Talanx AG performs various services in the area of taxes for a number of investment vehicles of the Hannover Re Group in the asset classes of private equity and real estate. In this regard corresponding agreements have been concluded with altogether 14 Hannover Re companies.
Hannover Rück SE has concluded a service contract with Talanx Service AG in the area of flight services as well as a contract regarding the reciprocal provision of business continuity management services.
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.
The allocations for the years 2007, 2009 to 2011 gave rise to commitments in the 2015 financial year shown in the following table. No allocations were made for the years 2005 or 2008.
Number of rights existing at 31 December 2015 247,342 704,365 62,968 10,799 –
Provisions at 31 December 2015 (in EUR million) 7.00 5.74 0.55 0.17 –
Amounts paid out in the 2015 financial year (in EUR million) – 8.00 2.48 0.16 0.05
Expense in the 2015 financial year (in EUR million) 2.57 0.98 – – –
The calculations were based on the price of the Hannover Re share of EUR 109.95 as at the reference date of 17 December 2015, expected volatility of 23.48% (historical volatility on a five-year basis), an expected dividend yield of 2.86% and riskfree interest rates of 0.36% for the 2007 allocation year, 0.19% for the 2009 allocation year, 0.06% for the 2010 allocation year and 0.07% for the 2011 allocation year.
In the 2015 financial year the waiting period expired for 100% of the stock appreciation rights awarded in 2006, 2007 and 2009 and for 60% of those awarded in 2010.
4,831 stock appreciation rights from the 2006 allocation year, 14,362 stock appreciation rights from the 2007 allocation year, 282,722 stock appreciation rights from the 2009 allocation year and 896,118 stock appreciation rights from the 2010 allocation year were exercised. The total amount paid out stood at EUR 10.7 million.
The Share Award Plan replaces the cancelled Stock Appreciation Rights Plan. Please see our remarks under “Stock Appreciation Rights Plan” in this section. The share awards do not establish any claim against Hannover Re to the delivery of stock, but merely to payment of a cash amount in accordance with the conditions set out below.
The total number of share awards granted is based on the value per share of Hannover Rück SE. The value per share is established according to the unweighted arithmetic mean of the Xetra closing prices of the Hannover Re share. In the conditions applicable to members of the Executive Board a period of five trading days before to five trading days after the meeting of the Supervisory Board that approves the consolidated financial statement for the financial year just-ended is envisaged for the calculation. For senior executives a period of twenty trading days before to ten trading days after the meeting of the Supervisory Board that approves the consolidated financial statement for the financial year just-ended has been agreed. The total number of share awards granted is established by dividing the amount available for the granting of share awards to the respective eligible recipients by the value per share, rounded up to the next full share. For members of the Executive Board 20% and for senior executives 40% or 35% – according to management levels – of the defined variable remuneration shall be granted in the form of share awards.
Value per share award in EUR 105.65 87.26 74.97 61.38 62.38 59.86 58.96 42.09 38.33
Development of the provision for share awards of Hannover Rück SE N 91
Provision at 31 December of the previous year – 1,534 3,790 5,830 1,512 12,666
(EUR 7.0 million). This consists of the expense for share awards of the 2015 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 1.4 million (EUR 0.8 million). The distributed dividend is recognised, with no allowance made for expected dividend payments. Dividend claims are recognised in the discounted amounts.
A nn ua l f in an ci al s ta te m en ts 8.4 Staff and expenditures on personnel
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 2,553 (2,475). As at the balance sheet date altogether 2,568 (2,534) staff were employed by the Hannover Re Group, with 1,337 (1,289) employed in Germany and 1,231 (1,245) working for the consolidated Group companies abroad.
Number of employees (excluding Board members) 2,550 2,548 2,564 2,568 2,553 2,534 2,475
It will be proposed to the Annual General Meeting on 10 May 2016 that a dividend of EUR 3.25 per share as well as a special dividend of EUR 1.50 per share should be paid for the 2015 financial year. This corresponds to a total distribution of EUR 572.8 million. The dividend proposal does not form part of this consolidated financial statement.
In addition, we put up own investments with a book value of EUR 57.9 million (EUR 78.9 million) as collateral for existing derivative transactions. We received collateral with a fair value of EUR 6.9 million (EUR 12.9 million) for existing derivative transactions.
AG). The expense recognised for the fees paid to KPMG AG and worldwide member firms of KPMG International (KPMG) in the year under review can be broken down as follows: Fee paid to the auditor N 98 in EUR thousand
The auditor responsible for performance of the audit engagement as defined by § 24a Para. 2 of the Professional Charter for Accountants / Certified Auditors (Berufssatzung WP / VBP)
is Mr. Florian Möller. He served as the engagement partner responsible for the audit of the annual and consolidated financial statements for the first time as at 31 December 2015.
A nn ua l f in an ci al s ta te m en ts 8.11 Events after the balance sheet date
Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting -related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the combined management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and combined management report. We believe that our audit provides a reasonable basis for our opinion.
Committees of the Supervisory Board Of the committees formed by the Supervisory Board within the meaning of § 107 Para. 3 German Stock Corporation Act, the Finance and Audit Committee met on four occasions and the Standing 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.
The Standing Committee dealt among other things with the adequacy of the system of remuneration for the members of the Executive Board and the determination of the variable remuneration of the members of the Executive Board for the 2014 financial year on the basis of the findings with respect to attainment of their respective targets. In all these matters the Committee drew up corresponding recommendations for the full Supervisory Board.
Corporate Governance The Supervisory Board once again devoted considerable attention to the topic of corporate governance. It considered the various changes to the German Corporate Governance Code (DCKG) as amended on 5 May 2015 and in this connection specified a regular limit on the length of membership of the Supervisory Board. It also determined the differentiations that are required for the vertical comparison of remuneration pursuant to Item 4.2.2 of the Code. In addition, the Supervisory Board received a report on the design of the remuneration schemes pursuant to § 3 Para. 5 of the Regulation on the Supervisory Law Requirements for Remuneration Schemes in the Insurance Sector (VersVergV) as well as the compliance, internal audit and risk reports. The procedure to evaluate the efficiency of the Supervisory Board’s activities on a regular basis was adopted in accordance with Item 5.6 of the Code. Notwithstanding the high importance that the Supervisory Board attaches to the standards of good and responsible enterprise management defined in the German Corporate Governance Code, the Supervisory Board decided not to comply with the recommendations contained in Code Item 4.2.3 Para. 2 regarding caps on the amount of variable compensation elements in management board contracts, in Code Item 4.2.3 Para. 4 concerning a cap on severance payments in management board contracts, in Code Item 5.2 Para. 2 concerning the Chair of the Audit Committee and in Code Item 5.3.2 concerning the independence of the Chair of the Audit Committee. Justification for these divergences is provided in the Declaration of Conformity pursuant to § 161 German Stock Corporation Act regarding compliance with the German Corporate Governance Code, which is reproduced in this Annual Report as part of the Declaration on Corporate Governance. Further information on the topic of corporate governance is available on Hannover Re’s website.
participation of the auditors and in light of the audit reports, and it informed the Supervisory Board of the outcome of its examination. The audit reports were distributed to all members of the Supervisory Board and scrutinised in detail – with the participation of the auditors – at the Supervisory Board meeting held to consider the annual results. The auditors will also be present at the Annual General Meeting.
Word of thanks to the Executive Board and members of staff The very good result once again generated by Hannover Rück SE for the 2015 financial year was made possible by the exceptional performance of the Executive Board and the members of staff working for the company and the Group. The Supervisory Board would like to express its recognition and special appreciation to the Executive Board and all the employees for their efforts.
General Manager – Property & Casualty: Michael Eberhardt Agent: Ross Littlewood
Hannover Life Reassurance Africa Limited Hannover Re House Cnr Hillside & Empire Roads Parktown, Johannesburg 2193 P. O. Box 85321 Emmarentia 2029
Cession: transfer of a risk from the direct insurer to the re insurer.
I 01 Gross premium inside front cover 2 I 02 Group net income (loss) inside front cover 2 I 03 Policyholders’ surplus inside front cover 2 I 04 Book value per share inside front cover 2 I 05 Dividend inside front cover 2 I 06 Key figures inside front cover 3 I 07 The Group worldwide inside front cover 4 I 08 Strategic business groups inside front cover 4
M 15 Property & Casualty reinsurance: Breakdown of gross written premium in Continental Europe by line of business 40
shareholders’ equity) 80 M 51 Required risk capital 81 M 52 Risk landscape of Hannover Re 82 M 53 Required risk capital for underwriting risks in property and casualty reinsurance 83 M 54 Required risk capital for the four largest natural hazards scenarios 83 M 55 Survival Ratio in years and reserves for asbestasrelated claims and pollution damage 84 M 56 Stress tests for natural catastrophes after retrocessions 84 M 57 Limit and threshold for the 200-year aggregate annual loss as well as utilisation thereof 84 M 58 Catastrophe losses and major claims in 2015 85 M 59 Ensuring the quality of our portfolios 85 M 60 Combined and catastrophe loss ratio 86 M 61 Required risk capital for underwriting risks in life and health reinsurance 86 M 62 Required risk capital for market risks 87 M 63 Utilisation of the trigger system 88 M 64 Value at Risk for the investment portfolio of the
M 69 Required risk capital for operational risks 93 M 70 Opportunity management process 97 M 71 Measurement basis and payment procedures for fixed remuneration 104 M 72 Overview of the composition of variable remuneration 105 M 73 Measurement bases / conditions of payment for variable remuneration 106 M 74 Payment procedures for the total variable remuneration 108 M 75 Total remuneration of the active members of the
M 76 Total expense for share-based remuneration of the Executive Board 112
M 79 Defined benefit commitments 119 M 80 Defined contribution commitments 119 M 81 Individual remuneration received by the members of the Supervisory Board 120 M 82 Group of participants and total number of eligible participants in variable remuneration systems 122 M 83 Growth in gross domestic product (GDP) 126 M 84 Property & Casualty reinsurance: Forecast development for 2016 128 M 85 Life & Health reinsurance: Forecast development for 2016 131
N 01 Consolidated balance sheet as at 31 December 2015 136 N 02 Consolidated statement of income 2015 138 N 03 Consolidated statement of comprehensive
N 04 Consolidated statement of changes in shareholders’ equity 2015 140 N 05 Consolidated cash flow statement 2015 142 N 06 Further IFRS Amendments and Interpretations 148 N 07 Valuation models 150 N 08 Key exchange rates 155 N 09 Scope of consolidation 159 N 10 List of shareholdings 160 N 11 Book values from business relations with unconsolidated structured entities 2015 168 N 12 Book values from business relations with unconsolidated structured entities 2014 169 N 13 Consolidated segment report as at
N 17 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 2014 178
N 18 Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value 2015 179
N 19 Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value 2014 179
N 20 Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as available for sale as well as their fair value 2015 180
N 22 Fair value of financial assets at fair value through profit or loss before and after accrued interest as well as accrued interest on such financial assets 181
N 23 Carrying amounts before impairment 182 N 24 Rating structure of fixed-income securities 2015 183 N 25 Rating structure of fixed-income securities 2014 183 N 26 Breakdown of investments by currencies 2015 184 N 27 Breakdown of investments by currencies 2014 185 N 28 Financial information on investments in associated companies 186 N 29 Investments in associated companies 186 N 30 Development of investment property 187 N 31 Fair value hierarchy of financial assets and liabilities recognised at fair value 2015 189 N 32 Fair value hierarchy of financial assets and liabilities recognised at fair value 2014 189 N 33 Movements in level 3 financial assets and
N 35 Income and expenses from level 3 financial assets and liabilities 2015 191 N 36 Income and expenses from level 3 financial assets and liabilities 2014 191 N 37 Fair value hierarchy of financial assets and liabilities measured at amortised cost 2015 192 N 38 Fair value hierarchy of financial assets and liabilities measured at amortised cost 2014 192 N 39 Development of deferred acquisition costs 193 N 40 Age structure of overdue accounts receivable 193 N 41 Value adjustments on accounts receivable 193 N 42 Development of goodwill 194 N 43 Capitalisation rates 194 N 44 Other assets 195 N 45 Development of the present value of future profits
N 88 Business assumed and ceded in Germany and abroad 226 N 89 Stock appreciation rights of Hannover Rück SE 228 N 90 Share awards of Hannover Rück SE 230 N 91 Development of the provision for share awards of Hannover Rück SE 230 N 92 Personnel information 231 N 93 Nationality of employees in 2015 231 N 94 Personnel expenditures 231 N 95 Calculation of the earnings per share 231 N 96 Future leasing commitments 233 N 97 Rental income 234 N 98 Fee paid to the auditor 234
A printed version of the Hannover Re Group’s Annual Report is also available in German. The report can additionally be accessed online in English and German as an HTML version and downloaded in PDF format.