and tele­
sisted three or four of the university’s “master students” each year as they seek to embark on their career as soloists, while at the same time offering our clients a musical highlight.
The available economic capital increased in the observation period from EUR 8,381.7 million to EUR 8,758.7 million. This was principally due to the positive business result for 2011 des­
monitored with the aid of qualitative measurement methods, such as expert assessments.
(especially earthquake, windstorm and flood). Furthermore, we establish the risk to our portfolio from various scenarios in the form of probability distributions. The monitoring of the natural hazards exposure of the Hannover Re portfolio (ac­
All natural catastrophe risks, net exposure 100-year aggregate annual loss 1,010 909 762 200-year aggregate annual loss 1,230 1,107 925
wide, which set out detailed rules governing the type, quality, level and origin of risks. These global guidelines are revised annually and approved by the Executive Board. Special under­
October 2009. The table shows the MCEV 2010 and its sensi­
1 More extensive information is provided in the McEv reports published on our website. The presentation is based on the principles for publication of the McEv defined by the cFO Forum. The cFO Forum is an international organisation of chief Financial Officers from major insurance and reinsurance enterprises.
The short­term “Value at Risk” (VaR) is another vital tool used for monitoring and managing market price risks. The VaR is determined on the basis of historical data, e.g. the volatil­
1 vaR upper limit according to Hannover Re‘s investment guidelines: 1.5%
and long­term business (cession management). Depending on the type and expected run­off duration of the reinsured business, the selection of reinsurers takes into account not only the minimum ratings of the rating agencies Standard &
EUR 1,550.6 million (EUR 1,025.3 million) as at the balance sheet date.
pecially in risk management, because all enterprise processes are based on the information made available. The overriding goal of our data quality management is to bring about sustain­
lected market niches. In so doing, just as on the reinsurance side, we always work together with partners from the primary sector – such as insurance brokers and underwriting agencies.
The liquidity risk refers to the risk of being unable to meet our financial obligations when they become due. The liquid­
Governance of the Company as defined by § 289a Para. 1
tions and the Group­wide whistleblower system, the report concludes that five inconsequential circumstances have been identified which point to breaches of relevant compliance standards. After detailed exploration of these incidents, the necessary safeguards were put in place to ensure that in future the Hannover Re Group will be in full compliance with the external requirements for its business activities.
tence and take decisions in lieu of the Supervisory Board with­
HR­SAs granted is based on the value per share of Hannover
ation for the profit bonus is in this case measured by the arith­
9 The non-cash compensation and fringe benefits for Mr. Chèvre include the contractually agreed reimbursement of his relocation costs as well as compensation for the forfeited stock options and 2011 bonus from his previous employer.
The benefit level as a percentage of the pensionable fixed re­
justed group amount for Group S established according to the statutes and benefits plan of the Bochumer Verband (contracts prior to 1997).
Name Attainable annual pension (age 65) dBO 31.12. 2011 Personnel expense dr. Wolf Becke1 189.0 2,629.8 151.6
A system of variable remuneration is in place for management ranks below the Executive Board on the levels of Managing
gions. In the area of political risks we again expect to see good claims rates. Overall, the total credit and surety reinsurance portfolio is expected to deliver increased premium income.
larly, the total premium generated by our portfolio of direct business will also increase significantly. The higher growth rates in this segment will be driven, among other things, by the branch that we opened in Canada in 2011. Our casualty business is expected to show price increases, especially in certain professional indemnity lines, such as for surveyors.
vironment. Only under loss­impacted programmes – fire claims in Russia and Romania – were we able to obtain im­
ance business in France for a number of years now, yet a trend towards rising prices has hitherto failed to emerge. For the current year we expect to see stable rates and conditions. The premium volume should come in on a par with 2011. In the
The other lines will also likely see no let­up in the existing fierce competition, which scarcely lends itself to implementa­
ly higher prices in the treaty renewals as at 1 January 2012.
ance companies, the increased capital requirement can be cost­effectively reduced through reinsurance; this is likely to further boost demand for reinsurance covers as an equity sub­
also under the provisions of Solvency II – to offer our clients attractive reinsurance solutions.
European Currency and the low interest rate level in 2011 caused investment income to come under pressure. In some major insurance markets it was necessary to eliminate reserve redundancies in order to achieve earnings targets. These ef­
Particularly with an eye to Solvency II, we expect to see grow­
Bearing in mind the satisfactory to good market conditions described above in non­life and life/health reinsurance as well as our strategic orientation, we are looking forward to a good financial year in 2012. This is subject to the premise that the burden of major losses does not significantly exceed the ex­
tunities in response to our clients’ needs – and thereby deliver the maximum benefit for them.
Consolidated balance sheet assets in eUR thousand notes 31.12. 2011 31.12. 2010
total income and expense recognised after tax – – 171,104 130,760 (1,722) 748,890 94,200 1,143,232
of the German Accounting Standards Board regarding the preparation of cash flow statements, which were supplemented by the requirements of DRS 2-20 that apply specifically to insurance enterprises. In accordance with the recommendation of the German Accounting Standards Board for insurance enterprises, we adopted the indirect method of presentation.
“J curve” effect during the investment period of the funds), we take an impairment to net asset value as an approximation of the fair value for the first time after a two-year waiting period if there is a significant or prolonged decrease in value.
ity and maturity) exists or is expressly agreed by contract, in other words if the intention exists to offset such items on a net basis or to effect this offsetting simultaneously.
4 “Insurance Contracts” but fail to meet the risk transfer re­
ance sheets drawn up in accordance with national standards and the IFRS balance sheets of the companies included in the consolidated financial statement drawn up in accordance with uniform group standards as well as from consolidation processes. Deferred tax assets are also recognised on tax loss carry­forwards and for tax credits. Insofar as the deferred taxes refer to items carried directly in equity, the resulting deferred taxes are also recognised directly in equity. Value adjustments are taken on deferred tax assets as soon as realisation of the receivable no longer appears likely. Deferred taxes are measured according to the tax regulations specific to the country concerned that are applicable or have been adopted as at the closing date.
Non-controlling interests are shares in the equity of affiliated companies not held by companies belonging to the Group. IAS 1
ed at the mean rates of exchange on the balance sheet date.
insured portions of the reserves are estimated on a basis con­
a calculation pro rata temporis is not available. The unearned premium corresponds to the insurance protection afforded in future periods.
ing values for the Group as a whole on average over the last three years. For this reason 30 (26) companies at home and abroad, the business object of which is primarily the rendering of services for reinsurance companies within the Group, were not consolidated in the year under review.
posal group and the continuing operations of the Group were similarly eliminated in accordance with IAS 27 “Consolidated and Separate Financial Statements”.
N ot es 4.2 COnSOLIDaTED COMPanIES anD COMPLETE LIST OF SHaREHOLDInGS NOtes 4.2 Consolidated companies and complete list of shareholdings
N ot es 4.2 COnSOLIDaTED COMPanIES anD COMPLETE LIST OF SHaREHOLDInGS NOtes
International Mining Industry Underwriters Ltd., London/United Kingdom4 100.00 GBP 419 GBP 60
Hannover Life Re Consultants, Inc., Orlando/USA11 100.00 USD 199 USD 26
Funis GmbH & Co. KG acquired roughly 75% of the shares in
In the 2011 financial year Hannover Re and E+S Rück each acquired 50% interests in HAPEP II Komplementär GmbH
from Talanx Asset Management GmbH, which is wholly owned by Talanx AG. No goodwill had to be capitalised with respect to this transaction between companies under common control.
Hannover Re holds all shares of CIGI indirectly through the intermediate holding company Hannover Finance, Inc. (HFI),
lion in the current financial year. The income was recognised in other income and expenses.
abilities of the disposal group in corresponding balance sheet items that were distinct from continuing operations. Transac­
150 Hannover Re Group annual report 2011NOtes 5.1 InVESTMEnTS unDER OWn ManaGEMEnT
Fixed-income securities – loans and receivables 1,118,414 776,712 241,609 94,831 5,303 – – 77,560 2,314,429
Breakdown of investments by currencies Figures in EuR thousand auD CaD EuR GBP JPy uSD ZaR Other Total
Total financial liabilities measured at fair value 1,755 75,451 – 77,206
Net book value at 1 January of the year under review 82,464 11 779,592
Present value of future profits on acquired life reinsurance portfolios 94,985 98,368
5.7 technical provisions technical provisions in EuR thousand gross retro net gross retro net
Empirical values for the reinsured portfolio, where available, are also taken into consideration. In this context insights into the gender, age and smoker structure are incorporated into the calculations, and allowance is also made for factors such as product type, sales channel and the frequency of premium payment by policyholders.
surance scheme are taken into account. The pension plan was closed to new participants with effect from 31 January 1981.
quisition costs corresponding to the shortfall. Any remaining difference is constituted as an additional provision.
expense for the year under review 9,217 7,688 amounts paid during the year (590) (344)
nancial Instruments: Recognition and Measurement”. Please see our remarks on derivative financial instruments in Section 7.1 “Derivative financial instruments”.
Altogether three (previous year: four) subordinated bonds were recognised as at the balance sheet date with amortised cost of EUR 1,731.6 million (EUR 1,869.1 million).
Net change in benefit reserve 621,460 652,711 change in deferred acquisition costs 75,682 (117,566)
Deferred taxes from loss carry-forwards (43,830) 6,299 change in deferred taxes due to changes in tax rates (324) (899)
lion (EUR 8.5 million) as at the balance sheet date. Increases in income amounting to EUR 8.8 million (EUR 11.0 million)
ing bodies, directors’ dealings and shareholdings as well as the structure of the remuneration system for the Executive
Fair value at 31.12.2011 (in EUR) 5.09 7.65 6.93 7.57 12.49 8.99 8.79
If the Board mandate or the employment relationship with the member of the Executive Board ends, the member of the Ex­
In the event of death the claims arising out of the already grant­
Corporation Act regarding compliance with the German Corporate Governance Code, which is reproduced in this Annual
Financial Solutions: targeted provision of financial support for primary insurers through reinsurance arrangements under which the reinsurer participates in the original costs of an insurance portfolio and receives as a consider ation a share of the future profits of the said portfolio. This approach is used primarily for long-term products in personal lines, such as life, annuity and personal accident insurance.
Matching currency cover: coverage of technical liabilities in foreign currencies by means of corresponding investments in the same currency in order to avoid exchange­rate risks.
Other securities, available­for­sale: securities that are not classified as “trading” or “held­to­maturity”; these secur ities can be disposed of at any time and are reported at their market value at the balance sheet date. Changes in market value do not affect the statement of income.
Priority: direct insurer’s loss amount stipulated under nonproportional reinsurance treaties; if this amount is exceeded, the reinsurer becomes liable to pay. The prior ity may refer to an individual loss, an accumulation loss or the total of all annual losses.
Rate: percentage rate (usually of the premium income) of the reinsured portfolio which is to be paid to the reinsurer as reinsurance premium under a non­proportional reinsurance treaty.
The reinsurer’s lines thus vary according to the level of the retention and the sum insured of the reinsured contract. The reinsurer’s liability is gen erally limited to a multiple of the ceding company’s retention.
Mortality (risk, solutions, cover, rates) 5, 21, 38 ff, 43 f, 46,