The total number of share awards granted is based on the value per share of Hannover Rück SE. The value per share is established according to the unweighted arithmetic mean of the Xetra closing prices of the Hannover Re share. In the conditions applicable to members of the Executive Board a period of five trading days before to five trading days after the meeting of the Supervisory Board that approves the consolidated financial statement for the financial year just-ended is envisaged for the calculation. For managers a period of twenty trading days before to ten trading days after the meeting of the Super visory Board that approves the consolidated financial statement for the financial year just-ended has been agreed. The total number of share awards granted is established by dividing the amount available for the granting of share awards to the respective eligible recipients by the value per share, rounded up to the next full share. For members of the Executive Board 20% and for managers 40% or 35% – according to management levels – of the defined variable remuneration shall be granted in the form of share awards.
Value per share award in EUR 62.38 59.86 58.96 42.09 38.33
Personnel expense in EUR thousand 1 1,379 1,543 1,839 285 269
1 The personnel expense for share awards in the case of members of the Executive Board is spread on an accrual basis across the four-year term of the share awards or the shorter term of the service contracts; in the case of managers the personnel expense is spread across the four-year term of the share awards.
Diluted earnings per share in EUR 7.43 7.04 1 Adjusted pursuant to IAS 8 (cf. Section 3.1)
It will be proposed to the Annual General Meeting on 7 May 2014 that a dividend of EUR 3.00 per share should be paid for the 2013 financial year. This corresponds to a total distribution of EUR 361.8 million. The dividend proposal does not form part of this consolidated financial statement.
Hannover Re has placed four subordinated debts on the European capital market through its subsidiary Hannover Finance (Luxembourg) S.A. Hannover Rück SE has secured by subordinated guarantee both the debt issued in 2004, the volume of which amounts to EUR 750.0 million, and the debts from the 2005, 2010 and 2012 financial years in amounts of EUR 500.0 million each.
As part of our business activities we hold collateral available outside the United States in various blocked custody accounts and trust accounts, the total amount of which in relation to the Group’s major companies was EUR 2,514.4 million (EUR 2,314.4 million) as at the balance sheet date.
The securities held in the blocked custody accounts and trust accounts are recognised predominantly as available-for-sale investments. As security for our technical liabilities, various financial institutions have furnished sureties for our company in the form of letters of credit. The total amount as at the balance sheet date was EUR 2,895.1 million (EUR 3,343.0 million). The standard market contractual clauses contained in some of the underlying letter of credit facilities regarding compliance with stipulated conditions are explained in greater detail in the “Financial position and net assets” section of the management report, page 57 et seq., on the information pursuant to § 315 Para. 4 German Commercial Code (HGB) as well as in Section 6.12 “Debt and subordinated capital” on other financial facilities.
In addition, we keep own investments with a book value of EUR 53.8 million (EUR 67.3 million) in blocked custody accounts as collateral provided under existing derivative transactions. We received collateral with a fair value of EUR 18.6 million (EUR 9.5 million) for existing derivative transactions.
For liabilities in connection with participating interests in real estate companies and real estate transactions the usual collateral under such transactions has been furnished to various banks, the amount of which totalled EUR 459.9 million (EUR 288.3 million) as at the balance sheet date.
Outstanding capital commitments with respect to alternative investments exist on the part of the Group in an amount of EUR 598.5 million (EUR 575.9 million). These primarily involve as yet unfulfilled payment obligations from investment commitments given to private equity funds and venture capital firms.
Several Group companies are members of the association for the reinsurance of pharmaceutical risks and the association for the insurance of German nuclear reactors. In the event of one of the other pool members failing to meet its liabilities, an obligation exists to take over such other member’s share within the framework of the quota participation.
Rented property Altogether, non-cancellable contracts will produce the rental income shown below in subsequent years: Rental income in EUR thousand Payments to be received
Rental income totalled EUR 58.7 million (EUR 47.3 million) in the year under review. The rental income resulted principally from the renting out of properties by the Group’s real estate companies.
An expense of altogether EUR 3.5 million (EUR 3.2 million) was incurred in the year under review for the fee paid to the appointed auditor of the consolidated financial statement as defined by § 318 German Commercial Code (HGB). Of this total amount, EUR 1.3 million (EUR 1.5 million) was attributable to the fee for auditing services in relation to the financial statement, EUR 0.6 million (EUR 0.5 million) to other assurance services, EUR 0.2 million (EUR 0.1 million) to tax consultancy services and EUR 1.4 million (EUR 1.1 million) to other services.
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in Germany (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the combined management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accountingrelated internal control system and the evidence supporting the disclosures in the consolidated financial statements and the combined management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and combined management report. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS, as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a Para. 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The combined management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.
In our function as the Supervisory Board we considered at length during the 2013 financial year the position and development of the company and its major subsidiaries. We advised the Executive Board on the direction of the company and monitored the management of business on the basis of written and verbal reports from the Executive Board. The Supervisory Board of Hannover Rückversicherung AG held one regular meeting. Following transformation of the company into an SE and entry of the transformation in the commercial register on 19 March 2013 the Supervisory Board of Hannover Rück SE came together for three regular meetings, one extraordinary meeting and one constituent meeting in order to adopt the necessary resolutions after appropriate discussion. We received quarterly written reports from the Executive Board on the course of business and the position of the company and the Group. These reports describe, inter alia, the current planned and expected figures for the company and the Group as a whole and for the individual business groups. The quarterly reports with the quarterly financial statements and key figures for the Hannover Re Group constituted a further important source of information for the Supervisory Board. We received an analysis of the 2012 results in non-life and life and health reinsurance as well as a presentation from the Executive Board covering the profit expectations for the 2013 financial year and the operational planning for the 2014 financial year. In addition, the Chairman of the Supervisory Board was constantly advised by the Chairman of the Executive Board of major developments and impending decisions as well as of the risk situation within the company and the Group. All in all, we were involved in decisions taken by the Executive Board and assured ourselves of the lawfulness, regularity and efficiency of the company’s management as required by our statutory responsibilities and those placed upon us by the company’s Articles of Association. No audit measures pursuant to § 111 Para. 2 Sentence 1 German Stock Corporation Act were required in the 2013 financial year.
The Finance and Audit Committee considered inter alia the consolidated annual and quarterly financial statements drawn up in accordance with IFRS and the corresponding individual financial statements of Hannover Rückversicherung AG / Hannover Rück SE drawn up in accordance with the German Commercial Code (HGB) and discussed with the independent auditors their reports on these financial statements. As in the previous year, an expert opinion on the adequacy of the loss reserves in nonlife reinsurance was noted, and a review of the accumulated prefinancing volume in life reinsurance including a comparison of the expected return flows with the repayments actually made, the risk reports, the compliance report and the report on adherence to Corporate Governance principles as well as reports on the major subsidiaries were received and discussed. In addition, the Committee examined the investment structure and investment income – including the stress tests with regard to the investments and their implications for net income and the equity base – and defined the audit concentrations for the 2013 financial year. The Committee was provided with detailed reports on the current position and probable development of the subsidiary International Insurance Company of Hannover as well as on the recognition and measurement of the acquired ING portfolios. It prepared the resolutions to be adopted by the Supervisory Board on the implementation of various capital measures (including issuance of a perpetual bond). The Committee also received an explanation of the capital market risks in life and health reinsurance and was provided with a detailed report on the implications of downgrade clauses as well as a status analysis of risk management within the Group. An analysis of the results of major competitors rounded off the work of the Finance and Audit Committee in the year under review.
The Standing Committee dealt with the adequacy of the system of remuneration for the members of the Executive Board, the review of the fixed remuneration, the determination of the variable remuneration of the members of the Executive Board for the 2012 financial year on the basis of the findings with respect to attainment of the respective targets and the revised arrangements for the business group bonus. The Committee drew up corresponding recommendations for the full Supervisory Board. The Committee also recommended to the full Supervisory Board the reappointment of Mr. Claude Chèvre, Dr. Klaus Miller and Mr. Ulrich Wallin.
Audit of the annual financial statements and consolidated financial statements The accounting, annual financial statements, consolidated financial statements and the combined management report were audited by KPMG AG Wirtschaftsprüfungsgesellschaft. The Supervisory Board selected the auditor and the Chairman of the Supervisory Board awarded the audit mandate. The auditor ’s independence declaration was received. In addition to the usual tasks performed by the auditors, key points of focus in the audit of the individual and consolidated financial statements of Hannover Rück SE were the issues defined by the Financial Reporting Enforcement Panel (Deutsche Prüfstelle für Rechnungslegung ) for the 2013 financial year as well as the currency translation in the individual financial statements drawn up according to the German Commercial Code (HGB) and in the IFRS consolidated financial statements. The mandate for the review report by the independent auditors on the interim financial report as at 30 June 2013 was also awarded again. The special challenges associated with the international aspects of the audits were met without reservation. Since the audits did not give rise to any objections KPMG AG issued unqualified audit certificates. The Finance and Audit Committee discussed the annual financial statements and the combined management report with the participation of the auditors and in light of the
audit reports, and it informed the Supervisory Board of the outcome of its examination. The audit reports were distributed to all members of the Supervisory Board and scrutinised in detail – with the participation of the auditors – at the Supervisory Board meeting held to consider the annual results. The auditors will also be present at the Annual General Meeting.
– in each case drawn up as at 31 December 2013 – and have no objections. Nor do we have any objections to the statement reproduced in the dependent company report. The Supervisory Board thus concurred with the opinions of the auditors and approved the annual financial statements and the consolidated financial statements; the annual financial statements are thereby adopted. Our proposal regarding the appropriation of the disposable profit for 2013 is in accordance with that of the Executive Board.
Changes on the Supervisory Board and the Executive Board The composition of the shareholder representatives on the Supervisory Board, the Finance and Audit Committee and the Standing Committee did not change in the year under review. With effect from 6 March 2013 Dr. Pollak replaced Dr. Sturany as a member of the Nomination Committee. With effect from 6 March 2013 Ms. Maike Sielaff succeeded Mr. Gerd Wächtler as an employee representative on the Supervisory Board. The
Burgwedel (until 6 March 2013) Employee 1 Member of the Standing Committee 2 Member of the Finance and Audit Committee 3 Independent financial expert on the Finance and Audit Committee 4 Member of the Nomination Committee 5 Staff representative
Hannover Rueck SE Australian Branch – Agency The Re Centre, Level 21 Australia Square 264 George Street Sydney NSW 2000 G. P. O. Box 3973 Sydney NSW 2001
Hannover Rück SE Canadian Branch – Non-Life Office 130 King Street West Suite 2125 Toronto, Ontario M5X 1A4
Hannover Rück SE Succursale Française 109 rue de la Boetie (Entrance: 52 avenue des Champs Elysées) 75008 Paris
Hannover Rück SE Korea Branch Room 414, 4th Floor Gwanghwamoon Officia Building 92 Seamunan-ro, Jongro-gu Seoul, 110-999
Hannover Rueck SE Malaysian Branch Suite 31-1, 31st Floor Wisma UOA II No. 21 Jalan Pinang 50450 Kuala Lumpur
Hannover Rück SE Taipei Representative Office Rm 902, 9F, No. 129, Sec. 3 Minsheng E. Road Taipeh
Benefit reserves: value arrived at using mathematical methods for future liabilities (present value of future liabilities minus present value of future incoming premiums), primarily in life and health insurance.
International Securities Identification Number (ISIN): tencharacter universal code used to identify securities internationally. It is prefixed by a country code that specifies the country where the issuer entity is legally registered or in which it has legal domicile, e. g. DE = Germany.
Letter of credit (LOC): bank guarantee; at the request of the guaranteed party, the bank undertakes to render payment to the said party up to the amount specified in the LOC. This method of providing collateral in reinsurance business is typically found in the USA.
Market Consistent Embedded Value (MCEV): a refinement and closer specification of the previous principles of European Embedded Value (EEV). In particular, the market-consistent calculation method is intended to bring about better comparability. The MCEV is established using risk-neutral 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.
A printed version of the Hannover Re Group’s Annual Report is also available in German. The report can be downloaded online in PDF format in English and German at www.hannover-re.com.
We would also be pleased to provide you with the individual Annual Report of Hannover Rück SE in German or English. If you wish to receive paper copies of any of these versions, please contact Corporate Communications on: Fax + 49 511 5604-1648 or order them online at www.hannover-re.com under “Media Centre / Financial Reports”.