Interim / Quarterly Report • Aug 18, 2014
Interim / Quarterly Report
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Talanx Group Interim Report as at 30 June 2014
| +/– % 6M 2014/ |
||||||||
|---|---|---|---|---|---|---|---|---|
| UNIT | Q1 2014 | Q2 2014 | 6M 2014 | Q1 2013 | Q2 2013 | 6M 2013 | 6M 2013 | |
| Gross written premium | IN EUR MILLION | 8,414 | 6,561 | 14,975 | 8,458 | 6,508 | 14,966 | — |
| by regions | ||||||||
| Germany | IN % | 39 | 29 | 35 | 40 | 29 | 36 | –1 pt. |
| UK | IN % | 8 | 10 | 9 | 8 | 10 | 9 | — pt. |
| Central and Eastern Europe including Turkey (CEE) |
IN % | 7 | 9 | 8 | 8 | 10 | 9 | –1 pt. |
| Rest of Europe | IN % | 17 | 16 | 16 | 15 | 15 | 15 | +1 pt. |
| USA | IN % | 11 | 12 | 11 | 12 | 14 | 12 | –1 pt. |
| Rest of North America | IN % | 2 | 3 | 2 | 2 | 3 | 2 | — pt. |
| Latin America | IN % | 6 | 7 | 6 | 6 | 7 | 7 | –1 pt. |
| Asia and Australia | IN % | 8 | 14 | 11 | 7 | 10 | 8 | +3 pt. |
| Africa | IN % | 2 | — | 2 | 2 | 2 | 2 | — pt. |
| Net premium earned | IN EUR MILLION | 5,599 | 5,709 | 11,308 | 5,715 | 5,783 | 11,498 | –2 |
| Underwriting result | IN EUR MILLION | –3705) | –405 | –775 | –2525) | –4645) | –7165) | –8 |
| Net investment income | IN EUR MILLION | 1,010 | 938 | 1,948 | 875 | 1,002 | 1,877 | +4 |
| Net return on investment 1) | IN % | 4.3 | — | 4.0 | 3.7 | — | 4.0 | — pt. |
| Operating profi t (EBIT) | IN EUR MILLION | 5545) | 451 | 1,005 | 5275) | 5055) | 1,0325) | –3 |
| Net income (after fi nancing costs and taxes) | IN EUR MILLION | 3685) | 289 | 657 | 3495) | 3235) | 6725) | –2 |
| of which attributable to shareholders of Talanx AG |
IN EUR MILLION | 2165) | 165 | 381 | 2065) | 2045) | 4105) | –7 |
| Return on equity 2) 3) | IN % | 11.85) | 8.7 | 10.3 | 11.35) | 11.6 | 11.85) | –1.5 pt. |
| Earnings per share | ||||||||
| Basic earnings per share | IN EUR | 0.865) | 0.65 | 1.51 | 0.815) | 0.81 | 1.625) | –7 |
| Diluted earnings per share | IN EUR | 0.865) | 0.65 | 1.51 | 0.815) | 0.81 | 1.625) | –7 |
| Combined ratio in property/casualty primary insurance and non-life reinsurance 4) |
IN % | 94.35) | 98.4 | 96.4 | 95.15) | 97.15) | 96.15) | +0.3 pt. |
| Combined ratio of property/ casualty primary insurers |
IN % | 94.05) | 101.6 | 98.0 | 96.45) | 100.65) | 98.55) | –0.5 pt. |
| Combined ratio for non-life reinsurance | IN % | 94.5 | 95.7 | 95.1 | 94.0 | 94.3 | 94.2 | +0.9 pt. |
| 30.6.2014 | 31.12.2013 | +/– % | ||
|---|---|---|---|---|
| Policyholders' surplus | IN EUR MILLION | 14,283 | 14,2885) | — |
| Equity attributable to shareholders of Talanx AG |
IN EUR MILLION | 7,645 | 7,1845) | +6 |
| Non-controlling interests | IN EUR MILLION | 4,280 | 3,997 | +7 |
| Hybrid capital | IN EUR MILLION | 2,358 | 3,107 | –24 |
| Assets under own management | IN EUR MILLION | 90,252 | 86,310 | +5 |
| Total investments | IN EUR MILLION | 105,528 | 100,962 | +5 |
| Total assets | IN EUR MILLION | 139,699 | 132,8535) | +5 |
| Carrying amount per share at the end of the period |
IN EUR | 30.24 | 28.425) | +6 |
| Share price at the end of the period | IN EUR | 25.60 | 24.65 | +4 |
| Market capitalisation of Talanx AG at the end of the period |
IN EUR MILLION | 6,472 | 6,231 | +4 |
| Staff | FULL-TIME EQUIVALENTS |
19,628 | 20,004 | –2 |
1) Annualised net investment income excluding interest income on funds withheld and contract deposits and profi t on investment contracts relative to average assets under own management (30 June 2014 and 31 December 2013)
2) Annualised net income excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests
3) Annualised quarterly net income excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests as at the beginning and the end of the quarter
4) Combined ratio adjusted for interest income on funds withheld and contract deposits, before elimination of intra-Group cross-segment transactions
5) Adjusted on the basis of IAS 8, cf. "Accounting policies" section of the Notes
Chairman Berg Former Chairman of the Board of Management of Talanx AG
Deputy Chairman Raesfeld Employee HDI Vertriebs AG
Deputy Chairman Hamburg Former Chairman of the Board of Management of ThyssenKrupp Technologies AG
Hamburg Lawyer Member of the Board of Management of APRAXA eG
Hannover Managing Director Hannover Rück SE, E+S Rückversicherung AG
Employee HDI Kundenservice AG
Gerald Herrmann * Norderstedt Trade union secretary (until 8 May 2014)
Albstadt Chairman of the Board of Management of Groz-Beckert KG
Forch, Switzerland President of the Administrative Board and Chairman of the Board of Management of Secquaero Advisors AG
Hannover Member of the ver.di National Executive Board (since 8 May 2014)
Oberhausen Employee HDI-Gerling Industrie Versicherung AG
Otto Müller * Hannover Employee Hannover Rück SE
Katja Sachtleben-Reimann * Hannover Employee Talanx Service AG
Hannover Former Member of the Board of Management of E.ON AG
Potsdam Head of Legal Department, ver.di National Administration (since 8 May 2014)
Baunatal Chairman of the Board of Management of K+S AG
Herbert K. Haas Chairman Burgwedel
Dr. Christian Hinsch Deputy Chairman Burgwedel
Torsten Leue Hannover
Dr. Thomas Noth Hannover (until 31 March 2014)
Dr. Immo Querner Celle
Dr. Heinz-Peter Roß Gräfelfi ng (until 30 June 2014)
Ulrich Wallin Hannover
Dr. Jan Wicke Stuttgart (since 1 May 2014)
The fi rst half of 2014 saw the global economy grow at a mode rate rate, stimulated by upturns in various regions. The emerging trend towards stable economic growth observed last year in the industrialised nations continued in most cases. While economic expansion eased off in China and in certain emerging markets, the Eurozone returned to – albeit modest – growth. The signals from countries that have experienced tough reform programmes are increasingly positive. Spain's growth picked up again early in the year (up by 0.4% in comparison with the previous quarter). In Portugal, the unemployment rate of around 17% recorded in the fi rst half of 2013 dropped to 14.3% in May 2014. On the back of an extremely severe winter and previously excessive inventories, the US economy shrank by 2.1% in the fi rst quarter; annualised growth in the second half of the year was 0.9%. However, the economy should recover quickly aft er the weather-related slump. The unemployment rate dropped to a fi ve-year low of 6.1% in June.
Overall, the major central banks maintained their expansionary monetary policies, although the Federal Reserve continued to systematically reduce its bond purchases by USD 10 billion per month. In the Eurozone, the European Central Bank unveiled a comprehensive package of measures: on the one hand it reduced its benchmark interest rate from 0.25% to 0.15% in June, while on the other it announced a EUR 400 billion targeted longer-term refi nancing operation for banks.
Following already low interest rates in the Eurozone in the fi rst quarter of 2014, the annual infl ation rate dropped to 0.5% in May and June, its lowest level since 2009. The annual infl ation rate in the USA remained at 1.5% in March, while US consumer prices rose to 2.1% in the second quarter of 2014.
Despite positive tendencies, the continued uncertain and above all very diverse economic climate in the Eurozone, a range of geopolitical risks, and the ECB's continuing expansionary monetary policy had a signifi cant impact on activity in the Eurozone bond markets. Along with unstable developments in various emerging markets such as Argentina, Brazil, Turkey and India, the Ukraine crisis and Russia's annexation of Crimea emerged as the dominant geopolitical risk. The yield curve on German government bonds retreated signifi cantly quarter-on-quarter. By the end of the second quarter, yields on bonds with a maturity of less than one year were slightly into negative territory. Yields on two-year bonds fell to 0.02%, while yields on fi ve- and ten-year bonds dropped to 0.35% and 1.23% respectively.
The primary market experienced high levels of activity in the fi rst half of 2014, with May and June in particular signifi cantly exceeding prior-year levels. Demand for high yields was uninterrupted. Risky investments paid off where performance was concerned, with corporate bonds rated BBB, high-yield investments, subordinated bank bonds and covered bonds from peripheral states recording the best half-year growth.
The recovery in US economic indicators and lively M&A activity on the equity markets led to new record highs in the second quarter. Prices were also buoyed by the ECB's expansionary monetary policy. In the fi rst half of the year the DAX rose by 2.9%, the EUROSToxx 50 recorded a 3.8% gain and the S&P 500 grew by around 6.1%. In Japan, the Nikkei dropped almost 7% in the fi rst six months of 2014.
Sentiment in the German insurance industry revealed a slight improvement in the second quarter of 2014, and was above-average compared with previous years. The main reason for this was a more positive assessment of the current business situation, whereas the outlook for the next six months was seen as being less optimistic. However, a look at both the property and casualty insurance and the life insurance lines shows that the mood in the industry is assessed diff erently.
In the German property and casualty insurance sector, business confi dence increased to an all-time high in the period under review, with the exceptionally positive assessment of the current business situation playing a crucial role. Despite a slight downturn in the second quarter, expectations for the coming six months were at an above-average level. These optimistic assessments are also probably due to higher premiums in several key lines of business such as property insurance and motor insurance. In terms of individual lines of business, sentiment in private property insurance, motor insurance and liability insurance was as encouraging as the mood in property and casualty insurance as a whole. By contrast, the climate in accident insurance and the industrial/commercial lines of business was more restrained.
Premium income was estimated to have grown in net terms across all business lines. Positive growth rates were expected in particular in motor insurance, industrial/commercial lines of business and private property insurance. However, further rate adjustments in the next twelve months were only expected in relation to motor insurance.
Claims during the reporting period were dominated by severe weather conditions in western Germany, France and Belgium at the beginning of June. North-Rhine Westphalia in particular experienced the worst damage caused by strong gusts of wind and hail. Almost two-thirds of the resulting claims expenses were attributable to property insurers, with close to a third attributable to motor insurers. With insured losses across Germany totalling approximately EUR 650 million according to the initial estimate by the German Insurance Association (GDV), this was the second most expensive summer storm for property insurers in the last 15 years.
Sentiment in German life insurance improved slightly in the reporting period compared with the previous quarter. This is primarily attributable to more favourable assessments of the current business situation. By contrast, the outlook for the next six months was judged to be below average due to a number of factors including the continuing low interest rates. The most optimistic business climate was in traditional annuity insurance, while the least favourable was in endowment life insurance and occupational disability insurance.
Stable premium income growth is expected for 2014, both in new business with regular premiums and in single-premium business, with total premiums remaining at around the prior-year fi gure. Potential for growth in premium income was only observed in unit-linked life and annuity insurance and occupational disability insurance.
The situation on the international non-life reinsurance markets remained highly competitive. Price pressure is coming increasingly from fi nancial investors, which provided additional capacity, but also from moderate levels of major losses and, in part, from higher retentions by cedants. In the course of the renewals in Japan, rates for natural catastrophe cover declined for the fi rst time on 1 April 2014 since the major earthquake in 2011.
The burden of natural catastrophes around the world was relatively low during both the second quarter and the fi rst half of 2014 as a whole. Total insured losses for the fi rst six months of the year remained under the corresponding average fi gure for the last ten years. High overall economic losses were caused by severe fl ooding in the Balkans in May, although the relatively low insurance density meant that the insured proportion was comparatively small. By contrast, the above-mentioned severe weather conditions during the second weekend of June caused high insurance losses amounting to a cross-border fi gure of some EUR 1.8 billion.
Increasing competition was also noted in international life and health reinsurance. As is the case with life primary insurance, the life reinsurance industry in Europe and the USA is also suff ering from the persistently low interest rates. The steadily changing age structure of the population continues to present both a challenge and an opportunity due to growing demand for innovative insurance concepts to protect against risks associated with longevity. Emerging countries in Eastern Europe, Asia and Latin America continue to off er growth opportunities, as their expanding urban middle classes are increasingly showing an interest in life and health insurance products.
| FIGURES IN EUR MILLION | |||
|---|---|---|---|
| 6M 2014 |
6M 2013 1) |
+/– % | |
| Gross written premium | 14,975 | 14,966 | — |
| Net premium earned | 11,308 | 11,498 | –2 |
| Underwriting result | –775 | –716 | –8 |
| Net investment income | 1,948 | 1,877 | +4 |
| Operating profi t (EBIT) | 1,005 | 1,032 | –3 |
| Combined ratio (net, property and casualty only) in% 2) |
96.4 | 96.1 | +0.3 pt. |
1) Adjusted on the basis of IAS 8, cf. "Accounting policies" section in the Notes 2) Including net interest income on funds withheld and contract deposits
GROUP KEY FIGURES
IN %
| 6M 2014 |
6M 2013 1) |
+/– % | |
|---|---|---|---|
| Gross premium growth (adjusted for exchange rate eff ects) |
2.1 | 11.3 | –9.2 pt. |
| Group net income in EUR million | 381 | 410 | –6.9 |
| Return on equity 2) | 10.3 | 11.8 | –1.5 pt. |
| Net return on investment 3) | 4.0 | 4.0 | — |
1) Adjusted on the basis of IAS 8, cf. "Accounting policies" section in the Notes 2) Annualised net income excluding non-controlling interests relative
to average shareholders' equity excluding non-controlling interests 3) Annualised net investment income relative to average assets under own management
The Group's gross written premium remained more or less stable year-on-year, at EUR 15.0 (15.0) billion. Adjusted for exchange rate eff ects, gross premium growth amounted to 2.1% year-on-year, meaning that in the fi rst half of the year we achieved our target of gross premium growth of 2% to 3% based on steady exchange rates. This growth was primarily generated in the Industrial Lines Division outside Germany and in the Retail International segment, including in the single-premium business in Italy. The retention ratio fell slightly to 86.4 (86.8)%, while net premium earned also decreased slightly by 2% to EUR 11.3 (11.5) billion.
The underwriting result fell by 8% to –EUR 775 million, partly owing to participation of policyholders in net investment income for life insurers in the Group. At EUR 250 (419) million, major losses were signifi cantly down year-on-year in the fi rst half of 2014. The biggest single loss from natural disasters for the Group was caused by the adverse weather in early June, which aff ected both primary insurance and reinsurance. The Group's combined ratio amounted to 96.4 (96.1)%, due to the slightly increased net expense ratio.
Net investment income amounted to EUR 1,948 million in the fi rst half of the year, up 4% on the same period of the previous year (EUR 1,877 million). This is due in particular to gains on the disposal of investments in the Industrial Lines and Retail Germany segments. At 4.0 (4.0)%, the net return on investment was at exactly the same level as in the prior-year period. We have therefore so far achieved our goal for 2014, which was to exceed 3.4%.
Operating profi t (EBIT) fell slightly to EUR 1,005 (1,032) million, with the improvement in net investment income unable to compensate for the decline in the underwriting result and other income. At EUR 381 (410) million, Group net income was thus down 6.9% year-on-year. The return on equity of 10.3% was slightly below the prior-year fi gure of 11.8%, but still exceeded the 10% forecast for full-year 2014.
Talanx divides its business strategically into six reportable segments: Industrial Lines, Retail Germany, Retail International, Non-Life Reinsurance, Life/Health Reinsurance and Corporate Operations. Please refer to the "Segment reporting" section in the Notes of this report for details of these segments' nature and scope of business.
ESSENTIAL KEY FIGURES IN THE INDUSTRIAL LINES SEGMENT
FIGURES IN EUR MILLION
| 6M 2014 |
6M 2013 1) |
+/– % | |
|---|---|---|---|
| Gross written premium | 2,497 | 2,399 | +4 |
| Net premium earned | 927 | 895 | +4 |
| Underwriting result | 6 | –19 | +132 |
| Net investment income | 151 | 108 | +39 |
| Operating profi t (EBIT) | 141 | 70 | +101 |
IN %
| 6M 2014 |
6M 2013 1) |
+/– % | |
|---|---|---|---|
| Gross premium growth (adjusted for exchange rate eff ects) |
5.2 | 7.5 | –2.3 pt. |
| Retention | 53.6 | 47.8 | +5.8 pt. |
| Combined ratio (net) 2) | 99.4 | 102.1 | –2.7 pt. |
| EBIT margin 3) | 15.2 | 7.8 | +7.4 pt. |
| Return on equity 4) | 9.2 | 4.5 | +4.7 pt. |
1) Adjusted on the basis of IAS 8, cf. "Accounting policies" section in the Notes
2) Including net interest income on funds withheld and contract deposits
3) Operating profi t (EBIT)/net premium earned
4) Annualised net income excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests
Competition is extremely fi erce in industrial insurance in our core market of Germany. Despite this strong competition, HDI-Gerling Industrie Versicherung AG increased its premium volume both within and outside Germany in the fi rst half of 2014. The on going sovereign debt crisis in the Eurozone and limited growth in the global economy continue to present challenges for insurance companies. Economic momentum is diminishing even in emerging countries, although the level of growth there is still signifi cantly higher than in developed economies. As domestic market penetration is already high, growth is generated primarily at our foreign branches and subsidiaries. HDI-Gerling Industrie Versicherung AG has achieved signifi cant premium growth, particularly through its branch in France.
The Industrial Lines segment's gross written premium amounted to EUR 2.5 (2.4) billion as at 30 June 2014, an increase of 4% (5.2% aft er adjustment for exchange rate eff ects). HDI-Gerling industrial insurance made a particularly signifi cant contribution to this with its branches in Germany and abroad, partly through the expansion of customer relationships in marine insurance business. Although growth slowed slightly compared with the previous year, it still remained at a positive level.
The segment's retention ratio increased signifi cantly to 53.6 (47.8)% in the fi rst half of 2014 due to the higher premium retained at HDI-Gerling industrial insurance. Net premium earned in the segment also rose by 4% year-on-year to EUR 927 (895) million.
The segment's net underwriting result improved to EUR 6 (–19) million thanks to the net loss ratio. At 75.9%, this was signifi cantly below the prior-year fi gure (82.7%), which was impacted by the fl ooding in southern and eastern Germany. HDI-Gerling Industrie Ver sicherung AG contributed EUR 32 (–8) million to this. The catastrophe losses from various single losses and the severe weather conditions in early June were off set by the positive eff ect of the retrospective adjustment made in the fi rst quarter of 2014; see our explanations in section "Accounting policies", page 39 et seqq. The net expense ratio was up on the prior year, at 23.4 (19.4)%. The prior-year fi gure had been positively infl uenced by the change in the accounting for reinsurance settlement. The combined ratio for the Industrial Lines segment was 99.4 (102.1)% overall, and is thus nearing the target for 2014 of 96% to 98%.
Net investment income rose significantly by 39% to EUR 151 (108) million despite persistently low interest rates. HDI-Gerling industrial insurance increased its income substantially through the sale of investments, owing to a decline in the area of fi xed-income secu rities caused by the capital market. The company took advantage of positive developments on the capital market early in the year to generate additional income while simultaneously reducing risks in the portfolio. In addition, reversals of impairment losses on Greek bonds amounted to around EUR 7 million.
The segment's operating profi t grew to EUR 141 (70) million, owing to the above developments and in particular to the improved underwriting result and the increase in net investment income. Group net income – i. e. income attributable to shareholders of Talanx AG – grew to EUR 89 (41) million. The EBIT margin and return on equity in the segment also rose to 15.2 (7.8)% and 9.2 (4.5)% respectively, owing to the increase in operating profi t. Both fi gures have thus met their targets for 2014 of at least 10% and 8% respectively.
| FIGURES IN EUR MILLION | |||
|---|---|---|---|
| 6M 2014 | 6M 2013 | +/– % | |
| Gross written premium | 3,563 | 3,623 | –2 |
| Net premium earned | 2,613 | 2,663 | –2 |
| Underwriting result | –808 | –732 | –10 |
| Net investment income | 937 | 872 | +8 |
| Operating profi t (EBIT) | 97 | 90 | +7 |
IN %
| 6M 2014 | 6M 2013 | +/– % | |
|---|---|---|---|
| Gross premium growth | –1.7 | 3.0 | –4.7 pt. |
| Combined ratio (net, property/ casualty only) 1) |
101.2 | 99.9 | +1.3 pt. |
| EBIT margin 2) | 3.7 | 3.4 | +0.3 pt. |
| Return on equity 3) | 4.4 | 4.0 | +0.4 pt. |
1) Including net interest income on funds withheld and contract deposits
2) Operating profi t (EBIT)/net premium earned
3) Annualised net income excluding non-controlling interests relative
to average shareholders' equity excluding non-controlling interests
The diffi cult capital market situation and the declining attractiveness of life insurance products as a result of low minimum returns continue to dominate the life insurance market. New business expressed in terms of APE is therefore experiencing a market-wide decline, both in regular premiums and in single premiums. As in the previous year, however, growth is expected in property/ casualty insurance across all business lines.
Gross written premium of the Retail Germany segment – including savings elements under unit-linked life insurance – almost matched its prior-year level in the fi rst half of 2014, at EUR 3.6 billion. Gross written premium in property/casualty insurance remained almost unchanged, at EUR 1.0 (1.0) billion. Ongoing measures to increase profi tability led to the erosion of premiums despite premium adjustments, particularly in motor insurance. This was off set by the positive trend in premium income in liability, accident and property insurance. The overall share of property/casualty insurers in the entire segment remained stable, at 28.8 (28.7)%. Gross written premium for our life insurers – including savings elements under unit-linked life insurance – fell slightly by 2% to EUR 2.5 (2.6) billion, owing to high portfolio disposals. The decline in gross premiums in the Retail Germany segment of around 2% corresponds overall to the expected amount for 2014 of 1% to 2%.
The division's retention ratio remains unchanged, at 94.5%. Allowing for higher savings elements under our unit-linked products and the change in unearned premiums, the net premium earned thus declined by 2% to EUR 2.6 (2.7) billion.
New business in life insurance products – measured by the international standard of the annual premium equivalent (APE) – fell from EUR 214 million to EUR 208 million as a result of lower regular premiums.
The underwriting result for the period under review amounted to –EUR 0.8 (–0.7) billion. This fi gure is dominated by life insurance companies, partly owing to compounding of technical provisions and participation of our policyholders in net investment income. These expenses are off set by net investment income, which is recognised in the non-underwriting result.
The combined ratio for property insurance increased by a net 1.3 percentage points to 101.2%. A signifi cantly lower run-off result and a higher level of claims at HDI Versicherung AG, particularly as a result of the severe weather conditions in early June, were largely responsible for this. By contrast, a decline in burdens from single major losses was recorded. The combined ratio therefore is very near to hitting our 101% target for 2014.
Net investment income increased by 8% overall to EUR 0.9 billion, of which 94% was attributable to the life insurance companies. Un realised gains on investments were realised in order to continue fi nancing the additional interest reserve and policyholder partici pation in the valuation reserves. This led to a corresponding increase in extraordinary investment income. Ordinary investment income remains stable, at EUR 0.8 billion.
The operating result for the fi rst half of the year increased by 7% year-on-year to EUR 97 (90) million, infl uenced in particular by the update of a large number of actuarial bases at the life insurers compared with the prior-year period. Accordingly, the EBIT margin increased by 0.3 percentage points to 3.7%, signifi cantly exceeding our full-year target of 3%. Aft er taking into account taxes on income and fi nancing costs, Group net income attributable to share holders of Talanx AG rose to EUR 57 (52) million; as a result, return on equity increased by 0.4 percentage points to 4.4%, meeting our target of 4% for 2014 as a whole.
FIGURES IN EUR MILLION
| 6M 2014 | 6M 2013 | +/– % | |
|---|---|---|---|
| Gross written premium | 3,563 | 3,623 | –2 |
| Property/casualty | 1,027 | 1,038 | –1 |
| Life | 2,536 | 2,585 | –2 |
| Net premium earned | 2,613 | 2,663 | –2 |
| Property/casualty | 703 | 702 | — |
| Life | 1,910 | 1,961 | –3 |
| Underwriting result | –808 | –732 | –10 |
| Property/casualty | –7 | 1 | — |
| Life | –801 | –733 | –9 |
| Other | — | — | — |
| Net investment income | 937 | 872 | +8 |
| Property/casualty | 52 | 55 | –5 |
| Life | 885 | 817 | +8 |
| Other | — | — | — |
| New business measured in annual premium equivalent (life) |
208 | 214 | –3 |
| Single premiums | 762 | 769 | –1 |
| Regular premiums | 132 | 137 | –4 |
| New business by product in annual premium equivalent (life) |
208 | 214 | –3 |
| Unit-linked life and annuity insurance |
59 | 70 | –16 |
| Traditional life and annuity insurance |
111 | 109 | +2 |
| Term life products | 36 | 33 | +9 |
| Other life products | 2 | 2 | — |
| 6M 2014 | 6M 2013 | +/– % |
|---|---|---|
| 2,255 | 2,151 | +5 |
| 1,912 | 1,748 | +9 |
| 14 | 17 | –18 |
| 156 | 146 | +7 |
| 124 | 113 | +9 |
| IN % | |||
|---|---|---|---|
| 6M 2014 | 6M 2013 | +/– % | |
| Gross premium growth (adjusted for exchange rate eff ects) |
10.7 | 66.0 | –55.3 pt. |
| Combined ratio (net, property/ casualty only) 1) |
95.3 | 94.9 | +0.4 pt. |
| EBIT margin 2) | 6.5 | 6.5 | — |
| Return on equity 3) | 8.4 | 7.8 | +0.6 pt. |
1) Including net interest income on funds withheld and contract deposits
2) Operating profi t (EBIT)/net premium earned
3) Annualised net income excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests
The division's gross written premium (including premiums from unit-linked life and annuity insurance) rose by around 5% yearon-year (around 11% with adjustments for exchange rate eff ects) to EUR 2.3 (2.2) billion. Gross premium growth (adjusted for exchange rate eff ects) declined year-on-year, as the premium volume for the fi rst half of 2013 had included the Polish companies T UiR WARTA S. A and T UnŻ WARTA S. A. for the fi rst time.
The Retail International Division is active in 14 countries, focusing on two strategic target regions and on two high-growth core markets within each of these. In Latin America, it is present in Brazil and Mexico, the two largest countries in terms of premium income. In Central and Eastern Europe, the division operates in Poland and Turkey, two of the three markets with the highest premium income. Gross written premium in property insurance was EUR 1.4 billion. This corresponds to a decline of 1% as a result of negative exchange rate eff ects, particularly in the core markets of Brazil, Mexico and Turkey. With adjustments for exchange rate eff ects, however, gross premium in property insurance increased by 7% owing to positive development of premium income, particularly in Brazil and Turkey. In contrast, life insurance business grew by 16% to EUR 827 million, owing to higher premium income at the Italian company HDI Assicurazioni. Written premium in life insurance rose by 18% with adjustments for exchange rate eff ects.
Around three quarters of our total premium income in Latin America comes from the Brazilian company HDI Seguros S. A., which operates mainly in motor insurance. The company's written premium declined by 4% year-on-year to EUR 404 million, taking into account exchange rate eff ects. With adjustments for exchange rate eff ects, however, premium income rose by 13%, partly owing to a 6% increase in average premiums in comprehensive motor insurance business. At the same time, the company's motor policy portfolio grew year-on-year by 9% to a total of 1.5 million policies; this was largely due to a large number of new contracts being signed. The gross written premium of the Mexican company HDI Seguros declined by 5% year-on-year to EUR 84 million. With adjustments for exchange rate eff ects, premium growth amounted to 2% – in excess of the market – mainly owing to growth in new business in other property insurance (especially building insurance).
The Polish companies accounted for 33% of the division's total written premium, compared with 41% in the same period of the previous year, owing to the decline in single-premium business in life insurance in particular. Premium volume from property insurance at T UiR WARTA S. A. amounted to EUR 438 (444) million. Gross written premium at the life insurer T UnŻ WARTA S. A. amounted to EUR 105 (152) million. Premium income for the TU Europa Group from life and property insurance combined amounted to EUR 206 (280) million. The Talanx Group was the second-largest operator on the Polish insurance market at the end of the fi rst quarter of 2014 in terms of premium income.
Gross written premium at the Turkish property company HDI Sigorta rose by 2% to EUR 99 million taking into account exchange rate eff ects; with adjustments for exchange rate eff ects, premium income rose by 26%. Written premium in other property insurance increased by 57% in local currency, while the number of contracts rose by 10%. Premium income in motor insurance grew by 4% in local currency. The Italian company HDI Assicurazioni held its ground well in a property insurance market that was in decline overall. Gross written premium in property/casualty business fell by 1%, with a 7% rise in the number of contracts in motor third-party liability insurance unable to off set fully the 10% drop in average premiums. Never theless, an adequate combined ratio of 95.3% was achieved. In contrast, life insurance premiums rose by 173% year-on-year, largely owing to higher single premiums.
The combined ratio of the property insurance companies rose by 0.4 percentage points year-on-year to 95.3%. This development was due to a rise in the gross acquisition cost ratio owing to the increase in the proportion of other property insurance, which generally involves higher commission for brokers, in line with the diversifi cation strategy. At the same time, the administrative expense ratio declined by almost the same amount. The loss ratio also fell, which was largely attributable to T UiR WARTA S. A., TU Europa and HDI Assicurazioni. By contrast, the low level of losses in motor insurance in Brazil in the corresponding half of the previous year did not continue in the fi rst half of 2014 as a result of price increases due to infl ation.
The division's underwriting result totalled EUR 14 million, compared with EUR 17 million in the same half of the previous year.
Net investment income in the division amounted to EUR 156 million as at the end of the second quarter of 2014, a year-on-year rise of 7%. The division's ordinary investment income rose by 9% compared with the corresponding period of the previous year, owing in particular to larger investment portfolios combined with a rise in interest rates in Brazil and Turkey. Extraordinary investment income increased to EUR 24 million. In total, the average yield on assets under own management fell by 0.3 percentage points compared with the first half of 2013, to 4.8%. Net investment income includes profi t on investment contracts in the amount of EUR 2 (4) million. Investment contracts are policies that, in accordance with IFRS, provide too little risk cover to be classifi ed as insurance contracts.
As a result of the above developments, the Retail International Division achieved an operating profi t (EBIT) of EUR 124 million in the fi rst half of 2014, a year-on-year increase of 9%. However, EBIT also benefi ted from extraordinary investment income in the fi rst half of the year. The EBIT margin remained stable at 6.5%, above the 5% target for 2014. Group net income aft er minority interests grew by 12% to EUR 74 (66) million. Annualised return on equity increased by 0.6 percentage points year-on-year to 8.4%; meaning that we met our target for 2014 of over 6% in the fi rst half of the year.
FIGURES IN EUR MILLION
| 6M 2014 | 6M 2013 | +/– % | |
|---|---|---|---|
| Gross written premium | 2,255 | 2,151 | +5 |
| Property/casualty | 1,428 | 1,439 | –1 |
| Life | 827 | 712 | +16 |
| Net premium earned | 1,912 | 1,748 | +9 |
| Property/casualty | 1,147 | 1,173 | –2 |
| Life | 765 | 575 | +33 |
| Underwriting result | 14 | 17 | –18 |
| Property/casualty | 54 | 59 | –8 |
| Life | –40 | –42 | –5 |
| Other | — | — | — |
| Net investment income | 156 | 146 | +7 |
| Property/casualty | 90 | 83 | +8 |
| Life | 66 | 63 | +5 |
| Other | — | — | — |
| New business measured in annual premium equivalent (life) |
103 | 103 | — |
| Single premiums | 714 | 572 | +25 |
| Regular premiums | 32 | 46 | –30 |
| New business by product in annual premium equivalent (life) |
103 | 103 | — |
| Unit-linked life and annuity insurance |
5 | 17 | –71 |
| Traditional life and annuity insurance |
23 | 27 | –15 |
| Term life products | 34 | 44 | –23 |
| Other life products | 41 | 15 | +173 |
ESSENTIAL KEY FIGURES IN THE NON-LIFE REINSURANCE SEGMENT
| FIGURES IN EUR MILLION | |||
|---|---|---|---|
| 6M 2014 | 6M 2013 | +/– % | |
| Gross written premium | 4,078 | 4,097 | –1 |
| Net premium earned | 3,370 | 3,404 | –1 |
| Underwriting result | 156 | 191 | –18 |
| Net investment income | 412 | 378 | +9 |
| Operating profi t (EBIT) | 533 | 567 | –6 |
| IN % | |||
|---|---|---|---|
| 6M 2014 | 6M 2013 | +/– % | |
| Gross premium growth (adjusted for exchange rate eff ects) |
2.0 | 1.3 | +0.7 pt. |
| Combined ratio (net) 1) | 95.1 | 94.2 | +0.9 pt. |
| EBIT margin 2) | 15.8 | 16.6 | –0.8 pt. |
| Return on equity for Non-Life and Life/Health Reinsurance 3) |
15.1 | 15.4 | –0.3 pt. |
1) Including interest income on funds withheld and contract deposits
2) Operating profi t (EBIT)/net premium earned
3) Annualised net income excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests; reported for the Reinsurance Division overall
Competition in non-life reinsurance is considerably more intense than in 2013. Supply currently outweighs demand signifi cantly. This can be attributed to the absence of market-changing major losses and the fact that cedants are also carrying more risks in their retention due to good capitalisation. Furthermore, additional capacity from the catastrophe bond market (ILS) – particularly in the US catastrophe business – is leading to signifi cant price erosion.
Treaty renewals in Non-Life Reinsurance business as at 1 April 2014 – when traditionally the business in Japan is renewed – were another factor behind the oversupply in reinsurance capacities. In addition, treaty renewals also took place on a minor scale in Korea, Australia and New Zealand. Aft er signifi cant rate increases in Japan in recent years as a result of the major earthquake in 2011, rates for natural catastrophe cover suff ered erosion, albeit from a high level. In liability, however, slight price increases were achieved. Although our premium volume fell slightly in Japan, we maintained our market position thanks to our strong, long-standing customer relationships. A smaller portion of the US property catastrophe business was also up for renewal, and, as expected, saw continued strong price erosion. We were able to achieve adequate margins overall, however, thanks to our selective underwriting policy, in which we focus solely on the profi tability of the business.
As premium growth has averaged 10% in the last fi ve years, we see no incentive to expand our business in the current soft market environment. Nevertheless, we are very satisfi ed with premium development in Non-Life Reinsurance as at 30 June 2014: the gross premium is only 1% below the prior-year value, at EUR 4.1 (4.1) billion. Indeed, at constant exchange rates, an increase of 2.0% would even have been recorded. The retention ratio increased slightly yearon-year to 91.1 (90.2)%. Net premium earned fell by 1% to EUR 3.4 (3.4) billion; with adjustments for exchange rate eff ects, a gain of 2% would have been recorded.
After burdens from major losses were below average in the fi rst quarter of 2014, expenses for major losses again remained en couragingly low in the second quarter. The largest individual loss was caused by the severe weather conditions during the second weekend in June, with strong gusts of wind and hail. This resulted in a net loss burden of EUR 33 million. The net burden from major losses for the fi rst half of 2014 amounted to a total of EUR 105 (260) million, signifi cantly below the EUR 276 million budget for major losses for the fi rst half of the year. We are very pleased with the underwriting result of EUR 156 (191) million for the entire Non-Life Reinsurance segment. At 95.1 (94.2)%, not only was the combined ratio extremely positive, it also met our target of a fi gure below 96%.
Income from investments, including interest income on funds withheld and contract deposits, increased to EUR 412 (378) million. Normalised income from the change in fair value of infl ation swaps, which was still negative in the prior-year period, contributed to this. Infl ation swaps are used to hedge a portion of the infl ation risks associated with the underwriting loss reserve.
The operating profi t (EBIT) in the Non-Life Reinsurance segment as at 30 June 2014 was EUR 533 million, 6% below the prior-year value (EUR 567 million), partly owing to a considerably lower exchange rate result. The EBIT margin was above the target of at least 10%, at 15.8 (16.6)%. Group net income remained almost at a level with the prior-year period, at EUR 165 (166) million. Return on equity, which is shown for both reinsurance segments, was 15.1 (15.4)%; we have thus slightly exceeded the 2014 target of 15%.
ESSENTIAL KEY FIGURES IN THE LIFE AND HEALTH REINSURANCE SEGMENT
| FIGURES IN EUR MILLION | |||
|---|---|---|---|
| 6M 2014 |
6M 2013 1) |
+/– % | |
| Gross written premium | 2,987 | 3,130 | –5 |
| Net premium earned | 2,469 | 2,787 | –11 |
| Underwriting result | –147 | –172 | +14 |
| Net investment income | 299 | 315 | –5 |
| Operating profi t (EBIT) | 152 | 130 | +17 |
1) Adjusted on the basis of IAS 8, cf. the "Accounting policies" section in the Notes
| IN % | |||
|---|---|---|---|
| 6M 2014 |
6M 2013 1) |
+/– % | |
| Gross premium growth (adjusted for exchange rate eff ects) |
–1.8 | 13.4 | –15.2 pt. |
| EBIT margin 2) fi nancial solutions/longevity |
4.8 | 4.0 | +0.8 pt. |
| EBIT margin 2) mortality/morbidity | 7.1 | 4.0 | +3.1 pt. |
| Return on equity for Non-Life and Life/Health Reinsurance 3) |
15.1 | 15.4 | –0.3 pt. |
1) Adjusted on the basis of IAS 8, cf. "Accounting policies" section in the Notes
2) Operating profi t (EBIT)/net premium earned
3) Annualised net income excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests; reported for the Reinsurance Division overall
The Life/Health Reinsurance segment recorded an encouraging improvement in profi tability in the fi rst half of the year under review compared with the prior-year period. Despite the diffi cult conditions prevailing on the capital markets, promising business opportunities arose worldwide.
As in the fi rst quarter of 2014, the US fi nancial solutions business made an extremely positive contribution to earnings once again. Our US mortality business improved considerably in the second quarter, exceeding our expectations in the current reporting period. Our business activities in France, Scandinavia and Central and Eastern Europe also showed better-than-expected development and consequently also made a positive contribution to profi t.
The total gross premium in the Life/Health Reinsurance segment amounted to EUR 3.0 (3.1) billion as at 30 June 2014. This represents a decline of 5% compared with the prior-year period; with adjustments for exchange rate eff ects, a decline of only 1.8% would have been recorded. Net premium earned fell more considerably by 11% to EUR 2.5 (2.8) billion owing to a reduction in the retention of 83.1 (89.6)%; with adjustments for exchange rate eff ects, the decline would have been 9%.
Net income from investments including interest income on funds withheld and contract deposits declined slightly to EUR 299 (315) million in the reporting period just ended, owing to persistently low interest rates. The performance of the embedded ModCo derivatives showed a slight positive change to EUR 4.6 (0.8) million in this reporting period.
Operating profit (EBIT) increased encouragingly to EUR 152 (130) million as at 30 June 2014. In terms of the EBIT margin, our fi nancial solutions and longevity business saw a return of 4.8 (4.0)%, thus clearly exceeding the 2% target. The EBIT margin for the mortality and morbidity business recovered in the reporting period; at 7.1 (4.0)%, it also surpassed the target of 6%. Group net income improved considerably by 19% to EUR 57 (47) million. The return on equity shown is for both reinsurance segments together.
Talanx AG issued a senior unsecured bond in the fi rst quarter of 2013, which will mature on 13 February 2023. The cash infl ow was used principally to replace existing fi nancing arrangements, which led to a signifi cant reduction in fi nancing costs in the fi rst quarter of 2014.
Talanx AG arranged a new syndicated credit line in the fi rst half of 2014 to secure liquidity for the Talanx Group. The credit line has a volume of EUR 550 million and a term of fi ve years, and will replace the EUR 500 million credit line issued in 2011 before it expires.
Underwriting business written through our subsidiary Talanx Reinsurance (Ireland) Ltd. has been reported in the Corporate Ope rations segment since 2013. The aim of this in-house reinsurance is to increase retention and optimise capital utilisation. In-house business written by Talanx Re (Ireland) will be partly reallocated to the ceding segments, to enable the respective segments to exploit the benefi ts of diversifi cation. Furthermore, any business that includes additional cross-segment diversifi cation benefi ts will be reported in the Corporate Operations segment. Gross written premium in this business amounted to EUR 35 (25) million in the fi rst half of 2014. It resulted from reinsurance cessions in the Industrial Lines, Retail Germany and Retail International segments. Talanx Re (Ireland) posted an operating profi t of EUR 5 (0) million for this business in the Corporate Operations segment in the fi rst half of 2014.
Talanx Reinsurance Broker GmbH is wholly owned by Talanx AG and handles the complete spectrum of the reinsurance business process for Group cedants. In 2014, it once again managed to obtain the reinsurance capacity on the global market required for all of the Group cedants that it manages. The company's operating profi t for the fi rst half of 2014 was EUR 8 (8) million, of which a signifi cant portion will be reallocated to the business ceding segments. EUR 2 (1) million of this company's earnings remained in the Corporate Operations segment.
Talanx Asset Management GmbH – in cooperation with its sub sidiary Ampega Investment GmbH (until 1 July 2013 AmpegaGerling Investment GmbH) – is chiefl y responsible for handling the mana ge ment and administration of the Group companies' investments and provides related services such as investment accounting and reporting. The total contribution of the two companies and of Talanx Immobilien Management GmbH to the segment's operating profi t amounted to EUR 22 (20) million in the fi rst half of 2014.
As an investment company, Ampega Investment GmbH administers mutual and special funds and performs fi nancial portfolio management tasks for institutional clients. It focuses on portfolio management and the administration of investments for clients outside the Group. The persistently low interest rates are having a lasting impact on the German population's willingness to save. Consumer confi dence is the highest it has been since 2006 owing to low interest rates, whereas savings appetite sank to its lowest level since 1997 in the middle of 2014. As a result, net cash infl ows in the investment sector are at a relatively low level compared with the years before the fi nancial crisis. The fact that people wanting to make further fi nancial provisions for their future are currently seeking alternatives to the low rate of return off ered by traditional savings deposits is having a positive impact on the investment sector, as they are increasingly also turning to investment funds. The total volume of assets managed by Ampega rose by 10% to EUR 17.2 (15.5) billion in the fi rst half of 2014 compared with the beginning of the year. Over half of this sum, EUR 8.9 (8.3) billion, was administered on behalf of Group companies through special funds and direct investment mandates. Of the remaining portion, EUR 4.1 (3.5) billion was attributable to institutional third-party clients and EUR 4.2 (3.8) billion to retail business. The latter is off ered both through the Group's own distribution channels and products such as unitlinked life insurance as well as through external asset managers and banks.
The operating profit of the Corporate Operations segment declined to –EUR 6 (85) million in the fi rst half of 2014, largely owing to the sale of shares in Swiss Life Holding AG by Talanx AG in the previous year. This transaction had resulted in a pre-tax profi t of EUR 98 million in the fi rst half of 2013.
Group net income for this segment attributable to shareholders of Talanx AG amounted to –EUR 57 (31) million in the fi rst half of 2014.
| FIGURES IN EUR MILLION | ||||
|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | |||
| Intangible assets | 2,489 | 2% | 2,551 | 2% |
| Investments | 105,528 | 76% | 100,962 | 76% |
| Investments for the account and risk of holders of life insurance policies |
8,896 | 6% | 8,325 | 6% |
| Reinsurance recoverables on technical provisions |
7,158 | 5% | 6,604 | 5% |
| Accounts receivable on insurance business |
5,744 | 4% | 5,039 | 4% |
| Deferred acquisition costs | 4,492 | 3% | 4,513 | 3% |
| Cash | 1,883 | 1% | 1,864 | 1% |
| Deferred tax assets | 658 | <1% | 546 | <1% |
| Other assets | 2,615 | 2% | 2,201 | 2% |
| Non-current assets and assets of disposal groups classifi ed as held for sale |
236 | <1% | 248 | <1% |
| Total assets | 139,699 | 100% | 132,853 | 100% |
The increase of EUR 6.8 billion in our total assets to EUR 139.7 billion can be attributed principally to growth in our investment portfolio, including investments for the account and risk of holders of life insurance policies (+ EUR 5.1 billion).
Of the EUR 2.5 (2.6) billion in intangible assets shown on the balance sheet, EUR 1.4 (1.5) billion related to other intangible assets (including PVFP) and EUR 1.1 (1.1) billion to capitalised goodwill. Other intangible assets are recognised in their entirety in the Group. Excluding noncontrolling interests and the policyholders' portion, other intangible assets attributable to the Group are as follows:
| FIGURES IN EUR MILLION | ||
|---|---|---|
| 30.6.2014 | 31.12.2013 | |
| Other intangible assets before deduction of non-controlling interests and the policyholders' portion and including deferred taxes |
1,380 | 1,446 |
| thereof attributable to: non-controlling interests |
149 | 159 |
| thereof attributable to: policyholders' portion |
483 | 513 |
| thereof attributable to: deferred taxes |
141 | 148 |
| Other intangible assets after deduction of non-controlling interests and the policyholders' portion and excluding deferred taxes |
607 | 626 |
FIGURES IN EUR MILLION
The total investment portfolio has grown by 4.5% during the fi nancial year to EUR 105.5 (101.0) billion. Funds withheld by ceding companies were up on the beginning of the year at EUR 13.3 billion. The main increase was in assets under own management, which grew by EUR 3.9 billion. This growth was principally due to cash infl ows from underwriting business, which were reinvested in accordance with respective corporate guidelines. There were slight cash infl ows into investments under investment contracts, which totalled EUR 1.9 billion by the end of the second quarter.
Interest rates remain at a historically low level. Disinfl ation in Europe is the main argument being put forward for further support from central banks. The ECB cut the benchmark interest rate by 10 basis points to 0.15% in June. As a result, interest rates on the markets continued to decline in the second quarter of 2014; the decrease aff ected all maturities.
Changes in the exchange rate against the US dollar did not have a signifi cant impact on investments in the second quarter, as the rate at the end of the second quarter was USD 1.37 to the euro, roughly the same as in the previous quarter. Our holdings of investments in US dollars amounted to EUR 14.2 billion at the end of the quarter, representing 16% of assets under own management.
Fixed-income investments are once again the most signifi cant asset class. Most reinvestments occurred in this class. Fixed-income securities accounted for 77% of the total investment portfolio, and the contribution to earnings of this asset class amounted to EUR 1.6 billion. As far as possible, this was reinvested in the year under review.
A possible Argentine default would only have an insignifi cant impact on the Talanx Group, since the latter's total holdings of Argentine
FIGURES IN EUR MILLION
30.6.2014 31.12.2013 Investment property 1,801 2% 1,623 2% Investments in affi liated companies and participations 123 <1% 92 <1% Investments in associated companies and joint ventures 251 <1% 247 <1% Loans and receivables Loans incl. mortgage loans 957 1% 1,041 1% Loans and receivables due from governmental or quasi-governmental entities, together with fi xed-income securities 30,311 34% 31,190 36% Financial assets held to maturity 2,646 3% 2,984 3% Financial assets available for sale Fixed-income securities 47,544 53% 43,531 50% Variable-yield securities 1,474 2% 1,391 2% Financial assets at fair value through profi t or loss Financial assets classifi ed at fair value through profi t or loss Fixed-income securities 814 1% 797 1% Variable-yield securities 119 <1% 87 <1% Financial assets held for trading Fixed-income securities 4 <1% 4 <1% Variable-yield securities 86 <1% 120 <1% Derivatives 1) 79 <1% 82 <1% Other invested assets 4,043 4% 3,121 4% Total investments under own management 90,252 100% 86,310 100%
1) Derivatives only with positive fair values
investments amount to a mere EUR 14 million. The portfolio does not contain any Argentine government bonds.
Once again, equity exposure did not increase in the second quarter of 2014. The equity allocation aft er taking account of derivatives (equity ratio) was 1.1% at the end of the fi rst half of the year.
Although the "alternative investments" asset class and real estate still only constitute a small proportion of the total investment portfolio, they nevertheless diversifi ed and thus added stability to the various portfolios.
30.6.2014 31.12.2013
Interest rates remained low in the second quarter. The main risk factors for spreads related to the still unresolved debt problems in many countries, economic instability in Asia and geopolitical risks, particularly in Ukraine. We do not have any signifi cant holdings in Ukraine.
Fixed-income investments chiefl y comprised the traditional asset classes of government bonds, corporate securities and German covered bonds (Pfandbriefe). The Retail Germany segment sold bonds with a short residual term in 2013 to realise gains, which were then used to strengthen the additional interest reserve, and for policyholder participation in the valuation reserves. We continued this strategy in the fi rst half of 2014.
The portfolio of fi xed-income investments (excluding mortgage and policy loans) rose by EUR 2.8 billion in the fi rst half of 2014 and totalled EUR 81.3 billion at the end of the quarter. At 77% of total investments, this asset class continues to represent the most signifi cant share of our investments in terms of volume. Fixed-income investments were primarily divided into the investment categories of "Loans and receivables" and "Financial assets available for sale".
"Fixed-income securities available for sale", whose volatility impacts on shareholders' equity, increased signifi cantly (+EUR 4.0 billion) to EUR 47.5 billion, or 58% of total investments in the fi xed-income portfolio. Corporate securities accounted for the majority of these investments. Valuation reserves – i.e. the balance of unrealised gains and losses – have risen from EUR 1.3 billion to EUR 3.0 billion since the end of 2013, owing to the slight fall in interest rates.
Holdings in the "Loans and receivables" category declined during the fi rst half of the year and amounted to EUR 31.3 (32.2) billion at the end of the second quarter. This corresponds to 38% of total holdings in this asset class. Along with corporate securities and German covered bonds (Pfandbriefe), government bonds accounted for a signifi cant portion of holdings in this category. Off -balance sheet valuation reserves increased considerably from EUR 2.8 to 4.3 billion.
Group holdings in the "Financial assets held to maturity" category totalled EUR 2.6 (3.0) billion at the end of the second quarter. Having increased our holdings in this category in 2011 through restructuring, particularly in the Reinsurance segment, we undertook no further expansion in the half-year just ended. The option and intention of holding these investments to maturity enables companies to reduce the volatility in their balance sheets that is caused by movements in interest rates.
We continue to focus on government bonds with good ratings or securities from similarly sound issuers when investing in fi xedincome securities. Holdings of AAA-rated bonds stood at EUR 26.5 billion as at the balance sheet date, accounting for 32% of the total portfolio of fi xed-income securities and loans.
RATING OF FIXED-INCOME SECURITIES
The Talanx Group pursues a conservative investment policy. Of instruments in the fi xed-income securities asset class, 80% have a rating of A or above.
The Macaulay duration of the total fixed-income securities investment portfolio of the Talanx Group stood at 7.50 years as at 30 June 2014.
As far as matching currency cover is concerned, US dollar-denominated investments continue to account for the largest share (16%) of the foreign currency portfolio within the Talanx Group. The total share of assets under own management held in foreign currencies as at 30 June 2014 remained virtually unchanged at 29%.
European stock markets performed well in 2014. The EURO STOXX 50 reached 3,228 points on 30 June, up 3.8% compared with the beginning of the year. The DAX closed at 9,833 points, an increase of 2.9% compared with the start of the year.
The net balance of unrealised gains and losses on holdings within the Group (excluding "Other invested assets") rose slightly by EUR 41 million to EUR 307 (265) million.
Investment property totalled EUR 1.8 billion as at the balance sheet date. An additional EUR 555 million is held in real estate funds, which are recognised under "Financial assets available for sale". No signifi cant investments were made in the year to date. Depreciation of EUR 16 million was taken on investment property in the period under review. Impairments amounted to EUR 3 million. There were no write-ups to off set these write-downs in the period under review.
The real estate allocation, including investments in real estate funds, was 2 (2)%.
Holdings of alternative investments are still at a low level and serve to diversify the portfolio.
| FIGURES IN EUR MILLION | ||
|---|---|---|
| 6M 2014 | 6M 2013 | |
| Ordinary investment income | 1,554 | 1,553 |
| thereof current income from interest |
1,438 | 1,435 |
| thereof profi t/loss from shares in associated companies |
6 | 6 |
| Realised net gains on investments | 304 | 320 |
| Write-ups/write-downs on investments |
–16 | –36 |
| Unrealised net gains/losses on investments |
41 | –47 |
| Other investment expenses | 102 | 93 |
| Income from investments under own management |
1,781 | 1,697 |
| Interest income on funds withheld and contract deposits |
165 | 176 |
| Income from investment contracts | 2 | 4 |
| Total | 1,948 | 1,877 |
Net investment income for the fi rst half of the year amounted to EUR 1.9 billion, a slight increase on the previous year. We managed to keep current income stable despite low interest rates by expanding our portfolio. At EUR 1.4 billion, current income still accounts for the bulk of income. While gains of EUR 0.3 billion were realised on the disposal of investments, there were also lower write-downs of EUR 16 (36) million and higher unrealised gains than in the previous year of EUR 41 (–47) million.
Overall, realised net gains on investments were down slightly year-on-year in the fi rst half of the year, at EUR 304 (320) million. When comparing these fi gures with the previous year, it should be noted that the 2013 fi gure was impacted by a one-off eff ect from the partial sale of shares in Swiss Life Holding AG for approximately EUR 70 million. The positive net gains realised are mainly attributable to regular portfolio restructuring in all segments and the current low interest rates.
No signifi cant write-downs were necessary in the fi rst half of the year. Write-downs across all asset classes totalled EUR 26 (36) million, compared with write-ups of EUR 10 (0) million.
The unrealised net gain improved from –EUR 47 million to EUR 41 million in net terms. Across all segments, unrealised gains were mainly generated in the fi xed-income securities and derivatives asset categories. In the year to date, infl ation swaps entered into to hedge a portion of the infl ation risks associated with our underwriting loss reserve (Non-Life Reinsurance segment) have given rise to positive changes in fair value of EUR 4 million, which were recognised in profi t or loss. In contrast, negative changes in fair value of EUR 40 million were recognised in profi t or loss in the previous year.
The net result from interest income and expenses on funds withheld and contract deposits amounted to EUR 165 (176) million.
Net income for the fi rst half of 2014 is shown below broken down into Group segments. Contributions to earnings rose in all segments. The increase in the Retail Germany segment was mainly due to the realisation of hidden reserves on investments.
Net investment income in the Corporate Operations Group segment primarily comprises costs for the management of investments. The previous year's fi gures had also included gains realised on shareholdings.
For further comments, please see "Notes on the consolidated balance sheet", item 12 "Net investment income", in the Notes.
FINANCIAL POSITION
| FIGURES IN EUR MILLION | ||||
|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | |||
| Shareholders' equity | 11,925 | 9% | 11,181 | 9% |
| Subordinated liabilities | 2,358 | 2% | 3,107 | 2% |
| Technical provisions | 96,829 | 69% | 91,717 | 69% |
| Technical provisions for life insurance insofar as the investment risk is borne by policyholders |
8,896 | 6% | 8,325 | 6% |
| Other provisions | 3,247 | 2% | 3,095 | 2% |
| Liabilities | 14,070 | 10% | 13,446 | 10% |
| Provisions for deferred taxes | 2,136 | 2% | 1,749 | 1% |
| Liabilities of disposal groups classifi ed as held for sale |
238 | <1% | 233 | <1% |
| Total liabilities | 139,699 | 100% | 132,853 | 100% |
Provisions connected with the insurance business aft er consolidation and allowing for the shares of reinsurers can be broken down as follows:
FIGURES IN EUR BILLION
| 30.6.2014 | 31.12.2013 | |
|---|---|---|
| Unearned premium reserve | 6.3 | 5.0 |
| Benefi t reserve | 49.9 | 48.9 |
| Loss and loss adjustment expense reserve |
30.0 | 28.9 |
| Provision for premium refunds | 3.5 | 2.2 |
| Other technical provisions | 0.3 | 0.3 |
| Total | 90.0 | 85.3 |
Liabilities to policyholders must be covered by assets in at least the same amount. The proportion of net provisions relating to insurance business relative to total assets as at the balance sheet date, including funds withheld by ceding companies but excluding investments under investment contracts, stood at 87 (86)%. Provisions thus include surplus coverage in the amount of EUR 13.6 (13.9) billion.
Overall, net technical provisions rose by 5% or EUR 4.7 billion yearon-year. EUR 1.3 billion of this increase related to the unearned premium reserve, under which portions of premiums for subsequent insurance periods that are not yet due are reported, while EUR 1.3 billion was attributable to provisions for premium refunds and EUR 1.1 billion to loss and loss adjustment expense reserves. The increase was distributed mainly across the Retail Germany (+EUR 1.7 billion), Non-Life Reinsurance (+EUR 1.1 billion) and Retail International (+EUR 0.8 billion) segments.
In the reporting period just ended, shareholders' equity grew by EUR 744 million – or 7% – to EUR 11,925 (11,181) million.
The Group's share (shareholders' equity excluding non-controlling interests) amounted to EUR 7,645 (7,184) million. Major movements in shareholders' equity were driven by the following factors:
Net income for the period attributable to our shareholders totalled EUR 381 million and was allocated in full to retained earnings.
"Cumulative other comprehensive income and other reserves" increased by EUR 382 million compared with 31 December 2013, to EUR 570 million. This change was mainly due to a rise in unrealised gains/losses on investments, which grew by EUR 1,207 million to EUR 2,476 (1,269) million as a result of the slight decline in interest rates since the end of the year. Other changes in shareholders' equity had a compensatory eff ect, declining from –EUR 906 million to –EUR 1,954 million. Of the change of –EUR 1,048 million, –EUR 897 million related to policyholder participation/shadow accounting and –EUR 151 million to underwriting gains and losses from pension provisions. Cumulative gains/losses from currency translation improved by EUR 54 million, from –EUR 209 million to –EUR 155 million. The cash fl ow hedge reserve grew to EUR 203 (34) million, mainly owing to interest rates.
In contrast, payment of the dividend to Talanx AG shareholders in May of the period under review led to a decrease of EUR 303 (265) million in shareholders' equity.
Non-controlling interests in shareholders' equity increased by EUR 283 million – or 7% – to EUR 4.3 billion. The non-controlling interest share in net income amounted to EUR 276 (6M 2013: 262) million. The dividend payment to non-Group shareholders totalling EUR 245 (6M 2013: 257) million stemmed mainly from the Hannover Re Group.
FIGURES IN EUR MILLION
| 30.6.2014 | 31.12.2013 1) | |
|---|---|---|
| Common shares | 316 | 316 |
| Additional paid-in capital | 1,373 | 1,373 |
| Retained earnings | 5,386 | 5,307 |
| Cumulative other comprehensive income and other reserves |
570 | 188 |
| Group shareholders' equity | 7,645 | 7,184 |
| Non-controlling interests in shareholders' equity |
4,280 | 3,997 |
| Total | 11,925 | 11,181 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
FIGURES IN EUR MILLION
| 30.6.2014 | 31.12.2013 2) | |
|---|---|---|
| Segment | ||
| Industrial Lines | 2,016 | 1,867 |
| thereof non-controlling interests | — | — |
| Retail Germany | 2,768 | 2,596 |
| thereof non-controlling interests | 63 | 61 |
| Retail International | 2,084 | 1,948 |
| thereof non-controlling interests | 239 | 237 |
| Reinsurance | 7,060 | 6,519 |
| thereof non-controlling interests | 3,996 | 3,717 |
| Corporate Operations | –1,992 | –1,739 |
| thereof non-controlling interests | — | — |
| Consolidation | –11 | –10 |
| thereof non-controlling interests | –18 | –18 |
| Total shareholders' equity | 11,925 | 11,181 |
| Group shareholders' equity | 7,645 | 7,184 |
| Non-controlling interest in shareholders' equity |
4,280 | 3,997 |
1) The diff erence between the assets and liabilities of each segment
2) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
Note: In the interests of simplicity the non-controlling interests in equity for the Reinsurance Division are derived from Group non-controlling interests in Hannover Re; for this purpose, the two reinsurance segments are combined.
The Corporate Operations segment posted a negative value that refl ects Talanx AG's debt leverage. As the Group's holding company, Talanx AG performs a fi nancing function for the Group in the primary insurance sector and for the companies in Corporate Operations. The liabilities concerned are mainly retirement pension provisions amounting to EUR 1,060 (939) million, liabilities from the utilisation of credit lines of EUR 270 (150) million, notes payable of EUR 565 (565) million and provisions for taxes totalling EUR 145 (145) million. These liabilities are off set on Talanx AG's balance sheet by liquid assets and, above all, by the value of its participations in subsidiaries, which are consolidated against the pro rata equity of the subsidiaries in the consolidated fi nancial statements.
Our subordinated bonds and debentures (abbreviated here to "subordinated bonds") complement shareholders' equity. Their purpose is to optimise the cost of capital and help ensure liquidity at all times. We refer to these subordinated bonds and other bank borrowings that serve to fi nance corporate acquisitions as "strategic debt".
The bond with a nominal value of EUR 750 million issued on 26 February 2004 through Hannover Finance (Luxembourg) S. A. was called by the issuer with eff ect from the fi rst regular redemption date in the amount of the entire nominal sum and was repaid on 26 February 2014. As a result, subordinated liabilities totalled EUR 2.4 (3.1) billion as at the balance sheet date. Furthermore, the Group announced on 26 June 2014 that HDI-Gerling Industrie Versicherung AG, Hannover, will repay the nominal amount of its EUR 250 million subordinated bond, which runs until 2024, early at the fi rst possible date. The redemption date is 12 August 2014. Further information can be found in the section "Events aft er the end of the reporting period" under "Other information" in the Notes.
Credit lines with a nominal volume of EUR 1.25 billion were in place as at 31 March 2014. As at the balance sheet date, the two syndicated fl oating-rate lines of credit were drawn down by EUR 270 (150) million. Existing syndicated credit lines can be terminated by the lenders if there is a change of control, i.e. if a person or persons acting jointly, other than HDI Haft pfl ichtverband der Deutschen Industrie V. a. G., gains direct or indirect control over more than 50% of the voting rights or share capital of Talanx AG. In addition, a senior unsecured bond exists with a volume of EUR 750 million, of which EUR 185 million is held by Group companies, as well as long-term loans, principally mortgage loans, amounting to EUR 287 (227) million. More detailed information can be found in the Notes under "Notes on the consolidated balance sheet", item 10 "Notes payable and loans".
Talanx AG issued another senior unsecured bond with a volume of EUR 500 million on the Luxembourg stock exchange on 23 July (see our comments in the Notes in the section "Events aft er the end of the reporting period" under "Other information").
We consider opportunity and risk management to be one of our core tasks. A central mandate performed by Talanx AG is comprehensive monitoring and precise management of our risk position within the Group and the divisions, with the aim of avoiding developments that could jeopardise the Group's continued existence while at the same time maximising available opportunities.
Derived from our corporate strategy, our risk strategy formulates the objectives and structure of our risk management. Our acceptance of risks is governed by the Board of Management's guidelines and decisions concerning the Group's risk budget. Our risk strategy is a stand-alone set of rules that provides the foundation for Groupwide risk management. It is, in conjunction with value-oriented management, an integral component of our entrepreneurial activities and is refl ected in the detailed strategies of the various divisions.
As an international insurance and fi nancial services group, we consciously enter into a wide range of risks that are inextricably linked to our business activities. Both our corporate strategy and our risk strategy are subject to an established review process. Through this scrutiny of our assumptions and, if necessary, adjustment of the strategy, we seek to ensure that our strategic guidelines are appropriate at all times and hence that actions are based on adequate information.
The Talanx Group satisfi es all currently applicable regulatory solvency requirements.
The interplay of the individual functions and bodies within the overall system is vital to an effi cient risk management system. Talanx has defi ned the roles and responsibilities as follows:
| GROUP RISK MANAGEMENT SYSTEM | |
|---|---|
| Management element | Key risk management tasks |
| Supervisory Board | ¡ Advising and monitoring the Board of Management in its management of the company, inter alia with respect to risk strategy and risk management |
| Board of Management | ¡ Overall responsibility for risk management ¡ Defi ning the risk strategy ¡ Responsibility for proper functioning of risk management |
| Risk Committee | ¡ Risk-monitoring and coordinating body, charged especially with the following tasks: ¡ Critical observation and analysis of the risk position of the Group as a whole, with particular attention paid to the risk budget approved by the Board of Management and the risk strategy ¡ Monitoring of management measures within the Group with a focus on risks that could threaten the Group's continued existence |
| Chief Risk Offi cer | ¡ Responsible for holistic monitoring across divisions (systematic identifi cation and assessment, control/monitoring and reporting) of all risks that are material from a Group perspective ¡ Chairman of the Risk Committee ¡ Option to participate in meetings of the Board of Management when there are items on the agenda relating to risk |
| Central Risk Management | ¡ Group-wide, independent risk monitoring function ¡ Methodological competence, inter alia for ¡ Development of processes/methods for risk assessment, management and analysis ¡ Risk limitation and reporting ¡ Risk monitoring and quantifying the risk capital needed across the Group |
| Local Risk Management | ¡ Risk monitoring function in the divisions ¡ Observance of the centrally defi ned guidelines, methods and processes and systems of limits and thresholds that serve as a framework for local implementation, monitoring and reporting |
| Compliance | ¡ Analysis of compliance risk, based on early identifi cation, assessment and communication of relevant changes in the legal framework ¡ Establishment and refi nement of suitable structures for ensuring compliance with applicable legal standards and the rules applied by the Group |
| Actuarial function | ¡ Coordination of and comments on the calculation of underwriting provisions ¡ Ensuring the calculations and the assumptions and methods used are appropriate |
| Group Auditing | ¡ Process-independent review of the functional areas of the Group |
In addition to these (risk) functions and bodies, organisational structures have been set up to deal with special issues, e.g. task forces for managing contingencies and crises.
Further information on risk management can be found in the Group Annual Report 2013.
The Talanx Group's risk situation can be broken down into the risk categories described below; they are based on German Accounting Standard DRS 20.
| Risk category | Material risks | Major risk management measures |
|---|---|---|
| Underwriting risks | ||
| Across segments | ||
| ¡ Concentration risk | ¡ Risk balancing through diversifi cation | |
| Property/casualty primary insurance and non-life reinsurance | ||
| ¡ Actual claims experience diverges from the expected claims experience (premium/loss risk) ¡ Technical provisions do not suffi ce to fully pay for claims that have not yet been settled or reported |
¡ Claims analysis and regular monitoring of the claims experience ¡ Actuarial modelling and monitoring of the natural hazards exposure ¡ Selective underwriting ¡ Technical audits ¡ Commensurate reinsurance protection ¡ Establishment of IBNR reserves ¡ External actuarial review of provisions |
|
| Life primary insurance | ||
| ¡ Changes in biometric actuarial bases ¡ Interest guarantee risk under life insurance contracts with guaranteed interest payments ¡ Lapse risks |
¡ Regular review of the biometric actuarial bases ¡ Factoring of safety loadings into the actuarial bases ¡ Constant monitoring of investments and markets, initiation of appropriate steering measures, especially with regard to duration ¡ Interest rate hedges ¡ Adjustment of the surplus distribution ¡ Cost controlling, focus on variable sales costs ¡ Careful selection of intermediaries ¡ Systematic monitoring of the MCEV ¡ Review of structure and volumes of new business |
|
| Life/Health Reinsurance | ||
| ¡ Changes in biometric actuarial bases ¡ Lapse and credit risk in connection with the prefi nancing of cedants' new business acquisition costs |
¡ Use of secure biometric actuarial bases ¡ Systematic monitoring of the MCEV |
|
| Default risks under insurance business | ||
| Across segments | ||
| ¡ Risk of default on receivables due from reinsurers, retrocessionaires, policyholders and insurance agents |
¡ Careful selection of reinsurers and retrocessionaires ¡ Constant monitoring of credit status ¡ Measures to secure receivables ¡ Consistent and uniform use of rating information relating to the balance sheet date through a rating information system that can be accessed throughout the Group ¡ Eff ective dunning and reduction of outstandings ¡ Establishment of adequate bad debt provisions |
|
| Investment risks | ||
| Across segments | ||
| ¡ Potential losses due to adverse changes in market prices (interest rates, real estate, share prices and exchange rates) ¡ Losses of value due to adverse changes in the credit status of debtors ¡ Illiquidity risk: holdings/open positions cannot be sold or closed or can only be sold/closed with delays/ price mark-downs |
¡ Monitoring and management of market price risks using the value at risk (VaR) ¡ Performance of enterprise-specifi c stress tests and those required by regulators ¡ Matching currency coverage ¡ Reviews of assets and liabilities using ALM/VaR ¡ Inclusion of ratings (rating agencies, internal ratings) in investment decisions ¡ Monitoring and management of credit risks using the credit VaR |
| Risk category | Material risks | Major risk management measures |
|---|---|---|
| Operational risks | ||
| Across segments | ||
| ¡ Risk of losses due to the failure of persons, (IT) systems or processes or on account of external events (including legal risks) |
¡ Multi-faceted and cause-based risk management ¡ Internal control system |
|
| Other risks | ||
| ¡ Participation risks of Talanx AG: instability in the performance of subsidiaries and/or the portfolio of participating interests ¡ Risk of asset erosion of acquisitions |
¡ Appropriate tools in the areas of controlling, internal auditing and risk management ¡ Segmental and regional diversifi cation ¡ Investments in growth markets and in product and portfolio segments that stabilise results ¡ Due diligence checks ¡ Liquidity analyses and forecasts ¡ M&A committees |
|
| ¡ Possible need to establish additional reserves in connection with pension obligations of Talanx AG |
¡ Regular reviews of the adequacy of actuarial bases | |
| Across segments | ||
| ¡ Emerging risks, the content of which is not as yet reliably known and the implications of which are diffi cult to assess |
¡ Various management measures, such as reinsurance, diversifi cation, risk exclusions, safety margins, contingency plans, etc. |
|
| ¡ Strategic risks: the risk of an imbalance between the corporate strategy and the constantly changing general business environment |
¡ At least annual review of the corporate and risk strategy ¡ Adjustment of processes and structures as required |
|
| ¡ Reputational risks: possible damage to the company's name as a consequence of an unfavourable public perception |
¡ Set communication channels ¡ Professional approach to corporate communications ¡ Tried and tested processes for defi ned crisis scenarios ¡ Established Code of Conduct |
Risk reporting in the interim report mainly focuses on relevant changes in the risk position that have occurred since the compilation of the Talanx Group Annual Report 2013. For a thorough presentation of the various types of risk, which is omitted here, the reader is referred to the information contained in the Annual Report.
No material changes in the risk position have occurred since the Annual Report was published, and no defi nite risks are as yet discernible that could have a signifi cant negative impact on the Talanx Group's assets, fi nancial position or net income.
Nevertheless, persistently low interest rates could lead to substantial burdens on net income in parts of the life insurance business, owing to increased interest guarantee risk and reinvestment risk. In particular, this poses a risk to the Group's life insurers and occupational pension scheme providers that draw up fi nancial statements according to the German Commercial Code (HGB), in that they may need to boost provisions for interest payments.
The Group has already been strengthening its reserves since 2011 in the form of the additional interest reserve, which is regulated by law. In addition, the Group reduces the interest guarantee risk primarily through regular analyses of its assets and liabilities, by constantly monitoring the investment portfolios and capital markets and by taking appropriate countermeasures. Interest rate hedging instruments such as book yield notes and forward purchases are also sometimes used.
Natural catastrophe risks also constitute signifi cant risks for the Talanx Group. The Group protects itself against peak exposures to such risks by using carefully and individually selected reinsurance coverage. This enables us to limit large individual losses and the impact of accumulation events eff ectively and thereby to plan for them.
There is still considerable uncertainty, at least in abstract terms and even if it has recently decreased, as to whether risks associated with the sovereign debt crisis could take an even more concrete form in future and have a lasting impact on the assets, fi nancial position or net income of the Talanx Group.
Operational risks are also important to the Talanx Group. We defi ne these as the risk of losses occurring due to the inadequacy or failure of internal processes, or as a result of events triggered by employeerelated, system-induced, or external factors. This includes operational risks in connection with investments including unit-linked life insurance policies, as well as risks relating to data protection, antitrust law and other legal risks.
Legal risks represent signifi cant risks for the Talanx Group in the area of life insurance in particular. Regulatory reforms, e.g. in connection with IFRS and Solvency II, are identifi ed at an early stage in order to fulfi l stricter requirements. In addition, we closely monitor developments in rulings of the Federal Court of Justice and changes in the law that aff ect Group companies.
For example, on 19 December 2013, the European Court of Justice clarifi ed a legal issue in connection with the policy model that applied to insurance contracts from 1994 to 2007. The court ruled that the statutory period that applied at the time (§ 5 Para. 2 Sentence 4 of the VVG [old version]) – aft er the expiry of which policyholders could no longer revoke the insurance policy – was incompatible with EU law (see the Talanx Group Annual Report 2013 for details). As one of the legal consequences of this decision, the Federal Court of Justice ruled on 7 May 2014 that life insurance policyholders can still exercise their right to object aft er the expiry of the period set out in § 5a Para. 2 Sentence 4 of the VVG (old version) in the case that insuffi cient information had been provided on the right to object, or that no consumer information or insurance terms and conditions had been provided. The actual claim resulting from such an objection, as well as the number of policyholders who will take the ruling as a precedent is, however, still unclear. This means that any assessment of this risk is currently subject to considerable uncertainties.
In addition, the adoption of the Life Insurance Reform Act (LVRG) not only reduces participation in the valuation reserves but also introduces amendments that are disadvantageous to the insurance industry. The precise eff ects of the change to the law are currently being analysed.
The economic recovery in the Eurozone is likely to continue at a moderate level in the coming quarters. The upturn is being supported by the consolidation of public fi nances and labour market reforms. A more stable macroeconomic foundation is becoming increasingly apparent. The Eurozone's trade balance is displaying clear structural improvements, with peripheral countries in particular becoming net exporters. As economic confi dence returns, an increase in lending is also likely. We therefore expect modest growth in the Eurozone for 2014.
We still expect the US economy, which is growing steadily, to boost momentum generally in the Eurozone. Its solid economic growth is particularly apparent on the real estate and, increasingly, the labour markets. The real estate market and improved conditions on the labour market are expected to continue propping up private household spending; fl anked by higher property values, disposable US household income has increased signifi cantly.
The upturn in emerging countries has recently lost momentum. We believe that these markets are facing structural and cyclical challenges, and that growth rates are likely to be very varied. A positive note is that currency reserves are oft en high, while overall debt is low.
The ECB's monetary policy is likely to remain expansionary due to low infl ation rates, high unemployment, and in some cases very moderate growth rates.
The geopolitical risks and the expansionary monetary policy pursued by the ECB lead us to expect continuing low interest rates in the medium term. Legal and political pressure on the ratings agencies is likely to result in even more cautious and, in case of doubt, lower ratings in the future.
Valuation levels on the European and US stock markets have risen signifi cantly, which means that potential for growth in share prices is limited. We are also seeing the fi rst signs of a possible phase of exaggeration in the USA: M&A volumes have increased signifi cantly and valuations in the technology sector are currently linked to expectations of high growth.
We are making the following assumptions:
Based on steady exchange rates, the Talanx Group is aiming for yearon-year gross premium growth of 2% to 3% for 2014 as a whole, with most of this generated outside Germany. Based on disposal gains realised in the fi rst half of the year, the IFRS net return on investment should be at least 3.4% in 2014, with by far the largest contribution coming from ordinary income. We are aiming for Group net income of at least EUR 700 million for 2014. It follows that we expect return on equity to be around 10%, thereby meeting our strategic target of 750 basis points in excess of the average risk-free interest rate. This profi t target assumes that any major losses will be within the expected range and that there will be no disruptions to currency and capital markets. Our express aim is to pay out 35% to 45% of Group net income as dividends.
As our domestic market penetration is already high, the best opportunities for growth in this segment are still to be found outside Germany. For this reason, we intend to continue our eff orts in 2014 to make HDI-Gerling Industrie Versicherung AG into a global player. Europe-wide, we aim to expand our industrial insurance business in the fi elds of local business, small and medium enterprises and international insurance programmes. Our target regions outside Europe continue to be Latin America, (South-)East Asia and the Arabian peninsula. Particularly as a result of the continuing increase in international business, we expect gross premium growth overall of 3% to 5% based on steady exchange rates. To enable us to refl ect a disproportionate benefi t from achieved premium growth in the result, we will continue in 2014 to follow our strategic aim of gradually raising retention. The segment's strong capital position should probably make it possible to increase the retention ratio to at least 50%. We expect a combined ratio towards the upper end of our forecast range (96% to 98%) for the fi nancial year as a whole, due to disproportionately high utilisation of the major loss budget in the fi rst six months. The EBIT margin should amount to over 10% and the return on equity should be in the region of 8%, as equity has risen in relation to the original forecast while expected profi t has remained stable.
We anticipate that gross written premium in the Retail Germany Group segment will fall slightly by 1% to 2% in 2014, due in particular to life business treaties maturing and further improvements in motor insurance profi tability. With regard to new life insurance business, we aim to improve the proportion of term life products and the fl exibility of guarantee products. We are targeting a new business margin of at least 2%. Key components of the future German Life Insurance Reform Act (LVRG), such as the reduction of the maximum technical interest rate, recognition of the eff ective costs of contracts and the reduction of the maximum zillmeri sation rate are not expected to take eff ect before 1 January 2015. The limits on customer participation in valuation reserves, which will enter into force as soon as the LVRG is adopted, are relevant to life insurers in this area of business. The amount of future distributions from the revaluation reserve is heavily dependent on changes in interest rates, and varies from company to company. However, no signifi cant impact on earnings for the current fi nancial year is expected in this regard. In the property/casualty business we anticipate a combined ratio of around 101%, due to the disproportionally high utilisation of the major loss budget in the fi rst half of the year. We forecast an EBIT margin of around 3% for 2014, meaning that the return on equity should be in the region of 4%.
In the Retail International Group segment we are aiming for growth in gross written premium in 2014 of 4% to 8%, as long as there are no material exchange rate fl uctuations. We expect growth in the value of new business in 2014 to be between 5% and 10%, in line with our strategic target. The combined ratio for 2014 should be no higher than 96%; the expected EBIT margin of at least 5% is likely to be positively infl uenced by the synergy created from merging with the Polish WARTA companies. Integration is expected to be completed in 2014 and should lead to further synergistic eff ects in subsequent years. In addition, we expect return on equity for 2014 to be in excess of 6%.
The business climate in the international (re)insurance industry remains challenging. On the one hand, the continuing low interest rates make it more diffi cult to generate attractive investment income. On the other, reinsurers are faced with a much more competitive environment than in previous years. We are well positioned to master the diffi cult conditions thanks to our conservative reserving policy, broadly diversifi ed investment strategy and selective underwriting policy in non-life reinsurance.
We expect premium volume in non-life reinsurance to remain more or less stable in 2014 as a whole. We shall not make any concessions as far as our systematic underwriting discipline is concerned and we will continue to reduce our business share where risks are not adequately priced. We have set a target of under 96% for our combined ratio and are still aiming for an EBIT margin of at least 10%. We report the return on equity for the Reinsurance Division as a whole; this fi gure should be around 15% in 2014.
In life and health reinsurance, we expect positive growth and attractive business opportunities in the second half of the year. This also includes the continued stabilisation of earnings in our Australian disability business. In the industrialised nations we are facing new challenges in the form of the highly complex and still partially uncertain solvency regulations such as the Solvency II Directive and are expecting increased demand for the corresponding reinsurance coverage in the fi nancial solutions area. The focus will be on reinsurance solutions that contribute at an individual level to reducing our customers' capital burdens and optimise their solvency situations. Demand for longevity products should remain at high levels due to demographic change. These products should also see increasing interest in Asian countries, thanks to an ageing population and growing affl uence. In Germany it is expected that future developments in the traditional life insurance market will depend heavily on the practical implementation of the legislative reforms currently under discussion, including participation in the revaluation reserves and the reduction in the guaranteed interest rate, among other factors.
In life and health reinsurance, we are anticipating that organic gross premium growth adjusted for exchange rate eff ects will amount to a low single-digit percentage in 2014. In the Australian group insurance business we managed to achieve our asking prices. Here, too, we will systematically avoid business where risk cannot be incurred at adequate prices. The value of new business (excluding non-controlling interests) should exceed EUR 90 million. We are aiming for an EBIT margin of at least 2% in the fi nancial solutions and longevity reporting categories. The objective for our mortality and morbidity business remains an EBIT margin of 6%. Return on equity for the Reinsurance Division should be around 15% in 2014.
There has been no material change in opportunities since the 2013 reporting year. Please refer to the Talanx Group Annual Report 2013 with regard to this.
FIGURES IN EUR MILLION Notes 30.6.2014 31.12.20131) A. Intangible assets 1 a. Goodwill 1,109 1,105 b. Other intangible assets 1,380 1,446 2,489 2,551 B. Investments a. Investment property 1,801 1,623 b. Investments in affi liated companies and participating interests 123 92 c. Investments in associated companies and joint ventures 251 247 d. Loans and receivables 2 31,268 32,231 e. Other fi nancial instruments i. Held to maturity 3 2,646 2,984 ii. Available for sale 4/6 49,018 44,922 iii. At fair value through profi t or loss 5/6 1,102 1,090 f. Other invested assets 6 4,043 3,121 Investments under own management 90,252 86,310 g. Investments under investment contracts 1,948 1,758 h. Funds withheld by ceding companies 13,328 12,894 Investments 105,528 100,962 C. Investments for the account and risk of holders of life insurance policies 8,896 8,325 D. Reinsurance recoverables on technical provisions 7,158 6,604 E. Accounts receivable on insurance business 5,744 5,039 F. Deferred acquisition costs 4,492 4,513 G. Cash 1,883 1,864 H. Deferred tax assets 658 546 I. Other assets 2,615 2,201 J. Non-current assets and assets of disposal groups classifi ed as held for sale 2) 236 248 Total assets 139,699 132,853
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors" 2) Cf. our remarks in the section "Non-current assets held for sale and disposal groups" of the Notes
FIGURES IN EUR MILLION
| Notes | 30.6.2014 | 31.12.2013 1) | |||
|---|---|---|---|---|---|
| A. Shareholders' equity | 7 | ||||
| a. Common shares | 316 | 316 | |||
| Nominal value: 316 (previous year: 316) Conditional capital: 104 (previous year: 104) |
|||||
| b. Reserves | 7,329 | 6,868 | |||
| Shareholders' equity excluding non-controlling interests | 7,645 | 7,184 | |||
| d. Non-controlling interests in shareholders' equity | 4,280 | 3,997 | |||
| Total shareholders' equity | 11,925 | 11,181 | |||
| B. Subordinated liabilities | 8 | 2,358 | 3,107 | ||
| C. Technical provisions | 9 | ||||
| a. Unearned premium reserve | 7,117 | 5,678 | |||
| b. Benefi t reserve | 50,797 | 49,767 | |||
| c. Loss and loss adjustment expense reserve | 35,095 | 33,775 | |||
| d. Provision for premium refunds | 3,508 | 2,178 | |||
| e. Other technical provisions | 312 | 319 | |||
| 96,829 | 91,717 | ||||
| D. Technical provisions in the area of life insurance insofar as the investment risk is borne by policyholders |
8,896 | 8,325 | |||
| E. Other provisions | |||||
| a. Provisions for pensions and similar obligations | 1,921 | 1,696 | |||
| b. Provisions for taxes | 714 | 711 | |||
| c. Sundry provisions | 612 | 688 | |||
| 3,247 | 3,095 | ||||
| F. Liabilities | |||||
| a. Notes payable and loans | 10 | 1,122 | 942 | ||
| b. Funds withheld under reinsurance treaties | 5,599 | 5,535 | |||
| c. Other liabilities | 6 | 7,349 | 6,969 | ||
| 14,070 | 13,446 | ||||
| G. Deferred tax liabilities | 2,136 | 1,749 | |||
| H. Liabilities of disposal groups classifi ed as held for sale 2) | 238 | 233 | |||
| Total liabilities/provisions | 127,774 | 121,672 | |||
| Total liabilities | 139,699 | 132,853 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
2) Cf. our remarks in the section "Non-current assets held for sale and disposal groups" of the Notes
| FIGURES IN EUR MILLION | |||||
|---|---|---|---|---|---|
| Notes | 6M 2014 | 6M 2013 1) | Q2 2014 | Q2 2013 1) | |
| 1. Gross written premium including premium from unit-linked life and annuity insurance |
14,975 | 14,966 | 6,561 | 6,508 | |
| 2. Savings elements of premiums from unit-linked life and annuity insurance | 526 | 583 | 307 | 325 | |
| 3. Ceded written premium | 1,959 | 1,899 | 590 | 736 | |
| 4. Change in gross unearned premium | –1,379 | –1,344 | 340 | 352 | |
| 5. Change in ceded unearned premium | –197 | –358 | 295 | 16 | |
| Net premium earned | 11 | 11,308 | 11,498 | 5,709 | 5,783 |
| 6. Claims and claims expenses (gross) | 10,629 | 10,332 | 5,316 | 5,354 | |
| Reinsurers' share | 1,343 | 971 | 771 | 643 | |
| Claims and claims expenses (net) | 14 | 9,286 | 9,361 | 4,545 | 4,711 |
| 7. Acquisition costs and administrative expenses (gross) | 2,980 | 3,000 | 1,606 | 1,583 | |
| Reinsurers' share | 242 | 268 | 90 | 129 | |
| Acquisition costs and administrative expenses (net) | 15 | 2,738 | 2,732 | 1,516 | 1,454 |
| 8. Other technical income | 24 | 27 | –5 | 14 | |
| Other technical expenses | 83 | 148 | 48 | 96 | |
| Other technical result | –59 | –121 | –53 | –82 | |
| Net technical result | –775 | –716 | –405 | –464 | |
| 9. a. Income from investments | 1,977 | 1,948 | 946 | 1,067 | |
| b. Expenses for investments | 196 | 251 | 91 | 154 | |
| Net income from investments under own management | 1,781 | 1,697 | 855 | 913 | |
| Income/expense from investment contracts | 2 | 4 | 2 | 2 | |
| Net interest income from funds withheld and contract deposits | 165 | 176 | 81 | 87 | |
| Net investment income | 12/13 | 1,948 | 1,877 | 938 | 1,002 |
| thereof income/expense from associated companies and joint ventures recognised using the equity method |
6 | 6 | 2 | 5 | |
| 10. a. Other income | 338 | 394 | 110 | 164 | |
| b. Other expenses | 506 | 523 | 192 | 197 | |
| Other income/expenses | 16 | –168 | –129 | –82 | –33 |
| Profi t before goodwill impairments | 1,005 | 1,032 | 451 | 505 | |
| 11. Goodwill impairments | — | — | — | — | |
| Operating profi t/loss (EBIT) | 1,005 | 1,032 | 451 | 505 | |
| 12. Financing costs | 89 | 104 | 41 | 54 | |
| 13. Taxes on income | 259 | 256 | 121 | 128 | |
| Net income | 657 | 672 | 289 | 323 | |
| thereof attributable to non-controlling interests | 276 | 262 | 124 | 119 | |
| thereof attributable to shareholders of Talanx AG | 381 | 410 | 165 | 204 | |
| Earnings per share | |||||
| Basic earnings per share (fi gures in EUR) | 1.51 | 1.62 | 0.65 | 0.81 | |
| Diluted earnings per share (fi gures in EUR) | 1.51 | 1.62 | 0.65 | 0.81 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
| 6M 2014 | 6M 2013 1) | Q2 2014 | Q2 2013 1) | |
|---|---|---|---|---|
| Net income | 657 | 672 | 289 | 323 |
| Not reclassifi able in the consolidated statement of income | ||||
| Actuarial gains (losses) on pension provisions | ||||
| Gains (losses) recognised in other comprehensive income during the period | –228 | –18 | –72 | 2 |
| Tax income (expense) | 69 | 6 | 22 | — |
| –159 | –12 | –50 | 2 | |
| Changes in policyholder participation/shadow accounting | ||||
| Gains (losses) recognised in other comprehensive income during the period | 9 | 1 | 3 | 1 |
| Tax income (expense) | — | — | — | — |
| 9 | 1 | 3 | 1 | |
| Total non-reclassifi able income (expenses) after taxes recognised in other comprehensive income during the period |
–150 | –11 | –47 | 3 |
| Reclassifi able in the consolidated statement of income | ||||
| Unrealised gains and losses from investments | ||||
| Gains (losses) recognised in other comprehensive income during the period | 2,018 | –847 | 1,068 | –834 |
| Shifted to the consolidated statement of income | –228 | –199 | –84 | –134 |
| Tax income (expense) | –295 | 219 | –163 | 201 |
| 1,495 | –827 | 821 | –767 | |
| Currency translation | ||||
| Gains (losses) recognised in other comprehensive income during the period | 102 | –246 | 101 | –299 |
| Shifted to the consolidated statement of income | — | –4 | — | — |
| Tax income (expense) | –10 | 14 | –9 | 25 |
| 92 | –236 | 92 | –274 | |
| Changes in policyholder participation/shadow accounting | ||||
| Gains (losses) recognised in other comprehensive income during the period | –1,022 | 331 | –576 | 284 |
| Tax income (expense) | 36 | –11 | 19 | –8 |
| –986 | 320 | –557 | 276 | |
| Changes from cash fl ow hedges | ||||
| Gains (losses) recognised in other comprehensive income during the period | 193 | –48 | 98 | –43 |
| Shifted to the consolidated statement of income | — | — | — | — |
| Tax income (expense) | –8 | 1 | –4 | 1 |
| 185 | –47 | 94 | –42 | |
| Changes attributable to equity-accounted investments | ||||
| Gains (losses) recognised in other comprehensive income during the period | — | –1 | — | –1 |
| Shifted to the consolidated statement of income | — | — | — | — |
| — | –1 | — | –1 | |
| Other changes | ||||
| Gains (losses) recognised in other comprehensive income during the period | — | — | — | –1 |
| Shifted to the consolidated statement of income | — | — | — | — |
| Tax income (expense) | — | — | — | — |
| — | — | — | –1 | |
| Total reclassifi able income (expenses) after taxes recognised in other comprehensive income during the period |
786 | –791 | 450 | –809 |
| Income (expenses) after taxes recognised in other comprehensive income during the period | 636 | –802 | 403 | –806 |
| Total comprehensive income during the period | 1,293 | –130 | 692 | –483 |
| thereof attributable to non-controlling interests | 530 | –29 | 276 | –178 |
| thereof attributable to shareholders of Talanx AG | 763 | –101 | 416 | –305 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
FIGURES IN EUR MILLION
| Common shares | Additional paid-in capital |
Retained earnings | |
|---|---|---|---|
| 2013 | |||
| As at 31.12.2012 | 316 | 1,369 | 4,830 |
| Adjustments on the basis of IAS 8 1) | — | — | –18 |
| As at 1.1.2013 adjusted | 316 | 1,369 | 4,812 |
| Changes in ownership interest without change of control status | — | — | –1 |
| Other changes in scope of consolidation | — | — | — |
| Net income 1) | — | — | 410 |
| Income and expenses recognised in other comprehensive income | — | — | — |
| thereof not reclassifi able | — | — | — |
| thereof actuarial gains or losses on pension provisions | — | — | — |
| thereof changes in policyholder participation/shadow accounting | — | — | — |
| thereof reclassifi able | — | — | — |
| thereof unrealised gains and losses from investments | — | — | — |
| thereof currency translation 1) | — | — | — |
| thereof change from cash fl ow hedges | — | — | — |
| thereof change in equity-accounted investments | — | — | — |
| thereof sundry changes 1), 2) | — | — | — |
| Total comprehensive income | — | — | 410 |
| Capital increase | — | — | — |
| Capital reduction | — | — | — |
| Dividends to shareholders | — | — | –265 |
| As at 30.6.2013 | 316 | 1,369 | 4,956 |
| 2014 | |||
|---|---|---|---|
| As at 31.12.2013 | 316 | 1,373 | 5,337 |
| Adjustments on the basis of IAS 8 1) | — | — | –30 |
| As at 1.1.2014 adjusted | 316 | 1,373 | 5,307 |
| Changes in ownership interest without change of control status | — | — | 1 |
| Other changes in scope of consolidation | — | — | — |
| Net income | — | — | 381 |
| Income and expenses recognised in other comprehensive income | — | — | — |
| thereof not reclassifi able | — | — | — |
| thereof actuarial gains or losses on pension provisions | — | — | — |
| thereof changes in policyholder participation/shadow accounting | — | — | — |
| thereof reclassifi able | — | — | — |
| thereof unrealised gains and losses from investments | — | — | — |
| thereof currency translation | — | — | — |
| thereof change from cash fl ow hedges | — | — | — |
| thereof change in equity-accounted investments | — | — | — |
| thereof sundry changes 2) | — | — | — |
| Total comprehensive income | — | — | 381 |
| Dividends to shareholders | — | — | –303 |
| As at 30.6.2014 | 316 | 1,373 | 5,386 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
2) Sundry changes consist of policyholder participation/shadow accounting as well as other changes
| Other reserves | |||||||
|---|---|---|---|---|---|---|---|
| Total shareholders' equity |
Non-controlling interests |
Equity attributable to shareholders of Talanx AG |
Measurement gains and losses from cash fl ow hedges |
Other changes in shareholders' equity |
Gains/losses from currency translation |
Unrealised gains/losses on investments |
|
| 11,309 | 4,156 | 7,153 | 87 | –1,446 | 48 | 1,949 | |
| –18 | — | –18 | — | — | — | — | |
| 11,291 | 4,156 | 7,135 | 87 | –1,446 | 48 | 1,949 | |
| — | 1 | –1 | — | — | — | — | |
| –14 | –14 | — | — | — | — | — | |
| 672 | 262 | 410 | — | — | — | — | |
| –802 | –291 | –511 | –43 | 281 | –176 | –573 | |
| –11 | 1 | –12 | — | –12 | — | — | |
| –12 | 1 | –13 | — | –13 | — | — | |
| 1 | — | 1 | — | 1 | — | — | |
| –791 | –292 | –499 | –43 | 293 | –176 | –573 | |
| –827 | –254 | –573 | — | — | — | –573 | |
| –236 | –60 | –176 | — | — | –176 | — | |
| –47 | –4 | –43 | –43 | — | — | — | |
| –1 | – | –1 | — | –1 | — | — | |
| 320 | 26 | 294 | — | 294 | — | — | |
| –130 | –29 | –101 | –43 | 281 | –176 | –573 | |
| 2 | 2 | — | — | — | — | — | |
| –2 | –2 | — | — | — | — | — | |
| –522 | –257 | –265 | — | — | — | — | |
| 10,625 | 3,857 | 6,768 | 44 | –1,165 | –128 | 1,376 |
| –209 | –906 | 34 | 7,214 | 3,997 | 11,211 |
|---|---|---|---|---|---|
| — | — | — | –30 | — | –30 |
| –209 | –906 | 34 | 7,184 | 3,997 | 11,181 |
| — | — | — | 1 | –1 | — |
| — | — | — | — | –1 | –1 |
| — | — | — | 381 | 276 | 657 |
| 54 | –1,048 | 169 | 382 | 254 | 636 |
| — | –143 | — | –143 | –7 | –150 |
| — | –151 | — | –151 | –8 | –159 |
| — | 8 | — | 8 | 1 | 9 |
| 54 | –905 | 169 | 525 | 261 | 786 |
| — | — | — | 1,207 | 288 | 1,495 |
| 54 | — | — | 54 | 38 | 92 |
| — | — | 169 | 169 | 16 | 185 |
| — | — | — | — | — | — |
| — | –905 | — | –905 | –81 | –986 |
| 54 | –1,048 | 169 | 763 | 530 | 1,293 |
| — | — | — | –303 | –245 | –548 |
| –155 | –1,954 | 203 | 7,645 | 4,280 | 11,925 |
FIGURES IN EUR MILLION 6M 2014 6M 2013 1) I. 1. Net income 657 672 I. 2. Changes in technical provisions 3,120 3,386 I. 3. Changes in deferred acquisition costs –9 –113 I. 4. Changes in funds withheld and in accounts receivable and payable –769 –819 I. 5. Changes in other receivables and liabilities as well as investments and liabilities from investment contracts 239 125 I. 6. Changes in fi nancial assets held for trading 50 –1 I. 7. Net gains and losses on investments and property, plant and equipment –309 –315 I. 8. Other non-cash expenses and income (including income tax expense/income) 427 427 I. Cash fl ows from operating activities 2) 3,406 3,362 II. 1. Cash infl ow from the sale of consolidated companies — –6 II. 2. Cash outfl ow from the purchase of consolidated companies –4 — II. 3. Cash infl ow from the sale of real estate 24 29 II. 4. Cash outfl ow from the purchase of real estate –189 –308 II. 5. Cash infl ow from the sale and maturity of fi nancial instruments 12,591 11,476 II. 6. Cash outfl ow from the purchase of fi nancial instruments –13,071 –12,702 II. 7. Changes in investments for the account and risk of holders of life insurance policies –566 –466 II. 8. Changes in other invested assets –846 –1,381 II. 9. Cash outfl ows from the acquisition of tangible and intangible assets –75 –55 II. 10. Cash infl ows from the sale of tangible and intangible assets 7 10 II. Cash fl ows from investing activities –2,129 –3,403 III. 1. Cash infl ow from capital increases — 2 III. 2. Cash outfl ow from capital reductions — –2 III. 3. Dividends paid –548 –522 III. 4. Net changes from other fi nancing activities –716 232 III. Cash fl ows from fi nancing activities –1,264 –290 Change in cash and cash equivalents (I. + II. + III.) 13 –331 Cash and cash equivalents at the beginning of the reporting period, excluding disposal groups 1,864 2,119 Cash and cash equivalents – exchange-rate diff erences on cash 8 –53 Changes in cash and cash equivalents attributable to scope of consolidation 3) –4 3 Changes in cash and cash equivalents of disposal groups in the reporting period 2 2 Cash and cash equivalents at the end of the reporting period, excluding disposal groups 1,883 1,740 Additional information Taxes paid 172 268 Interest paid 4) 202 173 Dividends received 33 38 Interest received 1,646 1,768
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
2) Taxes paid on income as well as dividends and interest received are allocated to cash fl ows from operating activities. Dividends received also comprise dividend-like
distributions from investment funds and private equity companies, which results in deviations from our fi gures in Note 12 "Net investment income"
3) This item essentially includes changes in the scope of consolidation excluding disposals and acquisitions
4) EUR 145 (122) million of interest paid pertains to cash fl ows from fi nancing activities, EUR 31 (35) million to cash fl ows from operating activities and EUR 26 (16) million to cash fl ows from investing activities
The consolidated half-yearly fi nancial report as at 30 June 2014 has been compiled in accordance with International Financial Reporting Standards (IFRS) in the form adopted for use in the European Union. The condensed consolidated fi nancial statements, consisting of the consolidated balance sheet, consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in shareholders' equity, consolidated cash fl ow statement and select explanatory notes, refl ects in particular the requirements of IAS 34 "Interim Financial Reporting".
We have observed all new or revised IFRSs whose application is mandatory as at 30 June 2014, as well as the interpretations thereof issued by the IFRS Interpretations Committee (IFRS IC, formerly known as the International Financial Reporting Interpretation Committee [IFRIC]) and the previous Standing Interpretations Committee (SIC) (see also the section "Newly applicable standards/interpretations and changes in standards"). In addition, the accounting policies and the consolidation principles for already existing and unchanged IFRSs correspond to those of our consolidated fi nancial statements as at 31 December 2013. We report changes made pursuant to IAS 8 in specifi c, justifi ed cases in the section "Accounting policies", subsection "Changes in accounting policies and accounting errors".
In conformity with IAS 34.41, in our preparation of the consolidated quarterly fi nancial statements we draw on estimates and assumptions to a greater extent than is the case with annual fi nancial reporting. Changes in estimates during the current interim reporting period with signifi cant implications for the Group's assets, fi nancial position or net income did not arise, other than the situation described in the section "Accounting policies". The tax expenditure (domestic income taxes, comparable taxes on income of foreign subsidiaries and changes in deferred taxes) is calculated during the year using an eff ective rate of taxation anticipated for the full fi nancial year, which is applied to the net income of the reporting period. When extrapolating the provisions for pensions during the year, the actuarially estimated eff ect of interest rate changes on pension commitments as at the end of the quarter is recognised under "Other comprehensive income" ("Other reserves"). Other actuarial parameters are not updated during the year.
These interim fi nancial statements were drawn up in euros (EUR). The amounts shown have been rounded to EUR millions (EUR million). This may give rise to rounding diff erences in the tables presented in this report. Figures indicated in brackets refer to the previous year.
As at 1 January 2014, the Group for the fi rst time applied the following changed or new IFRSs:
On 20 May 2013 the IASB published IFRIC 21 "Levies". This clarifi es how liabilities should be recognised for levies and in particular when these liabilities which are imposed by a government body and do not fall under the scope of a diff erent standard, should be carried. The interpretation standard is applicable for the fi rst time to fi nancial years beginning on or aft er 1 January 2014. However, application of the interpretation has only been mandatory since its endorsement by the EU in June 2014. This provision has no practical relevance for the Group, since it merely involves a clarifi cation that corresponds to our current accounting practice.
In June 2013 the IASB adopted "Novation of Derivatives and Continuation of Hedge Accounting" (Amendments to IAS 39 "Financial Instruments: Recognition and Measurement"). According to this amendment, despite novation the derivative remains designated as a hedging instrument in an existing hedging relationship. Application of this amendment had no impact for the Group.
The IASB adapted the provisions governing set-off of fi nancial assets and liabilities and published changes on 16 December 2011 in the form of amendments to IAS 32 "Financial Instruments: Presentation" – Off setting Financial Assets and Financial Liabilities. The presentation requirements set down in IAS 32 were retained more or less in their entirety and were merely clarifi ed by additional guidelines on application. This amendment was applied by the Group retrospectively and had no signifi cant impact.
On 12 May 2011 the IASB published three new (IFRS 10, IFRS 11, IFRS 12) and two revised (IAS 27, IAS 28) standards governing consolidation, the accounting of interests in associated companies and joint ventures, and the related disclosures in the Notes:
IFRS 10 "Consolidated Financial Statements" replaces the regulations previously contained in IAS 27 "Consolidated and Separate Financial Statements" and SIC 12 "Consolidation – Special purpose Entities". It defi nes the principle of control as the universal basis for establishing the existence of a parent-subsidiary relationship. The standard also contains additional guidelines demonstrating when control exists. The revised IAS 27 contains only provisions on accounting requirements for interests in subsidiaries, associated companies and joint ventures disclosed in the parent company's individual fi nancial statements. Aside from several minor changes, the wording of the previous standard was retained. Initial application of IFRS 10 had no impact for the Group on the consolidation of participating interests and structured entities held by the Group. For more detailed comments about the new control principle, cf. our remarks in the section "Consolidation", subsection "Consolidation principles".
IFRS 11 "Joint Arrangements" addresses the accounting requirements in cases where an entity shares management control over a joint venture or joint operation. The new standard replaces the pertinent regulations in IAS 31 "Interests in Joint Ventures" and SIC 13 "Jointly Controlled Entities – Non-Monetary Contributions by Venturers". According to IFRS 11 it is no longer permitted to consolidate joint ventures, e.g. arrangements where the parties have rights to the net assets, on a proportional basis. The equity method must be applied in future where an entity is classifi ed as a joint venture. Initial application of IFRS 11 had no impact on the Group. The signifi cant joint ventures included in the fi nancial statements were already being consolidated using the equity method. There are no joint venture activities pursuant to which the Group has rights to assets attributable to an agreement and liabilities for their debts.
The revised IAS 28 "Investments in Associates and Joint Ventures" is being expanded to include rules governing accounting for interests in joint ventures. In future, the equity method must be applied as standard. This is consistent with how the Group has been treating such interests. Another amendment aff ects accounting procedures in accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" if only part of an interest in an associated company/joint venture is held for sale. IFRS 5 must be applied only to the portion held for sale. Since there are currently no plans to sell portions of our interests in our associated companies/joint ventures, this new accounting rule had no impact as at the balance sheet date.
Disclosure requirements relating to the consolidation and accounting treatment of interests in associated companies and joint ventures are brought together in IFRS 12 "Disclosure of Interests in Other Entities". To some extent, duties of disclosure under the new standard for subsidiaries, associated companies, joint arrangements, unconsolidated structured entities, and all other participating interests extend far beyond what was previously the case, the aim being to provide users of fi nancial statements with a clearer picture of the nature of the company's interests in other entities and the eff ects on assets, fi nancial position and net income, including risks. These duties of disclosure are not to be applied to interim consolidated fi nancial statements unless material events or transactions during the interim reporting period make disclosure necessary. Consequently, the Group has not made such disclosures.
In June 2012 the IASB published transitional provisions (amendments to IFRS 10, IFRS 11 and IFRS 12). The amendments clarify the transition guidance and also provide additional relief, limiting the requirement to provide comparative information. The eff ective date of the amendments is aligned with the eff ective date of IFRS 10, IFRS 11 and IFRS 12. In October 2012, the IASB announced further amendments to IFRS 10, IFRS 12 and IAS 27, which contain an exception to the full consolidation of controlled subsidiaries. These amendments provide that parent companies meeting the defi nition of an investment entity must measure their investments in subsidiaries at fair value through profi t or loss. As a non-investment entity, Talanx AG is not aff ected by this exception, meaning that this amendment has no practical relevance for the consolidated fi nancial statements.
In recognising the interest rate-driven portion of the change in the loss and loss adjustment expense reserve (loss provision), various Group companies exercised an option in diff erent ways for certain contracts in the area of Life/Health Reinsurance. For instance, this item was sometimes recognised in the statement of income and sometimes in the statement of other comprehensive income. In accordance with the rules in IAS 8, we provided in the fourth quarter of 2013 for uniform Group recognition in the statement of income, and in accordance with IAS 8.41, we have made a corresponding adjustment to the comparable fi gures (see a)).
Effective 30 June 2014, the Group retrospectively corrected accounts receivable recognised in prior periods relating to own risks assumed in respect of a client relationship in the Industrial Lines segment in accordance with IAS 8.41 and restated the comparative amounts (see b)).
The effects of the retroactive application of the adjustments described in b) on the opening balance sheet as at 1 January 2013, the consolidated balance sheet as at 31 December 2013, the consolidated statement of income and the consolidated statement of comprehensive income for the comparative period (see a) and b)) were as follows:
FIGURES IN EUR MILLION
| Changes due to adjustments in accordance with IAS 8 |
||||
|---|---|---|---|---|
| As reported 1.1.2013 |
Adjustment relating to b) | 1.1.2013 | ||
| Assets | ||||
| D. | Reinsurance recoverables on technical provisions | 6,989 | 4 | 6,993 |
| E. | Accounts receivable on insurance business | 5,081 | –20 | 5,061 |
| Shareholders' equity and liabilities | ||||
| A.b. | Reserves | 7,153 | –18 | 7,135 |
| C.c. | Loss and loss adjustment expense reserve | 33,243 | 10 | 33,253 |
| G. | Deferred tax liabilities | 1,984 | –8 | 1,976 |
FIGURES IN EUR MILLION
| Changes due to adjustments in accordance with IAS 8 (incl. adjustments as at 1.1.2013) |
||||
|---|---|---|---|---|
| As reported 31.12.2013 |
Adjustment relating to b) | 31.12.2013 | ||
| Assets | ||||
| D. | Reinsurance recoverables on technical provisions | 6,596 | 8 | 6,604 |
| E. | Accounts receivable on insurance business | 5,071 | –32 | 5,039 |
| H. | Deferred tax assets | 532 | 14 | 546 |
| Shareholders' equity and liabilities | ||||
| A.b. | Reserves | 6,898 | –30 | 6,868 |
| C.c. | Loss and loss adjustment expense reserve | 33,755 | 20 | 33,775 |
FIGURES IN EUR MILLION
| Changes due to adjustments in accordance with IAS 8 |
||||||
|---|---|---|---|---|---|---|
| As reported 1.1. – 30.6.2013 |
Adjustment relating to a) |
Adjustment relating to b) |
1.1. – 30.6.2013 | |||
| 6. Claims and claims expenses (gross) | 10,344 | –24 | 12 | 10,332 | ||
| Reinsurers' share | 969 | –2 | 4 | 971 | ||
| 13. Taxes on income | 253 | 6 | –3 | 256 | ||
| Net income | 661 | 16 | –5 | 672 | ||
| thereof attributable to non-controlling interests | 254 | 8 | — | 262 | ||
| thereof attributable to shareholders of Talanx AG | 407 | 8 | –5 | 410 | ||
FIGURES IN EUR MILLION
| As reported 1.1. – 30.6.2013 |
Adjustment relating to a) |
Adjustment relating to b) |
1.1. – 30.6.2013 | |
|---|---|---|---|---|
| Net income | 661 | 16 | –5 | 672 |
| Currency translation | ||||
| Gains (losses) recognised in other comprehensive income during the period |
–247 | 1 | — | –246 |
| Shifted to the consolidated statement of income | –4 | — | — | –4 |
| Tax income (expense) | 14 | — | — | 14 |
| –237 | 1 | — | –236 | |
| Other changes | ||||
| Gains (losses) recognised in other comprehensive income during the period |
24 | –24 | — | — |
| Shifted to the consolidated statement of income | — | — | — | — |
| Tax income (expense) | –7 | 7 | — | — |
| 17 | –17 | — | — | |
| Total reclassifi able income (expenses) after taxes recognised in other comprehensive income during the period |
–775 | –16 | — | –791 |
| Income (expenses) after taxes recognised in other comprehensive income during the period |
–786 | –16 | — | –802 |
| Total comprehensive income during the period | –125 | — | –5 | –130 |
| thereof attributable to shareholders of Talanx AG | –96 | — | –5 | –101 |
The eff ect of these changes on earnings per share in the comparable period was as follows:
EFFECTS ON EARNINGS PER SHARE AS AT 30 JUNE 2013
FIGURES IN EUR
| Changes due to adjustments in accordance with IAS 8 |
||||
|---|---|---|---|---|
| As reported 30.6.2013 |
Adjustment relating to a) |
Adjustment relating to b) |
30.6.2013 | |
| Basic earnings per share | 1.61 | 0.03 | –0.02 | 1.62 |
| Diluted earnings per share | 1.61 | 0.03 | –0.02 | 1.62 |
| FIGURES IN EUR | ||||
|---|---|---|---|---|
| As reported 1.4. – 30.6.2013 |
Adjustment relating to a) |
Adjustment relating to b) |
1.4. – 30.6.2013 | |
| Basic earnings per share | 0.81 | 0.01 | –0.01 | 0.81 |
| Diluted earnings per share | 0.81 | 0.01 | –0.01 | 0.81 |
With eff ect from the third quarter of 2013, the calculation logic for amortising infl ation-indexed government bonds was modifi ed in order to level out seasonal deviations in the underlying infl ation indexes. This involves changing an accounting-related estimate that pursuant to IAS 8 is to be made prospectively in the reporting period without adjusting the comparable fi gures for previous years. If the parameters and procedures used until 30 June 2013 had been maintained, the amount of amortisation in the reporting period would have been higher by EUR 3 million. In future, amortisation amounts will not be diff erent at the end of each year, since adjustment of the parameters merely constitutes a levelling during the year that has an eff ect only at the end of the respective quarter.
The reporting currency of Talanx AG is the euro (EUR).
| 1 EUR corresponds to | Balance sheet (balance sheet date) |
Statement of income (average) |
||||
|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | 6M 2014 | 6M 2013 | |||
| AUD | Australia | 1.4532 | 1.5513 | 1.5071 | 1.3019 | |
| BRL | Brazil | 3.0283 | 3.2095 | 3.1496 | 2.6835 | |
| CAD | Canada | 1.4587 | 1.4751 | 1.5000 | 1.3358 | |
| CNY | China | 8.4694 | 8.3445 | 8.4507 | 8.1166 | |
| GBP | United Kingdom | 0.8012 | 0.8357 | 0.8213 | 0.8489 | |
| MXN Mexico | 17.7121 | 17.9831 | 17.9769 | 16.6573 | ||
| PLN | Poland | 4.1566 | 4.1502 | 4.1786 | 4.1966 | |
| USD | USA | 1.3656 | 1.3766 | 1.3714 | 1.3114 | |
| ZAR | South Africa | 14.4770 | 14.4390 | 14.6357 | 12.1184 |
In conformity with IFRS 8 "Operating Segments", the reportable segments were determined in accordance with the internal reporting and management structure of the Group, on the basis of which the Group Board of Management regularly assesses the performance of the segments and decides on the allocation of resources to the segments. The Group splits its business activities into the areas of insurance and Corporate Operations. Insurance activities are further subdivided into fi ve reportable segments. In view of the diff erent product types, risks and capital allocations, a diff erentiation is initially made between primary insurance and reinsurance.
Since they are managed according to customer groups and geographical regions (domestic versus international) – and therefore span various lines of business – insurance activities in the primary sector are organised into three reportable segments: "Industrial Lines," "Retail Germany" and "Retail International". This segmentation also corresponds to the responsibilities of the members of the Board of Management.
Reinsurance business is handled solely by the Hannover Re Group and is divided into the two segments Non-Life Reinsurance and Life/Health Reinsurance in accordance with that group's internal reporting system. In a departure from the segmentation used in the consolidated fi nancial statements of Hannover Rück SE, however, we allocate that group's holding functions to its Non-Life Reinsurance segment. By contrast, cross-segment loans within the Hannover Re Group are allocated to the two reinsurance segments in the consolidated fi nancial statements of the Talanx Group (in the consolidated fi nancial statements of Hannover Rück SE, these loans are shown in the consolidation column). Deviations between the segment results for reinsurance business as presented in the consolidated fi nancial statements of Talanx AG and those reported in the fi nancial statements of Hannover Rück SE are thus unavoidable.
The major products and services from which these reportable segments generate income are set out below.
Industrial Lines: In the Industrial Lines segment we report worldwide industrial business as an independent segment. The scope of business operations encompasses a wide selection of insurance products, such as liability, motor, accident, fi re, property, legal protection, marine, fi nancial lines and engineering insurance for large and midsized enterprises in Germany and abroad. In addition, reinsurance is provided in various classes of insurance.
Retail Germany: Insurance activities serving German retail and commercial customers that span the various lines of business, including bancassurance business transacted Germany-wide – i.e. insurance products sold over the counter at banks – are managed in this reportable segment. In the area of life insurance, this segment provides insurance services across the border in Austria too. The products range from property/casualty insurance through all segments of life insurance and occupational pension insurance to all-round solutions for small and medium-sized companies and freelancers. The Group employs a wide range of sales channels, including its own exclusivity organisation as well as sales through independent brokers and multiple agents, direct sales and bank cooperations.
Retail International: The scope of operations in this segment encompasses insurance business transacted across the various lines of insurance with retail and commercial customers, including bancassurance activities in foreign markets. The range of insurance products includes car insurance, property and casualty insurance, marine and fi re insurance as well as many products in the fi eld of life insurance. A large part of international business is transacted by brokers and agents. Additionally, many companies in this segment use post offi ces and banks as sales channels.
Non-life reinsurance 1): The most important activities are property and liability business with retail, commercial and industrial customers (fi rst and foremost in the US and German markets), marine and aviation business, credit/surety business, structured reinsurance, and facultative and NatCat business.
Life/health reinsurance 1): The segment comprises the international activities of the Hannover Re Group in all lines of life/health insurance. The Group also has specialty line products such as Shariacompliant reinsurance.
1) For the diff erence in the segment result between the Talanx Group and the Hannover Re Group, cf. our remarks at the start of the section Corporate Operations: In contrast to the fi ve operating segments, the Corporate Operations segment encompasses management and other functional activities that support the business conducted by the Group, primarily relating to asset management and, in the primary insurance sector, the run-off and placement of portions of reinsurance cessions, including intra-group reinsurance as well as Group fi nancing. Asset management for private and institutional investors outside the Group by Ampega Investment GmbH, Cologne, is also shown in this segment. This segment includes centralised service companies that provide specifi c billable services – such as IT, collection, personnel and accounting services – mainly to the Group's primary insurers based in Germany.
All transactions between reportable segments are measured on the basis of standard market transfer prices that would also be applicable to transactions at arm's length. Cross-segment transactions within the Group are consolidated in the consolidation column, whereas income from dividend payments and profi t/loss transfer agreements accruing to the Group holding company are eliminated in the respective segment. For reasons of consistency and comparability, we have adjusted the segment statement of income in line with the consolidated statement of income. The same applies to the segment balance sheet and the consolidated balance sheet.
Depending upon the nature and time frame of the commercial activities, various management metrics and performance indicators are used to assess the fi nancial success of the reportable segments within the Group. However, the operating profi t (EBIT) – determined from IFRS profi t contributions – is used as a consistent measurement basis. Net profi t or loss for the period before income taxes is highlighted as a means of capturing true operating profi tability and for the sake of better comparability. In addition, the result is adjusted for interest charges incurred for borrowing (fi nancing costs).
FIGURES IN EUR MILLION
| Assets | Industrial Lines | Retail Germany | Retail International | ||||
|---|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 1) | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | ||
| A. Intangible assets | |||||||
| a. Goodwill | 153 | 153 | 403 | 403 | 537 | 533 | |
| b. Other intangible assets | 15 | 16 | 944 | 1,000 | 216 | 235 | |
| 168 | 169 | 1,347 | 1,403 | 753 | 768 | ||
| B. Investments | |||||||
| a. Investment property | 39 | 21 | 826 | 734 | 19 | 21 | |
| b. Investments in affi liated companies and participating interests |
19 | 19 | 16 | 17 | — | — | |
| c. Investments in associated companies | |||||||
| and joint ventures | 123 | 124 | 33 | 35 | — | — | |
| d. Loans and receivables | 1,813 | 2,029 | 25,644 | 26,466 | 800 | 672 | |
| e. Other fi nancial instruments | |||||||
| i. Held to maturity | 86 | 32 | 167 | 116 | 394 | 353 | |
| ii. Available for sale | 4,356 | 3,821 | 16,142 | 14,194 | 4,583 | 3,883 | |
| iii. At fair value through profi t or loss | 144 | 98 | 274 | 319 | 571 | 565 | |
| f. Other invested assets |
736 | 524 | 1,259 | 549 | 470 | 528 | |
| Investments under own management | 7,316 | 6,668 | 44,361 | 42,430 | 6,837 | 6,022 | |
| g. Investments under investment contracts | — | — | — | — | 1,948 | 1,758 | |
| h. Funds withheld by ceding companies | 23 | 23 | 26 | 25 | — | — | |
| Investments | 7,339 | 6,691 | 44,387 | 42,455 | 8,785 | 7,780 | |
| C. Investments for the account and risk of holders of life insurance policies |
— | — | 8,206 | 7,616 | 690 | 709 | |
| D. Reinsurance recoverables on technical provisions | 5,081 | 4,640 | 2,490 | 2,446 | 745 | 668 | |
| E. Accounts receivable on insurance business | 1,333 | 1,168 | 332 | 364 | 855 | 820 | |
| F. Deferred acquisition costs | 34 | 16 | 1,974 | 2,161 | 455 | 403 | |
| G. Cash | 355 | 322 | 379 | 398 | 406 | 427 | |
| H. Deferred tax assets | 132 | 75 | 94 | 95 | 89 | 99 | |
| I. Other assets |
476 | 423 | 998 | 794 | 441 | 409 | |
| J. Non-current assets and assets of disposal groups classifi ed as held for sale 2) |
— | — | — | 4 | 236 | 233 | |
| Total assets | 14,918 | 13,504 | 60,207 | 57,736 | 13,455 | 12,316 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
2) Cf. our remarks in the section "Non-current assets held for sale and disposal groups" of the Notes
| Non-Life Reinsurance | Life/Health Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 1) |
| 16 | 16 | — | — | — | — | — | — | 1,109 | 1,105 |
| 24 | 22 | 95 | 94 | 86 | 79 | — | — | 1,380 | 1,446 |
| 40 | 38 | 95 | 94 | 86 | 79 | — | — | 2,489 | 2,551 |
| 915 | 845 | 2 | 2 | — | — | — | — | 1,801 | 1,623 |
| 66 | 32 | — | — | 22 | 24 | — | — | 123 | 92 |
| 129 | 126 | 19 | 19 | 13 | 13 | –66 | –70 | 251 | 247 |
| 2,930 | 3,137 | 70 | 72 | 11 | 11 | — | –156 | 31,268 | 32,231 |
| 2,091 | 2,469 | 196 | 198 | 3 | 6 | –291 | –190 | 2,646 | 2,984 |
| 17,490 | 16,918 | 6,094 | 5,768 | 353 | 338 | — | — | 49,018 | 44,922 |
| 53 | 38 | 59 | 69 | 1 | 1 | — | — | 1,102 | 1,090 |
| 1,545 | 1,536 | 321 | 281 | 265 | 245 | –553 | –542 | 4,043 | 3,121 |
| 25,219 | 25,101 | 6,761 | 6,409 | 668 | 638 | –910 | –958 | 90,252 | 86,310 |
| — | — | — | — | — | — | — | — | 1,948 | 1,758 |
| 942 | 890 | 13,816 | 13,453 | — | — | –1,479 | –1,497 | 13,328 | 12,894 |
| 26,161 | 25,991 | 20,577 | 19,862 | 668 | 638 | –2,389 | –2,455 | 105,528 | 100,962 |
| — | — | — | — | — | — | — | — | 8,896 | 8,325 |
| 1,180 | 1,307 | 758 | 589 | 4 | 1 | –3,100 | –3,047 | 7,158 | 6,604 |
| 2,267 | 1,702 | 1,235 | 1,243 | 15 | 4 | –293 | –262 | 5,744 | 5,039 |
| 577 | 491 | 1,189 | 1,181 | 3 | 2 | 260 | 259 | 4,492 | 4,513 |
| 484 | 434 | 203 | 209 | 56 | 74 | — | — | 1,883 | 1,864 |
| 17 | 16 | 81 | 56 | 245 | 205 | — | — | 658 | 546 |
| 1,456 | 1,273 | 181 | 151 | 376 | 483 | –1,313 | –1,332 | 2,615 | 2,201 |
| — | 11 | — | — | — | — | — | — | 236 | 248 |
| 32,182 | 31,263 | 24,319 | 23,385 | 1,453 | 1,486 | –6,835 | –6,837 | 139,699 | 132,853 |
| Liabilities | Industrial Lines | Retail Germany | Retail International | ||||
|---|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 1) | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | ||
| B. Subordinated liabilities | 142 | 144 | 212 | 213 | 2 | 2 | |
| C. Technical provisions | |||||||
| a. Unearned premium reserve | 1,552 | 936 | 1,205 | 888 | 1,746 | 1,591 | |
| b. Benefi t reserve | 1 | 1 | 36,987 | 36,795 | 3,007 | 2,554 | |
| c. Loss and loss adjustment expense reserve | 8,773 | 8,463 | 2,718 | 2,701 | 2,283 | 2,142 | |
| d. Provision for premium refunds | 8 | 8 | 3,319 | 2,071 | 181 | 99 | |
| e. Other technical provisions | 34 | 34 | 9 | 8 | 7 | 8 | |
| 10,368 | 9,442 | 44,238 | 42,463 | 7,224 | 6,394 | ||
| D. Technical provisions in the area of life insurance insofar as the investment risk is borne by policyholders |
— | — | 8,206 | 7,616 | 690 | 709 | |
| E. Other provisions | |||||||
| a. Provisions for pensions and other post-employment benefi ts |
559 | 502 | 112 | 92 | 16 | 14 | |
| b. Provisions for taxes | 151 | 130 | 131 | 116 | 72 | 92 | |
| c. Sundry provisions | 70 | 70 | 207 | 266 | 70 | 74 | |
| 780 | 702 | 450 | 474 | 158 | 180 | ||
| F. Liabilities | |||||||
| a. Notes payable and loans | — | — | — | — | — | — | |
| b. Funds withheld under reinsurance treaties | 23 | 27 | 1,973 | 1,951 | 183 | 184 | |
| c. Other liabilities | 1,490 | 1,283 | 2,023 | 2,138 | 2,733 | 2,543 | |
| 1,513 | 1,310 | 3,996 | 4,089 | 2,916 | 2,727 | ||
| G. Deferred tax liabilities | 99 | 39 | 337 | 285 | 143 | 121 | |
| H. Liabilities of disposal groups classifi ed as held for sale 2) |
— | — | — | — | 238 | 235 | |
| Total liabilities/provisions | 12,902 | 11,637 | 57,439 | 55,140 | 11,371 | 10,368 | |
| Non-Life Reinsurance | Life/Health Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 1) |
| 1,491 | 2,238 | 63 | 60 | 612 | 612 | –164 | –162 | 2,358 | 3,107 |
| 2,703 | 2,297 | 122 | 108 | 18 | 8 | –229 | –150 | 7,117 | 5,678 |
| — | — | 11,012 | 10,632 | — | — | –210 | –215 | 50,797 | 49,767 |
| 19,473 | 18,848 | 3,038 | 2,821 | 14 | 9 | –1,204 | –1,209 | 35,095 | 33,775 |
| — | — | — | — | — | — | — | — | 3,508 | 2,178 |
| 127 | 129 | 137 | 140 | — | — | –2 | — | 312 | 319 |
| 22,303 | 21,274 | 14,309 | 13,701 | 32 | 17 | –1,645 | –1,574 | 96,829 | 91,717 |
| — | — | — | — | — | — | — | — | 8,896 | 8,325 |
| 105 | 90 | 33 | 27 | 1,096 | 971 | — | — | 1,921 | 1,696 |
| 174 | 218 | 28 | 4 | 158 | 151 | — | — | 714 | 711 |
| 83 | 90 | 40 | 45 | 144 | 145 | –2 | –2 | 612 | 688 |
| 362 | 398 | 101 | 76 | 1,398 | 1,267 | –2 | –2 | 3,247 | 3,095 |
| 287 | 227 | 225 | 213 | 1,281 | 1,217 | –671 | –715 | 1,122 | 942 |
| 401 | 440 | 5,825 | 5,778 | — | — | –2,806 | –2,845 | 5,599 | 5,535 |
| 911 | 953 | 1,631 | 1,495 | 122 | 112 | –1,561 | –1,555 | 7,349 | 6,969 |
| 1,599 | 1,620 | 7,681 | 7,486 | 1,403 | 1,329 | –5,038 | –5,115 | 14,070 | 13,446 |
| 1,225 | 1,005 | 307 | 271 | — | — | 25 | 28 | 2,136 | 1,749 |
| — | — | — | — | — | — | — | –2 | 238 | 233 |
| 26,980 | 26,535 | 22,461 | 21,594 | 3,445 | 3,225 | –6,824 | –6,827 | 127,774 | 121,672 |
| Shareholders' equity 3) | 11,925 | 11,181 |
Total liabilities 139,699 132,853
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes,
subsection "Changes in accounting policies and accounting errors"
2) Cf. our remarks in the section "Non-current assets held for sale and disposal groups" of the Notes
3) Group shareholders' equity, including non-controlling interests
FIGURES IN EUR MILLION
| Industrial Lines | Retail Germany | Retail International | |||||
|---|---|---|---|---|---|---|---|
| 6M 2014 | 6M 2013 1) | 6M 2014 | 6M 2013 | 6M 2014 | 6M 2013 | ||
| 1. Gross written premium, including premiums from unit-linked life and annuity insurance |
2,497 | 2,399 | 3,563 | 3,623 | 2,255 | 2,151 | |
| thereof attributable to other segments | 47 | 23 | 28 | 32 | — | — | |
| with third parties | 2,450 | 2,376 | 3,535 | 3,591 | 2,255 | 2,151 | |
| 2. Savings elements of premiums from unit-linked life and annuity insurance |
— | — | 479 | 471 | 47 | 112 | |
| 3. Ceded written premium | 1,157 | 1,252 | 170 | 175 | 191 | 205 | |
| 4. Change in gross unearned premium | –610 | –605 | –317 | –329 | –132 | –117 | |
| 5. Change in ceded unearned premium | –197 | –353 | –16 | –15 | –27 | –31 | |
| Net premium earned | 927 | 895 | 2,613 | 2,663 | 1,912 | 1,748 | |
| 6. Claims and claims expenses (gross) | 1,434 | 1,315 | 2,798 | 2,830 | 1,553 | 1,284 | |
| Reinsurers' share | 737 | 572 | 77 | 69 | 124 | 50 | |
| Claims and claims expenses (net) | 697 | 743 | 2,721 | 2,761 | 1,429 | 1,234 | |
| 7. Acquisition costs and administrative expenses (gross) | 374 | 353 | 722 | 612 | 480 | 508 | |
| Reinsurers' share | 157 | 180 | 46 | 54 | 34 | 41 | |
| Acquisition costs and administrative expenses (net) | 217 | 173 | 676 | 558 | 446 | 467 | |
| 8. Other technical income | 4 | 8 | 6 | 7 | 11 | 10 | |
| Other technical expenses | 11 | 6 | 30 | 83 | 34 | 40 | |
| thereof attributable to amortisation PVFP | — | — | 22 | 76 | 7 | 16 | |
| Other technical result | –7 | 2 | –24 | –76 | –23 | –30 | |
| Net technical result | 6 | –19 | –808 | –732 | 14 | 17 | |
| 9. a. Income from investments | 171 | 132 | 1,028 | 965 | 176 | 180 | |
| b. Expenses for investments | 20 | 24 | 82 | 81 | 21 | 37 | |
| Net income from investments under own management | 151 | 108 | 946 | 884 | 155 | 143 | |
| Income/expense from investment contracts Net interest income from funds withheld and contract deposits |
— — |
— — |
— –9 |
— –12 |
2 –1 |
4 –1 |
|
| Net investment income | 151 | 108 | 937 | 872 | 156 | 146 | |
| thereof attributable to interest and similar income | 102 | 102 | 789 | 775 | 166 | 155 | |
| attributable to interest and similar expenses | 1 | — | 10 | 12 | 26 | 40 | |
| impairments/depreciation on investments | 1 | 5 | 14 | 16 | 1 | 6 | |
| write-ups on investments | 7 | — | 3 | — | — | — | |
| income/expense from associated companies and joint ventures recognised using the equity method |
— | — | — | — | — | — | |
| 10. a. Other income | 42 | 48 | 88 | 82 | 32 | 41 | |
| b. Other expenses | 58 | 67 | 120 | 132 | 78 | 91 | |
| Other income/expenses | –16 | –19 | –32 | –50 | –46 | –50 | |
| thereof attributable to interest and similar income | — | — | 1 | 1 | 6 | 8 | |
| write-ups on accounts receivable and other assets |
4 | — | — | — | 2 | 1 | |
| attributable to interest and similar expenses | 10 | 10 | 4 | 3 | 1 | 2 | |
| write-downs on accounts receivable | |||||||
| and other assets | 9 | 14 | 1 | 2 | 16 | 30 | |
| Profi t before goodwill impairments | 141 | 70 | 97 | 90 | 124 | 113 | |
| 11. Goodwill impairments | — | — | — | — | — | — | |
| Operating profi t/loss (EBIT) | 141 | 70 | 97 | 90 | 124 | 113 | |
| 12. Financing costs | 4 | 6 | 7 | 6 | 2 | 1 | |
| 13. Taxes on income | 48 | 23 | 30 | 30 | 32 | 31 | |
| Net income | 89 | 41 | 60 | 54 | 90 | 81 | |
| thereof attributable to non-controlling interests | — | — | 3 | 2 | 16 | 15 | |
| thereof attributable to shareholders of Talanx AG | 89 | 41 | 57 | 52 | 74 | 66 | |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
| Non-Life Reinsurance | Life/Health Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 6M 2014 | 6M 2013 | 6M 2014 | 6M 2013 1) | 6M 2014 | 6M 2013 | 6M 2014 | 6M 2013 | 6M 2014 | 6M 2013 1) |
| 4,078 | 4,097 | 2,987 | 3,130 | 35 | 25 | –440 | –459 | 14,975 | 14,966 |
| 254 | 284 | 76 | 95 | 35 | 25 | –440 | –459 | — | — |
| 3,824 | 3,813 | 2,911 | 3,035 | — | — | — | — | 14,975 | 14,966 |
| — | — | — | — | — | — | — | — | 526 | 583 |
| 362 | 400 | 504 | 325 | 8 | 5 | –433 | –463 | 1,959 | 1,899 |
| –374 | –329 | –14 | –17 | –11 | –14 | 79 | 67 | –1,379 | –1,344 |
| –28 | –36 | — | 1 | –4 | — | 75 | 76 | –197 | –358 |
| 3,370 | 3,404 | 2,469 | 2,787 | 20 | 6 | –3 | –5 | 11,308 | 11,498 |
| 2,488 | 2,500 | 2,533 | 2,568 | 10 | 7 | –187 | –172 | 10,629 | 10,332 |
| 156 | 164 | 442 | 300 | –1 | 3 | –192 | –187 | 1,343 | 971 |
| 2,332 | 2,336 | 2,091 | 2,268 | 11 | 4 | 5 | 15 | 9,286 | 9,361 |
| 932 | 944 | 565 | 720 | 4 | 2 | –97 | –139 | 2,980 | 3,000 |
| 53 | 65 | 43 | 35 | — | — | –91 | –107 | 242 | 268 |
| 879 | 879 | 522 | 685 | 4 | 2 | –6 | –32 | 2,738 | 2,732 |
| 2 | 1 | — | — | — | — | 1 | 1 | 24 | 27 |
| 5 | –1 | 3 | 6 | 1 | 1 | –1 | 13 | 83 | 148 |
| — | — | 2 | 2 | — | — | — | — | 31 | 94 |
| –3 | 2 | –3 | –6 | –1 | –1 | 2 | –12 | –59 | –121 |
| 156 | 191 | –147 | –172 | 4 | –1 | — | — | –775 | –716 |
| 471 | 469 | 148 | 152 | 14 | 83 | –31 | –33 | 1,977 | 1,948 |
| 68 | 99 | 15 | 17 | 36 | 35 | –46 | –42 | 196 | 251 |
| 403 | 370 | 133 | 135 | –22 | 48 | 15 | 9 | 1,781 | 1,697 |
| — | — | — | — | — | — | — | — | 2 | 4 |
| 9 | 8 | 166 | 180 | — | — | — | 1 | 165 | 176 |
| 412 | 378 | 299 | 315 | –22 | 48 | 15 | 10 | 1,948 | 1,877 |
| 339 | 354 | 341 | 363 | 3 | 6 | –35 | –37 | 1,705 | 1,718 |
| 1 | 2 | 63 | 66 | — | — | –4 | –5 | 97 | 115 |
| 10 | 8 | — | — | — | 1 | — | — | 26 | 36 |
| — | — | — | — | — | — | — | — | 10 | — |
| 4 | 6 | — | — | 2 | — | — | — | 6 | 6 |
| 109 | 120 | 55 | 70 | 363 | 408 | –351 | –375 | 338 | 394 |
| 144 | 122 | 55 | 83 | 351 | 370 | –300 | –342 | 506 | 523 |
| –35 | –2 | — | –13 | 12 | 38 | –51 | –33 | –168 | –129 |
| 1 | 2 | 6 | 5 | 3 | 1 | –3 | –1 | 14 | 16 |
| 5 | 7 | — | — | — | — | — | — | 11 | 8 |
| 8 | 9 | 21 | 29 | 21 | 17 | –6 | –5 | 59 | 65 |
| 17 | 15 | 5 | 4 | 2 | 1 | — | — | 50 | 66 |
| 533 | 567 | 152 | 130 | –6 | 85 | –36 | –23 | 1,005 | 1,032 |
| — | — | — | — | — | — | — | — | — | — |
| 533 | 567 | 152 | 130 | –6 | 85 | –36 | –23 | 1,005 | 1,032 |
| 49 | 63 | 1 | 2 | 56 | 56 | –30 | –30 | 89 | 104 |
| 128 | 141 | 28 | 33 | –5 | –2 | –2 | — | 259 | 256 |
| 356 | 363 | 123 | 95 | –57 | 31 | –4 | 7 | 657 | 672 |
| 191 | 197 | 66 | 48 | — | — | — | — | 276 | 262 |
| 165 | 166 | 57 | 47 | –57 | 31 | –4 | 7 | 381 | 410 |
FIGURES IN EUR MILLION
| Industrial Lines | Retail Germany | Retail International | |||||
|---|---|---|---|---|---|---|---|
| Q2 2014 | Q2 2013 1) | Q2 2014 | Q2 2013 | Q2 2014 | Q2 2013 | ||
| 1. Gross written premium, including premiums from unit-linked life and annuity insurance |
733 | 664 | 1,536 | 1,510 | 1,091 | 1,095 | |
| thereof attributable to other segments | 23 | 14 | 14 | 16 | — | — | |
| with third parties | 710 | 650 | 1,522 | 1,494 | 1,091 | 1,095 | |
| 2. Savings elements of premiums from unit-linked life and annuity insurance |
— | — | 284 | 252 | 23 | 73 | |
| 3. Ceded written premium | 253 | 476 | 71 | 76 | 75 | 87 | |
| 4. Change in gross unearned premium | 222 | 231 | 141 | 158 | –55 | –66 | |
| 5. Change in ceded unearned premium | 182 | –37 | –4 | — | 9 | –2 | |
| Net premium earned | 520 | 456 | 1,326 | 1,340 | 929 | 871 | |
| 6. Claims and claims expenses (gross) | 876 | 866 | 1,294 | 1,451 | 757 | 647 | |
| Reinsurers' share | 476 | 477 | 38 | 32 | 75 | 27 | |
| Claims and claims expenses (net) | 400 | 389 | 1,256 | 1,419 | 682 | 620 | |
| 7. Acquisition costs and administrative expenses (gross) | 190 | 179 | 447 | 322 | 247 | 256 | |
| Reinsurers' share | 49 | 90 | 16 | 26 | 17 | 20 | |
| Acquisition costs and administrative expenses (net) | 141 | 89 | 431 | 296 | 230 | 236 | |
| 8. Other technical income | –9 | 4 | –5 | 5 | 6 | 5 | |
| Other technical expenses | 15 | — | 12 | 66 | 17 | 20 | |
| thereof attributable to amortisation PVFP | — | — | 13 | 63 | 3 | 8 | |
| Other technical result | –24 | 4 | –17 | –61 | –11 | –15 | |
| Net technical result | –45 | –18 | –378 | –436 | 6 | — | |
| 9. a. Income from investments | 85 | 65 | 483 | 534 | 88 | 93 | |
| b. Expenses for investments | 6 | 11 | 43 | 43 | 7 | 22 | |
| Net income from investments under own management | 79 | 54 | 440 | 491 | 81 | 71 | |
| Income/expense from investment contracts | — | — | — | — | 2 | 2 | |
| Net interest income from funds withheld and contract deposits |
— | –1 | –4 | –6 | –1 | –1 | |
| Net investment income | 79 | 53 | 436 | 485 | 82 | 72 | |
| thereof attributable to interest and similar income | 52 | 49 | 401 | 383 | 84 | 77 | |
| attributable to interest and similar expenses | 1 | — | 5 | 6 | 14 | 24 | |
| impairments/depreciation on investments | — | 1 | 9 | 11 | — | 4 | |
| write-ups on investments | 7 | — | 1 | –1 | — | — | |
| income/expense from associated companies and joint ventures recognised using the equity method |
— | — | — | — | — | — | |
| 10. a. Other income | 28 | 21 | 45 | 40 | 10 | 22 | |
| b. Other expenses | 27 | 16 | 60 | 65 | 36 | 47 | |
| Other income/expenses | 1 | 5 | –15 | –25 | –26 | –25 | |
| thereof attributable to interest and similar income | — | — | 1 | — | 3 | 6 | |
| write-ups on accounts receivable and other assets |
4 | — | — | — | 1 | 1 | |
| attributable to interest and similar expenses | 6 | 6 | 2 | 2 | — | 2 | |
| write-downs on accounts receivable and other assets |
1 | 4 | 1 | — | 8 | 15 | |
| Profi t before goodwill impairments | 35 | 40 | 43 | 24 | 62 | 47 | |
| 11. Goodwill impairments | — | — | — | — | — | — | |
| Operating profi t/loss (EBIT) | 35 | 40 | 43 | 24 | 62 | 47 | |
| 12. Financing costs | 2 | 3 | 4 | 3 | 1 | — | |
| 13. Taxes on income | 12 | 13 | 10 | 11 | 17 | 14 | |
| Net income | 21 | 24 | 29 | 10 | 44 | 33 | |
| thereof attributable to non-controlling interests | — | — | 1 | 1 | 9 | 5 | |
| thereof attributable to shareholders of Talanx AG | 21 | 24 | 28 | 9 | 35 | 28 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
| Q2 2014 Q2 2013 Q2 2014 Q2 2013 1) Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 1) 1,970 1,899 1,470 1,570 20 14 –259 –244 6,561 6,508 164 151 38 49 20 14 –259 –244 — — 1,806 1,748 1,432 1,521 — — — — 6,561 6,508 — — — — — — — — 307 325 176 175 268 169 — — –253 –247 590 736 –50 –5 –14 –3 –9 –7 105 44 340 352 6 7 — — 2 2 100 46 295 16 1,738 1,712 1,188 1,398 9 5 –1 1 5,709 5,783 1,311 1,262 1,202 1,230 4 5 –128 –107 5,316 5,354 95 84 224 138 — 3 –137 –118 771 643 1,216 1,178 978 1,092 4 2 9 11 4,545 4,711 484 474 287 427 2 1 –51 –76 1,606 1,583 32 30 19 21 — — –43 –58 90 129 452 444 268 406 2 1 –8 –18 1,516 1,454 2 — — — — — 1 — –5 14 2 –3 2 4 1 1 –1 8 48 96 — — 1 1 — — — — 17 72 — 3 –2 –4 –1 –1 2 –8 –53 –82 70 93 –60 –104 2 1 — — –405 –464 229 245 73 76 11 64 –23 –10 946 1,067 33 66 7 13 20 19 –25 –20 91 154 196 179 66 63 –9 45 2 10 855 913 — — — — — — — — 2 2 5 4 81 90 — — — 1 81 87 201 183 147 153 –9 45 2 11 938 1,002 171 182 161 187 2 3 –25 –12 846 869 1 1 23 39 — — –2 –3 42 67 5 5 — — — 1 — — 14 22 — — — — — — — — 8 –1 1 5 — — 1 — — — 2 5 –1 44 22 16 183 216 –177 –195 110 164 23 19 21 36 175 191 –150 –177 192 197 –24 25 1 –20 8 25 –27 –18 –82 –33 1 1 3 2 1 — –2 — 7 9 1 3 — — — — — — 6 4 5 5 11 15 10 8 –2 –3 32 35 10 9 3 2 1 1 — — 24 31 247 301 88 29 1 71 –25 –7 451 505 — — — — — — — — — — 247 301 88 29 1 71 –25 –7 451 505 21 32 — 1 36 24 –23 –9 41 54 78 81 16 6 –10 4 –2 –1 121 128 148 188 72 22 –25 43 — 3 289 323 78 100 36 13 — — — — 124 119 70 88 36 9 –25 43 — 3 165 204 |
Non-Life Reinsurance | Life/Health Reinsurance | Corporate Operations | Consolidation | Total | |
|---|---|---|---|---|---|---|
The tables were essentially condensed to the areas of primary insurance, reinsurance, and Corporate Operations.
FIGURES IN EUR MILLION
| Primary insurance | Reinsurance | Corporate Operations |
Total | |
|---|---|---|---|---|
| 30.6.2014 | ||||
| Germany | 23,096 | 5,477 | 233 | 28,806 |
| United Kingdom | 3,269 | 2,397 | 27 | 5,693 |
| Central and Eastern Europe (CEE), including Turkey | 3,109 | 507 | 2 | 3,618 |
| Rest of Europe | 23,896 | 8,142 | 346 | 32,384 |
| USA | 1,780 | 8,793 | 4 | 10,577 |
| Rest of North America | 124 | 1,342 | — | 1,466 |
| Latin America | 1,099 | 959 | 2 | 2,060 |
| Asia and Australia | 1,642 | 3,701 | 3 | 5,346 |
| Africa | 4 | 298 | — | 302 |
| Total | 58,019 | 31,616 | 617 | 90,252 |
| 31.12.2013 | ||||
| Germany | 23,484 | 5,910 | 173 | 29,567 |
| United Kingdom | 3,062 | 2,348 | 53 | 5,463 |
| Central and Eastern Europe (CEE), including Turkey | 2,992 | 507 | 2 | 3,501 |
| Rest of Europe | 21,159 | 8,457 | 347 | 29,963 |
| USA | 1,315 | 8,353 | 4 | 9,672 |
| Rest of North America | 92 | 1,257 | 1 | 1,350 |
| Latin America | 931 | 884 | 2 | 1,817 |
| Asia and Australia | 1,524 | 3,135 | 4 | 4,663 |
| Africa | 14 | 300 | — | 314 |
| Total | 54,573 | 31,151 | 586 | 86,310 |
1) After elimination of internal transactions within the Group across segments. This can lead to deviations from the fi gures quoted in the Management Report
Non-current assets are considered largely to consist of intangible assets (including goodwill) and own-use real estate/investment property.
FIGURES IN EUR MILLION
| Primary insurance | Reinsurance | Corporate Operations |
Total | |
|---|---|---|---|---|
| 30.6.2014 | ||||
| Germany | 3,342 | 690 | 86 | 4,118 |
| United Kingdom | — | 3 | — | 3 |
| Central and Eastern Europe (CEE), including Turkey | — | — | — | — |
| Rest of Europe | 368 | 85 | — | 453 |
| USA | — | 336 | — | 336 |
| Rest of North America | — | — | — | — |
| Latin America | 32 | — | — | 32 |
| Asia and Australia | — | 2 | — | 2 |
| Africa | — | 7 | — | 7 |
| Total | 3,742 | 1,123 | 86 | 4,951 |
| 31.12.2013 | ||||
| Germany | 3,279 | 616 | 79 | 3,974 |
| United Kingdom | — | 3 | — | 3 |
| Central and Eastern Europe (CEE), including Turkey | — | — | — | — |
| Rest of Europe | 408 | 87 | — | 495 |
| USA | — | 335 | — | 335 |
| Rest of North America | — | — | — | — |
| Latin America | 33 | — | — | 33 |
| Asia and Australia | — | 2 | — | 2 |
| Africa | — | 7 | — | 7 |
| Total | 3,720 | 1,050 | 79 | 4,849 |
During the reporting period, there were no transactions with any one external client that amounted to 10% or more of total gross premium.
FIGURES IN EUR MILLION
| Primary insurance | Reinsurance | Corporate Operations |
Total | |
|---|---|---|---|---|
| 6M 2014 | ||||
| Germany | 4,690 | 548 | — | 5,238 |
| United Kingdom | 70 | 1,230 | — | 1,300 |
| Central and Eastern Europe (CEE), including Turkey | 1,065 | 114 | — | 1,179 |
| Rest of Europe | 1,498 | 969 | — | 2,467 |
| USA | 198 | 1,489 | — | 1,687 |
| Rest of North America | 11 | 333 | — | 344 |
| Latin America | 587 | 368 | — | 955 |
| Asia and Australia | 100 | 1,550 | — | 1,650 |
| Africa | 21 | 134 | — | 155 |
| Total | 8,240 | 6,735 | — | 14,975 |
| 6M 2013 | ||||
| Germany | 4,785 | 514 | — | 5,299 |
| United Kingdom | 69 | 1,270 | — | 1,339 |
| Central and Eastern Europe (CEE), including Turkey | 1,193 | 117 | — | 1,310 |
| Rest of Europe | 1,216 | 1,090 | — | 2,306 |
| USA | 169 | 1,682 | — | 1,851 |
| Rest of North America | 7 | 341 | — | 348 |
| Latin America | 592 | 410 | — | 1,002 |
| Asia and Australia | 70 | 1,182 | — | 1,252 |
| Africa | 16 | 243 | — | 259 |
| Total | 8,117 | 6,849 | — | 14,966 |
1) After elimination of internal transactions within the Group across segments. This can lead to deviations from the fi gures quoted in the Management Report
FIGURES IN EUR MILLION
| Primary insurance | Reinsurance | Corporate Operations |
Total | |
|---|---|---|---|---|
| Q2 2014 | ||||
| Germany | 1,727 | 183 | — | 1,910 |
| United Kingdom | 41 | 596 | — | 637 |
| Central and Eastern Europe (CEE), including Turkey | 515 | 48 | — | 563 |
| Rest of Europe | 616 | 435 | — | 1,051 |
| USA | 60 | 723 | — | 783 |
| Rest of North America | 4 | 185 | — | 189 |
| Latin America | 304 | 165 | — | 469 |
| Asia and Australia | 52 | 878 | — | 930 |
| Africa | 4 | 25 | — | 29 |
| Total | 3,323 | 3,238 | — | 6,561 |
| Q2 2013 | ||||
| Germany | 1,686 | 199 | — | 1,885 |
| United Kingdom | 24 | 617 | — | 641 |
| Central and Eastern Europe (CEE), including Turkey | 606 | 48 | — | 654 |
| Rest of Europe | 502 | 500 | — | 1,002 |
| USA | 53 | 828 | — | 881 |
| Rest of North America | 6 | 190 | — | 196 |
| Latin America | 303 | 179 | — | 482 |
| Asia and Australia | 46 | 593 | — | 639 |
| Africa | 12 | 116 | — | 128 |
| Total | 3,238 | 3,270 | — | 6,508 |
1) After elimination of internal transactions within the Group across segments. This can lead to deviations from the fi gures quoted in the Management Report
| FIGURES IN EUR MILLION | ||||
|---|---|---|---|---|
| 6M 2014 | 6M 2013 | Q2 2014 | Q2 2013 | |
| Property/casualty primary insurance | 4,905 | 4,853 | 1,649 | 1,578 |
| Life primary insurance | 3,335 | 3,265 | 1,674 | 1,661 |
| Non-Life Reinsurance | 3,824 | 3,813 | 1,806 | 1,748 |
| Life/Health Reinsurance | 2,911 | 3,035 | 1,432 | 1,521 |
| Total | 14,975 | 14,966 | 6,561 | 6,508 |
1) After elimination of internal transactions within the Group across segments. This can lead to deviations from the fi gures quoted in the Management Report
Eff ective 1 January 2014, as a result of IFRS 10, the Group changed the accounting method it uses to determine whether it exercises control over its investees, including special purpose entities, and thus must consolidate them.
IFRS 10 establishes a uniform principle of control that is applicable to all entities, including special purpose entities. The standard replaces the provisions of former IAS 27 and of SIC 12. Under IFRS 10, control over an investee exists where the Group has power over a Group entity based on voting or other rights, is exposed, or has rights, to variable returns from its involvement with the Group entity, and has the ability to aff ect those returns through its power. All of these aspects must be fulfi lled.
The capital consolidation is compiled in accordance with the requirements of IFRS 10. Subsidiaries are all companies that are controlled by the Group. Subsidiaries are included in the consolidated fi nancial statements (full consolidation) starting from the point when the Group acquired control over them. They are deconsolidated at the point when control ends.
In addition, cf. our remarks on consolidation principles in the section "Consolidation" in the 2013 Annual Report (page 183).
As at the balance sheet date, 125 individual companies, 38 investment funds, two structured entities and four subgroups (three of which are foreign subgroups) – collectively as a group (including asso ciated companies) – were included in full in the Talanx consolidated fi nancial statements, along with nine companies that were included at equity.
The major changes in the scope of consolidation relative to year-end 2013 are set out below.
Signifi cant additions and disposals of fully consolidated subsidiaries Eff ective 24 March 2014, Funis GmbH & Co. KG ("Funis") repaid the callable preferred shares with voting rights that it held in Glencar Underwriting Managers, Inc., Chicago, USA ("Glencar"), thus relinquishing the voting majority in the company. As part of the transaction, it was agreed that a change was to be made to the composition of the board of directors of Glencar, since Hannover Rück SE no longer held a majority of the seats. Since Hannover Rück SE is thus no longer able to exercise control over Glencar, although it continues to be able to exercise signifi cant infl uence over the company, Glencar was deconsolidated in the fi rst quarter of 2014 and included in the consolidated fi nancial statements under the equity method. Derecognition of assets and liabilities and the recognition of the participating interest at fair value resulted in income of EUR 3 million, which was recognised under "Other income/expenses". In addition, currency translation resulted in a charge against cumulative other comprehensive income in the amount of –EUR 0.1 million.
On entry of the transaction in the commercial register on 27 May 2014, HDI Lebensversicherung AG and HG-I Alternative Investments Beteiligungs-GmbH & Co. KG (both Cologne) together acquired 100% of the limited partner shares of WP Mörsdorf Nord GmbH & Co. KG, Cologne (formerly ABO Wind WP Mörsdorf Nord GmbH & Co. KG, Heidesheim); this company's general partner is Talanx Direct Infrastructure 1 GmbH, Cologne. The purpose of the company is to build and operate a wind farm. The purchase price amounted to EUR 7.1 million; no goodwill arose. No contingent liabilities, contingent considerations or separate transactions within the meaning of IFRS 3 were identifi ed. The company was initially consolidated in the second quarter of 2014.
HDI-Gerling Assurances S. A., Brussels, Belgium, was merged with HDI-Gerling Industrie Versicherung AG, Hannover, eff ective 1 January 2014; this transaction was entered in the commercial register of Hannover on 16 June 2014, on which date it also became legally eff ective.
In August 2013, Hannover Rück SE and another investor agreed to acquire a fi nancial participation in a company designed for the indirect acquisition of Heidelberger Lebensversicherung AG, Heidelberg. Aft er the supervisory authority gave its approval, the sale closed on 31 March 2014. Since that date, the shares of the company have been reported in the consolidated fi nancial statements as a fi nancial investment measured at amortised cost.
The scope of consolidation as at the balance sheet date encompasses the following companies:
| Individual companies | Investment funds 1) | Structured entities |
Subgroups 2) | ||||
|---|---|---|---|---|---|---|---|
| Domestic | Foreign | Domestic | Foreign | Foreign | Domestic/ Foreign |
Total | |
| 31.12.2013 | 68 | 55 | 25 | 11 | 2 | 4 | 165 |
| Additions | — | 2 | — | 2 | — | — | 4 |
| Disposals | — | 1 | — | — | — | — | 1 |
| 31.3.2014 | 68 | 56 | 25 | 13 | 2 | 4 | 168 |
| Additions | 2 | — | — | 1 | — | — | 3 |
| Disposals | — | 1 | — | 1 | — | — | 2 |
| 30.6.2014 | 70 | 55 | 25 | 13 | 2 | 4 | 169 |
1) Not structured entities because they are controlled via voting or similar rights
2) Including three foreign subgroups
Under IFRS 10, business relations with structured entities have to be examined with respect to their consolidation requirement. A structured entity within the meaning of IFRS 12 is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Accordingly, the Group must examine whether it has control despite the absence of a voting majority. For instance, control exists where the Group can use its power over the structured entity – e.g. through contractual arrangements – to infl uence the amount of the entity's profi tability.
As explained in the "Consolidation" section in the notes to the consolidated fi nancial statements in the 2013 Annual Report (pages 183 to 188), we classify business relations with structured entities and assess whether or not they must be consolidated on the basis of the following fi ve categories: investment funds, investments, securitisation of reinsurance risks, assumed life/health reinsurance business and retrocessions and insurance-linked securities.
The total of the contractually agreed capacities of the transactions in the "assumed life/health reinsurance business" category as at 30 June 2014 is the equivalent of EUR 2,288 (1,372) million, of which the equivalent of EUR 1,332 (892) million has been underwritten as at the balance sheet date. There were no further material changes in the business relations compared with 31 December 2013 that are signifi cant for an assessment of the assets, fi nancial position and net income.
Two structured entities are fully consolidated, as they were in the 2013 consolidated fi nancial statements.
As at the balance sheet date, three domestic and fi ve foreign associated companies were consolidated at equity (the fi gures are exclusive of foreign subgroups). As was the case in the 2013 consolidated fi nancial statements, Magma HDI General Insurance Company Limited, Kolkata, continues to be included at equity as a joint venture.
In the second quarter of 2014, CIV Hayat Sigorta A. Ș., Istanbul, Turkey, decided to sell its entire insurance portfolio. As a result, the Group reported assets and liabilities in the amount of EUR 13 million in each case separately as a disposal group. We expect the transfer of the risks and rewards of ownership for this transaction to take place by the end of fi nancial year 2014. The plan is to liquidate the company once the transaction has been completed.
As part of the merger of HDI Seguros S. A. de C. V. and Metropolitana Compañía de Seguros, Mexico City, Mexico, the Group continues to report the sale of a life insurance portfolio, including investments for covering liabilities, as in the prior-year period. The purchase price amounts to EUR 2 million. We expect the transfer of the risks and rewards of ownership for this transaction to take place in the course of 2014.
The key carrying amounts of the disposal group relate to investments, including accounts receivable on insurance business, totalling EUR 15 (15) million, as well as technical provisions and other liabilities amounting to EUR 17 (17) million. As at the balance sheet date, no cumulative income/expenses were contained in "Other comprehensive income". No impairments were recognised from measurement at fair value less costs to sell.
The non-life portfolio previously reported as a disposal group was disposed of in the second quarter of 2014 (assets and liabilities amounting to EUR 2 million in each case).
The transactions are part of the corporate focusing strategy and will lead to cost optimisation in the area of IT and personnel expenses.
In the third quarter of 2013, ASPECTA Assurance International Luxembourg S. A., Luxembourg, decided to sell a partial portfolio of its unit-linked life insurance business in connection with portfolio optimisation. The transaction has a purchase price at the lower end of seven fi gures. The agreement was signed on 23 April 2014, and we expect the transfer to take place during 2014. The disposal group contains assets of EUR 208 (216) million (including investments for the account and risk of holders of life insurance policies amounting to EUR 207 [212] million and cash of EUR 1 [4] million) and liabilities of EUR 208 (214) million (including technical provisions in the area of life insurance, insofar as the investment risk is borne by policyholders, amounting to EUR 207 [212] million, and other liabilities amounting to EUR 1 [2] million). As at the balance sheet date, no cumulative income/expenses were contained in "Other comprehensive income". No impairments were recognised from measurement at fair value less costs to sell.
As at the balance sheet date, we are not classifying any material real estate portfolios as held for sale. In the fi rst quarter of 2014, we disposed of all real estate classifi ed as at 31 December 2013 as held for sale (EUR 15 million).
The major items of the consolidated balance sheet can be broken down as follows:
| INTANGIBLE ASSETS | |||
|---|---|---|---|
| FIGURES IN EUR MILLION | |||
| 30.6.2014 | 31.12.2013 | ||
| a. Goodwill | 1,109 | 1,105 | |
| b. Other intangible assets | 1,380 | 1,446 | |
| thereof attributable to | |||
| Insurance-related intangible assets | 1,115 | 1,182 | |
| Software | 152 | 140 | |
| Other | |||
| Acquired distribution networks and customer relationships |
42 | 51 | |
| Other | 38 | 40 | |
| Acquired brand names | 33 | 33 | |
| Total | 2,489 | 2,551 |
FIGURES IN EUR MILLION
| Amortised cost | Unrealised gains/losses | Fair value | ||||
|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | |
| Mortgage loans | 770 | 849 | 83 | 88 | 853 | 937 |
| Loans and prepayments on insurance policies | 187 | 192 | — | — | 187 | 192 |
| Loans and receivables due from governmental or quasi-governmental entities 1) |
9,575 | 9,691 | 1,282 | 860 | 10,857 | 10,551 |
| Corporate securities | 6,556 | 6,731 | 443 | 218 | 6,999 | 6,949 |
| Covered bonds/asset-backed securities | 14,149 | 14,737 | 2,533 | 1,608 | 16,682 | 16,345 |
| Participation rights | 31 | 31 | 6 | 5 | 37 | 36 |
| Total | 31,268 | 32,231 | 4,347 | 2,779 | 35,615 | 35,010 |
1) Loans and receivables due from governmental or quasi-governmental entities include securities of EUR 3,007 (3,060) million that are guaranteed by the Federal Republic of Germany, other EU states or German federal states
The item "Covered bonds/asset-backed securities" includes German covered bonds (Pfandbriefe) with a carrying amount of EUR 14,128 (14,716) million, which corresponds to 99 (99)%.
FIGURES IN EUR MILLION
| Amortised cost | Unrealised gains/losses | Fair value | ||||
|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | |
| Government debt securities of EU member states | 558 | 556 | 29 | 26 | 587 | 582 |
| US treasury notes | 359 | 501 | 7 | 13 | 366 | 514 |
| Other foreign government debt securities | 61 | 69 | — | — | 61 | 69 |
| Debt securities issued by quasi-governmental entities 1) | 447 | 544 | 22 | 25 | 469 | 569 |
| Corporate securities | 375 | 343 | 10 | 10 | 385 | 353 |
| Covered bonds/asset-backed securities | 846 | 971 | 66 | 65 | 912 | 1,036 |
| Total | 2,646 | 2,984 | 134 | 139 | 2,780 | 3,123 |
1) Debt securities issued by quasi-governmental entities include securities of EUR 105 (130) million that are guaranteed by the Federal Republic of Germany, other EU states or German federal states
The item "Covered bonds/asset-backed securities" includes German covered bonds (Pfandbriefe) with a carrying amount of EUR 845 (969) million, which corresponds to 99 (99)%.
FIGURES IN EUR MILLION
| Amortised cost | Unrealised gains/losses | Fair value | ||||
|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | 30.6.2014 | 31.12.2013 | |
| Fixed-income securities | ||||||
| Government debt securities of EU member states | 6,777 | 6,554 | 660 | 217 | 7,437 | 6,771 |
| US treasury notes | 2,122 | 1,750 | 18 | –5 | 2,140 | 1,745 |
| Other foreign government debt securities | 1,856 | 1,682 | — | –30 | 1,856 | 1,652 |
| Debt securities issued by quasi-governmental entities 1) | 7,120 | 7,056 | 577 | 219 | 7,697 | 7,275 |
| Corporate securities | 18,466 | 16,923 | 957 | 361 | 19,423 | 17,284 |
| Investment funds | 650 | 699 | 62 | 38 | 712 | 737 |
| Covered bonds/asset-backed securities | 7,161 | 7,152 | 698 | 489 | 7,859 | 7,641 |
| Participation rights | 405 | 416 | 15 | 10 | 420 | 426 |
| Total fi xed-income securities | 44,557 | 42,232 | 2,987 | 1,299 | 47,544 | 43,531 |
| Variable-yield securities | ||||||
| Equities | 370 | 391 | 263 | 221 | 633 | 612 |
| Investment funds | 692 | 639 | 108 | 99 | 800 | 738 |
| Participation rights | 41 | 41 | — | — | 41 | 41 |
| Total variable-yield securities | 1,103 | 1,071 | 371 | 320 | 1,474 | 1,391 |
| Total securities | 45,660 | 43,303 | 3,358 | 1,619 | 49,018 | 44,922 |
1) Debt securities issued by quasi-governmental entities include securities of EUR 2,570 (2,681) million that are guaranteed by the Federal Republic of Germany, other EU states or German federal states
The item "Covered bonds/asset-backed securities" includes German covered bonds (Pfandbriefe) with a carrying amount of EUR 6,715 (6,541) million, which corresponds to 85 (86)%.
FIGURES IN EUR MILLION
| Fair value | ||
|---|---|---|
| 30.6.2014 | 31.12.2013 | |
| Fixed-income securities | ||
| Government debt securities of EU member states | 23 | 31 |
| Other foreign government debt securities | 30 | 39 |
| Debt securities issued by quasi-governmental entities 1) | 24 | 34 |
| Corporate securities | 496 | 453 |
| Investment funds | 148 | 114 |
| Covered bonds/asset-backed securities | 36 | 24 |
| Participation rights | 57 | 82 |
| Other | — | 20 |
| Total fi xed-income securities | 814 | 797 |
| Investment funds (variable-yield securities) | 48 | 52 |
| Other variable-yield securities | 72 | 35 |
| Total fi nancial assets classifi ed at fair value through profi t or loss | 934 | 884 |
| Fixed-income securities | ||
| Government debt securities of EU member states | — | — |
| Other foreign government debt securities | 2 | 1 |
| Corporate securities | 2 | 3 |
| Other securities | — | — |
| Total fi xed-income securities | 4 | 4 |
| Investment funds (variable-yield securities) | 85 | 120 |
| Derivatives | 79 | 82 |
| Total fi nancial assets held for trading | 168 | 206 |
| Total | 1,102 | 1,090 |
1) Debt securities issued by quasi-governmental entities include securities of EUR 2 (7) million that are guaranteed by the Federal Republic of Germany, other EU states or German federal states
The item "Covered bonds/asset-backed securities" includes German covered bonds (Pfandbriefe) with a carrying amount of EUR 0 (12) million, which corresponds to 0 (50)%.
For the purposes of the disclosure requirements pursuant to IFRS 13 "Fair Value Measurement", fi nancial instruments that are recognised at fair value must be assigned to a three-level fair-value h ierarchy. The purpose of this requirement is, inter alia, to show how closely the data included in the determination of fair values relate to market inputs. The following classes of fi nancial instruments are aff ected: fi nancial assets available for sale; fi nancial assets at fair value through profi t or loss; other invested assets and investment contracts (fi nancial assets and fi nancial liabilities), insofar as they are recognised at fair value; negative market values under derivative fi nancial instruments; and hedging instruments (derivatives in connection with hedge accounting).
The fair value hierarchy refl ects characteristics of the pricing information and inputs used for measurement, and it is structured as follows:
measured on the basis of yield curves such as debenture bonds and registered debt securities. Also allocated to level 2 are market prices for bonds with limited liquidity such as corporate securities.
¡ Level 3: Assets and liabilities that cannot be measured, or measured only in part, using inputs observable on the market. These instruments are mainly measured using measurement models and methods. This level primarily includes unlisted equity instruments.
Allocation to the fair value hierarchy levels is reviewed at a minimum as at the end of a period. Transfers are shown as if they had taken place at the beginning of the fi nancial year.
As at the balance sheet date, the share of level 1 fi nancial instruments in the total portfolio of fi nancial assets measured at fair value was 8 (7)%.
Altogether, 88 (89)% of fi nancial instruments measured at fair value were allocated to level 2 as at the balance sheet date.
As at the balance sheet date, the Group allocated 4 (4)% of fi nancial instruments measured at fair value to level 3.
FIGURES IN EUR MILLION
| Level 1 | Level 2 | Level 3 1) | Book value | |
|---|---|---|---|---|
| 30.6.2014 | ||||
| Financial assets measured at fair value | ||||
| Financial assets available for sale | ||||
| Fixed-income securities | 25 | 47,519 | — | 47,544 |
| Variable-yield securities | 805 | 70 | 599 | 1,474 |
| Financial assets at fair value through profi t or loss | ||||
| Financial assets classifi ed at fair value through profi t or loss | 86 | 830 | 18 | 934 |
| Financial assets held for trading | 97 | 66 | 5 | 168 |
| Other invested assets | 2,567 | 67 | 1,395 | 4,029 |
| Other assets, derivative fi nancial instruments (hedging instruments) | — | 274 | — | 274 |
| Investment contracts | ||||
| Financial assets classifi ed at fair value through profi t or loss | 297 | 444 | 127 | 868 |
| Financial assets available for sale | — | 27 | — | 27 |
| Derivatives | — | 63 | 10 | 73 |
| Total fi nancial assets measured at fair value | 3,877 | 49,360 | 2,154 | 55,391 |
| Financial liabilities measured at fair value | ||||
| Other liabilities (negative market values under derivative fi nancial instruments) | ||||
| Negative market values under derivatives | — | 52 | 126 | 178 |
| Negative market values under hedging instruments | — | — | — | — |
| Other liabilities (investment contracts) | ||||
| Financial liabilities classifi ed at fair value through profi t or loss | 361 | 444 | 127 | 932 |
| Derivatives | — | 62 | 10 | 72 |
| Nominal values | 361 | 558 | 263 | 1,182 |
1) Categorisation in level 3 does not amount to a statement as to quality; no conclusions may be drawn as to the creditworthiness of the issuers
FIGURES IN EUR MILLION
| Financial assets measured at fair value Financial assets available for sale Fixed-income securities Variable-yield securities Financial assets at fair value through profi t or loss Financial assets classifi ed at fair value through profi t or loss Financial assets held for trading |
49 801 53 127 |
43,482 67 |
— 523 |
31.12.2013 43,531 1,391 |
|---|---|---|---|---|
| 807 | 24 | 884 | ||
| 77 | 2 | 206 | ||
| Other invested assets 1,782 |
72 | 1,265 | 3,119 | |
| Other assets, derivative fi nancial instruments (hedging instruments) | — | 86 | — | 86 |
| Investment contracts | ||||
| Financial assets classifi ed at fair value through profi t or loss | 295 | 268 | 89 | 652 |
| Financial assets available for sale | — | 32 | — | 32 |
| Derivatives | — | 59 | 10 | 69 |
| Total fi nancial assets measured at fair value 3,107 |
44,950 | 1,913 | 49,970 | |
| Financial liabilities measured at fair value | ||||
| Other liabilities (negative market values under derivative fi nancial instruments) | ||||
| Negative market values under derivatives | — | 67 | 117 | 184 |
| Negative market values under hedging instruments | — | 7 | — | 7 |
| Other liabilities (investment contracts) | ||||
| Financial liabilities classifi ed at fair value through profi t or loss | 414 | 263 | 89 | 766 |
| Derivatives | — | 60 | 10 | 70 |
| Nominal values | 414 | 397 | 216 | 1,027 |
1) Categorisation in level 3 does not amount to a statement as to quality; no conclusions may be drawn as to the creditworthiness of the issuers
In the reporting period just ended, securities with a fair value of EUR 20 million that had been classifi ed as level 1 fi nancial assets in the previous year were instead allocated to level 2. The reclassifi cations were required primarily as a consequence of the reduced liquidity of the instruments. All reclassifi cations aff ect fi xed-income securities allocated to the category "Financial assets available for sale". Each of the indicated reclassifi cation amounts relates to the recognised carrying amount of the investment at the start of the period.
The following table shows a reconciliation of the fi nancial instruments (hereinaft er, "FI") included in level 3 at the beginning of the reporting period with the values as at the balance sheet date.
FIGURES IN EUR MILLION
| FI available for sale/ fi xed-income securities |
FI classifi ed at fair value through profi t or loss |
FI held for trading |
Other invested assets |
Investment contracts/FI classifi ed at fair value through profi t or loss |
Investment contracts/ derivatives |
Total amount of fi nancial assets measured at fair value |
|
|---|---|---|---|---|---|---|---|
| 2014 | |||||||
| Book value as at 1.1.2014 | 523 | 24 | 2 | 1,265 | 89 | 10 | 1,913 |
| Income and expenses | |||||||
| recognised in the statement of income |
–4 | — | — | 2 | 29 | — | 27 |
| recognised in other comprehensive income |
10 | — | — | 50 | — | — | 60 |
| Transfers to level 3 | 3 2) | — | — | — | — | — | 3 |
| Transfers from level 3 | — | — | — | — | — | — | — |
| Additions | |||||||
| Purchases | 90 | 9 | 3 | 148 | 13 | 3 | 266 |
| Disposals | |||||||
| Sales | 24 | 1 | — | 76 | 4 | 3 | 108 |
| Repayments | — | 14 | — | — | — | — | 14 |
| Exchange rate fl uctuations | 1 | — | — | 6 | — | — | 7 |
| Book value as at 30.6.2014 | 599 | 18 | 5 | 1,395 | 127 | 10 | 2,154 |
| 2013 | |||||||
| Book value as at 1.1.2013 | 369 | 31 | 3 | 1,179 | 114 | 18 | 1,714 |
| Income and expenses | |||||||
| recognised in the statement of income |
— | 1 | –1 | –5 | –31 | –3 | –39 |
| recognised in other comprehensive income |
5 | — | — | –1 | — | — | 4 |
| Transfers to level 3 | 30 2) | — | — | — | — | — | 30 |
| Transfers from level 3 | — | — | — | — | — | — | — |
| Additions | |||||||
| Purchases | 66 | 4 | 2 | 80 | 19 | 1 | 172 |
| Disposals | |||||||
| Sales | 20 | 25 | — | 73 | 17 | 5 | 140 |
| Exchange rate fl uctuations | 1 | — | — | 5 | –6 | –1 | –1 |
| Book value as at 30.6.2013 | 451 | 11 | 4 | 1,185 | 79 | 10 | 1,740 |
1) In the following, fi nancial instruments are abbreviated as "FI"
2) Measurement at net asset value and thus transfer to level 3
FIGURES IN EUR MILLION
| Other liabilities/ negative market values under derivatives |
Investment contracts/ FI classifi ed at fair value through profi t or loss |
Investment contracts/derivatives |
Total amount of fi nancial liabilities measured at fair value |
|
|---|---|---|---|---|
| 2014 | ||||
| Book value as at 1.1.2014 | 117 | 89 | 10 | 216 |
| Income and expenses | ||||
| recognised in the statement of income | — | –29 | — | –29 |
| recognised in other comprehensive income |
— | — | — | — |
| Transfers to level 3 | — | — | — | — |
| Transfers from level 3 | — | — | — | — |
| Additions | ||||
| Purchases | 8 | 13 | 3 | 24 |
| Disposals | ||||
| Sales | — | 4 | 3 | 7 |
| Exchange rate fl uctuations | 1 | — | — | 1 |
| Book value as at 30.6.2014 | 126 | 127 | 10 | 263 |
| 2013 | ||||
| Book value as at 1.1.2013 | 103 | 115 | 18 | 236 |
| Income and expenses | ||||
| recognised in the statement of income | — | 38 | — | 38 |
| recognised in other comprehensive income |
— | — | — | — |
| Transfers to level 3 | — | — | — | — |
| Transfers from level 3 | — | — | — | — |
| Additions | ||||
| Purchases | — | 83 | 3 | 86 |
| Disposals | ||||
| Sales | 1 | 74 | 10 | 85 |
| Exchange rate fl uctuations | — | –6 | –1 | –7 |
| Book value as at 30.6.2013 | 102 | 80 | 10 | 192 |
1) In the following, fi nancial instruments are abbreviated as "FI"
As at the balance sheet date, there were no liabilities that had been issued with an inseparable third-party credit enhancement within the meaning of IFRS 13.98.
Income and expenses for the period that were recognised in the consolidated statement of income, including gains and losses on level 3 assets and liabilities held in the portfolio at the end of the reporting period, are shown in the following table.
FIGURES IN EUR MILLION
| FI available for sale/variable yield securities |
FI classifi ed at fair value through profi t or loss |
FI held for trading |
Other invested assets |
Investment contracts/FI classifi ed at fair value through profi t or loss |
Investment contracts/ derivatives |
Total amount of fi nancial assets measured at fair value |
|
|---|---|---|---|---|---|---|---|
| 2014 | |||||||
| Gains and losses in the 2014 fi nancial year until 30.6.2014 |
|||||||
| Income from investments | — | 1 | 2 | 3 | 36 | 4 | 46 |
| Investment expenses | –4 | –1 | –2 | –1 | –7 | –4 | –19 |
| thereof attributable to fi nancial instruments included in the portfolio as at 30.6.2014 |
|||||||
| Income from investments 2) | — | 1 | 2 | 3 | 36 | 4 | 46 |
| Investment expenses 3) | –4 | — | –2 | –1 | –7 | –4 | –18 |
| 2013 | |||||||
| Gains and losses in the 2013 fi nancial year until 30.6.2013 |
|||||||
| Income from investments | — | 1 | — | — | 81 | 4 | 86 |
| Investment expenses | — | — | –1 | –5 | –112 | –7 | –125 |
| thereof attributable to fi nancial instruments included in the portfolio as at 30.6.2013 |
|||||||
| Income from investments | — | — | — | — | 81 | 4 | 85 |
| Investment expenses | — | — | –1 | –5 | –112 | –7 | –125 |
1) In the following, fi nancial instruments are abbreviated as "FI"
2) Thereof EUR 46 (85) million attributable to unrealised gains
3) Thereof EUR 13 (–120) million attributable to unrealised losses
FIGURES IN EUR MILLION
| Other liabilities/ negative market values under derivatives |
Investment contracts/ FI classifi ed at fair value through profi t or loss |
Investment contracts/ derivatives |
Total amount of fi nancial liabilities measured at fair value |
|
|---|---|---|---|---|
| 2014 | ||||
| Gains and losses in the 2014 fi nancial year |
||||
| Income from investments | 1 | 7 | 4 | 12 |
| Investment expenses | — | –36 | –4 | –40 |
| Financing costs | –1 | — | — | –1 |
| thereof attributable to fi nancial instruments included in the portfolio as at 30.6.2014 |
||||
| Income from investments2) | 1 | 7 | 4 | 12 |
| Investment expenses3) | — | –36 | –4 | –40 |
| Financing costs4) | –1 | — | — | –1 |
| 2013 | ||||
| Gains and losses in the 2013 fi nancial year |
||||
| Income from investments | — | 38 | — | 38 |
| Investment expenses | — | — | — | — |
| Financing costs | — | — | — | — |
| thereof attributable to fi nancial instruments included in the portfolio as at 30.6.2013 |
||||
| Income from investments | — | 38 | — | 38 |
| Investment expenses | — | — | — | — |
| Financing costs | — | — | — | — |
1) In the following, fi nancial instruments are abbreviated as "FI"
2) Thereof EUR 12 (38) million attributable to unrealised gains
3) Thereof –EUR 40 (0) million attributable to unrealised losses 4) Thereof –EUR 1 (0) million attributable to unrealised losses
The measurement process consists of using either publicly available prices on active markets or measurements with economically established models that are based on observable input factors in order to ascertain the fair value of fi nancial investments (level 1 and level 2 assets). For assets for which publicly available prices or observable market data are not available (level 3 assets), measurements are primarily made on the basis of proven measurements prepared by independent professional experts (e. g. audited net asset value) that have been previously subjected to systematic plausibility checks. The organisational unit entrusted with measuring investments is independent from the organisational units that enter into investment risks, thus ensuring separation of functions and responsibilities. The measurement processes and methods are documented in full. Decisions on measurement questions are made by the Talanx measurement committee, which meets monthly.
We do not make use of the option of portfolio measurement within the meaning of IFRS 13.48.
Determination of fair value: Fair value essentially corresponds to the price that the Group would receive if it were to sell an asset or pay if it were to transfer a liability in a customary transaction between market participants on the measurement date. The fair value of securities is thus generally determined on the basis of current, publicly available, unadjusted market prices. Where prices are quoted on markets for fi nancial instruments, the bid price is used. Financial liabilities are measured at the asking price. In the case of securities for which no current market price is available, a valuation price is determined on the basis of current and observable market data using established mathematical fi nancial models. Such models are used principally for the measurement of unlisted securities.
The Group uses various measurement models for this purpose:
| Financial instrument | Pricing method | Parameter | Pricing model |
|---|---|---|---|
| Fixed-income securities | |||
| Unlisted plain vanilla bonds | Theoretical price | Interest rate curve | Present value method |
| Unlisted structured bonds | Theoretical price | Interest rate curve, volatility surfaces, correlations | Hull-White, Black-Karasinski, Libor market model, etc. |
| ABS/MBS for which no market prices are available |
Theoretical price | Prepayment speed, incurred losses, default probabilities, recovery rates |
Present value method |
| CDOs/CLOs | Theoretical price | Prepayment speed, risk premiums, default rates, recovery rates, redemptions |
Present value method |
| Equities and funds | |||
| Unlisted equities | Theoretical price | Acquisition cost, cash fl ows, EBIT multiples, expert opinions, carrying amount where applicable |
NAV method 1) |
| Unlisted equity, real estate and annuity funds |
Theoretical price | Audited NAV 1) | NAV method 1) |
| Other invested assets | |||
| Private equity funds/private equity real estate funds |
Theoretical price | Audited NAV 1) | NAV method 1) |
| Derivative fi nancial instruments | |||
| Listed stock options | Listed price | — | — |
| Equity and index futures | Listed price | — | — |
| Interest rate and annuities futures | Listed price | — | — |
| Plain vanilla interest rate swaps | Theoretical price | Interest rate curve | Present value method |
| Currency forwards | Theoretical price | Interest rate curve, spot and forward rates | Interest parity model |
| OTC stock options, OTC stock index options |
Theoretical price | Listing of the underlying share, implicit volatilities, money-market interest rate, dividend yield |
Black-Scholes |
| FX options | Theoretical price | Spot rates, exchange rates, implicit volatilities | Garman/Kohlhagen |
| Interest rate futures (forward purchases) |
Theoretical price | Interest rate curve | Present value method |
| Infl ation swaps | Theoretical price | Infl ation swap rates (Consumer Price Index), historical index fi xings, interest rate curve |
Present value method with seasonality adjustment |
1) NAV: net asset value
| Financial instrument | Pricing method | Parameter | Pricing model |
|---|---|---|---|
| Swaptions | Theoretical price | Interest rate curve, implicit volatilities | Black76 |
| Credit default swaps | Theoretical price | Interest rate curve, recovery rates | ISDA model |
| Insurance derivatives | Theoretical price | Market values of CAT bonds, interest rate curve | Present value method |
| Other | |||
| Real estate | Theoretical value | Location, year of construction, rental space, | Expanded discounted |
| Fair value 30.6.2014 |
Measurement method | Unobservable inputs | Fluctuation ( weighted average) |
|
|---|---|---|---|---|
| CDOs/CLOs 2) | 9 | Present value method | Prepayment speed, risk premiums, default rates, recovery rates, redemptions |
n. a. 4) |
| Unlisted equity, real estate and bond funds 1) | 612 | NAV method 3) | n. a. | n. a. |
| Private equity funds/private equity real estate funds 1) | 1.280 | NAV method 3) | n. a. | n. a. |
| Written put options for minority interests 1) | 49 | Discounted NAV 3) | Risk-free interest | 5.6 % |
| Unlisted bond funds 1) | 8 | NAV method 3) | n. a. | n. a. |
| Insurance derivatives 2) | 185 | Present value method | Market values of CAT bonds, interest rate curve |
n. a. 4) |
| Investment contracts | 274 | — | — | — |
1) These fi nancial instruments are classifi ed in level 3, since they are neither based on market prices nor measured by the Group on the basis of
observable inputs. They are measured using the NAV method
2) These fi nancial instruments are classifi ed in level 3, since unobservable inputs were used to measure them
3) NAV: net asset value – alternative inputs within the meaning of IFRS 13 cannot be reasonably established
4) Due to the distinct character of the individual measurement inputs, fl uctuations cannot be reasonably established without disproportionate eff ort
If level 3 fi nancial instruments are measured using models where the adoption of reasonable alternative inputs leads to a material change in fair value, IFRS 7 requires disclosure of the eff ects of these alternative assumptions. Of the level 3 fi nancial assets with fair values of altogether EUR 2.4 (2.1) billion as at the balance sheet date, the Group generally measured fi nancial assets with a volume of EUR 1.9 (1.8) billion using the net asset value method, whereby alternative inputs within the meaning of the standard cannot reasonably be established. In addition, assets under investment contracts in the amount of EUR 137 (99) million are off set by liabilities under investment contracts in the same amount. Since assets and liabilities completely off set each other and trend similarly in value, we have elected to dispense with a scenario analysis. Insurance derivatives in the amount of EUR 185 (130) million are recognised in level 3. The trend in the value of these derivatives depends on the risk trends in a subordinate group of primary insurance contracts with statutory reserve requirements. The use of alternative inputs and assumptions had no material eff ect on the consolidated fi nancial statements. For the remaining level 3 fi nancial assets with a volume of EUR 9 (14) million, the eff ects of alternative inputs and assumptions are immaterial.
The share capital of Talanx AG remains unchanged at EUR 316 million and is divided into 252,797,634 registered no-par value shares. The share capital is fully paid up. With regard to the composition of shareholders' equity, cf. "Consolidated statement of changes in shareholders' equity".
There were no changes in the composition of conditional and authorised capital in the reporting period. For further information, please refer to the disclosures in our 2013 consolidated fi nancial statements (page 240 et seq.).
| FIGURES IN EUR MILLION | ||
|---|---|---|
| 30.6.2014 | 31.12.2013 | |
| Unrealised gains and losses from investments |
668 | 380 |
| Non-controlling interest in net income | 276 | 520 |
| Other shareholders' equity | 3,336 | 3,097 |
| Total | 4,280 | 3,997 |
"Non-controlling interests in shareholders' equity" refers principally to shares held by shareholders outside the Group in the shareholders' equity of the Hannover Re subgroup.
FIGURES IN EUR MILLION
| Nominal | 30.6.2014 | 31.12.2013 | ||||
|---|---|---|---|---|---|---|
| Hannover Finance (Luxembourg) S. A. | 500 | amount Coupon Fixed (5%), then fl oating rate |
Maturity 2005/no fi nal maturity |
Rating 5) (a+; A) |
496 | 493 |
| Hannover Finance (Luxembourg) S. A. | 500 | Fixed (5.75%), then fl oating rate |
2010/2040 | (a+; A) | 498 | 498 |
| Hannover Finance (Luxembourg) S. A. | 750 | Fixed (5.75%), then fl oating rate |
2004/2024 | (a+; A) | — | 749 |
| Hannover Finance (Luxembourg) S. A. | 500 | Fixed (5.0%), then fl oating rate |
2012/2043 | (a+; A) | 497 | 497 |
| HDI-Gerling Industrie Versicherung AG | 142 | Fixed (7%), then fl oating rate |
2004/2024 4) | (bbb+; A–) | 142 | 144 |
| HDI Lebensversicherung AG (formerly HDI-Gerling Lebensversicherung AG) 1) |
110 Fixed (6.75%) | 2005/no fi nal maturity |
(—; A–) | 111 | 112 | |
| Talanx Finanz 2) | 113 Fixed (4.5%) | 2005/2025 | (bbb; BBB) | 112 | 112 | |
| Talanx Finanz | 500 | Fixed (8.37%), then fl oating rate |
2012/2042 | (bbb; BBB) | 500 | 500 |
| Open Life Towarzystwo Ubezpieczeń Życie S. A. 3) |
2 | Fixed (2.5%), plus WIBOR 3M |
2013/2018 | (—; —) | 2 | 2 |
| Total | 2,358 | 3,107 |
1) As at the balance sheet date, Group companies in addition held bonds with a nominal value of EUR 50 million
(of these EUR 10 million are consolidated in the consolidated fi nancial statements, with the remaining EUR 40 million being blocked)
2) As at the balance sheet date, Group companies in addition held bonds with a nominal value of EUR 96 million (consolidated in the consolidated fi nancial statement)
3) Not included in the calculation of Group solvency
4) It was announced on 26 June 2014 that the bond be will repaid at par and in full; the repayment date is 12 August 2014
5) (Debt rating A. M. Best; debt rating S&P)
The bond issued by Hannover Finance (Luxembourg) S. A. on 26 February 2004 in the nominal amount of EUR 750 million was called in the entire nominal amount with eff ect on the fi rst scheduled repayment date and repaid on 26 February 2014.
With respect to other features, cf. the published 2013 Annual Report, page 242.
The fair value of the subordinated liabilities as at the balance sheet date amounted to EUR 2,682 (3,356) million.
FIGURES IN EUR MILLION
| Gross | Re | Net | Gross | Re | Net | |
|---|---|---|---|---|---|---|
| 30.6.2014 | 31.12.20131) | |||||
| a. Unearned premium reserve | 7,117 | 838 | 6,279 | 5,678 | 635 | 5,043 |
| b. Benefi t reserve | 50,797 | 962 | 49,835 | 49,767 | 832 | 48,935 |
| c. Loss and loss adjustment expense reserve | 35,095 | 5,057 | 30,038 | 33,775 | 4,894 | 28,881 |
| d. Provision for premium refunds | 3,508 | 1 | 3,507 | 2,178 | 2 | 2,176 |
| e. Other technical provisions | 312 | 4 | 308 | 319 | 8 | 311 |
| Total | 96,829 | 6,862 | 89,967 | 91,717 | 6,371 | 85,346 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
Technical provisions where the investment risk is borne by policyholders amounted to EUR 8,896 (8,325) million. Of this amount, EUR 296 (233) million is attributable to reinsurers.
As at the balance sheet date, the following issues were reported under this item:
| FIGURES IN EUR MILLION | ||
|---|---|---|
| 30.6.2014 | 31.12.2013 | |
| Talanx AG bank liability | 270 | 150 |
| Talanx AG notes payable | 565 | 565 |
| Mortgage loan of Hannover Re Real Estate Holdings, Inc., Orlando |
185 | 150 |
| Mortgage loan of HR GLL Central Europe GmbH & Co. KG, Munich |
102 | 77 |
| Total | 1,122 | 942 |
In 2011, and by way of an addendum in 2012, Talanx AG concluded agreements on two syndicated fl oating-rate lines of credit in a total nominal amount of EUR 1.2 billion, with a term of fi ve years. One of these lines of credit obtained in 2011 (for EUR 500 million) was replaced in the fi rst quarter of 2014 with a new line of credit at better conditions, which likewise has a term of fi ve years. The volume was increased to EUR 550 million. Accordingly, as at 30 June 2014, there are lines of credit having a nominal amount of EUR 1.25 billion. As at the balance sheet date, draw-downs amounted to EUR 270 million.
The fair value of the notes payable and loans as at the balance sheet date amounted to EUR 1,143 (958) million.
On 23 July 2014, Talanx AG issued a senior unsecured bond with a volume of EUR 500 million on the Luxembourg Stock Exchange. The bond carries a fi xed coupon of 2.5% and has a term of 12 years.
FIGURES IN EUR MILLION
| Nominal | amount Coupon | Maturity | Rating 1) | Issue | 30.6.2014 | 31.12.2013 | |
|---|---|---|---|---|---|---|---|
| This senior unsecured bond has a fi xed term and may be called only for |
|||||||
| Talanx AG | 750 Fixed (3.125 %) | 2013/2023 | (—; A–) | extraordinary reasons | 565 | 565 | |
| Total | 565 | 565 | |||||
| 1) (Debt Rating A. M. Best; Debt Rating S&P) |
Gross written premium includes the savings elements of premium from unit-linked life and annuity policies. These savings elements were eliminated from net premium earned.
| FIGURES IN EUR MILLION | |||||||
|---|---|---|---|---|---|---|---|
| Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total | |
| 6M 2014 1) | |||||||
| Gross written premium, including premium from unit-linked life and annuity insurance |
2,450 | 3,535 | 2,255 | 3,824 | 2,911 | — | 14,975 |
| Savings elements of premium from unit-linked life and annuity insurance |
— | 479 | 47 | — | — | — | 526 |
| Ceded written premium | 920 | 86 | 113 | 356 | 477 | 7 | 1,959 |
| Change in gross unearned premium | –596 | –317 | –132 | –321 | –13 | — | –1,379 |
| Change in ceded unearned premium | –146 | –11 | –9 | –28 | — | –3 | –197 |
| Net premium earned | 1,080 | 2,664 | 1,972 | 3,175 | 2,421 | –4 | 11,308 |
| 6M 2013 1) | |||||||
| Gross written premium, including premium from unit-linked life and annuity insurance |
2,376 | 3,591 | 2,151 | 3,813 | 3,035 | — | 14,966 |
| Savings elements of premium from unit-linked life and annuity insurance |
— | 471 | 112 | — | — | — | 583 |
| Ceded written premium | 985 | 77 | 140 | 396 | 297 | 4 | 1,899 |
| Change in gross unearned premium | –605 | –329 | –117 | –276 | –17 | — | –1,344 |
| Change in ceded unearned premium | –287 | –10 | –28 | –34 | 1 | — | –358 |
1) After elimination of internal transactions within the Group across segments
FIGURES IN EUR MILLION
| Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total | |
|---|---|---|---|---|---|---|---|
| 6M 2014 1) | |||||||
| Income from real estate | 2 | 32 | 1 | 41 | — | — | 76 |
| Dividends 2) | 4 | 7 | 2 | 6 | — | 10 | 29 |
| Current interest income | 92 | 774 | 135 | 323 | 113 | 1 | 1,438 |
| Other income | 1 | 1 | — | 3 | 6 | — | 11 |
| Ordinary investment income | 99 | 814 | 138 | 373 | 119 | 11 | 1,554 |
| Appreciation | 7 | 3 | — | — | — | — | 10 |
| Realised gains on investments | 45 | 182 | 23 | 81 | 19 | — | 350 |
| Unrealised gains on investments | 11 | 15 | 15 | 11 | 10 | 1 | 63 |
| Investment income | 162 | 1,014 | 176 | 465 | 148 | 12 | 1,977 |
| Realised losses on investments | 12 | 17 | 6 | 7 | 4 | — | 46 |
| Unrealised losses on investments | 2 | 2 | 6 | 8 | 4 | — | 22 |
| Total | 14 | 19 | 12 | 15 | 8 | — | 68 |
| Impairments/depreciation on investment property | |||||||
| scheduled | — | 7 | — | 9 | — | — | 16 |
| unscheduled | — | 3 | — | — | — | — | 3 |
| Impairments on equity securities | — | 1 | — | — | — | — | 1 |
| Impairments on fi xed-income securities | — | 3 | — | — | — | — | 3 |
| Impairments on other investments | — | 2 | — | 1 | — | — | 3 |
| Expenses for the administration of investments | 2 | 8 | 2 | 11 | 2 | 35 | 60 |
| Other expenses | 1 | 16 | 5 | 17 | 3 | — | 42 |
| Other investment expenses/impairments | 3 | 40 | 7 | 38 | 5 | 35 | 128 |
| Investment expenses | 17 | 59 | 19 | 53 | 13 | 35 | 196 |
| Net income from assets under own management | 145 | 955 | 157 | 412 | 135 | –23 | 1,781 |
| Profi t on investment contracts | — | — | 2 | — | — | — | 2 |
| Interest income from funds withheld and contract deposits |
— | — | — | 10 | 226 | — | 236 |
| Interest expense from funds withheld and contract deposits |
— | 7 | — | 1 | 63 | — | 71 |
| Net interest income from funds withheld and contract deposits |
— | –7 | — | 9 | 163 | — | 165 |
| Net investment income | 145 | 948 | 159 | 421 | 298 | –23 | 1,948 |
1) After elimination of internal transactions within the Group across segments
2) Income from investments in associated companies and joint ventures amounts to EUR 6 (6) million and is recognised under "Dividends"
| FIGURES IN EUR MILLION | ||
|---|---|---|
| Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total | |
|---|---|---|---|---|---|---|---|
| 6M 2013 1) | |||||||
| Income from real estate | 2 | 36 | 1 | 31 | — | — | 70 |
| Dividends 2) | 4 | 8 | 1 | 7 | — | 7 | 27 |
| Current interest income | 95 | 763 | 124 | 335 | 117 | 1 | 1,435 |
| Other income | 2 | 3 | — | 12 | 4 | — | 21 |
| Ordinary investment income | 103 | 810 | 126 | 385 | 121 | 8 | 1,553 |
| Appreciation | — | — | — | — | — | — | — |
| Realised gains on investments | 20 | 138 | 43 | 70 | 23 | 70 | 364 |
| Unrealised gains on investments | 2 | 5 | 11 | 5 | 8 | — | 31 |
| Investment income | 125 | 953 | 180 | 460 | 152 | 78 | 1,948 |
| Realised losses on investments | 8 | 14 | 10 | 9 | 3 | — | 44 |
| Unrealised losses on investments | 5 | 8 | 16 | 43 | 6 | — | 78 |
| Total | 13 | 22 | 26 | 52 | 9 | — | 122 |
| Impairments/depreciation on investment property | |||||||
| scheduled | 1 | 6 | 1 | 6 | — | — | 14 |
| unscheduled | — | — | — | — | — | — | — |
| Impairments on equity securities | — | 5 | 5 | — | — | 1 | 11 |
| Impairments on fi xed-income securities | 3 | 3 | — | — | — | — | 6 |
| Impairments on other investments | 1 | 2 | — | 2 | — | — | 5 |
| Expenses for the administration of investments | 2 | 8 | 2 | 8 | 2 | 33 | 55 |
| Other expenses | 1 | 13 | 2 | 18 | 4 | — | 38 |
| Other investment expenses/impairments Investment expenses |
8 21 |
37 59 |
10 36 |
34 86 |
6 15 |
34 34 |
129 251 |
| Net income from assets under own management | 104 | 894 | 144 | 374 | 137 | 44 | 1,697 |
| Profi t on investment contracts | — | — | 4 | — | — | — | 4 |
| Interest income from funds withheld and contract deposits |
1 | — | — | 10 | 241 | — | 252 |
| Interest expense from funds withheld and contract deposits |
— | 8 | — | 2 | 66 | — | 76 |
| Net interest income from funds withheld and contract deposits |
1 | –8 | — | 8 | 175 | — | 176 |
| Net investment income | 105 | 886 | 148 | 382 | 312 | 44 | 1,877 |
1) After elimination of internal transactions within the Group across segments
2) Income from investments in associated companies and joint ventures amounts to EUR 6 (6) million and is recognised under "Dividends"
Of impairments totalling EUR 10 (22) million, EUR 1 (11) million was attributable to equity securities, EUR 3 (6) million to fi xed-income securities and EUR 2 (5) million to private equity. On the other hand, there was an appreciation of EUR 10 (0) million on investments that had been written down in previous periods.
For the credit risk associated with special life reinsurance contracts (ModCo), under which securities deposits are held by cedants on our behalf, we recognised a derivative (Life/Health Reinsurance segment) whose change in value in the reporting period gave rise to positive changes in fair value of EUR 5 (1) million, which were recognised as income. In 2010 we entered into infl ation swaps (Non-Life Reinsurance segment) to hedge a portion of the infl ation risks associated with our underwriting loss reserve, and in the year to date, this has given rise to positive changes in fair value of EUR 4 (–40) million, which were recognised as an expense. Pursuant to IAS 39, the changes in their market values are recognised as a derivative in the statement of income. From an economic standpoint, we expect that changes in these two balance sheet items will be neutral, meaning that any volatility that may be experienced in individual quarters will have no bearing on actual business performance.
| FIGURES IN EUR MILLION | ||
|---|---|---|
| 6M 2014 | 6M 2013 | |
| Investments in affi liated companies and participating interests | 1 | 2 |
| Loans and receivables | 706 | 754 |
| Financial assets held to maturity | 59 | 65 |
| Financial assets available for sale | ||
| Fixed-income securities | 905 | 780 |
| Variable-yield securities | 56 | 98 |
| Financial assets at fair value through profi t or loss | ||
| Financial assets classifi ed at fair value through profi t or loss | ||
| Fixed-income securities | 45 | 18 |
| Variable-yield securities | 9 | –1 |
| Financial assets held for trading | ||
| Fixed-income securities | — | — |
| Variable-yield securities | 3 | 1 |
| Derivatives | 6 | –12 |
| Other invested assets, insofar as they are fi nancial assets | 26 | 49 |
| Other 1) | 67 | 36 |
| Assets under own management | 1,883 | 1,790 |
| Investment contracts investments/liabilities 2) | 2 | 4 |
| Funds withheld by ceding companies/funds withheld under reinsurance treaties | 165 | 176 |
| Total | 2,050 | 1,970 |
1) For the purposes of reconciliation with the consolidated statement of income, the item "Other" combines the gains on investment property, associated companies, joint ventures and derivative fi nancial instruments – insofar as the fair values are negative. Derivatives held for hedging purposes within the scope of hedge accounting are not included in the list if they do not relate to hedges in the area of investments
2) Includes income and expenses from the administration of investment contracts, which net out at –EUR 1 million. Of income and expenses, EUR 65 million/–EUR 41 million is attributable to fi nancial instruments at fair value through profi t or loss (assets/liabilities), EUR 11 million to loans and receivables, and ‒EUR 26 million to other liabilities. In addition, amortisation of PVFP in the amount of –EUR 6 million is taken into consideration under expenses
Making allowance for "Expenses for assets under own management" in the amount of EUR 60 (55) million and for "Other expenses" in the amount of EUR 42 (38) million, "Net investment income" as at the balance sheet date amounted to EUR 1,948 (1,877) million.
| FIGURES IN EUR MILLION | |||||||
|---|---|---|---|---|---|---|---|
| Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total | |
| 6M 2014 1) | |||||||
| Gross | |||||||
| Claims and claims expenses paid | 1,142 | 1,918 | 934 | 1,933 | 2,256 | — | 8,183 |
| Change in loss and loss adjustment expense reserve | 276 | 17 | 136 | 435 | 138 | — | 1,002 |
| Change in benefi t reserve | — | 234 | 483 | — | 117 | — | 834 |
| Expenses for premium refunds | 2 | 608 | — | — | — | — | 610 |
| Total | 1,420 | 2,777 | 1,553 | 2,368 | 2,511 | — | 10,629 |
| Reinsurers' share | |||||||
| Claims and claims expenses paid | 391 | 65 | 45 | 331 | 298 | — | 1,130 |
| Change in loss and loss adjustment expense reserve | 226 | –5 | 54 | –177 | 23 | –1 | 120 |
| Change in benefi t reserve | — | –4 | –3 | — | 99 | — | 92 |
| Expenses for premium refunds | — | — | 1 | — | — | — | 1 |
| Total | 617 | 56 | 97 | 154 | 420 | –1 | 1,343 |
| Net | |||||||
| Claims and claims expenses paid | 751 | 1,853 | 889 | 1,602 | 1,958 | — | 7,053 |
| Change in loss and loss adjustment expense reserve | 50 | 22 | 82 | 612 | 115 | 1 | 882 |
| Change in benefi t reserve | — | 238 | 486 | — | 18 | — | 742 |
| Expenses for premium refunds | 2 | 608 | –1 | — | — | — | 609 |
| Total | 803 | 2,721 | 1,456 | 2,214 | 2,091 | 1 | 9,286 |
1) Presentation after elimination of internal transactions within the Group across segments
FIGURES IN EUR MILLION
| Industrial Lines 2 ) |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total | |
|---|---|---|---|---|---|---|---|
| 6M 2013 1) | |||||||
| Gross | |||||||
| Claims and claims expenses paid | 1,206 | 1,745 | 937 | 1,628 | 2,399 | — | 7,915 |
| Change in loss and loss adjustment expense reserve | 94 | 18 | 118 | 755 | 85 | — | 1,070 |
| Change in benefi t reserve | — | 737 | 228 | — | 67 | — | 1,032 |
| Expenses for premium refunds | 7 | 306 | 2 | — | — | — | 315 |
| Total | 1,307 | 2,806 | 1,285 | 2,383 | 2,551 | — | 10,332 |
| Reinsurers' share | |||||||
| Claims and claims expenses paid | 668 | 60 | 35 | 222 | 250 | — | 1,235 |
| Change in loss and loss adjustment expense reserve | –213 | –2 | –7 | –58 | 27 | 2 | –251 |
| Change in benefi t reserve | — | –17 | –3 | — | 1 | — | –19 |
| Expenses for premium refunds | 4 | — | 2 | — | — | — | 6 |
| Total | 459 | 41 | 27 | 164 | 278 | 2 | 971 |
| Net | |||||||
| Claims and claims expenses paid | 538 | 1,685 | 902 | 1,406 | 2,149 | — | 6,680 |
| Change in loss and loss adjustment expense reserve | 307 | 20 | 125 | 813 | 58 | –2 | 1,321 |
| Change in benefi t reserve | — | 754 | 231 | — | 66 | — | 1,051 |
| Expenses for premium refunds | 3 | 306 | — | — | — | — | 309 |
| Total | 848 | 2,765 | 1,258 | 2,219 | 2,273 | –2 | 9,361 |
1) Presentation after elimination of internal transactions within the Group across segments
2) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
FIGURES IN EUR MILLION
| 6M 2014 1) Gross Acquisition costs and reinsurance commissions 290 439 439 854 453 2,475 Changes in deferred acquisition costs and changes in reserves for commissions –48 133 –43 –63 –17 –38 Total acquisition costs 242 572 396 791 436 2,437 Administrative expenses 125 146 84 99 89 543 Total acquisition costs and administrative expenses 367 718 480 890 525 2,980 Reinsurers' share Acquisition costs and reinsurance commissions 129 7 17 57 61 271 Changes in deferred acquisition costs and changes in reserves for commissions –9 5 1 –5 –21 –29 Total acquisition costs 120 12 18 52 40 242 Net Acquisition costs and reinsurance commissions 161 432 422 797 392 2,204 Changes in deferred acquisition costs and changes in reserves for commissions –39 128 –44 –58 4 –9 Total acquisition costs 122 560 378 739 396 2,195 Administrative expenses 125 146 84 99 89 543 Total acquisition costs and administrative expenses 247 706 462 838 485 2,738 6M 2013 1) Gross Acquisition costs and reinsurance commissions 269 470 462 827 575 2,603 Changes in deferred acquisition costs and changes in reserves for commissions –45 –17 –48 –42 — –152 Total acquisition costs 224 453 414 785 575 2,451 Administrative expenses 127 156 94 94 78 549 Total acquisition costs and administrative expenses 351 609 508 879 653 3,000 Reinsurers' share Acquisition costs and reinsurance commissions 158 8 27 67 53 313 Changes in deferred acquisition costs and changes in reserves for commissions –25 3 1 –5 –19 –45 Total acquisition costs 133 11 28 62 34 268 Net Acquisition costs and reinsurance commissions 111 462 435 760 522 2,290 Changes in deferred acquisition costs and changes in reserves for commissions –20 –20 –49 –37 19 –107 Total acquisition costs 91 442 386 723 541 2,183 Administrative expenses 127 156 94 94 78 549 Total acquisition costs and administrative expenses 218 598 480 817 619 2,732 |
Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Total |
|---|---|---|---|---|---|---|
1) Presentation after elimination of internal transactions within the Group across segments
FIGURES IN EUR MILLION
| 6M 2014 | 6M 2013 | |
|---|---|---|
| Other income | ||
| Foreign exchange gains | 111 | 147 |
| Income from services, rents and commissions |
124 | 114 |
| Reversals of impairments on receivables | 11 | 8 |
| Income from contracts recognised in accordance with the deposit accounting method |
34 | 40 |
| Income from the release of other non-technical provisions |
4 | 5 |
| Interest income | 14 | 16 |
| Miscellaneous income | 40 | 64 |
| Total | 338 | 394 |
| Other expenses | ||
| Foreign exchange losses | 109 | 95 |
| Other interest expenses | 59 | 65 |
| Depreciation and impairments | 50 | 66 |
| Expenses for the company as a whole | 129 | 134 |
| Expenses for personnel | 24 | 19 |
| Expenses for services and commissions | 66 | 45 |
| Other taxes | 20 | 27 |
| Allocation for restructuring provisions | 1 | 12 |
| Miscellaneous expenses | 48 | 60 |
| Total | 506 | 523 |
| Other income/expenses | –168 | –129 |
"Other income/expenses" for the reporting period just ended does not contain any material income from the release of restructuring provisions.
AVERAGE ANNUAL NUMBER OF STAFF EMPLOYED
| 30.6.2014 | 31.12.2013 | |
|---|---|---|
| Industrial Lines | 3,019 | 2,878 |
| Retail Germany | 4,950 | 5,092 |
| Retail International | 7,415 | 8,072 |
| Reinsurance companies | 2,443 | 2,376 |
| Corporate Operations | 2,845 | 2,792 |
| Total excluding apprentices and student trainees |
20,672 | 21,210 |
| Apprentices and student trainees | 517 | 509 |
| Total | 21,189 | 21,719 |
The decline in the Retail International segment was expected as a result of restructuring measures associated with the integration of our Polish insurance company T UiR WARTA S. A.
As at the balance sheet date, a total workforce of 19,628 (20,004) was employed by the Talanx Group. This fi gure refers to full-time equivalents (FTEs).
Related entities within the Talanx Group consist of HDI Haft pfl icht verband der Deutschen Industrie Versicherungsverein auf Gegenseitigkeit (HDI V. a. G.), which directly holds the majority of the shares of Talanx AG, all subsidiaries that are not consolidated on the grounds of materiality, as well as associated companies and joint ventures. In addition, there are the provident funds that pay benefi ts in favour of employees of Talanx AG or one of its related entities aft er termination of their employment. Related individuals comprise members of the Board of Management and the Supervisory Board of Talanx AG and of HDI V. a. G.
Transactions between Talanx AG and its subsidiaries are eliminated on consolidation and hence not discussed in the Notes.
In connection with operating activity, there is a contractual relationship between Ampega Investment GmbH, Cologne, and C-QUADRAT Investment AG, Vienna (an associated company measured at equity in the consolidated fi nancial statements), for outsourcing of the portfolio management of investment funds. As at the balance sheet date, this resulted in expenses for services provided of EUR 6 million.
Furthermore, services provided for Group companies by the subsidiaries HDI-Gerling Sicherheitstechnik GmbH and HDI Direkt Service GmbH (both Hannover), which were not consolidated on grounds of materiality, generated income of EUR 5 million and expenses totalling EUR 5 million, with the latter relating primarily to payments to HDI Versicherung AG in connection with the management of the insurance contract portfolio.
Further business relations with unconsolidated companies, associated companies and joint ventures are of minor importance overall.
In addition, there are service contracts with a company in which a member of the Supervisory Board participates. During the reporting period, the company generated revenues under these contracts in the amount of EUR 0.2 million with Group companies.
As at the balance sheet date, the Group recognised securities that had been sold to third parties under an obligation to redeem at a fi xed price (genuine repurchase agreements), since the material risks and opportunities associated with the fi nancial assets remained within the Group. Of these transactions, investments in the category "Financial assets held to maturity" and the category "Financial assets available for sale" amounting to EUR 7 million and EUR 61 million respectively (carrying amounts prior to the transfer: EUR 7 million and EUR 61 million respectively, fair value as at the balance sheet date corresponds to the carrying amount) were aff ected. There are no restrictions on use of the transferred fi nancial assets. The Group recognised the redemption obligation under "Other liabilities" in the amount of the payments received (EUR 68 million). The diff erence between the amount received for the transfer and that agreed to for retransfer is allocated in accordance with the eff ective interest rate method for the term of the repurchase transaction and recognised under "Net investment income".
There were no signifi cant court cases pending during the reporting period or as at the balance sheet date, with the exception of proceedings in connection with ordinary insurance and reinsurance business.
Earnings per share are calculated by dividing the Group profi t attributable to the shareholders of Talanx AG by the average number of outstanding shares. Dilutive eff ects, which have to be recognised separately when calculating earnings per share, were not present either as at the balance sheet date or in the previous year. In the future, earnings per share may be diluted as a result of the issuance of shares or subscription rights from conditional or authorised capital.
| 6M 2014 | 6M 2013 1) | Q2 2014 | Q2 2013 1) | |
|---|---|---|---|---|
| Net income attributable to shareholders of Talanx AG for calculating earnings per share (fi gures in EUR million) |
381 | 410 | 165 | 204 |
| Weighted average number of ordinary shares outstanding (in units) | 252,797,634 | 252,625,682 | 252,797,634 | 252,625,682 |
| Basic earnings per share (fi gures in EUR) | 1.51 | 1.62 | 0.65 | 0.81 |
| Diluted earnings per share (fi gures in EUR) | 1.51 | 1.62 | 0.65 | 0.81 |
1) Adjusted on the basis of IAS 8. Cf. "Accounting policies" section of the Notes, subsection "Changes in accounting policies and accounting errors"
FIGURES IN EUR MILLION
In the second quarter of 2014, a dividend for the 2013 fi nancial year was paid in the amount of EUR 1.20 per share (in 2013 for the 2012 fi nancial year: EUR 1.05), resulting in a total distribution of EUR 303 (265) million.
As at the balance sheet date, the following contingent liabilities and other fi nancial commitments derived from contracts and memberships that had been entered into, as well as from taxes:
| 30.6.2014 | 31.12.2013 | |
|---|---|---|
| Trust accounts in the United States (Master Trust Funds, Supplement Trust Funds and Single Trust Funds) as security for technical liabilities to US cedants 1) |
3,348 | 3,335 |
| Sureties in the form of letters of credit furnished by various fi nancial institutions as security for technical liabilities |
2,828 | 2,946 |
| Guarantees for subordinated bonds issued: the guarantees cover the relevant bond volumes as well as interest due |
2,112 | 2,862 |
| Blocked custody accounts and other trust accounts as collateral in favour of reinsurers and cedants; generally outside the USA 1) |
2,611 | 2,538 |
| Outstanding capital commitments with respect to existing investment exposures: the commitments primarily involve private equity funds and venture capital fi rms in the form of partnerships |
1,975 | 1,558 |
| Commitments arising out of rental/lease agreements 2) | 464 | 464 |
| Funding commitments and contribution payments pursuant to §§124 et seq. Insurance Supervision Act (VAG) as a member of the Security Fund for Life Insurers |
447 | 447 |
| Collateral for liabilities to various fi nancial institutions in connection with participating interests in real estate companies and real estate transactions |
580 | 460 |
| Commitments based on service agreements – primarily in connection with IT outsourcing contracts | 165 | 165 |
| Assets in blocked custody accounts as collateral for existing derivative transactions: We have received collateral with a fair value of EUR 2 (60) million for existing derivative transactions 3) |
50 | 92 |
| Other commitments | 51 | 53 |
| Total | 14,631 | 14,920 |
1) Securities held in the trust accounts are predominantly recognised as "Financial assets available for sale" in the portfolio of investments.
The amount stated refers primarily to the fair value/carrying amount
2) Fresh data is collected only at year-end
3) The amount stated refers primarily to the fair value/carrying amount
There were no other signifi cant changes in contingent liabilities and other fi nancial commitments in the reporting period compared with 31 December 2013.
The German Life Insurance Reform Act (LVRG) was signed by the Federal President and published in the Federal Law Gazette on 6 August. Key aspects of this law (e.g. regarding the valuation reserves) thus came into force on 7 August 2014; however, the full requirements will not apply until 1 January 2015. We are currently in the process of analysing the precise impact of the changes in the law.
Eff ective 31 July 2014, BaFin authorised Ampega Investment GmbH (AIG), Cologne, to operate as a German AIF management company. This means that, with immediate eff ect, AIG is a German management company licensed under the new German Investment Code (KAGB) that is permitted to manage UCITS funds (undertakings for collective investment in transferable securities) and open-ended retail and special AIFs (alternative investment funds).
On 23 July 2014, Talanx AG issued a senior unsecured bond with a volume of EUR 500 million on the Luxembourg Stock Exchange. The bond carries a fi xed coupon of 2.5% and has a term of 12 years.
The Group acquired ABO Wind WP Berngerode GmbH & Co. KG, Heidesheim, by way of a purchase agreement dated 18 July 2014. The acquisition will become eff ective upon its entry in the commercial register (expected in the third quarter of 2014). The company operates a wind farm project. HDI Lebensversicherung AG, Cologne (Retail Germany segment), acquired 80% and HG-I Alternative Investments Beteiligungs-GmbH & Co. KG (Industrial Lines segment) acquired 20% of this company's limited partner interests. The new general partner will be Talanx Direct Infrastructure 1 GmbH, Cologne. The purchase price amounted to EUR 12 million, with the planned investment volume expected to total approximately EUR 60 million.
Malaysia Airlines fl ight MH17, a passenger aircraft on a scheduled fl ight from Amsterdam to Kuala Lumpur, crashed on 17 July 2014 in the Ukrainian/Russian border region east of Donetsk, Ukraine. In addition, we assume that further losses will result from the armed clashes at Tripoli airport in Libya. The Talanx Group expects these incidents to result in a signifi cant catastrophe loss in the third quarter, although current indications are that this should be comfortably off set by the unused portion of the major loss budget for reinsurance in the fi rst six months.
In a press release dated 2 July 2014, Hannover Rück SE announced that it had completed a new transaction as part of its extended insurance-linked securities (ILS) activities eff ective 1 July 2014. Hannover Rück SE transferred defi ned storm risks to the capital markets via Alamo Re Ltd., a special purpose insurer registered in Bermuda. The assumed risks are limited to the state of Texas. The capital made available by institutional investors amounts to USD 400 million and this catastrophe bond matures in approximately three years.
HDI-Gerling Industrie Versicherung AG, Hannover (Industrial Lines segment), announced on 26 June 2014 that it would repay at par and at the earliest possible date the EUR 250 million subordinated bond maturing in 2024 issued by one of its predecessor companies, Gerling-Konzern Allgemeine Versicherungs-AG, Cologne, on 12 August 2004. The bond will be repaid on 12 August 2014.
Drawn up and released for publication in Hannover, 7 August 2014.
Board of Management
| Herbert K. Haas, | Dr. Christian Hinsch, | Torsten Leue |
|---|---|---|
| Chairman | Deputy Chairman | Leu |
| Dr. Immo Querner | Ulrich Wallin Wallin |
Dr. Jan Wicke |
To the best of our knowledge, and in accordance with the applicable reporting principles for interim fi nancial reporting, the interim consolidated fi nancial statements give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the Group in accordance with German accepted accounting principles, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group for the remaining months of the fi nancial year.
Hannover, 7 August 2014
Board of Management
| Herbert K. Haas, Chairman |
Dr. Christian Hinsch, Deputy Chairman |
Torsten Leue Leu |
|
|---|---|---|---|
| Dr. Immo Querner | Ulrich Wallin Wallin |
Dr. Jan Wicke |
We have reviewed the condensed interim consolidated fi nancial statements – consisting of the consolidated balance sheet, consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in shareholders' equity, consolidated cash fl ow statement, and select notes – and the interim Group Management Report of Talanx AG, Hannover, for the period from 1 January to 30 June 2014, which are the components of the half-yearly fi nancial report required under § 37w of the German Securities Trading Act (WpHG). Preparation of both the condensed interim consolidated fi nancial statements in accordance with the IFRS rules for interim fi nancial reporting, in the form adopted for use in the EU, and the interim Group Management Report in accordance with the provisions of the WpHG applicable to interim group management reports is the responsibility of the company's management. Our responsibility is to issue a report on the condensed interim consolidated fi nancial statements and the interim Group Management Report based on our review.
We conducted our review of the condensed interim consolidated fi nancial statements and the interim Group Management Report in accordance with generally accepted German standards for the review of fi nancial statements promulgated by the Institute of Public Auditors in Germany (IDW). Those standards require that we plan and perform the review such that, aft er a critical assessment, we are able to rule out with a fair degree of certainty that, in material respects, the condensed interim consolidated fi nancial statements were not prepared in accordance with the IFRS rules for interim fi nancial reporting, in the form adopted for use in the EU, and that, in material respects, the interim Group Management Report was not prepared in accordance with the provisions of the WpHG applicable to interim management reports. A review is essentially limited to questioning company employees and making analytical evaluations. It therefore does not off er the certainty that can be achieved by an audit of the fi nancial statements. Since we were not asked to audit the fi nancial statements, we cannot provide an auditor's opinion.
Based upon our review, we did not learn of any circumstances that give us reason to assume that, in material respects, the condensed interim consolidated fi nancial statements were not prepared in accordance with the IFRS rules for interim fi nancial reporting, in the form adopted for use in the EU, or that, in material respects, the interim Group Management Report was not prepared in accordance with the provisions of the WpHG applicable to interim group management reports.
Hannover, 8 August 2014
KPMG AG Wirtschaft sprüfungsgesellschaft
Husch Stiede Wirtschaft sprüfer Wirtschaft sprüfer (German public auditor) (German public auditor)
Riethorst 2 30659 Hannover Germany Telephone +49 511 3747-0 Telefax +49 511 3747-2525 www.talanx.com
Group Communications
Telephone +49 511 3747-2020 Telefax +49 511 3747-2025 [email protected]
Andreas Krosta
13 November 2014 Interim Report as at 30 September 2014
23 March 2015 Results Press Conference 2014
7 May 2015 Annual General Meeting
11 May 2015 Interim Report as at 31 March 2015
12 August 2015 Interim Report as at 30 June 2015
12 November 2015 Interim Report as at 30 September 2015
This is a translation of the original German text; the German version shall be authoritative in case of any discrepancies in the translation.
Interim Report online: www.talanx.com/investor-relations
Talanx AG Riethorst 2 30659 Hannover Germany Telephone +49 511 3747-0 Telefax +49 511 3747-2525 www.talanx.com
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