In order to measure the ultimate liability in property and casualty reinsurance the expected ultimate loss ratios are calculated for all lines. Actuarial methods such as the “chain ladder ” method provide the starting point for these calculations. The realistically estimated future settlement amount is recognised in the balance sheet. The development until completion of the run-off is projected on the basis of statistical triangles from the original notifications of ceding companies. The more recent underwriting years in actuarial projections are of course subject to greater uncertainty, although this can be considerably reduced with the aid of a variety of additional information on improvements in the rates and conditions of the business written and on loss trends. The amounts arrived at as the difference between the ultimate losses and the reported losses are set aside as the IBNR reserve for losses that have been incurred but are not yet known or have still to be reported. In applying statistical methods, separate consideration is given to large losses.
In life and health reinsurance, too, the calculation of reserves and assets is crucially dependent on actuarial projections of the covered business. So-called model points are defined according to the type of business covered. The main distinguishing criteria are the age, sex and (non-)smoker status of the insured, tariff, policy period, period of premium payment and amount of insurance. The portfolio development is simulated for each model point, in which regard the key input parameters are either predefined by the tariff (e. g. allowance for costs, amount of premium, actuarial interest rate) or need to be estimated (e. g. mortality or disability rates, lapse rates). These assumptions are heavily dependent on country-specific parameters and on the sales channel, quality of the cedant’s underwriting and claims handling, type of reinsurance and other framework conditions of the reinsurance treaty. The superimposition of numerous model points gives rise to a projection, which incorporates inter alia assumptions concerning the portfolio composition and the commencement of covered policies within the year. Such assumptions are estimated at the inception of a reinsurance treaty and subsequently adjusted to the actual projection.
The projections, which cover various model scenarios (“conservative assumptions” versus “best estimate”), constitute the starting point for numerous areas of application encompassing quotation, the determination of carrying amounts and embedded values as well as contract-specific analyses, e. g. regarding the appropriateness of the recognised reinsurance liabilities (“liability adequacy test”). In this context we would refer the reader to our comments on technical assets and provisions in section 3.1 “Summary of major accounting policies” and on the liability adequacy tests in section 6.7 “Technical provisions”.
In determining the carrying amounts for certain financial assets it is sometimes necessary to make assumptions in order to calculate fair values. In this regard we would refer the reader to our remarks in section 3.1 “Summary of major accounting policies” concerning financial assets at fair value through profit or loss and securities held as available for sale as well as in section 6.1 “Investments under own management ” concerning investment property. Assumptions concerning the appropriate applicability criteria are necessary when determining the need for impairments on non-monetary financial assets held as available for sale. In this regard we would again refer the reader to our explanatory remarks in section 3.1 “Summary of major accounting policies”.
Capital consolidation The capital consolidation is carried out according to the requirements of IFRS 10 “Consolidated Financial Statements” on the basis of a consistent consolidation model for all entities that identifies control as the single basis for verifying the consolidation requirement, irrespective of whether control is substantiated in company law, contractually or economically. Group companies are consolidated from the point in time when Hannover Re gains control over them. Control exists if Hannover Re directly or indirectly has decision-making power over a Group company on the basis of voting rights or other rights, if it has exposure or rights to positive and negative variable returns from its involvement with the Group company and if it can use its power to influence these returns. All of these criteria must be met. Other circumstances may also give rise to control, for example the existence of a principal -agent relationship. In this case a party outside the Group with decision-making powers (agent) acts for Hannover Re, but does not control the company since it merely exercises decision-making powers that have been delegated by Hannover Re (principal). These principles are also applied to structured entities, on which further information is provided in section 4.2 “Consolidated companies and complete list of shareholdings”. Group companies are consolidated until the Hannover Re Group loses control over them. The accounting policies of Group companies are adjusted, where necessary, in order to ensure consistent application of the Hannover Re Group’s accounting policies.
Companies over which Hannover Re is able to exercise a significant influence are consolidated as associated companies using the equity method of accounting. We therefore measure investments in associated companies with the proportion of the shareholders’ equity attributable to the Group. According to the proportionate interest method required by IAS 28 “Investments in Associates”, the goodwill attributable to associated companies is recognised together with the investments in associated companies. The share of an associated company’s year-end profit or loss relating to the Group is included in the income from investments and shown separately in the consolidated statement of income. Shareholders’ equity and profit or loss are taken from the associated company’s latest available financial statement. A significant influence is presumed to exist if a company belonging to the Hannover Re Group directly or indirectly holds at least 20% – but no more than 50% – of the voting rights. We also derive evidence of significant influence over an associated company from representation on a governing body of such company, participation in its policy-making processes – e. g. with respect to dividends or other distributions –, the existence of material inter-company transactions, the possibility of interchanging managerial personnel or the provision of key technical information for the company. Further particulars on companies consolidated using the equity method of accounting are provided in section 6.1 “Investments under own management” under “Associated companies”.
A n n u al f in an ci al s ta te m en ts 4.2 Consolidated companies and complete list of shareholdings
Under a purchase agreement concluded on 1 August 2018 with HDI Global SE, Hannover Rück SE sold 50.2% of the shares in International Insurance Company of Hannover SE. Hannover Rück SE gave an undertaking in the purchase agreement – as is customary with such transactions – not to dispose of and, in particular, not to encumber the shares prior to payment of the purchase price and transfer of the shares. This commitment remained in force beyond the balance sheet date. Following payment of the agreed purchase price the shares were transferred to the purchaser on 8 January 2019.
HILSP Komplementär GmbH 3, Hannover / Germany 100.00 EUR 35 1
Hannover Insurance-Linked Securities GmbH & Co. KG 3, Hannover / Germany 100.00 EUR 20,393 25
Hannover America Private Equity Partners II GmbH & Co. KG 1, Hannover / Germany 95.42 EUR 424,437 61,024
HAPEP II Holding GmbH 1, Hannover / Germany 95.42 EUR 3,994 90
Hannover Re Euro PE Holdings GmbH & Co. KG 1, Hannover / Germany 91.20 EUR 301,283 55,983
HR GLL Central Europe Holding GmbH 1, Munich / Germany 87.67 EUR 60,667 1,086
HAPEP II Komplementär GmbH 1, Hannover / Germany 82.40 EUR 43 1
Perseus Technologies GmbH 7, Berlin / Germany 18.72 EUR 669 (1,354)
ELEMENT Insurance AG 7, Berlin / Germany 6.72 EUR 7,527 (3,370)
Hannover Finance (Luxembourg) S. A. 1, Luxembourg / Luxembourg 100.00 EUR 35,030 678
Hannover Life Reassurance Bermuda Ltd. 1, Hamilton / Bermuda 100.00 USD 452,380 55,988
Hannover Life Reassurance Company of America (Bermuda) Ltd. 1, Hamilton / Bermuda 100.00 USD 1,122,202 64,825
Hannover Re (Ireland) Designated Activity Company 1, Dublin / Ireland 100.00 USD 857,255 68,234
Hannover Life Re of Australasia Ltd 1, Sydney / Australia 100.00 AUD 469,676 (11,637)
Hannover ReTakaful B. S.C. (c) 1, Manama / Bahrain 100.00 BHD 63,150 1,287
Hannover Services (UK) Limited 1, London / United Kingdom 100.00 GBP 968 75
APCL Corporate Director No.1 Limited 1, 9, London / United Kingdom 100.00 GBP – –
APCL Corporate Director No.2 Limited 1, 9, London / United Kingdom 100.00 GBP – –
Argenta Insurance Research Limited 1, 9, 10, London / United Kingdom 100.00 GBP – –
Fountain Continuity Limited 1, 9, Edinburgh / United Kingdom 100.00 GBP – –
Argenta Secretariat Limited 1, 9, London / United Kingdom 100.00 GBP – –
Argenta Underwriting No.2 Limited 1, 9, London / United Kingdom 100.00 GBP 1,299 (3,693)
Argenta Underwriting No.8 Limited 1, 9, London / United Kingdom 100.00 GBP (32) (8)
Argenta No.14 Limited 1, 9, London / United Kingdom 100.00 GBP – –
Argenta Underwriting Asia Pte. Ltd. 1, 9, Singapore / Singapore 100.00 SGD 1,687 308
Kubera Insurance (SAC) Ltd 9, Hamilton / Bermuda 100.00 USD 889 (111)
Leine Investment General Partner S.à r. l. 1, 9, Luxembourg / Luxembourg 100.00 EUR 869 363
Leine Investment SICAV-SIF 1, 9, Luxembourg / Luxembourg 100.00 USD 96,470 1,030
LI RE 1, 9, Hamilton / Bermuda 100.00 USD – –
Hannover Finance, Inc. 9, Wilmington / USA 100.00 USD 1,404,793 436
Hannover Life Reassurance Africa Limited 1, Johannesburg / South Africa 100.00 ZAR 565,752 37,502
Hannover Reinsurance Africa Limited 1, Johannesburg / South Africa 100.00 ZAR 820,846 87,934
Compass Insurance Company Limited 1, Johannesburg / South Africa 100.00 ZAR 250,242 55,312
HR US Infra Equity LP 1, 9, Wilmington / USA 95.25 USD 32,528 (328)
101BOS LLC 1, 9, Wilmington / USA 95.15 USD 50,439 1,545 402 Santa Monica Blvd, LLC 1, 9, Wilmington / USA 95.15 USD (847) 931 111ORD LLC 1, 9, Wilmington / USA 95.15 USD 69,582 2,370 140EWR LLC 1, 9, Wilmington / USA 95.15 USD 61,889 (1,390)
Nashville West, LLC 1, 9, Wilmington / USA 95.15 USD 27,324 964 1225 West Washington, LLC 1, 9, Wilmington / USA 95.15 USD 33,123 6,878 975 Carroll Square, LLC 1, 9, Wilmington / USA 95.15 USD 47,090 (308)
M8 Property Trust 1, Sydney / Australia 94.72 AUD 67,100 (500)
PAG Real Estate Asia Select Fund Limited 1, George Town / Cayman Islands 94.72 USD 173,810 972
3541 PRG s. r.o. 1, Prague / Czech Republic 87.67 CZK 901,512 17,955
HR GLL Liberty Corner SPÓLKA Z OGRANICZONA ODPOWIEDZIALNÓSCIA 1, Warsaw / Poland 87.67 PLN 47,995 (1,391)
Akvamarín Beta s. r.o. 1, Prague / Czech Republic 87.67 CZK 68,433 16,397
HR GLL Europe Holding S.à r. l. 1, Luxembourg / Luxembourg 87.67 EUR 190,580 720
Commercial & Industrial Acceptances (Pty) Ltd. 1, Johannesburg / South Africa 79.20 ZAR 15,996 30,662
Lireas Holdings (Pty) Ltd. 1, Johannesburg / South Africa 70.00 ZAR 283,916 65,690
Garagesure Consultants and Acceptances (Pty) Ltd. 1, Johannesburg / South Africa 70.00 ZAR 1,721 3,087
Hospitality Industrial and Commercial Underwriting Managers (Pty) Ltd. 1, Johannesburg / South Africa 63.00 ZAR 2,509 9,245
Landmark Underwriting Agency (Pty) Ltd. 1, Bloemfontein / South Africa 45.85 ZAR 5,025 5,341
International Mining Industry Underwriters Limited 7, 10, London / United Kingdom 100.00 GBP 238 12
Hannover Re Services Japan 1, Tokyo / Japan 100.00 JPY 139,207 12,290
Hannover Services (México) S. A. de C. V. 7, Mexico City / Mexico 100.00 MXN 7,877 828
U FOR LIFE SDN. BHD. 1, Petaling Jaya / Malaysia 60.00 MYR (24,057) (2,153)
Svedea Skadeservice AB 7, Stockholm / Sweden 53.00 SEK 50 –
Clarenfin (Pty) Ltd. 1, Johannesburg / South Africa 22.87 ZAR 97 (25)
Pineapple Tech (Pty) Ltd 1, Johannesburg / South Africa 17.50 ZAR 1,927 (3,254)
Vela Taxi Finance (Pty) Ltd 1, Johannesburg / South Africa 12.58 ZAR (5,316) (1,394)
Marmic Taxi Parts (Pty) Ltd 15, Durban / South Africa 6.86 ZAR 2,484 2,484
Reaseguradora del Ecuador S. A. 1, Guayaquil / Equador 30.00 USD 17,381 2,274
Sureify Labs, Inc. 1, 8, Wilmington / USA 20.69 USD (489) (2,134)
Monument Insurance Group Limited 16, 17, Hamilton / Bermuda 20.00 GBP 58,472 11,640
Acte Vie S. A. 7, Schiltigheim / France 9.38 EUR 9,453 194
B3i Services AG 20, Zurich / Switzerland 7.94 CHF – –
The Sociotech Institute Proprietary Limited 1, Cape Town / South Africa 3.84 ZAR 4,866 (2,332)
Liberty Life Insurance Public Company Ltd 7, Nicosia / Cyprus 3.30 EUR 8,222 331 1 Provisional (unaudited) figures 2 Year-end result after profit transfer 3 Financial year as at 30 September 2018 4 Company is in liquidation 5 Company was wound up with effect from the end of 31 December 2018 6 Figures as at 30 November 2018 7 Figures as at 31 December 2017 8 Financial year as at 31 July 2018 9 IFRS figures 10 Company is inactive 11 The company holds 35 subsidiaries with capital and reserves of altogether EUR 0.5 million. 12 Financial year as at 31 October 2018 13 Figures as at 31 December 2013 14 Financial year as at 28 February 2018 15 Financial year as at 28 February 2017 16 Figures for the period from 9 March 2016 (establishment) to 31 December 2017 17 Consolidated figures 18 Figures as at 31 December 2016 19 Financial year as at 31 August 2017 20 Company was newly established in 2018; an annual financial statement is not yet available. 21 Financial year as at 30 June 2018
Hannover Rueck SE Australian Branch, Sydney / Australia 489,319 220,125 16,168 (1,737)
Hannover Rück SE Canadian Branch, Toronto / Canada 247,225 225,366 19,432 23,472
Hannover Rück SE, Tyskland Filial, Stockholm / Sweden 253,390 242,045 35,184 29,188
Hannover Rück SE – India Branch, Mumbai / India 104,217 58,437 (5,203) (2,547)
International Insurance Company of Hannover SE, Australian Branch, Sydney / Australia 81,407 62,296 1,945 2,151
International Insurance Company of Hannover SE, Canadian Branch, Toronto / Canada 62,858 54,364 577 417
International Insurance Company of Hannover SE 2, Italian Branch, Milan / Italy – – – –
International Insurance Company of Hannover SE, Scandinavian Branch, Stockholm / Sweden 230,861 198,462 2,652 108
International Insurance Company of Hannover SE, UK Branch, London / United Kingdom 373,283 368,196 (10,454) (200)
Consolidation of structured entities Business relations with structured entities are to be examined in accordance with IFRS 10 with an eye to their implications for consolidation. In the context of their operational activities some companies belonging to the Hannover Re Group enter into business relations with structured entities that are to be analysed and accounted for according to these new provisions.
Kubera Insurance (SAC) Ltd is similarly a segregated accounts company, the object of which is to establish segregated accounts that are made available to non-Group companies for structured finance transactions.
Hannover Re participates through its subsidiary Leine Investment SICAV-SIF, Luxembourg, in a number of structured entities that issue catastrophe bonds for the securitisation of catastrophe risks by investing in such bonds. Leine Investment General Partner S.à.r.l. is the managing partner of the asset management company Leine Investment SICAV-SIF, the business object of which is to build, hold and manage a portfolio of insurance-linked securities (catastrophe bonds) – including for third-party investors outside the Group. In addition, a portfolio of such securities is also managed by Hannover Insurance-Linked Securities GmbH & Co. KG, Hannover. The volume of these transactions is derived from the book values of the respective investments and amounted to EUR 86.3 million (EUR 56.0 million) as at the balance sheet date. The maximum risk of loss corresponds to the book values.
Collateralised fronting (ILS) As part of its extended insurance-linked securities (ILS) activities, Hannover Re has concluded so-called collateralised fronting arrangements under which risks assumed from ceding companies are passed on to institutional investors outside the Group using structured entities. The purpose of such transactions is to directly transfer clients’ business. The volume of the transactions is derived from the ceded exposure limit of the underlying retrocession agreements and amounted to EUR 6,131.3 million (EUR 5,235.2 million) as at the balance sheet date. Part of the ceded exposure limit is funded and collateralised by contractually defined investments in the form of cash and equivalent liquid assets; a further part remains uncollateralised or is collateralised by less liquid assets. The maximum risk of loss from these transactions is derived from the uncollateralised exposure limit and the credit risk of the collateral and amounted to EUR 3,063.1 million (EUR 2,775.4 million) as at the balance sheet date. This does not, however, correspond to the economic risk of loss, which is established using recognised actuarial methods. The expected loss on a modelled basis in a worst-case scenario of 10,000 years amounts to at most EUR 50.0 million (EUR 50.0 million).
Fixed-income securities – at fair value through profit or loss – 55,952 –
Within the 95.2%-owned US subgroup Hannover Re Real Estate Holdings, Inc., the special purpose property company 1600FLL LLC, Wilmington, USA, was established via the subsidiary GLL HRE Core Properties, LP, for the purpose of real estate acquisition. An amount of roughly EUR 30.4 million was invested in this connection.
On 11 May 2018 the Executive Board of Hannover Re announced the plan to sell the majority of the shares in International Insurance Company of Hannover SE, Hannover (Inter Hannover), a wholly owned subsidiary of Hannover Rück SE, to HDI Global SE, Hannover.
Pursuant to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” Inter Hannover was classified as at the balance sheet date as a disposal group, which is to be measured at the lower of the carrying amount and fair value less costs to sell. This measurement did not give rise to any impairment expense.
There are no cross-segment gross premiums between the two segments of property & casualty reinsurance and life & health reinsurance. To this extent, the gross premiums shown are exclusively amounts from business with external third parties.
Fixed-income securities – loans and receivables 2,349,266 2,417,894 34,635 37,270 15,049 – 2,398,950 2,455,164
Reinsurance recoverables on other reserves 543 1,269 6,627 6,032 – – 7,170 7,301
Other liabilities in the segment 1,718,949 1,948,148 2,192,760 1,705,864 (1,173,150) (682,176) 2,738,559 2,971,836
Financial assets at fair value through profit or loss 94,333 56,652 656,176 244,222 – – 750,509 300,874
Loss and loss adjustment expense reserve 24,542,826 24,130,443 4,215,749 4,248,296 – (194) 28,758,575 28,378,545
Commission and brokerage, change in deferred acquisition costs and other technical income / expenses 3,033,430 2,434,368 1,263,529 1,081,775 – 227 4,296,959 3,516,370 thereof
Non-controlling interest in profit or loss 84,418 79,740 1,616 6,282 – – 86,034 86,022
Change in fair value of financial instruments 528 2,069 30,632 36,500 – – 31,160 38,569
Maturities of the fixed-income and variable-yield securities N 17 in EUR thousand
Loans and receivables due in one year 178,975 182,670 129,159 130,841 due after one through two years 200,522 209,143 179,739 188,653 due after two through three years 303,603 314,716 218,893 233,670 due after three through four years 213,694 232,687 302,243 320,436 due after four through five years 228,382 252,883 214,455 235,151 due after five through ten years 842,190 959,706 942,722 1,126,196 due after more than ten years 431,584 453,879 467,953 505,538
Financial assets at fair value through profit or loss due in one year 427,918 427,918 177,634 177,634 due after one through two years 86,411 86,411 8,620 8,620 due after two through three years 13,075 13,075 – –
Variable-rate bonds (so-called “floaters”) are shown under the maturities due in one year and constitute an interest-related, within-the-year reinvestment risk.
Debt securities issued by semi-governmental entities 29,493 437 2,433 – 31,926
Debt securities issued by semi-governmental entities 1,451,697 22,045 132,424 2,487 1,581,634
Government debt securities of EU member states 3,101,426 19,901 132,208 10,214 3,223,420
Other foreign government debt securities 271,933 – – – 271,933 –
Hannover Re recognised in this category as at the balance sheet date designated fixed-income securities amounting to EUR 559.8 million (EUR 212.0 million) as well as derivative financial instruments in an amount of EUR 190.8 million (EUR 88.8 million) that are originally allocable to this item.
For further explanatory remarks on the impairment criteria please see section 3.1 “Summary of major accounting policies ”.
Fixed-income securities – held-to-maturity 164,531 37,132 48,280 – – – – – 249,943
Fixed-income securities – available-for-sale 2,222,892 1,098,885 685,210 8,428,778 2,908,509 16,191,456 253,826 1,450,129 33,239,685
Equity securities – available-for-sale – – – 18,091 – 10,638 – – 28,729
Other financial assets – at fair value through profit or loss – – – 835 58,964 29,033 – – 88,832
Associated companies The associated companies included at equity in the consolidated financial statement that both on an individual basis and in their entirety are not material for the Hannover Re Group pursuant to IFRS 12 are comprised of
Net book value at 31 December of the year under review 110,545 121,075
Real estate is valued at cost of acquisition less depreciation with useful lives of at most 50 years.
Development of investment property N 32 in EUR thousand 2018 2017
Cumulative depreciation at 31 December of the previous year 128,939 100,557
Cumulative depreciation at 31 December of the year under review 159,476 128,939
Net book value at 31 December of the previous year 1,583,728 1,402,243
Net book value at 31 December of the year under review 1,684,932 1,583,728
The additions to this item are attributable to investment activities at the relevant real estate companies belonging to the Hannover Re Group, specifically in Australia and the United States.
In addition, we held indirect real estate investments measured at fair values in an amount of EUR 433.9 million (EUR 385.0 million) in the year under review, the amortised costs of which amounted to EUR 379.8 million (EUR 327.2 million). The differences between the carrying amounts and amortised costs were recognised as unrealised gains of EUR 57.5 million (EUR 59.5 million) and unrealised losses of EUR 3.4 million (EUR 1.7 million) under cumulative other comprehensive income.
Short-term investments This item comprises investments with a maturity of up to one year at the time of investment. This includes overnight and time deposits as well as shares in investment funds that invest in such securities.
The fair value hierarchy, which reflects characteristics of the price data and inputs used for measurement purposes, is structured as follows: • Level 1: Assets or liabilities measured at (unadjusted) prices quoted directly in active and liquid markets
Movements in level 3 financial assets and liabilities N 35 in EUR thousand
Net book value at 31 December of the year under review – 132,339 433,899 1,647,992 24,548
Movements in level 3 financial assets and liabilities N 36 in EUR thousand
Income and expenses recognised in the statement of income (88) 2,024 (2,341) 9,093 (29,818)
The breakdown of income and expenses recognised in the statement of income in the financial year in connection with financial assets and liabilities assigned to level 3 is as follows: Income and expenses from level 3 financial assets and liabilities N 37 in EUR thousand
Change in fair value of financial instruments – 29,037 – 512 5,775
Total depreciation, impairments and appreciation of investments – – (2,601) (15,299) –
Change in fair value of financial instruments – 2,024 – 1,392 29,818
Total depreciation, impairments and appreciation of investments (9) – (2,341) (8,440) –
Of the financial assets included in level 3 with fair values of altogether EUR 2,214.2 million (EUR 2,073.2 million) as at the balance sheet date, Hannover Re measures financial assets with a volume of EUR 1,924.9 million (EUR 1,892.6 million) using the net asset value method. These items consist principally of shares in private equity and real estate funds. Assuming that the present values of the assets and liabilities contained in the funds would be 10% lower than used for measurement as at the balance sheet date, the fair values for these items would amount to EUR 1,732.4 million. The remaining financial assets included in level 3 with a volume of EUR 289.3 million (EUR 180.6 million) relate to investments, the valuation of which is based inter alia on technical parameters. Derivative financial instruments in connection with the reinsurance business were recognised under the other liabilities included in level 3 in the year under review. Their performance is dependent upon lapse rates within an underlying primary insurance portfolio. The application of alternative inputs and assumptions has no material effect on the consolidated financial statement.
Fair value disclosures for financial assets N 41 in EUR thousand
Rating structure of financial assets that give rise to solely payments of principal and interest N 42 in EUR thousand
The contract deposits on the assets side increased slightly by EUR 5.0 million in the year under review from EUR 167.9 million to EUR 172.9 million.
The retrocessionaires’ portions of the technical provisions are based on the contractual agreements of the underlying reinsurance treaties. For further details please refer to our comments on the technical provisions in section 6.7 “Technical provisions”. With regard to the nature and scope of risks arising out of insurance contracts we would also refer to the explanatory remarks on page 102 et seq. of the risk report.
SFAS 60 requires that acquisition costs be capitalised as assets and amortised in proportion to the earned premium.
Development of deferred acquisition costs N 43 in EUR thousand 2018 2017
Net book value at 31 December of the year under review 2,155,820 2,228,246
Age structure of overdue accounts receivable N 44 in EUR thousand
Within the scope of our management of receivables we expect to receive payment of accounts receivable within three months of the date of creation of the debit entry unless otherwise agreed – a period for which we also make allowance in our risk analysis. Please see our comments on the counterparty default risk within the risk report on page 114 et seq.
In addition, we took specific value adjustments on reinsurance recoverables on unpaid claims in the year under review. We would refer the reader to the corresponding remarks on the loss and loss adjustment expense reserve in section 6.7 “Technical provisions”. With regard to the credit risks resulting from technical assets we would also refer the reader to our comments on page 114 et seq. of the risk report.
Net book value at 31 December of the previous year 91,692 64,609
This item principally includes the goodwill from the acquisitions of E+S Rückversicherung AG, Integra Insurance Solutions Limited, Glencar Underwriting Managers Inc. and Argenta Holdings Limited.
The risk-free basic interest rate is determined, where possible, using corresponding yield curve data from the respective national banks. If this data cannot be obtained or can only be obtained with a disproportionately high effort, reference is made to the yields of the respective 30-year government bonds. Both the yield curves and the government bonds reflect the current interest rate trend on financial markets. The selection of the market risk premium is guided by the current recommendations of the Institute of Public Auditors in Germany (IDW). The beta factor is calculated for Hannover
Rück SE on the basis of publicly accessible capital market data. The foreign exchange rates used for currency translation correspond to the situation on the balance sheet date.
Based on the current financial planning, it was necessary to make value adjustments on the goodwill allocated to the cash-generating units Glencar Underwriting Managers Inc. and Integra Insurance Solutions Limited because the recoverable amount in each case fell short of the book value of the
The other receivables include unadjusted items of EUR 0.3 million (EUR 0.3 million) that were overdue by more than twelve months as at the balance sheet date.
Gross book value at 31 December of the year under review 126,578 121,859
Cumulative depreciation at 31 December of the previous year 58,574 59,461
The increased amortisation results from treaty recaptures made by individual cedants as a consequence of rate increases. For further information please refer to our explanatory notes on intangible assets in section 3.1 “Summary of major accounting policies”.
Insurance for pension commitments Effective 1st of July 2003 Hannover Rück SE took out insurance for pension commitments. The commitments involve deferred annuities with regular premium payment under a group insurance policy. In accordance with IAS 19 “Employee
Benefits” they were carried as a separate asset at fair value as at the balance sheet date in an amount of EUR 94.0 million (EUR 90.8 million).
Gross book value at 31 December of the year under review 159,365 157,511
Net book value at 31 December of the previous year 29,653 27,234
Development of other intangible assets N 51 in EUR thousand 2018 2017
Gross book value at 31 December of the previous year 364,879 265,220
Net book value at 31 December of the previous year 133,713 52,088
The item includes EUR 37.8 million (EUR 33.7 million) for purchased software as at the balance sheet date, on which depreciation is taken over useful lives of three to ten years. Of the additions, an amount of EUR 8.7 million (EUR 3.6 million) is attributable to purchased software.
Loss and loss adjustment expense reserve 28,758,575 2,084,630 26,673,945 28,378,545 1,651,335 26,727,210
Net book value at 31 December of the previous year 28,378,545 1,651,335 26,727,210 28,129,418 1,506,292 26,623,126
Reclassifications pursuant to IFRS 5 (1,642,408) (87,253) (1,555,155) – – –
Specific value adjustment for retrocessions – 9,257 (9,257) – 43,609 (43,609)
On balance, cumulative specific value adjustments of EUR 54.6 million (EUR 44.5 million) were recognised in these reinsurance recoverables as at the balance sheet date.
Net loss reserve and its run-off in the property and casualty reinsurance segment N 54 in EUR million
As percentage of original loss reserve 1.2 0.6 0.6 1.6 0.2 0.6 0.8 0.5 (0.0) 0.1 1 The net loss reserve shown in the run-off triangle for the 2018 financial year in an amount of EUR 24,194.7 million includes the assets and liabilities held for sale in connection with assets held for sale of International Insurance Company of Hannover SE in an amount of EUR 1,555.2 million.
The run-off profit of altogether EUR 996.7 million (EUR 1,058.0 million) in the 2018 financial year derives, as in the previous year, above all from positive run-offs of reserves in the areas of general liability and marine / aviation as well as in short-tail property business.
Due after one through five years 10,363,466 956,613 9,406,853 1,411,465 573,539 837,926
Due after five through ten years 4,426,226 349,296 4,076,930 777,725 163,443 614,282
A benefit reserve is established for life, annuity, personal accident and health reinsurance contracts. Based on the duration of these contracts, long-term reserves are constituted for life and annuity policies and predominantly shortterm reserves are set aside for health and personal accident business.
The benefit reserve is established in accordance with the principles set out in SFAS 60. The provisions are based on the Group companies’ information regarding mortality, interest and lapse rates.
Net book value at 31 December of the previous year 8,977,946 959,533 8,018,413 10,313,952 1,189,420 9,124,532
Net book value at 31 December of the year under review 9,184,356 909,056 8,275,300 8,977,946 959,533 8,018,413
Development of the unearned premium reserve N 58 in EUR thousand gross retro net gross retro net
Net book value at 31 December of the previous year 3,541,194 96,402 3,444,792 3,382,498 134,927 3,247,571
The funds withheld under reinsurance treaties totalling EUR 969.3 million (EUR 974.8 million) represent the cash and securities deposits furnished to our company by our retrocessionaires that do not trigger any cash flows and cannot be realised without the consent of our retrocessionaires. The maturities of these deposits are matched to the corresponding shares of the reinsurers in the technical provisions. If such a share no longer exists the corresponding funds withheld are reduced to the same extent.
The contract deposits on the liabilities side decreased by EUR 337.5 million in the year under review from EUR 3,949.2 million to EUR 3,611.7 million. The contract deposits item on the liabilities side essentially encompasses balances deriving from non-traditional life insurance contracts that are to be carried as liabilities.
Pension commitments are given in accordance with the relevant version of the pension plan as amended. The 1968 pension plan provides for retirement, disability, widows’ and orphans ’ benefits. The pension entitlement is dependent on length of service; entitlements under the statutory pension insurance scheme are taken into account. The pension plan was closed to new participants with effect from 31 January 1981.
From 1997 onwards it has been possible to obtain pension commitments through deferred compensation. The employee -funded commitments included in the provisions for accrued pension rights are protected by an insurance contract with HDI Lebensversicherung AG, Cologne.
Provisions for pensions are established in accordance with actuarial principles and are based upon the commitments made by the Hannover Re Group for retirement, disability and widows’ benefits. The amount of the commitments is determined according to length of service and salary level.
Longevity entails the risk that the mortality contained in the actuarial bases does not correspond to the actual mortality and that pension payments have to be rendered and funded for a longer duration than had been assumed.
The calculation of the provisions for pensions is based upon the following assumptions: Measurement assumptions N 59 in %
The movements in the net pension liability for the Group’s various defined benefit plans were as follows: Movements in net liability from defined benefit pension plans N 60 in EUR thousand
Position at 1 January of the financial year 210,855 207,621 33,675 26,981 135 40
Past service cost and plan curtailments 725 81 – – – –
Actuarial gain (–) / loss (+) from change in financial assumptions 4,597 (7,176) – – – –
Experience gains (–) / losses (+) 2,618 3,145 – – – –
Employee contributions and deferred compensation 63 24 (5) – – –
The reconciliation of the projected benefit obligations with the recognised provisions for pensions is as follows: Provisions for pensions N 61 in EUR thousand 2018 2017
Fair value of plan assets at 31 December of the financial year 39,989 33,675
In the current financial year Hannover Re anticipates contribution payments of EUR 3.3 million under the plans set out above. The weighted average duration of the defined benefit obligation is 18.0 (18.3) years.
Sensitivity analysis An increase or decrease in the key actuarial assumptions would have the following effect on the present value of the defined benefit obligation as at the balance sheet date: Effect on the defined benefit obligation N 62 in EUR thousand Parameter increase Parameter decrease
With regard to the liabilities from derivatives in an amount of EUR 82.5 million (EUR 264.3 million), please see our explanatory remarks on derivative financial instruments in section 8.1 “Derivative financial instruments and financial guarantees”.
Partial retirement arrangements and early retirement obligations 1,235 (2) 1,233 (24) 845 – 96 772 – (7) 1,371
On 18 April 2018 Hannover Rück SE placed a senior bond with a volume of EUR 750.0 million on the European capital market. The bond has a maturity date of 18 April 2028 and may be redeemed at any time from 18 January 2028 onwards, although not later than 18 April 2028. It carries a fixed coupon of 1.125% p. a.
On 20 November 2012 Hannover Rück SE placed a EUR 500.0 million subordinated bond on the European capital market via its subsidiary Hannover Finance (Luxembourg) S. A. The bond has a maturity of approximately 30 years with a first scheduled call option on 30 June 2023 and may be redeemed at each coupon date thereafter. It carries a fixed coupon of 5.00% p. a. until this date, after which the interest rate basis changes to a floating rate of 3-month EURIBOR +430 basis points.
Long-term debt and notes payable N 66 in EUR thousand 2018
Long-term debt and notes payable N 67 in EUR thousand 2017
1 Excluding sundry non-technical provisions and derivative financial instruments; the maturities of these items are broken down separately.
Reconciliation of long-term debt and notes payable N 71 in EUR thousand
Other long-term liabilities – 39 – – 39 6.13 Shareholders’ equity and treasury shares
The Executive Board is further authorised, with the consent of the Supervisory Board, to acquire treasury shares – including through the use of derivatives – up to an amount of 10% of the share capital. The authorisation has a time limit of 5 May 2020.
The Annual General Meeting of Hannover Rück SE resolved on 7 May 2018 that a gross dividend of EUR 5.00 per share should be paid for the 2017 financial year. This corresponds
A n n u al f in an ci al s ta te m en ts to a total distribution of EUR 603.0 million (EUR 603.0 million ). The distribution consists of a dividend of EUR 3.50 per share and a special dividend of EUR 1.50 per share.
The increase in the other reserves arising out of currency translation, which is recognised in equity, was attributable in an amount of EUR 16.0 million (EUR 51.4 million) to the translation of long-term debt or loans with no maturity date extended to Group companies and branches abroad.
The disclosures on capital management arising out of IAS 1.134 – 136 “Presentation of Financial Statements” are provided in the “Financial position” section of the management report, to which the reader is referred. This includes both a presentation of our capital management objectives and procedures (page 60 et seq., section entitled “Investment policy”) and a description of our policyholders’ surplus (page 62 et seq., section entitled “Management of policyholders’ surplus”), together with a summary of the diverse external capital requirements to which we are subject. The Solvency II regulatory framework, in particular, gives rise to capital requirements and consequences for capital management, which we discuss more closely on pages 95 et seq. of the risk report.
Treasury shares IAS 1 requires separate disclosure of treasury shares in shareholders ’ equity. As part of this year’s employee share option plan Hannover Rück SE acquired altogether 16,530 (18,805) treasury shares during the second quarter of 2018 on the legal basis of § 71 Para. 1 No. 2 Stock Corporation Act (AktG) and delivered them to eligible employees at preferential conditions. These shares are blocked until 31 May 2022. This transaction resulted in an expense of EUR 0.4 million (EUR 0.4 million), which was recognised under personnel expenditure, as well as a negligible change in retained earnings recognised in equity. The company was no longer in possession of treasury shares as at the balance sheet date.
Non-controlling interests in the shareholders’ equity of subsidiaries are reported separately within Group shareholders’ equity in accordance with IAS 1 “Presentation of Financial Statements”. They amounted to EUR 765.2 million (EUR 758.1 million) as at the balance sheet date.
Dividends paid 151,566 125,000 thereof attributable to non-controlling interests 53,364 44,011
Financial assets – at fair value through profit or loss 13,769 11,515
Making allowance for the other investment expenses of EUR 114.3 million (EUR 110.8 million), net income from assets under own management of altogether EUR 1,322.0 million (EUR 1,539.0 million) was recognised in the year under review.
Other financial assets – 2,558 – 34,317 36,875 1 Including income from associated companies, for reconciliation with the consolidated statement of income 2 Excluding other investment expenses
Net gains and losses on investments N 78 in EUR thousand
Other income / expenses N 83 in EUR thousand 2018 2017
Income from contracts recognised in accordance with the deposit accounting method 206,525 198,088
Expenses from contracts recognised in accordance with the deposit accounting method 2,375 5,951
The sundry expenses include the goodwill impairment of EUR 8.4 million (none) as well as the amortisation of the PVFP in an amount of EUR 25.9 million (EUR 4.3 million). For details we would refer to sections 6.5 “Goodwill” and 6.6 “Other assets”.
In addition, other revenues were realised on the South African market from claims settlement in an amount of EUR 5.6 million as well as other revenues from administrative activities, known as “binding fees”, in an amount of EUR 2.8 million.
On the North American market revenues of EUR 3.9 million were earned by performing administrative tasks. Revenues of
In this context revenues of EUR 15.7 million were generated on the North American market by taking on underwriting activities in relation to insurance policies. The amount of the revenues to be recognised is calculated according to the written premiums. A further EUR 3.6 million was earned from the performance of administrative activities. The transaction price corresponds to the agreed contract price. The performance obligation is deemed to be satisfied when the administrative activities specified in the contract were carried out.
Revenues of EUR 3.0 million connected with commission -based business were realised in the South African market. The transaction price is arrived at as a percentage of the underlying gross premium share.
Deferred tax assets and deferred tax liabilities of all Group companies N 87 in EUR thousand 2018 2017
Present value of future profits on acquired life reinsurance portfolios (PVFP) – 7,911
The deferred tax assets and deferred tax liabilities are shown according to their origin in the above table. Deferred taxes resulting from a single transaction and with respect to which the corresponding temporary valuation differences are simultaneously reversed were already netted on recognition. Further netting was made based on the timing of the reversal of temporary differences and other offsetting possibilities, ultimately resulting in the following disclosure of deferred tax assets and deferred tax liabilities in the balance sheet: Netting of deferred tax assets and deferred tax liabilities N 88 in EUR thousand 2018 2017
Tax expense / income not attributable to the reporting period (26,752) (42,861)
The expense for income taxes in the financial year was EUR 124.8 million higher than in the previous year at EUR 372.9 million (EUR 248.0 million). In addition to the increased pretax profit compared to the previous year, this was due largely to considerable tax-exempt income from the disposal of equities and equity funds.
Availability of non-capitalised loss carry-forwards Unused tax loss carry-forwards, deductible temporary differences and tax credits of EUR 2,924.7 million (EUR 601.2 million ) existed as at the balance sheet date. The increase is attributable primarily to the transfer of extensive portfolios of reinsurance treaties to US Group companies as part of the restructuring of US mortality business. Of existing tax loss carry-forwards, EUR 329.4 million (EUR 367.3 million) was not capitalised in consideration of local tax rates since realisation is not sufficiently certain.
The assets-side unadjusted deferred taxes on loss carry-forwards and tax credits amounting to EUR 545.6 million (EUR 55.1 million) will probably be realised in an amount of EUR 18.1 million (EUR 15.5 million) within one year and in an amount of EUR 527.5 million (EUR 39.6 million) in the subsequent years.
In the year under review the actual taxes on income were reduced by EUR 2.2 million (EUR 5.2 million) because loss carry-forwards were used for which no deferred tax assets were established.
No deferred taxes were established on liabilities-side taxable temporary differences amounting to EUR 40.6 million (EUR 50.6 million) in connection with interests in Group companies because the Hannover Re Group can control their reversal and will not reverse them in the foreseeable future.
Availability of loss carry-forwards that have not been capitalised: Expiry of non-capitalised loss carry-forwards and temporary differences N 90 in EUR thousand One to five years Six to ten years More than ten years
Loss carry-forwards – – – 325,743 325,743 8. Other notes 8.1 Derivative financial instruments and financial guarantees
The fair values of the derivative financial instruments were determined on the basis of the market information available at the balance sheet date. Please see section 3.1 “Summary of major accounting policies” with regard to the measurement models used.
Maturity structure of derivative financial instruments N 92 in EUR thousand
Hannover Re enters into derivative transactions on the basis of standardised master agreements that contain global netting agreements. The netting agreements set out below normally do not meet the criteria for netting in the balance sheet, since Hannover Re has no legal right whatsoever at the present moment in time to netting of the recognised amounts. The right to netting can, as a matter of principle, only be enforced upon occurrence of certain future defined events. Collateral furnished or received is recognised per counterparty up to at most the amount of the respective net liability or net asset.
A number of transactions concluded in the life and health reinsurance business group in previous years, under which Hannover Re companies offer their contracting parties coverage for risks from possible future payment obligations arising out of hedging instruments, are also to be classified as derivative financial instruments. The payment obligations result from contractually defined events and relate to the development of an underlying group of primary insurance contracts with statutory reserving requirements. The contracts are to be categorised and recognised as stand-alone credit derivatives pursuant to IAS 39. These derivative financial instruments were carried in equity on initial recognition. Please see section 6.6 “Other assets”. The fair value of these instruments was EUR 53.2 million on the balance sheet date and was recognised under other financial assets at fair value through profit or loss (EUR 165.1 million under other liabilities). The change in value in subsequent periods is dependent upon the risk experience and led to an improvement of EUR 32.9 million (EUR 30.0 million) in investment income in the financial year.
A retrocession agreement exists in the area of life and health reinsurance under which the premiums were deposited with Hannover Re and invested in a structured bond. The retrocessionaire has furnished a guarantee for its fair value. In accordance with the requirements of IFRS 4 this guarantee was to be unbundled from the retrocession agreement and is carried as a derivative financial instrument at fair value. The de-
A n n u al f in an ci al s ta te m en ts rivative was recognised with a positive fair value of EUR 22.7 million (EUR 2.2 million) as at the balance sheet date under other financial assets at fair value through profit or loss. In the course of the year the change in the fair value of the derivative resulted in income of EUR 19.8 million (charge of EUR 7.4 million). Conversely, the performance of the structured bond, which is also measured at fair value, gave rise to an expense (income) in the same amount.
In the area of life and health reinsurance a reinsurance treaty with a financing component was also written in the previous year under which the amount and timing of the return flows are dependent on lapse rates within an underlying primary insurance portfolio. This treaty and a corresponding retrocession agreement, which were classified as financial instruments pursuant to IAS 39, resulted in the recognition of other liabilities of EUR 24.5 million (EUR 20.4 million) and other financial assets at fair value through profit or loss in an amount of EUR 79.2 million (EUR 49.0 million). Altogether, these arrangements gave rise to an improvement in income of EUR 1.9 million (EUR 1.8 million) in the year under review.
At the end of the previous financial year under review an index -linked cover was written for longevity risks. The resulting derivative was recognised as at the balance sheet date with a negative fair value of EUR 45.5 million (EUR 52.6 million) under other liabilities. The change in the fair value of the derivative gave rise to income of EUR 7.1 million (EUR 0 million ) in the course of the year.
All in all, application of the standards governing the accounting for derivatives in connection with the technical account led to recognition of assets totalling EUR 173.9 million (EUR 86.3 million) as well as recognition of liabilities in an amount of EUR 75.9 million (EUR 244.7 million) from the derivatives resulting from technical items as at the balance sheet date. Improvements in investment income amounting to EUR 62.4 million (EUR 40.2 million) as well as charges to income of EUR 14.5 million (EUR 8.6 million) were recognised in the year under review from all separately measured derivatives in connection with the technical account.
Talanx AG holds an unchanged majority interest of 50.22% in Hannover Rück SE. For its part, HDI Haftpflichtverband der Deutschen Industrie Versicherungsverein auf Gegenseitigkeit (HDI), Hannover, holds a stake of 79.0% in Talanx AG
Talanx Reinsurance Broker GmbH grants Hannover Rück SE and E+S Rückversicherung AG a preferential position as reinsurers of cedants within the Talanx Group. In addition, Hannover Rück SE and E+S Rückversicherung AG are able to participate in the protection covers on the retention of Group cedants and share in the protection afforded by them. In certain circumstances Hannover Rück SE and E+S Rückversicherung AG are obliged to assume unplaced shares of the reinsurance of Group cedants from Talanx Reinsurance Broker GmbH.
Business assumed and ceded in Germany and abroad N 95 in EUR thousand
Loss and loss adjustment expense reserve 1,166,164 46,553 1,212,717 1,136,189 50,257 1,186,446
In addition, other assets of EUR 3.4 million (EUR 3.5 mil- lion) as well as other liabilities of EUR 18.3 million (EUR 17.6 million) exist with respect to Talanx AG and its subsidiaries which are not part of the scope of consolidation of Hannover Re.
Hannover Rück SE has concluded a service contract with HDI Service AG in the area of flight services as well as a contract regarding the reciprocal provision of business continuity management services.
Since 2004 a service agreement has existed between Hannover Rück SE, E+S Rückversicherung AG and Talanx Reinsurance Broker GmbH regarding the use of market security services and access to the business partner information system of Hannover Rück SE.
Remuneration and shareholdings of the management boards of the parent company The remuneration of the active members of the Executive Board of Hannover Re amounted to altogether EUR 8.4 million (EUR 8.0 million). The total remuneration (excluding pension payments) of former members of the Executive Board and their surviving dependants stood at EUR 0.1 million (EUR 0.3 million). The pension payments to previous members of the Executive Board and their surviving dependants, for whom 17 (17) pension commitments existed, totalled EUR 1.7 million (EUR 1.6 million) in the year under review; altogether, a provision of EUR 26.0 million (EUR 24.7 million) has been set aside for these commitments.
The total remuneration of the Supervisory Board of Hannover Re amounted to EUR 1.0 million (EUR 1.0 million). There are no pension commitments to former members of the Supervisory Board or their surviving dependants.
The members of the governing bodies did not receive any advances or loans in the year under review. Nor were there any other material reportable circumstances or contractual relationships as defined by IAS 24 between companies of the Hannover Re Group and the members of the governing bodies or their related parties in the year under review. Further-
The information required pursuant to IAS 24.17 “Related Party Disclosures” as well as all other information on the remuneration of the governing bodies, directors’ dealings and shareholdings as well as the structure of the remuneration system for the Executive Board is contained in the remuneration report from page 127 onwards. With regard to the disclosures required by IAS 24.17 we would refer in particular to the tables M 87 (Total remuneration of the active members of the Executive Board), M 91 (Pension commitments) and M 92 (Individual remuneration received by the members of the Supervisory Board). The remuneration report is based on the recommendations of the German Corporate Governance Code and contains information which also forms part of the notes to the 2018 consolidated financial statement as required by IAS 24 “Related Party Disclosures”. In addition, we took into account the more specific provisions of DRS 17 “Reporting on the Remuneration of Members of Governing Bodies”. Under German commercial law, too, this information includes data specified as mandatory for the notes (§ 314 HGB) and the management report (§ 315 HGB). These details are discussed as a whole in the remuneration report. Consequently, we have not provided any further explanation in the notes.
The maximum period of the stock appreciation rights is ten years, commencing at the end of the year in which they are awarded. Stock appreciation rights which are not exercised by the end of the 10-year period lapse. Stock appreciation rights may only be exercised after a waiting period and then only within four exercise periods each year. Upon expiry of a four-year waiting period a maximum 60% of the stock appreciation rights awarded for an allocation year may be exercised.
Upon exercise of a stock appreciation right the amount paid out to the entitled party is the difference between the basic price and the current market price of the Hannover Rück SE share at the time of exercise. In this context, the basic price corresponds to the arithmetic mean of the closing prices of the Hannover Rück SE share on all trading days of the first full calendar month of the allocation year in question. The current market price of the Hannover Rück SE share at the time when stock appreciation rights are exercised is determined by the arithmetic mean of the closing prices of the Hannover Rück SE share on the last twenty trading days prior to the first day of the relevant exercise period.
Fair value at 31 December 2018 (in EUR) 32.21 8.92 8.76
Number of rights existing at 31 December 2018 13,561 70,266 5,050
In the 2018 financial year the waiting period expired for 100% of the stock appreciation rights awarded in 2009, 2010 and 2011. 17,460 stock appreciation rights from the 2009 allocation year, 24,276 stock appreciation rights from the 2010 allocation year and 49,972 stock appreciation rights from the 2011 allocation year were exercised. The total amount paid out stood at EUR 2.0 million.
On this basis the aggregate provisions – included in the sundry non-technical provisions – amounted to EUR 1.1 million (EUR 3.1 million) for the 2018 financial year. No expense (EUR 0.3 million) was recognised in the year under review.
the first payout was also made to the participating senior executives.
The Share Award Plan of Hannover Rück SE gives rise to the amounts shown in the following table.
Provision at 31 December of the previous year – 1,559 4,045 6,371 8,965 13,116 – 34,056
Provision at 31 December of the year under review 2,018 3,561 6,784 9,291 12,228 – 33,882
EUR 14.2 million (EUR 12.1 million). This consists of the expense for share awards of the 2018 financial year as well as the dividend claim and the additionally earned portion of the share awards granted in earlier financial years. The value of the share awards finally granted is also influenced by movements in the share price. The sum total of the dividends included in the expenditures on personnel for earlier financial years amounted to EUR 1.6 million (EUR 2.0 million). The distributed dividend is recognised, with no allowance made for expected dividend payments. Dividend claims are recognised in the discounted amounts.
In the year under review the 16,631 share awards of the Executive Board finally allocated in 2013 with a value of EUR 111.65 each plus the dividend entitlement of EUR 17.00 were paid out to the eligible members of the Executive Board. The 94,988 share awards of the senior executives for the 2013 financial year were paid out in 2018 with a value of EUR 111.32 each plus the dividend entitlement of EUR 17.00. The allocation to the provision for the 2013 share awards results from the difference between the share price as at the last balance sheet date (EUR 104.90) and the price from March 2018 on which the payout of the share awards was based (EUR 111.65 and EUR 111.32 respectively).
Staff The average number of staff at the companies included in the consolidated financial statement of the Hannover Re Group during the reporting period was 3,272 (3,089). As at the balance sheet date altogether 3,317 (3,251) staff were employed by the Hannover Re Group, with 1,426 (1,385) employed in Germany and 1,891 (1,866) working for the consolidated Group companies abroad.
Number of employees (excluding Board members) 3,239 3,272 3,282 3,317 3,272 3,251 3,089
Expenditures on personnel The expenditures on insurance business, claims expenses (claims settlement) and expenditures on the administration of investments include the following personnel expenditures: Personnel expenditures N 100 in EUR thousand 2018 2017 a) Wages and salaries 287,012 274,375 b) Social security contributions and expenditure on provisions and assistance ba) Social security contributions 26,928 25,486 bb) Expenditures for pension provision 26,117 26,551 bc) Expenditures for assistance 4,067 4,716
A n n u al f in an ci al s ta te m en ts 8.5 Earnings per share and dividend proposal
Neither in the year under review nor in the previous reporting period were there any dilutive effects. The weighted average of the issued shares was, as in the previous year, slightly lower than the value of the shares in circulation on the balance sheet date. In the context of the employee share option plan Hannover Re acquires treasury shares and sells them at a later date to eligible employees. The weighted average number of shares does not include 16,530 (18,805) treasury shares pro rata temporis for the duration of the holding period. For further details please see our comments in section 6.13 “Shareholders’ equity and treasury shares”.
Dividend per share A dividend of EUR 603.0 million (EUR 603.0 million) was paid in the year under review for the 2017 financial year.
It will be proposed to the Annual General Meeting on 8 May 2019 that a dividend of EUR 3.75 per share as well as a special dividend of EUR 1.50 per share should be paid for the 2018 financial year. This corresponds to a total distribution of EUR 633.1 million. The dividend proposal does not form part of this consolidated financial statement.
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 2,915.0 million (EUR 3,173.0 million) as at the balance sheet date.
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 1,330.3 million (EUR 1,216.9 million).
We put up own investments with a book value of EUR 5.6 million (EUR 17.2 million) as collateral for existing derivative transactions. We received collateral with a fair value of EUR 15.6 million (EUR 3.0 million) for existing derivative transactions.
A n n u al f in an ci al s ta te m en ts 8.8 Rent and leases
In the year under review expenses from operating leases of EUR 15.3 million (EUR 13.7 million) were included in the result for the period.
Future minimum lease payments receivable N 103 in EUR thousand Amounts receivable
The auditor responsible for performance of the audit engagement as defined by § 38 Para. 2 of the Professional Charter for
Reproduction of the independent auditor’s report In accordance with the final outcome of our audit, we issued the following unqualified auditor’s report dated 5 March 2019: Independent Auditor’s Report to Hannover Rück SE, Hannover
• the attached Group management report provides an accurate view overall of the position of the Group. In all material respects this Group management report is consistent with the consolidated financial statement, complies with German legal requirements and suitably presents the opportunities and risks of future development. Our audit opinion on the Group management report does not extend to the content of the components of the Group management report specified in the section “ Other information”.
Pursuant to § 322 Para. 3 Sentence 1 Commercial Code (HGB), we confirm that our audit did not give rise to any reservations concerning the correctness of the consolidated financial statement and the Group management report.
ep or t conformity with these requirements. Furthermore, we confirm pursuant to Article 10 (2) letter f) EU Audit Regulation that we did not provide any prohibited non-audit services as defined by Article 5 (1) EU Audit Regulation. We are of the opinion that the audit evidence obtained is sufficient and appropriate to serve as a basis for our audit opinions on the consolidated financial statement and the Group management report.
In our assessment, the following matters were of the greatest significance in our audit: (1) Measurement of certain financial instruments at fair value
The key audit matters are presented below: (1) Measurement of certain financial instruments at fair value
(a) Financial instruments in an amount of EUR 53,062.0 million (82.3% of the consolidated balance sheet total) are recognised in the company’s consolidated financial statement.
Of these financial instruments, financial assets in an amount of EUR 36,523.8 million are measured at fair value. In turn, of these financial instruments, fair values of EUR 36,045.1 million are determined using valuation models or values indicated by third parties. The measurement of financial instruments, the fair values of which have to be determined using valuation models or values indicated by third parties, is subject to uncertainty because the most up-to-date market data / comparative values are not available for measurement in all cases and hence estimated values and parameters not currently observable on the market are also used.
(b) In the context of our audit we analysed the financial instruments measured using valuation models and values indicated by third parties, with our focus being on the measurement uncertainties. In this regard, we evaluated the adequacy and effectiveness of the relevant controls used for measurement of these financial instruments and for model validation. In so doing, among other things, we assessed the integrity of the underlying data and the process for establishing the assumptions and estimates included in the valuation.
With the support of our internal specialists in financial mathematics, we also evaluated the adequacy of the methods adopted by Management to test assets for impairment and the parameters used for this purpose. We compared the methods and assumptions used to calculate measurement adjustments in the financial year with recognised practices and industry standards and examined
the extent to which they are appropriate for proper recognition in the balance sheet.
On the basis of the audit procedures performed we were able to assure ourselves that the methods and assumptions used by Management to measure certain financial instruments (those measured on the basis of models and values indicated by third parties) are suitable overall and the remarks and disclosures presented in the notes to the consolidated financial statement are appropriate.
Against this backdrop, and also bearing in mind the material significance (in terms of amount) of this provision for the net assets and results of operations of the Group, the measurement of this provision was of particular significance in the context of our audit.
Building on the review of the controls, we conducted further analytical and substantive audit procedures in relation to the measurement of the loss reserve. Bearing in mind the significance of the loss reserve for the company ’s total business, our internal measurement specialists evaluated the adequacy of the methods used by the company. Furthermore, our internal measurement specialists assessed the models used by the company and assumptions made by Management on the basis of industry expertise and experience with general accepted actuarial practices. In this context, the consistent application of the measurement methods was also reviewed.
(a) Technical provisions of altogether EUR 9,184.4 million (14.2% of the consolidated balance sheet total) are recognised in the company’s consolidated financial statement under the balance sheet item “benefit reserve”. The benefit reserve was established largely for reinsurance transacted in the lines of life and health reinsurance.
Against this backdrop and in view of the material significance (in terms of amount) of the benefit reserve for the Group’s net assets and results of operations as well as the complexity of the underlying calculations, this matter was of particular significance in the context of our audit.
(b) As part of our audit, in light of the significance of the benefit reserve, we evaluated the methods used by the company and the assumptions made by Management in cooperation with our actuaries. In so doing, we worked on the basis of, among other things, our industry expertise and our industry experience.
For the purposes of our evaluation, we assessed the design and effectiveness of the controls put in place to determine and document the benefit reserve. A special focus here was on the controls that ensure new products and contracts are correctly classified and that changes in assumptions are correctly implemented in the systems.
Building on the review of the controls, we conducted further analytical and substantive audit procedures in relation to the measurement of the benefit reserve. With the involvement of our actuaries, we compared the actuarial methods applied in each case and the material assumptions made with generally recognised actuarial practices and industry standards and we examined the extent to which they are suitable for measurement. In the context of case-by-case checks we assessed the correct and appropriate use of statements of account available from ceding companies in the determination of the benefit reserve. In this connection we also evaluated the adequacy of the material assumptions by analysing the actuarial methods used to arrive at them.
Based on the liability adequacy tests performed, we formed an opinion on whether the actuarial bases and methods used were appropriately applied. If market interest rates were used for measurement purposes, we reviewed the adequacy of the discount rates used through comparison with parameters that could be observed on the market. In this context, we devoted particularly close attention to the liability adequacy test for US mortality solutions business on account of the significance of this business to the Group. Furthermore, we analysed the development of the benefit reserve compared to the previous year, in particular with an eye to whether the assumptions consistently reflect the latest available cedant information as well as current business developments at ceding companies and our expectations based on market observations.
Premiums for reinsurance assumed are recognised according to the terms and conditions of the reinsurance treaties. Where statements of account from ceding companies are not yet available, the company has made supplementary or complete estimates of the premiums. The estimates are based on assumptions and are therefore subject to considerable uncertainty and highly discretionary.
On the basis of our audit procedures we were able to assure ourselves that the calculation methods used by Management to arrive at the estimated gross premium are appropriate overall.
Management is responsible for the other information. The other information encompasses the following components of the Group management report, the content of which was not audited: • the declaration on corporate governance pursuant to § 289f Commercial Code (HGB) and § 315d Commercial Code (HGB) contained in the section of the Group management report entitled “Enterprise management”
• the non-financial information statement pursuant to § 289b Para. 1 Commercial Code (HGB) and § 315b Para. 1 Commercial Code (HGB) contained in the section of the Group management report entitled “Combined non-financial information statement”
In connection with our audit, our responsibility is to read the other information and assess whether the other information
• shows material inconsistencies with the consolidated financial statement, the Group management report or knowledge that we obtained as part of the audit or
Management is responsible for preparation of the consolidated financial statement, which in all material respects is in conformity with IFRS, as applicable in the EU, and with the additional requirements of German law applicable pursuant to § 315e Para. 1 Commercial Code (HGB) and for ensuring that the consolidated financial statement gives a true and fair view of the Group’s net assets, financial position and results of operations in accordance with these requirements. In addition, Management is responsible for the internal controls that they have determined to be necessary in order to facilitate preparation of a consolidated financial statement that is free of material misstatements, whether intended or unintended.
Moreover, Management is responsible for the preparation of the Group management report, which overall gives an accurate view of the position of the Group and in all material respects is consistent with the consolidated financial statement, complies with German legal requirements and suitably reflects the opportunities and risks of future development. Management is also responsible for the safeguards and measures (systems) that they considered necessary in order to facilitate the preparation of a Group management report in conformity with applicable German legal requirements and in order to be able to provide sufficient appropriate evidence for the statements contained in the Group management report.
The Supervisory Board is responsible for monitoring the financial reporting process used by the Group for drawing up the consolidated financial statement and the Group management report.
Our objective is to obtain reasonable assurance as to whether the consolidated financial statement as a whole is free of material – intended or unintended – misstatements and whether overall the Group management report gives an accurate view of the Group’s position and in all material respects is consistent with the consolidated financial statement as well as with the insights gained from the audit, is in conformity with German legal requirements and suitably presents the opportunities and risks of future development; it is also our goal to provide an audit report that contains our audit opinions on the consolidated financial statement and on the Group management report.
Reasonable assurance is a high degree of assurance, but not a guarantee, that an audit performed in conformity with § 317 Commercial Code (HGB) and the EU Audit Regulation and with due regard to German generally accepted standards for the auditing of financial statements promulgated by the Institute of Public Auditors in Germany (IDW) always detects a material misstatement. Misstatements may be due to fraud or error and are considered to be material if it could reasonably be expected that individually or as whole they influence the economic decisions made by users on the basis of this consolidated financial statement and Group management report.
• we identify and assess the risks of material – intended or unintended – misstatements in the consolidated financial statement and in the Group management report, plan and conduct audit procedures in response to these risks and obtain audit evidence that is sufficient and appropriate to serve as a basis for our audit opinions. The risk of material misstatements not being detected is greater with fraud than with error, because fraud may involve fraudulent collaboration, falsifications, wilful incompleteness, misleading representations or the bypassing of internal controls.
• we conduct audit procedures with respect to the prospective information presented by Management in the Group management report. In particular, based on sufficient suitable audit evidence we verify the major assumptions taken as a basis by Management for the prospective information and assess the proper derivation of the prospective information from these assumptions. We do not provide an independent audit opinion on the prospective information or on the underlying assumptions. There is a considerable unavoidable risk that future events may differ substantially from the prospective information.
We declare that the audit opinions contained in this audit report are consistent with the additional report to the Audit Committee in accordance with Article 11 EU Audit Regulation (long-form audit report).
The legal representatives of the Company are responsible for the preparation of the non-financial information statement in conformity with §§ 315b and 315c in conjunction with 289b to 289e Commercial Code (HGB).
We are independent in conformity with the requirements of German professional standards and we fulfilled our other professional duties in accordance with these requirements.
Our audit firm applies the national statutory regulations and professional pronouncements – especially those of the Professional Code for Certified Accountants and Sworn Auditors (BS WP / vBP) as well as of Quality Assurance Standard 1
“ Requirements for Quality Assurance in the Practice of Audit Firms” (IDW QS 1) issued by the Institute of Public Auditors in Germany (IDW) – and accordingly maintains an extensive quality assurance system that comprises documented rules and measures in relation to compliance with ethical requirements, professional standards and pertinent statutory and other legal requirements.
Our responsibility is to express a limited assurance conclusion on the disclosures in the non-financial information statement based on the assurance engagement that we have performed.
An assessment of external documentation sources or expert opinions, to which reference is made in the non-financial information statement, did not form part of our engagement.
• Identifying probable risks of material misstatements in the non-financial information statement
• Reconciling disclosures with the corresponding data in the consolidated financial statement and combined management report
The report is not intended to assist third parties in making (investment) decisions. Our responsibility is solely to the Company and we assume no responsibility, liability or other obligations towards third parties.
We received an analysis of the 2017 results in property & casualty and life & health reinsurance as well as a presentation from the Executive Board covering the profit expectations for the 2018 financial year and the operational planning for the 2019 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 Stock Corporation Act (AktG) were required in the 2018 financial year.
the current financial year, the examination of the Own Risk and Solvency Assessment (ORSA) and the capitalisation under Solvency II constituted further key points of deliberation. Following up on this, the structure of the Regular Supervisory Report (RSR) and its differences and overlaps relative to the ORSA were explained. We also received a report on the return on investment as compared with peer companies. The deliberations on the joint growth initiative in specialty lines between Hannover Rück SE and HDI Global SE formed another major part of our work on the Supervisory Board.
At the extraordinary meeting of the Supervisory Board on 7 May 2018 the necessary by-elections on the committees were held after the Annual General Meeting, together with a by-election for our Deputy Chairman. The personnel particulars in this regard are to be found below in the present report (“Changes on the Supervisory Board and the Executive Board”).
Committees of the Supervisory Board Of the committees formed by the Supervisory Board within the meaning of § 107 Para. 3 Stock Corporation Act (AktG), the Finance and Audit Committee met on four occasions, the Standing Committee met three times and the Nomination Committee met twice. The Chairman of the Supervisory Board updated the full Supervisory Board on the major deliberations of the committee meetings at its next meeting and provided an opportunity for further questions.
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 prepared the audit concentrations for the 2018 financial year for adoption by the full Supervisory Board.
The Standing Committee dealt with, among other things, the adequacy of the system of remuneration for the members of the Executive Board, the determination of the variable remuneration of the members of the Executive Board for the 2017 financial year based on the findings with respect to attainment of their respective targets and the examination of the remuneration for the Board members who were due for review.
The Nomination Committee recommended to the Supervisory Board the candidates for the necessary by-elections to the Supervisory Board. On this basis the Supervisory Board recommended the candidates to the Annual General Meeting on 7 May 2018, which followed the recommendation and elected the candidates to the Supervisory Board. In addition, the Nomination Committee discussed suitable candidates for the upcoming election of new shareholder representatives to the Supervisory Board in the coming year. When recommending candidates for nomination, the Committee takes into account the legal and supervisory stipulations, the goals set by the Supervisory Board itself for the composition of the body, the guidelines regarding the specialist and personal requirements for the members of the Supervisory Board – which the latter had approved in updated form in 2017 – as well as the current self-assessments of each of the members of the Supervisory Board and the self-assessments of the candidates for the Supervisory Board.
Corporate Governance The Government Commission on the German Corporate Governance Code (DCKG) did not make any changes to the German Corporate Governance Code in 2018. We nevertheless devoted considerable attention to the topic of corporate governance. For example, the Supervisory Board expanded the diversity concept in the year under review (cf. page 126 of the combined management report in the Annual Report) and reported on the manner of its implementation as well as the results achieved in the financial year. Furthermore, diversity on the Supervisory Board and Executive Board was increased in the financial year and steps were initiated to bring about a further improvement in the coming years.
In addition, the Supervisory Board received a report on the design of the remuneration schemes as well as the compliance, internal audit and risk reports. The Supervisory Boards further noted that at least two of its members – namely Dr. Andrea Pollak and Dr. Ursula Lipowsky – are to be considered independent members of the Supervisory Board.
Changes on the Supervisory Board and the Executive Board There were changes in the composition of the Supervisory Board, its committees and the Executive Board in the year under review.
On 9 November 2018 Mr. Jürgen Gräber, a long-serving member of the Executive Board, passed away suddenly and entirely unexpectedly. Mr. Gräber had joined the company as an underwriter in 1981 after graduating from university. He was appointed to the Executive Board in 1997, most recently overseeing the areas of Worldwide Treaty Reinsurance, Catastrophe XL business, Structured Reinsurance and Insurance -Linked Securities as well as coordination of the Property &Casualty reinsurance business group; he was additionally responsible for Quotations and Retrocessions. Thanks to his efforts and dedication, Mr. Gräber was directly involved in shaping the excellent underwriting results recorded by the company over the past years.
Ascona, Switzerland (until 7 May 2018) Deputy Chairman Former member of the Executive Board of RWE AG
Burgwedel Employee 1 Member of the Standing Committee 2 Member of the Finance and Audit Committee 3 Member of the Nomination Committee 4 Staff representative
Hannover Rück SE – India Branch Unit 604, 6th Floor B Wing, Fulcrum Sahar Road Andheri (East)
Hannover Life Reassurance Africa Limited Rosebank Towers Office Level 3 15 Biermann Ave Rosebank, Johannesburg 2196 P. O. Box 85321 Emmarentia 2029
Hannover Reinsurance Africa Limited Rosebank Towers Office Level 3 15 Biermann Ave Rosebank, Johannesburg 2196 P. O. Box 85321 Emmarentia 2029
Hannover Rück SE, Tyskland Filial Hantverkargatan 25 P. O. Box 22085 10422 Stockholm
Fax (Property & Casualty) +46 8 617-5593 Managing Director: Thomas Barenthein
Book value per share: shareholders’ equity divided by the number of shares outstanding
Capital asset pricing model (CAPM): model used to explain the materialisation of prices / returns on the capital market based on investor expectations regarding the future probability distribution of returns. Under this method, the opportunity cost rate for the shareholders’ equity consists of three components – a risk-averse interest rate, a market-specific risk loading and an enterprise-specific risk assessment, the beta coefficient.
Coinsurance Funds Withheld (CFW) Treaty: reinsurance treaty under which the ceding company retains a portion of the original premium at least equal to the ceded reserves.
Direct (also: primary) insurer: company which accepts risks in exchange for payment of an insurance premium and pays indemnification for the insured loss in the event of a claim. A direct insurer has a direct contractual relationship with the policyholder (private individual, company, organisation).
Diversification: orientation of business policy towards various revenue streams in order to mitigate the effects of e. g. economic fluctuations or natural catastrophes and thereby minimise the volatility of results. Diversification is an instrument of growth policy and risk policy for a company.
Intrinsic value creation (IVC): the IVC is calculated according to the following formula: real operating value creation = adjusted operating profit (EBIT) – (capital allocated x weighted cost of capital). IVC is a tool of value-based enterprise management used to measure the accomplishment of longterm targets on the level of the Group, the individual business groups and the operating units (profit centres).
Retrocession (also: Retro): ceding of risks or shares in risks which have been reinsured. Retrocessions are ceded to other risk carriers (retrocessionaires) in exchange for a pro-rata or separately calculated premium (cf. Gross / Retro / Net).
Target solvency capital: regulatory solvency capital requirement in accordance with Solvency II standards. At Hannover Re this is calculated using an internal model.
Volatility adjustment: Addition to the risk-free curve used under Solvency II to calculate technical provisions. Its use must be approved by the responsible supervisory authority and is intended to smooth volatility in the measurement of bonds due to changes in credit spreads.
I 09 Highs and lows of the Hannover Re share 12 I 10 Relative performance of the Hannover Re share 13 I 11 Shareholding structure as at 31 December 2018 15 I 12 Geographical breakdown of the shares held by institutional investors 15 I 13 Basic information 16 I 14 Key figures 16
M 09 Breakdown of gross premium by distribution channel: through brokers / direct 36
M 16 Property & Casualty reinsurance: Breakdown of gross written premium in worldwide specialty lines 42
M 18 Property & Casualty reinsurance: Breakdown of gross written premium in global reinsurance 45
Hannover Re Group 66 M 37 Financial strength ratings of subsidiaries 66 M 38 Issue ratings of issued debt 66 M 39 Condensed profit and loss account of
Hannover Rück SE 71 M 40 Hannover Rück SE: Breakdown of gross premium by individual lines of business 72 M 41 Balance sheet structure of Hannover Rück SE 73 M 42 Materiality matrix 77
M 45 Goal to be achieved by 2020: Compliance 82 M 46 Goal to be achieved by 2020: Stakeholder dialogue 83 M 47 Goal to be achieved by 2020: Sustainable insurance solutions 84 M 48 Goal to be achieved by 2020: ESG criteria in asset management 85 M 49 Goal to be achieved by 2020: Customer orientation and satisfaction 86 M 50 Number of employees by country 86 M 51 Breakdown of employees by country and gender 87 M 52 Goal to be achieved by 2020: Executive development / Employee advancement 88 M 53 Goal to be achieved by 2020: Employee retention 89 M 54 Goal to be achieved by 2020: Diversity 89 M 55 Goal to be achieved by 2020: Operational environmental protection 90 M 56 Goal to be achieved by 2020: Supplier management 91 M 57 Risk management through multiple levels of limits 94 M 58 Strategic targets for the risk position 95 M 59 Available capital and required risk capital 97 M 60 Central functions of risk monitoring and steering 99 M 61 Risk landscape of Hannover Re 103
(economic capital / shareholders’ equity) 104 M 63 Required risk capital 105 M 64 Required risk capital for underwriting risks in property and casualty reinsurance 105 M 65 Required risk capital for four natural hazards scenarios 105 M 66 Survival ratio in years and reserves for asbestos-related claims and pollution damage 106 M 67 Stress tests for natural catastrophes after retrocessions 106 M 68 Limit and threshold for the 200-year aggregate annual loss as well as utilisation thereof 107 M 69 Catastrophe losses and major claims in 2018 107 M 70 Ensuring the quality of our portfolios 108 M 71 Combined and catastrophe loss ratio 108
M 88 Total expense for share-based remuneration of the Executive Board 136
N 01 Consolidated balance sheet as at 31 December 2018 162
N 02 Consolidated statement of income 2018 164 N 03 Consolidated statement of comprehensive
N 05 Consolidated cash flow statement 2018 168 N 06 Further IFRS Amendments and Interpretations 175 N 07 Valuation models 176 N 08 Key exchange rates 182
N 17 Maturities of the fixed-income and variable-yield securities 205 N 18 Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as held to maturity as well as their fair value 2018 206
N 20 Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value 2018 207
N 21 Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value 2017 207
N 25 Carrying amounts before impairment 210 N 26 Rating structure of fixed-income securities 2018 211 N 27 Rating structure of fixed-income securities 2017 211 N 28 Breakdown of investments by currencies 2018 212 N 29 Breakdown of investments by currencies 2017 213 N 30 Financial information on investments in associated companies 214 N 31 Investments in associated companies 214 N 32 Development of investment property 215 N 33 Fair value hierarchy of financial assets and liabilities recognised at fair value 2018 217 N 34 Fair value hierarchy of financial assets and liabilities recognised at fair value 2017 217 N 35 Movements in level 3 financial assets and
N 40 Fair value hierarchy of financial assets and liabilities measured at amortised cost 2017 220
N 41 Fair value disclosures for financial assets 221 N 42 Rating structure of financial assets that give rise to solely payments of principal and interest 221 N 43 Development of deferred acquisition costs 222 N 44 Age structure of overdue accounts receivable 223 N 45 Value adjustments on accounts receivable 223 N 46 Development of goodwill 224 N 47 Capitalisation rates 224 N 48 Other assets 225 N 49 Development of the present value of future profits
(PVFP) on acquired life reinsurance portfolios 226 N 50 Fixtures, fittings and equipment 227 N 51 Development of other intangible assets 228 N 52 Technical provisions 229 N 53 Loss and loss adjustment expense reserve 229 N 54 Net loss reserve and its run-off in the property and casualty reinsurance segment 231 N 55 Maturities of the technical reserves 2018 232 N 56 Maturities of the technical reserves 2017 232 N 57 Development of the benefit reserve 233 N 58 Development of the unearned premium reserve 234 N 59 Measurement assumptions 235 N 60 Movements in net liability from defined benefit pension plans 236 N 61 Provisions for pensions 237 N 62 Effect on the defined benefit obligation 237 N 63 Other liabilities 238 N 64 Development of sundry non-technical provisions 238 N 65 Maturities of the sundry non-technical provisions 238 N 66 Long-term debt and notes payable 2018 240 N 67 Long-term debt and notes payable 2017 241 N 68 Maturities of financial liabilities 2018 241 N 69 Maturities of financial liabilities 2017 241 N 70 Net gains and losses from long-term debt and notes payable 242 N 71 Reconciliation of long-term debt and notes
Alamy Zoonar / chungking; page 34 / 35; Juergen Schonnop: page 68 / 69
Gettyimages Tom Werner / DigitalVision: page 24 / 25; Hero Images / Hero Images: page 50 / 51; vm / E+, page 148 / 149
Annual financial statements 2018 Annual Results Press Conference, Hannover Analysts’ Meeting, London
Annual General Meeting Hannover Congress Centrum Theodor-Heuss-Platz 1 – 3 30175 Hannover