funds held under reinsurance treaties): collateral provided to cover insurance liabilities that a (re­)insurer retains from the liquid funds which it is to pay to a reinsurer under a reinsurance treaty. In this case, the retaining company shows a deposit received, while the company furnishing the collateral shows a deposit with a ceding company.
struments such as equities, fixed­income securities and foreign exchange instruments, the price of which is deter­
Direct business: business focused on narrowly defined portfolios of niche or other non­standard risks.
Direct (also: primary) insurer: company which accepts risks in exchange for an insurance premium and which has a direct contractual relationship with the policyholder
Discounting of loss reserves: determination of the present value of future profits through multiplication by the cor­
fication is an instrument of growth policy and risk policy for a company.
Due diligence: activity generally performed as part of a capital market transaction or in the case of mergers and acquisitions, covering inter alia an examination of the finan­
FASB Accounting Standards Codification, FASB ASC: since 15 September 2009 the single source of authoritative
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 consideration a share of the future profits of the said portfolio.
Gross/Retro/Net: gross items constitute the relevant sum total deriving from the acceptance of direct insurance policies or reinsurance treaties; retro items constitute the relevant sum total deriving from own reinsurance cessions.
Board on accounting and reporting (until 2002 they were named International Accounting Standards, IAS).
Investment grade: investment grade ratings are awarded to companies and assigned to securities that have a low risk profile. They contrast with non-investment-grade ratings, which by definition include speculative elements and therefore entail a significantly higher risk.
Issuer: private enterprise or public entity that issues securities, e.g. the federal government in the case of German
Treasury Bonds and a joint-stock corporation in the case of shares.
Loss ratio: proportion of loss expenditure in the retention relative to the (gross or net) premiums earned.
European Embedded Value (EEV). In particular, the marketconsistent calculation method is intended to bring about better comparability. The MCEV is established using riskneutral assumptions in relation to the expected investment income and the discounting approach. In addition, the swap curve is adopted as a risk-neutral interest rate structure.
(Insurance) Pool: a risk-sharing partnership under civil law formed by legally and economically independent insurers and reinsurers in order to create a broader underwriting base for particularly large or unbalanced risks.
or in their entirety; b) group of investments defined according to specific criteria.
Property and casualty (re-)insurance: collective term for all lines of business which in the event of a claim reimburse only the incurred loss, not a fixed sum insured (as is the case in life and personal accident insurance, for example).
Provision: liability item as at the balance sheet date to discharge obligations which exist but whose extent and/
or due date is/are not known. Technical provisions, for example, are for claims which have already occurred but which have not yet been settled, or have only been partially settled (= provision for outstanding claims, abbreviated to: claims provision).
Surplus reinsurance: form of proportional reinsurance under which the risk is not spread between the insurer and reinsurer on the basis of a previously agreed, set quota share. Instead, the insurer determines a maximum sum insured per risk up to which it is prepared to be liable. Risks that exceed the ceding company‘s retention (surpluses)
Surplus relief treaty: a portfolio reinsurance contract under which an admitted reinsurer assumes (part of) a ceding company‘s business to relieve stress on the cedant‘s policyholders ‘ surplus.
Technical result: the balance of income and expenditure allocated to the insurance business and shown in the technical statement of income (after additional allowance is made for the allocation to/withdrawal from the equalisation reserve: net technical result).
Principles): internationally recognised US accounting principles. Not all the provisions which together constitute
US GAAP have been codified. In addition to the authoritative standards of the FASB ASC, US GAAP also includes, for example, standard accounting practices in specific industries.
Non-life reinsurance Life and health reinsurance hannover reR hannover life reR
Report is also available in German. The report can be downloaded online in PDF format in English and German at www.hannover-re.com.
Picture credits New York (Corbis): pages 24/25 Thailand (Getty): pages 34/35 Hannover (Getty): cover and pages 48/49 London (Getty): pages 72/73 Beach volleyball (Corbis): pages 92/93 Frank Bauer: pages 2 and 7