Quarterly Report • Nov 14, 2011
Quarterly Report
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as at 30 September 2011
| 1.1.–30.9.2011 | 1.1.–30.9.2010 | +/– % | ||
|---|---|---|---|---|
| Talanx Group overall | ||||
| Gross written premium | EUR m | 17,843 | 17,255 | +3.4 |
| by regions | ||||
| Germany | % | 38.5 | 39.7 | –1.2 points |
| Rest of Europe | % | 30.6 | 30.6 | 0.0 points |
| North America | % | 13.5 | 15.2 | –1.7 points |
| Australia/Asia | % | 8.1 | 6.4 | +1.7 points |
| Other countries | % | 9.3 | 8.1 | +1.2 points |
| Net premium earned | EUR m | 14,114 | 13,870 | +1.8 |
| Underwriting result | EUR m | –1,364 | –1,596 | +14.5 |
| Net investment income | EUR m | 2,352 | 2,404 | –2.2 |
| Operating profi t/loss (EBIT) | EUR m | 720 | 758 | –5.0 |
| Net profi t (after tax) | EUR m | 566 | 473 | +19.7 |
| Group net income (after non-controlling interests) | EUR m | 329 | 115 | +186.1 |
| Return on equity 1) | % | 8.6 | 3.2 5) | +5.4 points |
| Presentation by segments 2) | ||||
| Industrial Lines | ||||
| Gross written premium | EUR m | 2,556 | 2,527 | +1.1 |
| Net premium earned | EUR m | 1,095 | 1,084 | +1.0 |
| Underwriting result | EUR m | 74 | –13 | n.a. |
| Net investment income | EUR m | 151 | 172 | –12.2 |
| Operating profi t/loss (EBIT) | EUR m | 168 | 182 | –7.7 |
| Retail Germany | ||||
| Gross written premium | EUR m | 5,006 | 5,067 | –1.2 |
| Net premium earned | EUR m | 3,797 | 3,823 | –0.7 |
| Underwriting result | EUR m | –972 | –1,305 | +25.5 |
| Net investment income | EUR m | 1,149 | 1,234 | –6.9 |
| Operating profi t/loss (EBIT) | EUR m | 111 | –2 | n.a. |
| Retail International | ||||
| Gross written premium | EUR m | 1,774 | 1,651 | +7.5 |
| Net premium earned | EUR m | 1,362 | 1,319 | +3.3 |
| Underwriting result | EUR m | –49 | –106 | +53.8 |
| Net investment income | EUR m | 112 | 116 | –3.7 |
| Operating profi t/loss (EBIT) | EUR m | 18 | –29 | +162.1 |
| Non-Life Reinsurance | ||||
| Gross written premium | EUR m | 5,220 | 4,826 | +8.2 |
| Net premium earned | EUR m | 4,391 | 4,068 | +7.9 |
| Underwriting result | EUR m | –224 | 30 | n.a. |
| Net investment income | EUR m | 608 | 527 | +15.4 |
| Operating profi t/loss (EBIT) | EUR m | 352 | 669 | –47.4 |
| Life/Health Reinsurance | ||||
| Gross written premium | EUR m | 3,844 | 3,730 | +3.1 |
| Net premium earned | EUR m | 3,487 | 3,405 | +2.4 |
| Underwriting result | EUR m | –193 | –202 | +4.5 |
| Net investment income | EUR m | 350 | 363 | –3.6 |
| Operating profi t/loss (EBIT) | EUR m | 147 | 213 | –31.0 |
| Combined ratio in property/casualty insurance and non-life reinsurance 3) | % | 102.0 | 100.5 | +1.5 points |
| Combined ratio in property/casualty insurance | % | 98.2 | 102.4 | –4.2 points |
| Combined ratio in non-life reinsurance | % | 104.9 | 99.1 | +5.8 points |
| 30.9.2011 | 31.12.2010 | +/– % | ||
| Policyholders' surplus | EUR m | 11,019 | 10,771 | +2.3 |
| Equity attributable to shareholders of Talanx AG | EUR m | 5,257 | 4,9455) | +6.3 |
| Non-controlling interests | EUR m | 3,134 | 3,035 | +3.3 |
| Hybrid capital | EUR m | 2,628 | 2,791 | –5.8 |
| Investments under own management | EUR m | 75,256 | 72,461 | +3.9 |
| Total investments | EUR m | 86,579 | 83,422 | +3.8 |
| Return on investment 4) | % | 3.8 | 4.2 | –0.4 points |
| Total assets | EUR m | 113,303 | 111,100 | +2.0 |
| Staff | FTEs | 17,149 | 16,874 | +1.6 |
1) Annualized net profi t excluding non-controlling interests relative to average shareholders' equity excluding non-controlling interests
2) Before elimination of internal transactions within the Group across segments
3) Combined ratio adjusted for deposit interest received aft er elimination of internal transactions within the Group across segments
4) Investment income excluding deposit interest received relative to average investments under own management
5) Adjusted on the basis of IAS 8
Chairman Former Chairman of the Board of Management of Talanx AG, Berg
Deputy Chairman Employee, HDI-Gerling Vertrieb Firmen und Privat AG, Raesfeld
Deputy Chairman Former Chairman of the Board of Management of ThyssenKrupp Technologies AG, Hamburg
(from 1 September 2011) Attorney, Hamburg
Managing Director, Hannover Rückversicherung AG, E+S Rückversicherung AG, Hannover
Employee, HDI-Gerling Leben Betriebsservice GmbH, Bergisch Gladbach
Trade union secretary, Norderstedt
Chairman of the Board of Management of Groz-Beckert KG, Albstadt
Employee, HDI-Gerling Industrie Versicherung AG, Oberhausen
Employee, Hannover Rückversicherung AG, Hannover
Former Member of the Board of Management of Deutsche Post AG, Inning
Chairman of the Foundation Council of Hanns-Voith-Stift ung, Heidenheim
Employee, Talanx Service AG, Hannover
Former Member of the Board of Management of E.ON AG, Hannover
(until 31 August 2011) Member of the Board of Management of Daimler AG, Stuttgart
Professor at Leibniz University, Hannover
Chairman of the Board of Management of Bayer AG, Leverkusen
Chairman Burgwedel
Deputy Chairman Burgwedel
Dr. Thomas Noth Hannover
Dr. Heinz-Peter Roß Gräfelfi ng
The global economy underwent a cooldown in the fi rst three quarters of 2011. Business activity in the United States was fl at at the beginning of the year, although it went on to regain some momentum. Within the Eurozone the picture was in some respects a very mixed one. Most strikingly, countries on the Eurozone periphery – which are faced with austerity drives on a massive scale – suff ered marked cuts in growth. The German economy also lost some of its energy in the course of the second quarter, generating even less vigorous growth than the Eurozone as a whole at just 0.1%.
The US labor market failed to see any easing as 2011 progressed. Key leading indicators simply caved in; consumer confi dence in the US similarly took a considerably darker turn. Within the Eurozone Germany continues to be the bright spot on the labor market; yet in most other Eurozone countries unemployment is high (Spain 21%, Greece 16%, Portugal 12%). Some leading indicators – such as the Ifo Index and the Purchasing Managers Index – were, however, also disappointing of late for the Eurozone.
The Eurozone GDP growth of 0.2% in the second quarter was sobering aft er the 0.8% recorded in the fi rst quarter. In the United States the fi gure for the fi rst quarter was revised sharply downwards from 1.9% to 0.4%, while the annualized rate in the second quarter was 1.3%. The United Kingdom fared similarly poorly with growth rates of 0.4% in the fi rst and 0.1% in the second quarter.
The monetary policy pursued by the major central banks has remained expansionary in the course of 2011. Despite the protracted debt crisis the ECB has raised the key rate to 1.5% in two increments, although of late it has seen downside risks for the European economy. Accordingly, it cut the key rate by 25 basis points to 1.25% on 3 November 2011.
In the fi rst two quarters of 2011 the euro profi ted from the more restrictive monetary policy of the ECB, climbing from around USD 1.34 to the euro to a high of USD 1.48. With the economic prospects for the Eurozone looking gloomier – coupled with the ongoing sovereign debt crisis –, the euro came under increasing pressure in the third quarter and fell against the greenback to a level of USD 1.35 to the euro.
In the fi rst three quarters of 2011 bond markets were primarily dominated by the unresolved debt and credit crisis aff ecting the co-called GIIPS countries. The situation has become more strained in the last quarter even though the bank stress tests carried out in the middle of July passed off on a broadly positive note. Present circumstances point to a renewed banking crisis: the liquidity supply is principally provided through extended central bank lines. The ECB remains active on the secondary market with its purchasing of government bonds issued by countries on the Eurozone periphery, while a new program to buy up covered bonds has also been approved. The strengthening of trust in the banking sector is increasingly coming into the political focus.
Equity markets came under particular strain in the fi rst quarter as a consequence of the disaster in Fukushima. The continued unresolved sovereign debt crisis within the Eurozone and the ongoing discussion surrounding a possible Greek debt reduction prompted a global stock crash in the third quarter, accompanied by a renewed banking crisis. As at the end of the third quarter the DAX was around 20% lower than the level at the beginning of the year. The EURO STOXX 50 TR similarly shed almost 20% of its value. With a fall of 10% the losses on the US S&P 500 were only half as high.
Compared to the previous quarter, the business climate in the German insurance industry has become less favorable in some areas. The prevailing mood varies in life insurance and on the property/casualty side: while the current situation in life insurance is assessed more negatively, the business atmosphere in property/casualty insurance – driven by developments in motor insurance as well as in the property lines – is brighter.
No signifi cant implications of the sovereign debt crisis could be observed in German property/casualty insurance in the fi rst nine months. This is principally due to the time lag with which changes in overall economic conditions make themselves felt in the insurance sector. Fierce price competition, on the other hand, continues to be a major driver of the business development, although early soft ening tendencies are becoming evident. Thus, for example, it was pleasing to note that in the 2010/2011 turn-of-the-year policy renewals in motor insurance – by far the largest line in property/casualty insurance and the profi tability of which had been heavily eroded in recent years – it was possible to push through premium increases again both in new business and for in-force policies. This caused the pace of growth in this line to pick up appreciably.
Intense competition is similarly the hallmark of industrial and commercial property insurance; although further growth potential here is generally limited by the already achieved high level of market penetration, this business was nevertheless able to profi t from the recent recovery of the business sector and boosted its premium volume in subsegments such as marine and credit insurance. In business with retail customers demand has been stable over the course of the year to date. In light of the favorable state of the economy, the strain from loss events has tended to increase relative to the previous year.
On the German life insurance market (including occupational retirement provision in the form of "Pensionskassen" and "Pensionsfonds") gross written premium looks set to decline in 2011 by around 6% to 7%. In this context regular premiums can be expected to record a marginal decrease. Business with a single premium payment, on the other hand, is showing a sharp downturn of some 20%; it is thus moving towards normalization aft er the extraordinarily dynamic growth recorded in prior years. This is therefore also the major factor in the anticipated premium contraction in German life insurance.
The depressed growth in business with long-duration products can be attributed to the fact that demand among customers has already been overshadowed by marked purchasing restraint for quite some time now. This is primarily due to the general uncertainty surrounding the development of the basic economic environment and fi nancial markets going forward – doubts which have existed since the onset of the global fi nancial and economic crisis. Since the crisis fi rst set in this has deterred broad swathes of consumers from entering into fi nancial commitments through long-term contracts. What is more, the growing importance of single-premium
contracts in recent years has gone hand-in-hand with greater volatility in life insurance business, which otherwise tends to be geared more towards long-term asset growth. Against this backdrop, the increase of around 2% in new business with a regular premium payment – the fi rst such rise in a long time – should be assessed positively.
Although the situation on the international non-life reinsurance markets varies across regions and segments, it is driven by stable demand overall for reinsurance protection. Emerging markets continue to post good growth fi gures. In Europe, demand among ceding companies is being fostered inter alia by the growing need for solvency capital that is becoming apparent under Solvency II. In this context, clients will continue to attach considerable signifi cance to a reinsurer's fi nancial strength. The heavy burden of natural catastrophe losses incurred over the year to date, including the fl oods in Australia, the earthquake in New Zealand and the tsunami in Japan – together with the devastation triggered by these events – not only led to sometimes appreciable price increases as early as the April and June/July treaty renewals; they are also likely to push up prices for natural catastrophe covers through the necessary recalibration of the corresponding exposures – not just in the impacted regions but also worldwide.
The general environment in international life/health reinsurance remains favorable in the period under review. The aging of the population in established insurance markets such as the United States, Japan, United Kingdom and Germany is promoting greater awareness of the need for provision. This has proven especially benefi cial to providers of annuity and health insurance products. Yet in leading emerging markets such as China, India and Brazil demand for individual retirement provision is also rising. Financially oriented reinsurance solutions, i.e. models designed to strengthen the equity base of primary insurers, continue to enjoy sustained demand. Yet at the same time we are faced with regulatory uncertainties and a challenging capital market climate.
| 1.1.– | 1.1.– | ||
|---|---|---|---|
| 30.9. | 30.9. | ||
| 2011 | 2010 | +/– | |
| Figures in EUR million | |||
| Gross written premium | 17,843 | 17,255 | +3% |
| Net premium earned | 14,114 | 13,870 | +2% |
| Underwriting result | –1,364 | –1,596 | +15% |
| Net investment income | 2,352 | 2,404 | –2% |
| Operating profi t/loss (EBIT) | 720 | 758 | –5% |
| Combined ratio | +1.5 | ||
| (net, property and casualty only) | 102.0% | 100.5% | points |
In the third quarter of 2011 the Talanx Group entered into and extended two major strategic partnerships respectively. In August we took another step in our strategy of internationalization by agreeing on a strategic partnership with the Vietnamese company Petro Vietnam Insurance Holdings (PVI Holdings). Our subsidiary HDI-Gerling Industrie Versicherung AG became its partner through the acquisition of a 25% stake in PVI Holdings; the transaction closed in the fourth quarter. The two companies will pool their resources in the relevant insurance areas – inter alia also with the support of the Talanx subsidiary Hannover Re. This partnership with the successful and strong insurer PVI Holdings gives us access to the Vietnamese growth market and also secures a solid foundation for cultivating further activities in this highly attractive region. At the same time, we will be able to off er our own locally invested customers an all-round service.
In the asset management sector a cooperation between Talanx Asset Management GmbH and the Austrian asset manager C-Quadrat Investment AG has already been in place since the end of 2010. This strategic partnership was further expanded: Talanx Asset Management expects to award management mandates to C-Quadrat Kapitalanlage AG as early as the fourth quarter of 2011 for fund portfolios in the form of funds of funds with an absolute return investment profi le in an amount of some EUR 300 million. Another step in the cooperation is the planned establishment of a joint venture geared specifi cally to institutional sales partners and hence intended to open up new distribution channels. Business activities are planned to start in 2012.
At the end of October the rating agency Standard & Poor's confi rmed the Talanx Primary Group's key fi nancial strength rating of A+, with special mention being made of the Group's capital strength and its leading competitive position in industrial lines and in German bancassurance business.
The Group's gross written premium increased relative to the corresponding period of the previous year by 3% to reach EUR 17.8 (17.3) billion for the fi rst nine months of 2011. Adjusted for exchange rate eff ects growth would have come in at 4%. With the exception of Retail Germany, all segments recorded premium growth. Non-Life Reinsurance generated the strongest increase (8% before exchange rate eff ects), followed by Retail International with a gain of 7% excluding exchange rate eff ects.
Despite the modest increase in the level of retained premium, net premium earned only grew by just under 2% to EUR 14.1 (13.9) billion owing to the rise in unearned premiums – driven in particular by the large share of new business in unit-linked life insurance as well as the pleasing growth in credit life insurance products.
In the fi rst nine months of the year, the underwriting result improved on the corresponding period of the previous year in all segments except for Non-Life Reinsurance, where a slight plus slipped into sharply negative territory as a consequence of the major losses in the fi rst quarter. It was negative in all the other operational segments apart from Industrial Lines, where a profi t was reported – contrasting with a slight defi cit booked in the comparable period of the previous year. On the Group level the underwriting result is regularly negative because the participation of policyholders in the investment income generated by our life insurers is recognized here. It improved by EUR 232 million or 15%. These improvements are attributable in part to a lower volume of single premiums, but also to the reduced investment income and hence a smaller allocation to the benefi t reserve.
The rise in the combined ratio from 100.5% to 102.0% can be attributed both to the expense ratio (26.6% as against 25.9% in the previous year) and the increase of 0.9 percentage points in the loss ratio. Despite the heavy burden of major losses in Non-Life Reinsurance, the increase was very slight because the ratios in Industrial Lines and in the Retail International segment were signifi cantly lower than in the corresponding period of the previous year.
The development of investment income ran contrary to the underwriting result: in a protracted low-interest environment it declined in each of the individual segments by a singledigit or low double-digit percentage amount; only in Non-Life Reinsurance was there a signifi cant rise of 15%. Investment income for the Group as a whole contracted by 2% to EUR 2.4 (2.4) billion.
The operating result (EBIT) generated by our segments developed very inconsistently; in both Retail Germany and Retail International it increased (in the previous year both segments had seen a slight decrease). On the other hand, it declined in Industrial Lines and especially in the Reinsurance segments. Their share of the operating profi t (EBIT) generated by the operational segments consequently contracted from 88% in the previous year to 64%.
Group EBIT was also adversely impacted by a decline in other income, which includes inter alia a decrease in the balance of exchange gains and losses. The operating profi t (EBIT) within the Group retreated by 5% from EUR 758 million to EUR 720 million.
The net profi t for the period climbed by almost 20% thanks to sharply lower income taxes. Group net income more than doubled owing to reduced non-controlling interests: it stood at EUR 329 (115) million for the fi rst nine months of 2011.
| 1.1.– | 1.1.– | ||
|---|---|---|---|
| 30.9. | 30.9. | ||
| 2011 | 2010 | +/– | |
| Figures in EUR million | |||
| Gross written premium | 2,556 | 2,527 | +1% |
| Net premium earned | 1,095 | 1,084 | +1% |
| Underwriting result | 74 | –13 | n.a. |
| Net investment income | 151 | 172 | –12% |
| Operating profi t/loss (EBIT) | 168 | 182 | –8% |
| –8.1 | |||
| Combined ratio (net) | 93.1% | 101.2% | points |
The Industrial Lines division is led by HDI-Gerling Industrie Versicherung AG. As an internationally operating industrial insurer, HDI-Gerling Industrie supports its clients at home and abroad with bespoke solutions optimally tailored to their individual needs. Industrial clients in Germany and abroad benefi t from decades of experience. Comprehensive insurance solutions are assembled on the basis of customized coverage concepts. We thereby provide the complete product spectrum needed to protect against entrepreneurial risks.
Gross written premium in the segment amounted to EUR 2.6 (2.5) billion as at the end of the third quarter 2011, corresponding to an increase of 1%.
In the motor line gratifying growth of around EUR 19 million was generated in the German market on the basis of tariff increases in the in-force portfolio and the positive development of new business. Premiums in the fi re line also fared well, recording a modest increase of around EUR 12 million relative to the comparable period of the previous year. The industrial liability line saw premium decreases of roughly EUR 40 million relative to the corresponding period of the previous year – which had been notable for signifi cant additional premiums from individual relationships – owing to the termination of some sizeable accounts as well as increased risk assumption by captive insurers. Declines in the marine line were driven by portfolio rehabilitation measures.
Turning to the international arena, business in the various submarkets was stable overall with a positive tendency. In the fi re line growth was particularly vigorous in France at around EUR 25 million. Our Belgian company contributed an increase of some EUR 9 million to gross premiums in the segment, largely through a new business relationship. In the Netherlands premiums also developed favorably. The Spanish company held its ground well in a market climate that remains fi ercely competitive, booking gross premiums on a par with the previous year's period. The Austrian company also recorded a stable development. As an established niche insurer transacting primarily specialty lines such as professional indemnity and D&O as well as off ering crisis management services, the Dutch company Nassau Verzekering Maatschappij N. V., Rotterdam (Nassau) – which was included for the fi rst time in the second quarter of 2011 – delivered gross written premium of EUR 22 million.
Reinsurance premiums increased by around EUR 12 million; in the previous year's period reinstatement premium of EUR 26 million was included, which reduced the net premium earned in the full amount. Unearned premium was 9% higher in the third quarter of 2011 at EUR 229 (211) million; this eff ect was largely off set by a 14% increase in the ceded share thereof to EUR 102 (90) million, as a result of which net premium earned in the Industrial Lines segment increased slightly to EUR 1,095 (1,084) million.
The Industrial Lines segment closed the end of the third quarter 2011 with a net underwriting profi t of EUR 74 million, contrasting with a defi cit of EUR 13 million in the comparable period of the previous year. The net expense ratio amounted to 21.4 (19.8)%, while the loss ratio stood at 71.8 (81.4)% – hence producing – especially on account of the sharply lower loss ratio – a signifi cantly improved combined ratio of 93.1 (101.2)%.
Net claims and claims expenses in the Industrial Lines segment fell by 7% to EUR 761 (815) million. Major claims were incurred most notably in the fi re line; the March earthquake and tsunami in Japan produced a net strain of EUR 44 million in the third quarter, principally in the fi re line. Along
with other losses the fl ooding in Australia is worth mentioning, with a total burden in the order of EUR 3 million for net account.
Investment income in the segment contracted by around 12% to EUR 151 (172) million; the decline is, however, attributable chiefl y to HDI-Gerling Industrie, which booked income of EUR 122 (150) million as at the end of the third quarter 2011. Decisive factors here were impairments on equities as well as – to a modest extent – on Greek government bonds. The other companies in the Industrial Lines segment generated stable investment income; Nassau Verzekering recorded income from investments amounting to a good EUR 3 million.
The operating profi t (EBIT) in the Industrial Lines stood at EUR 168 (182) million aft er the third quarter of 2011. Key factors here were the decline in the other income and investment income – driven by exchange rate movements –, which was not entirely off set by the rise in the net underwriting result.
| 1.1.– | 1.1.– | ||
|---|---|---|---|
| 30.9. | 30.9. | ||
| 2011 | 2010 | +/– | |
| Figures in EUR million | |||
| Gross written premium | 5,006 | 5,067 | –1% |
| Net premium earned | 3,797 | 3,823 | –1% |
| Underwriting result | –972 | –1,305 | +25% |
| Net investment income | 1,149 | 1,234 | –7% |
| Operating profi t/loss (EBIT) | 111 | –2 | n.a. |
| Combined ratio | +0.1 | ||
| (net, property and casualty only) | 101.8% | 101.7% | points |
The Retail Germany division brings together within the Talanx Group the German business transacted by HDI-Gerling with private and commercial customers as well as all German bancassurance activities.
Gross written premium in this Group segment – including savings elements of premiums from unit-linked life insurance – contracted by around 1% in the period under review to EUR 5.0 (5.1) billion.
While premiums in the life insurance sector fell, property/ casualty business continued to show a very pleasing development. This can be attributed in part to high-volume new business and also to premium adjustments. Premium income in the period under review climbed 6% year-on-year to EUR 1,337 (1,263) million. Our most important P/C line, namely motor business, benefi ted particularly strongly from this trend, booking both higher in-force premiums and growth in policy numbers.
Refl ecting the market trend, declining single premiums in life insurance led to gross written premium – including savings elements of premiums from unit-linked life insurance – of EUR 3,670 (3,804) million. PBV Lebensversicherung AG – which was merged into PB Lebensversicherung AG on 4 October 2011 with retroactive eff ect from 1 January 2011 – nevertheless signifi cantly enlarged its single premium business against the trend and boosted its premium income by 11%. Neue Leben Lebensversicherung AG increased its income from regular premium payments in individual life business; driven by growth in credit life insurance, TARGO Lebensversicherung AG also posted a positive development in this area. In the case of HDI-Gerling Lebensversicherung AG, the high number of maturities relative to new business shaped the premium development and – with single premiums holding stable – led to a drop in premium income.
The level of retained premium climbed from 90.5% to 93.2%. This can be attributed to a reduced proportion of reinsurance cessions in life insurance business – resulting from the commutation of quota share reinsurance treaties in the previous year. Aft er elimination of the savings elements of premiums for our unit-linked products and allowing for the change in unearned premiums, net premium earned came in at EUR 3,797 (3,823) million.
Measured by the Annual Premium Equivalent (APE), the growth in new business booked by our companies operating in the segment was satisfactory overall. At EUR 505 million, it surpassed the level of the previous year and – in view of the forecast decline in single-premium business – exceeded expectations. HDI-Gerling Firmen und Privat Versicherung AG was notable for an increase of 29% to EUR 93 million on account of its success in co-insurance business. Despite the expected drop in single-premium business, TARGO Lebensversicherung AG and PBV Lebensversicherung AG reported favorable developments.
The underwriting result for the segment improved markedly by 25% to –EUR 972 (–1,305) million. This development was crucially infl uenced by life insurance products: their share improved year-on-year by 26% to EUR 954 (1,288) million. The improvement in the life insurers' underwriting performance in the period under review was primarily driven by the development of investment income, the decline of which resulted in reduced policyholder participations. The claims and claims expenses (net) associated with life insurance products thus fell – in part, however, also as a consequence of the drop in single premiums – by 8% to EUR 3,250 (3,516) million. In addition, a decrease in the amortization of PVFPs from acquired life insurance portfolios also played a key part in easing the strain on profi tability.
The development of the underwriting result from our property/casualty insurance products was shaped principally by higher amortizations of deferred acquisition costs. Acquisition costs and administrative expenses (net) thus climbed to –EUR 363 (–310) million. The positive premium development combined with a virtually unchanged loss ratio had a favorable eff ect on profi tability. What is more, the profi ts from the run-off of reserves constituted for prior years were substantially boosted. Altogether, the underwriting result in this area slipped to –EUR 20 (–16) million.
The investment income booked in the segment fell notably by 7% to EUR 1.1 (1.2) billion. With an unchanged share of 93%, the bulk of this amount is attributable to life insurance products. Of the total investment income, around EUR 1,064 (1,138) million was therefore to be credited pro rata to the holders of life insurance policies. Ordinary income profi ted heavily from the substantial single-premium business of the previous year. Al in all, though, the dominant factor is the development of extraordinary income, which contracted in the period under review to EUR 5 million aft er EUR 141 million in the corresponding period of the previous year. In this regard, the performance of the comparable period had been driven by disposal gains from special funds. In the period under review, by contrast, it was necessary inter alia to take losses on disposals in connection with the sale of equities.
The operating profi t (EBIT) generated by the segment stood at EUR 111 (–2) million, although it should be borne in mind that the comparable period had been impacted by adjustments in the context of the division's reorientation. The increase stemmed primarily from the improved underwriting result, which – allowing for off setting of the signifi cant drop in investment income – was also assisted by reduced amortization on the PVFPs from acquired portfolios.
| 1.1.– 30.9. |
1.1.– 30.9. |
||
|---|---|---|---|
| 2011 | 2010 | +/– | |
| Figures in EUR million | |||
| Gross written premium | 1,774 | 1,651 | +7% |
| Net premium earned | 1,362 | 1,319 | +3% |
| Underwriting result | –49 | –106 | +54% |
| Net investment income | 112 | 116 | –4% |
| Operating profi t/loss (EBIT) | 18 | –29 | n.a. |
| Combined ratio | –4.8 | ||
| (net, property and casualty only) | 99.7% | 104.5% | points |
The Group segment of Retail International brings together the activities of the companies transacting retail business in property/casualty insurance, life insurance and bancassurance in international markets. The segment is led by Talanx International AG.
In this division we off er private and commercial customers outside Germany comprehensive insurance protection. By drawing upon local, industry-specifi c know-how and our presence through an extended distribution network we are able to identify our customers' particular requirements and provide customized solutions.
Brazil, Poland and Italy continue to rank among the highestvolume markets in this segment. On the Brazilian market we are particularly active in motor insurance, which promises further growth in keeping with the favorable economic trend. Poland's economic output has already shown soft er, but nevertheless positive growth since 2009, which also promises further growth for the insurance market. In addition to motor insurance, we transact other lines in Poland such as casualty and general property insurance as well as life insurance. On the Italian market we conduct operations both in the life insurance market and in property/casualty insurance – predominantly motor insurance. The company there noted the fi rst indications of rate increases beginning to take hold in motor insurance aft er several years of fi erce competitive and pricing pressure.
Gross written premium in the segment increased by around 7% relative to the corresponding period of the previous year to reach altogether EUR 1.8 (1.7) billion.
New additions in the second quarter were a company in Argentina for property/casualty and life insurance products and a company in Uruguay for property/casualty products. The company in Uruguay contributed a premium volume of almost EUR 4 million in the third quarter, while the Argentinian company generated premium of altogether EUR 25 million.
The Russian property/casualty company OOO HDI Strakhovannie, which commenced operational business in the year under review, is included with a premium volume of EUR 218,000.
The growth recorded in the area of property/casualty insurance products was to some extent distorted by exchange rate eff ects. Exchange rates for the Brazilian, Turkish and Mexican currencies fl uctuated particularly sharply. The strong market position of the Brazilian company HDI Seguros S. A. delivered premium growth – translated into EUR – of 26%. The premium volume booked by the Turkish company HDI Sigorta A. Ş. grew particularly vigorously; converted into EUR, however, the increase was just 15%.
The life insurance premiums booked by HDI Assicurazioni S. p. A., Rome, contracted relative to the comparable period because a crucial eff ect in the previous year – a tax amnesty on account of which considerable amounts were available for investment and in which life insurance policies were also able to participate as an attractive investment alternative – ceased to apply in 2011. The company nevertheless booked an increase in traditional life insurance business. In property/ casualty business the company generated growth of around 16% based on higher average premiums and the materialization of numerous new contracts, especially in the motor liability sector. It thus surpassed the average growth of the property/casualty market as a whole.
Thanks to a cooperation with the Polish BRE Bank, our life insurance company HDI-Gerling Życie TU S. A. boosted its premium volume in EUR by 103% – most notably in the area of unit-linked life insurance. The Russian OOO Strakhovaya Kompaniya "CiV Life" also booked an increase of 42% in its premium volume in EUR. The premium growth booked by the Turkish company CiV Hayat Sigorta A. Ş. was particularly vigorous in the local currency at 30%; translated into EUR it increased by 14% relative to the corresponding period of the previous year, although the sale of single-premium products declined in favor of regular premiums in the areas of credit life insurance for credit card holders and personal accident insurance. These two companies thus rank among the fastest growing in their respective markets.
The Aspecta companies in Luxembourg and Liechtenstein largely ceased writing new business with eff ect from 1 January 2011, as a consequence of which the premium volume contracted by almost 29% relative to the previous year in Luxembourg and by 10% in Liechtenstein in the local currency.
The underwriting result generated by the segment improved on the corresponding period of the previous year to reach –EUR 49 (–106) million. The combined ratio of the international property/casualty insurance companies stood at 99.7 (104.5)%, i.e. roughly 5 percentage points lower than in the previous year's period. This was due inter alia to the favorable development at HDI Assicurazioni S. p. A., Rome.
The underwriting result reported by the Brazilian company HDI Seguros S. A. includes infl ation-related adjustments for claims heard before the courts, as a consequence of which both the technical expenses and the loss ratio increased. The fall in the average premium in motor insurance also adversely impacted the loss ratio.
The Polish company HDI Asekuracja TU S. A. moved back into underwriting profi tability in the third quarter of 2011 thanks to the absence of major loss events; in the previous year the company's result had been hard hit by fl ood and winter damage.
The Turkish HDI Sigorta A. Ş. boosted its operational business relative to the comparable period and also sharply reduced its loss ratio. The underwriting result was nevertheless again impacted by negative eff ects, since a change in the law led to retroactive payments in motor business.
The investment income reported by the segment in the period under review totaled EUR 112 million, a decline of 4% relative to the corresponding period of the previous year. The decrease stemmed principally from extraordinary income, whereas ordinary income improved on the previous year by 18% on the back of larger portfolios.
The deterioration in extraordinary income was driven fi rst and foremost by the Italian company HDI Assicurazioni S. p. A., which booked write-downs on investments of almost EUR 13 million in the third quarter.
The Polish company HDI Asekuracja TU S. A. was also adversely impacted by movements on capital markets, taking write-downs on investments of almost EUR 2 million.
Thanks to favorable developments in the segment's underwriting results, the period under review in 2011 closed with an operating profi t (EBIT) of EUR 18 (–29) million.
| 1.1.– | 1.1.– | ||
|---|---|---|---|
| 30.9. | 30.9. | ||
| 2011 | 2010 | +/– | |
| Figures in EUR million | |||
| Gross written premium | 5,220 | 4,826 | +8% |
| Net premium earned | 4,391 | 4,068 | +8% |
| Underwriting result | –224 | 30 | n.a. |
| Net investment income | 608 | 527 | +15% |
| Operating profi t/loss (EBIT) | 352 | 669 | –47% |
| +5.8 | |||
| Combined ratio (net) | 104.9% | 99.1% | points |
The Reinsurance division within the Talanx Group is operated almost exclusively by the Hannover Re Group, one of the leading reinsurance groups in the world. The reinsurer off ers its clients in the Group segment of Non-Life Reinsurance a comprehensive product range in treaty and facultative reinsurance and is also one of the foremost providers of structured reinsurance solutions.
Business developed broadly to our satisfaction in non-life reinsurance. The situation on the international reinsurance markets is favorable on the whole. Owing to the massive scale of the natural disasters in the fi rst quarter, the treaty renewals during the year saw the anticipated sharp surges in rates, especially under programs that had suff ered losses. In Australia and New Zealand, where the bulk of treaties are traditionally renewed as at 1 July, appreciably rate increases and improved conditions were booked on the back of the heavy losses attributable to natural disasters. The 1 June/1 July
renewals in our target market of North America passed off favorably, albeit not without qualifi cations. In US catastrophe business, for example, rate increases of 5% to 15% were obtained. Casualty covers, on the other hand, failed to see any signifi cant trend reversal towards market hardening, although prices have now bottomed out.
The gross premium for the Non-Life Reinsurance division increased by 8% as at 30 September 2011 relative to the corresponding period of the previous year to stand at EUR 5.2 (EUR 4.8) billion. At constant exchange rates, especially against the US dollar, growth would have been as much as 11%. The level of retained premium remained virtually unchanged. Net premium earned climbed 8% to EUR 4.4 (4.1) billion.
The third quarter passed off relatively moderately in terms of major losses; at EUR 118 million the strain was below the expected level of EUR 165 million. The largest single loss for our account was Hurricane "Irene", with a net burden of EUR 20 million. In view of the exceptionally heavy major loss incidence in the fi rst quarter, however, the net burden of catastrophe losses and major claims as at 30 September 2011 totaled EUR 743 million – a fi gure still well in excess of the corresponding period of the previous year (EUR 554 million). The combined ratio stood at 104.9 (99.1)%. The net underwriting result came in at –EUR 224 (30) million.
The operating profi t (EBIT) in Non-Life Reinsurance fell to EUR 352 (669) million as at 30 September 2011 on account of the heavy burden of major losses in the fi rst quarter as well as the negative performance of infl ation swaps in the third quarter.
| 1.1.– 30.9. 2011 |
1.1.– 30.9. 2010 |
+/– | |
|---|---|---|---|
| Figures in EUR million | |||
| Gross written premium | 3,844 | 3,730 | +3% |
| Net premium earned | 3,487 | 3,405 | +2% |
| Underwriting result | –193 | –202 | +4% |
| Net investment income | 350 | 363 | –4% |
| Operating profi t/loss (EBIT) | 147 | 213 | –31% |
The Group segment of Life/Health Reinsurance brings together our reinsurance activities in the life, annuity and health lines under the Hannover Life Re brand name. The Hannover Re Group also writes the accident line in this segment, to the extent that it is transacted by life insurers.
The international life and health reinsurance markets continue to off er us attractive business opportunities. The demographic trend in mature insurance markets such as the United States, United Kingdom, Germany, France and Australia is generating heightened awareness overall of the need for provision. Yet in leading emerging markets such as China, India and Brazil demand for individual protection against biometric risks is also rising.
We support our clients with tailored reinsurance solutions for their management of capital, liquidity and risk. We are thoroughly satisfi ed with the development of our business in the United Kingdom, above all in the area of longevity risks. The reinsurance of enhanced annuities taken out with a single premium payment continues to account for a large share of UK annuity business. In the current fi nancial year we have continued to expand our assumption of blocks of existing pension obligations from pension funds and primary insurers.
In most markets the business development was – as anticipated – pleasing. Gross written premium in Life/Health Reinsurance climbed 3% to EUR 3.8 (3.7) billion as at 30 September 2011. Net premium earned increased by 2% to EUR 3.5 (3.4) billion.
The development of the result in Life/Health Reinsurance did not entirely live up to our expectations. The further widening of credit spreads on bond markets resulted in an additional strain of around EUR 70 million on deposits held by US clients for Hannover Re's account. What is more, we incurred adverse currency eff ects of –EUR 12 million in the fi rst nine months, contrasting with a positive eff ect of EUR 32 million in the corresponding period of the previous year. The operating profi t (EBIT) of EUR 147 (213) million generated despite the aforementioned negative eff ects is a testament to the good quality and excellent diversifi cation of our book of life/health reinsurance.
| 1.1.– | 1.1.– | ||
|---|---|---|---|
| 30.9. | 30.9. | ||
| 2011 | 2010 | +/– | |
| Figures in EUR million | |||
| Investment income | –27 | –34 | +21% |
| Other income/expenses | –32 | –205 | +84% |
| Operating profi t/loss (EBIT) | –59 | –239 | +75% |
Along with Talanx AG, the companies belonging to the Corporate Operations segment consist of the internal service companies Talanx Service AG and Talanx Systeme AG as well as Talanx Investments (including AmpegaGerling) and Talanx Reinsurance Broker.
Talanx Asset Management GmbH – in cooperation with the subsidiary AmpegaGerling Investment GmbH – is chiefl y responsible for handling the management and administration of Group companies' securities portfolios and performs associated services such as investment bookkeeping and reporting. The company had assets under management of EUR 72.6 billion as at the end of the third quarter 2011, compared with a volume of EUR 67.2 billion at year-end 2010.
AmpegaGerling Investment GmbH manages fi nancial portfolios for institutional clients and administers public and special funds. The emphasis is on portfolio management and the administration of investments for clients outside the Group. The sales situation for the investment sector is heavily overshadowed in the current year by the spreading crisis on fi nancial markets, which has been further exacerbated by the unresolved debt crises in the United States and Europe. Concerns about the security of their invested money prompted investors to pull capital out of investment funds and deterred them from putting new cash into such products. As a consequence, statistics compiled by the BVI Bundesverband Investment and Asset Management indicate that the industry has recorded net outfl ows of EUR 5.7 billion from securities funds since the beginning of the year. In this challenging situation AmpegaGerling Investment GmbH held its ground comparatively well, generating net sales of EUR 84 million in business with external clients in the period under review. In the third quarter the company recorded a net outfl ow of EUR 24 million owing to the deteriorating sales environment as a consequence of the fi nancial crisis. Despite the positive cash infl ow, the total assets of the public funds under management by AmpegaGerling Investment GmbH at the end of the third quarter were lower than the year-end level at EUR 3.2 (2010: 3.5) billion. This was attributable to sharply soft ening prices on international equity markets.
The total volume of assets under management fell to EUR 12.7 (14.7) billion, a contraction of 14% relative to the level at the beginning of the year. Of this total volume, more than half – specifi cally EUR 7.1 (8.0) billion – was administered on behalf of Group companies through special funds and direct investment mandates. The remaining portion was attributable to institutional third-party clients in an amount of EUR 2.5 (3.4) billion and retail business in an amount of EUR 3.1 (3.3) billion. The latter is off ered both through the Group's own sales channels and products such as unit-linked life insurance as well as through external asset managers and banks.
Assets of EUR 1.2 (1.2) billion were attributable to Talanx Immobilien Management GmbH as at 30 September 2011.
All in all, the volume of assets under management by all Talanx investment companies grew from EUR 83.1 billion at the beginning of the year to EUR 86.5 billion at the end of the quarter, of which EUR 79.2 billion was apportionable to Group companies and EUR 7.3 billion to business with third-party clients.
With the renaming of Protection Reinsurance Intermediaries AG as Talanx Reinsurance Broker AG eff ective 1 September, the restructuring of the Talanx companies is complete. Talanx Reinsurance Broker serves as the professional reinsurance advisor and broker for composite reinsurance cessions of all primary insurers belonging to the Talanx Group. The operating profi t (EBIT) generated by Talanx Reinsurance Broker AG in this segment totaled EUR 5 (6) million for the fi rst three quarters of 2011.
The operating result (EBIT) of Talanx Asset Management GmbH amounted to EUR 26 million, while at Talanx Immobilien Management GmbH it totaled –EUR 2 million, at AmpegaGerling Investment GmbH EUR 5 million and at Talanx AG –EUR 93 million, since as a holding company the latter performs the fi nancing function for the Group.
The two service companies Talanx Service AG and Talanx Systeme AG have now commenced trading; they do not, however, deliver a profi t contribution because they operate – as agreed – on an at-cost basis.
The balance sheet structure of the Talanx Group is shaped by its character as a diversifi ed insurer and its activities as a large, globally operating insurance group. The dominant item on the assets side is the investments, which – excluding funds held by ceding companies (EUR 11.3 billion) – accounted for 66% of total assets. They serve fi rst and foremost as security for the provisions constituted in insurance business, which
– excluding provisions in the area of life insurance insofar as the investment risk is borne by policyholders – totaled EUR 82.4 billion. Over and above this, the most important sources of funding are the shareholders' equity (7% of the balance sheet total) and the issued subordinated debt (2% of the balance sheet total).
The assets of the Group are described on the basis of the following overview, which is based on the assets shown in the consolidated balance sheet.
| Asset structure over a multi-year period | 30.9.2011 | 20101) | 20091) | 2008 | ||||
|---|---|---|---|---|---|---|---|---|
| EUR | EUR | EUR | EUR | |||||
| million | % | million | % | million | % | million | % | |
| Intangible assets | 2,210 | 2 | 2,172 | 2 | 2,480 | 2 | 2,938 | 3 |
| Investments | 86,579 | 76 | 83,422 | 75 | 76,385 | 75 | 69,466 | 74 |
| Investments for the account and risk of holders | ||||||||
| of life insurance policies | 5,924 | 5 | 6,414 | 6 | 4,975 | 5 | 3,371 | 4 |
| Reinsurance recoverables on technical provisions | 6,462 | 6 | 5,523 | 5 | 5,962 | 6 | 6,989 | 7 |
| Accounts receivable on insurance business | 4,594 | 4 | 5,011 | 5 | 4,342 | 4 | 4,438 | 5 |
| Deferred acquisition costs | 3,998 | 4 | 3,715 | 3 | 3,544 | 4 | 3,509 | 4 |
| Cash | 1,367 | 1 | 1,265 | 1 | 1,685 | 2 | 1,408 | 1 |
| Deferred tax assets | 287 | <1 | 268 | < 1 | 235 | < 1 | 295 | < 1 |
| Other assets | 1,736 | 1 | 1,781 | 2 | 1,655 | 2 | 1,736 | 2 |
| Non-current assets and assets of disposal | ||||||||
| groups classifi ed as held for sale | 146 | <1 | 1,529 | 1 | 35 | < 1 | 43 | < 1 |
| Total assets | 113,303 | 100 | 111,100 | 100 | 101,298 | 100 | 94,193 | 100 |
1) Adjusted on the basis of IAS 8
The appreciable increase of EUR 2.2 billion in our total assets to EUR 113.3 billion can be attributed fi rst and foremost to the signifi cant growth in our investments (+EUR 3,157 million) as well as the marked rise in reinsurance recoverables on technical provisions (+EUR 939 million). The decrease in the investments for the account and risk of holders of life insurance policies (–EUR 490 million) as well as in the accounts receivable on insurance business (–EUR 417 million) had off setting eff ects. More detailed explanations of the investments are provided below under "Notes on the individual items of the consolidated balance sheet".
In addition to the sale of the participating interest in HDI-Gerling Rechtsschutz Versicherung AG, Hannover, by HDI-Gerling Firmen- und Privatversicherung AG, Hannover, and the sale of the participating interest in HDI-Gerling Rechts schutz Schadenregulierungs-GmbH, Hannover, by Talanx Deutschland AG, Hannover (both in the Group segment Retail Germany), the sale of a real estate portfolio of HDI- Gerling Lebensversicherung AG, Cologne, (Group segment Retail Germany) and of HDI-Gerling Industrie Versicherung AG, Hannover, are recognized under the item "Non-current assets and assets of disposal groups classifi ed as held for sale". The sale of the operational companies of the Hannover Re subgroup Clarendon Insurance Group, Inc., Wilmington, in the Group segment Non-Life Reinsurance was closed in the period under review. All transactions are discussed in chapter VI of the Notes entitled "Non-current assets held for sale and disposal groups".
| Breakdown of the investment portfolio | 30.9.2011 | 2010 | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|
| Figures in EUR million | |||||
| Funds held by ceding companies | 11,323 | 10,961 | 9,349 | 7,242 | 8,055 |
| Assets under own management | 75,256 | 72,461 | 67,036 | 62,224 | 61,572 |
| Total | 86,579 | 83,422 | 76,385 | 69,466 | 69,627 |
In the course of the 2011 fi nancial year the total investment portfolio grew by EUR 3.2 billion to reach EUR 86.6 billion. In the third quarter alone the improvement amounted to EUR 2.9 billion. These increases can be attributed largely to reinvested ordinary income.
Having listed at USD 1.34 to the euro at the beginning of the year, the US dollar depreciated signifi cantly against the euro in the course of the year to reach USD 1.45 to the euro. As at 30 September 2011, however, an upturn in value can be observed. The exchange rate of USD 1.35 to the euro is back to the level at the beginning of the year.
Interest rates in the third quarter fell appreciably relative to the start of the year. In the category of fi ve-year government bonds a decline of some 80 basis points could be observed as at 30 September 2011, while the decrease on ten-year government bonds was as much as 105 basis points. The main category of funds for reinvestment is the asset category "Financial assets available for sale", which is recognized at fair value.
Altogether, fi xed-income securities accounted for 77% of the total investment portfolio. Reinvestments were guided by the existing investment structure in this asset class. In the period under review an amount of EUR 2.2 billion was available from ordinary income for reinvestment.
The current equity allocation is around 1%; equity holdings have been progressively reduced in the course of the year. Having soared to a temporary high in April, the stock market had slumped by the end of the quarter and is well short of the level at the beginning of the year.
Cash deriving from cash infl ows from underwriting business that have still to be invested led to an increase in short-term assets (+1%). In compliance with all legal requirements and internal Group guidelines, the diversifi cation of the investment portfolio as at 30 September 2011 is similar to that at year-end 2010.
| Breakdown of the | |||
|---|---|---|---|
| investment portfolio | 30.9.2011 | 2010 | 2009 |
| % | |||
| Fixed-income securities | 77 | 76 | 75 |
| Equities and other | |||
| variable-yield securities | 1 | 2 | 2 |
| Funds held by ceding | |||
| companies | 13 | 13 | 12 |
| Real estate | 2 | 2 | 2 |
| Other | 7 | 7 | 9 |
| Total | 100 | 100 | 100 |
The composition of the assets under own management recognized in the balance sheet is shown below.
| Breakdown of the assets under own management | ||||||
|---|---|---|---|---|---|---|
| by asset classes | 30.9.2011 | 2010 | +/– | |||
| EUR million | % | EUR million | % | EUR million | % | |
| Investment property | 857 | 1 | 860 | 1 | –3 | <0 |
| Investments in affi liated companies and participating interests | 79 | <1 | 74 | <1 | +5 | +7 |
| Investments in associated companies | 151 | <1 | 144 | <1 | +7 | +5 |
| Loans and receivables | ||||||
| Loans incl. mortgage loans | 1,335 | 2 | 1,439 | 2 | –104 | –7 |
| Loans and receivables due from governmental or semi- governmental entities as well as fi xed-income securities |
31,791 | 42 | 30,904 | 43 | +887 | +3 |
| Financial assets held to maturity | 2,862 | 4 | 2,999 | 4 | –137 | –5 |
| Financial assets available for sale | ||||||
| Fixed-income securities | 30,797 | 41 | 28,330 | 39 | +2,467 | +9 |
| Variable-yield securities | 1,417 | 2 | 2,305 | 3 | –888 | –39 |
| 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 | 753 | 1 | 974 | 1 | –221 | –23 |
| Variable-yield securities | 18 | <1 | 15 | <1 | +3 | +20 |
| Financial assets – trading | ||||||
| Fixed-income securities | 34 | <1 | 69 | <1 | –35 | –51 |
| Variable-yield securities | 89 | <1 | 83 | <1 | +6 | +7 |
| Derivatives 1) | 48 | <1 | 80 | <1 | –32 | –40 |
| Other invested assets | 5,025 | 7 | 4,185 | 6 | +840 | +20 |
| Total investments under own management | 75,256 | 100 | 72,461 | 100 | +2,795 | +4 |
1) Derivatives only with positive fair values and excluding hedging instruments used in the context of hedge accounting
A sharp decline in interest rates could be observed across all durations in the course of the year. The spreads for fi nancials widened on account of growing uncertainties, increasing refi nancing diffi culties faced by banks and sustained negative rating pressure. Spreads for corporates have decreased slightly to date.
Compared to Germany, the current picture as regards the performance of government bonds in countries on the Eurozone periphery is very mixed: bonds from Spain and Italy have increasingly been aff ected by contagion eff ects. Portuguese and Irish government bonds also recorded losses depending on duration, as a consequence of which we are currently not expanding our existing investment exposure. In light of risk considerations we sold the Greek government bonds in our portfolio with the exception of a small residual
Fixed-income securities holding. We took write-downs to fair value (average rate 46%) of altogether EUR 8 million on this holding. The investment exposure (government bonds and debt securities issued by semi-governmental entities) of the Talanx Group to countries on the Eurozone periphery – the so-called GIIPS states – amounts to EUR 1.3 billion at fair values. In this context, Italy accounts for EUR 604 million (thereof HDI Assicurazioni EUR 379 million), Spain EUR 413 million, Ireland 233 million, Portugal 46 million and Greece 6 million.
As far as the struggling Belgian Dexia Bank is concerned, we have an asset holding of EUR 1,271 million measured at fair values; of this amount, EUR 1,150 million is attributable to German covered bonds (Pfandbriefe). Write-downs did not, however, have to be taken on this portfolio because the governments of France, Belgium and Luxembourg announced
a restructuring plan on 10 October 2011 that provides, inter alia, for the furnishing of government guarantees. Based on the information currently available, we consider a default to be unlikely.
The bulk of the Talanx Group's asset portfolio under own management is comprised of investments in fi xed-income securities and loans. Total holdings of this asset class grew by EUR 2.9 billion in the course of the year.
The "Fixed-income securities available for sale", which have a volatile impact on shareholders' equity, remained relatively stable at EUR 30.8 billion and 46% of the total holding of this asset class. The valuation reserves – i.e. the balance of unrealized gains and losses – climbed from EUR 307 million to EUR 617 million owing to the sharp reduction in the interest rate level relative to year-end 2010. Along with the category of "Financial assets available for sale", the Talanx Group is fundamentally standing by its strategy of making new investments principally in the category of "Loans and receivables" so as to reduce balance sheet volatility. Assets under the item "Loans and receivables" grew by EUR 783 million to EUR 33.1 billion (49% of the total portfolio). The reserves here surged sharply to EUR 2.4 billion, aft er EUR 842 million as at year-end 2010.
Government bonds with a good rating or instruments of similarly sound issuers continue to be the focus of investments in fi xed-income securities. In the course of the fi nancial year the downgrade of US treasuries led to a reduction in the proportion of AAA-rated holdings. This was, however, partly compensated for through purchases of AAA-rated fi xed-income securities. At the end of September 2011 they amounted to EUR 27.6 billion, corresponding to a share of 41% of the total volume of fi xed-income securities and loans.
Investments in corporate bonds grew slightly to EUR 19.2 billion, accounting for 28% of fi xed-income securities. A further 31% is attributable to covered bonds, with a total volume of EUR 21.1 billion. These holdings consist almost exclusively of German mortgage-backed and public covered bonds (Pfandbriefe).
The duration (average capital commitment) of the total portfolio of fi xed-income securities held within the Talanx Group stood at around 6.28 years as at 30 September 2011.
With an eye to matching currency coverage, investments in US dollars continue to account for the largest share (11%) of the foreign currency portfolio within the Talanx Group. The total proportion held in foreign currencies as at the end of the third quarter 2011 remained virtually unchanged.
| Rating of fi xed-income securities |
30.9. 2011 |
2010 | 2009 | 2008 |
|---|---|---|---|---|
| % | ||||
| AAA | 41 | 45 | 45 | 42 |
| AA | 28 | 27 | 29 | 31 |
| A | 20 | 19 | 18 | 21 |
| BBB or less | 11 | 9 | 8 | 6 |
The Talanx Group continues to pursue a conservative investment policy. 89% of instruments in the asset class of fi xedincome securities have at least an A rating.
There has been a clear dichotomy in movements on equity markets over the course of 2011. Having started the year at 6,914 points, the DAX soared to a high of 7,515 points by the end of April. Aft er moving sideways for three months, stock markets fell sharply in August. As at the end of the period under review the DAX stood at 5,502 points, a decline of 20% relative to the beginning of the year. The performance of the EURO STOXX 50 was similar, although the decline here was as much as 22% – driven by the relatively high representation of banks in the index.
Overall, the portfolio of equities and equity funds contracted from EUR 2.0 billion as at 31 December 2010 to EUR 1.0 billion as at the balance sheet date. With an equity allocation of 1% (gross), the equity exposure of the Talanx Group therefore remains on a low level.
The net balance of unrealized gains and losses on holdings within the Group (excluding other invested assets) amounted to +EUR 167 million as at the end of September 2011 (2010: +EUR 308 million).
Investment property amounted to EUR 857 million as at the balance sheet date. An additional amount of EUR 564 million is held in real estate funds, which are recognized under the "Financial assets available for sale" category. Scheduled depreciation of EUR 12 million was taken on investment property in the period under review, along with impairments of EUR 14 million. These write-downs contrasted with write-ups of EUR 13 million.
The real estate allocation, which also includes investments in real estate funds, was unchanged at 2%. Own-use real estate is recognized under the item "Other assets" and is not included in the calculation of this ratio.
| Development of net | 30.9. | 30.9. | |
|---|---|---|---|
| investment income | 2011 | 2010 1) | +/– |
| Figures in EUR million | |||
| Ordinary investment income | 2,190 | 2,075 | +115 |
| thereof current income from interest |
2,037 | 1,953 | +84 |
| thereof profi t/loss from shares in associated companies |
4 | 1 | +3 |
| Realized net gains on investments | 201 | 324 | –123 |
| Write-ups/write-downs on investments |
–104 | –66 | –38 |
| Unrealized net gains/losses on investments |
–67 | –39 | –28 |
| Other investment expenses | 93 | 87 | +6 |
| Income from investments under own management |
2,127 | 2,207 | –80 |
| Interest income on funds with held and contract deposits |
225 | 197 | +28 |
| Net investment income | 2,352 | 2,404 | –52 |
1) Expenses for the management of non-Group investments were recognized under the "Other expenses" in the year under review. The previous year was adjusted accordingly
Income from investments under own management fell short of the previous year's level by EUR 80 million. In this context, the lower realized net gains in the Retail Germany and Non-Life Reinsurance segments as well as the de teri oration in net unrealized losses eroded ordinary income more heavily than in the previous year. Of the decline in net unrealized losses, an amount of EUR 2 (40) million can be attributed to Retail Germany and is due to changes in the fair values
of fi xed-income securities measured at fair value through profi t or loss. The unrealized net loss in the reinsurance segments improved by EUR 24 million to –EUR 70 (–94) million. This was crucially driven by the infl ation swaps taken out by Hannover Re in 2010 to hedge part of the infl ation risks associated with the loss reserves in the technical account; they produced unrealized losses of EUR 11 (89) million, which were recognized in income. An opposing eff ect derived from technical derivatives in the Life/Health Reinsurance segment, which gave rise to unrealized losses of EUR 70 million. In addition, write-downs taken on our equity positions increased to EUR 82 (37) million, of which EUR 61 million was incurred in Industrial Lines and Retail Germany. The rise of EUR 115 million in ordinary income can be attributed in particular to the enlarged total portfolio of fi xed-income assets, with the average coupon remaining virtually identical. This increase did not suffi ce to off set the declines in net realized and unrealized gains/losses described above.
The net investment income is shown below broken down into Group segments.
| Breakdown of net investment income by Group segments 1) |
30.9. 2011 |
30.9. 2010 |
30.9. 2009 |
|---|---|---|---|
| Figures in EUR million | |||
| Industrial Lines | 146 | 169 | 157 |
| Retail Germany | 1,163 | 1,256 | 941 |
| Retail International | 115 | 119 | 93 |
| Non-Life Reinsurance | 608 | 527 | 419 |
| Life/Health Reinsurance | 346 | 366 | 431 |
| Corporate Operations | –26 | –33 | –39 |
| Total | 2,352 | 2,404 | 2,002 |
1) Presentation aft er elimination of intra-Group relations
The Talanx Group enters into various commitments. Of material signifi cance to the assessment of its assets in this context are letters of credit and trust accounts put up as security for technical liabilities (EUR 6,103 million), guarantee payments under issued subordinated bonds (EUR 1,968 million), blocked custody accounts and other trust accounts (EUR 2,092 million), outstanding contribution commitments as well as collateral furnished under existing capital participations and tender rights (EUR 845 million). All other commitments are described in the section of the Notes entitled "Other information – Contingent liabilities and other fi nancial commitments".
The capital structure and composition of the liabilities of the Talanx Group are shaped by its primary insurance and reinsurance business. The technical provisions, which in accordance with the requirements of regulators are to be covered by assets, account for the largest share. In addition, the Group fi nances itself most notably through shareholders' equity as well as through subordinated debt and liabilities, which also represent our most important sources of funds.
The fi nancial position of the Group is illustrated by the following overview, which we have based on the liabilities shown in the consolidated balance sheet.
| Capital structure over a multi-year period | 30.9.2011 | 20101) 20091) |
2008 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR | EUR | EUR | EUR | ||||||
| million | % | million | % | million | % | million | % | ||
| Shareholders' equity | 8,391 | 7 | 7,980 | 7 | 7,153 | 7 | 5,718 | 6 | |
| Subordinated liabilities | 2,628 | 2 | 2,791 | 3 | 2,003 | 2 | 2,074 | 2 | |
| Technical provisions – gross | 82,398 | 73 | 77,510 | 70 | 73,263 | 72 | 69,612 | 74 | |
| Technical provisions in the area of life insurance insofar | |||||||||
| as the investment risk is borne by policyholders | 5,924 | 5 | 6,414 | 6 | 4,975 | 5 | 3,371 | 4 | |
| Other provisions | 2,323 | 2 | 2,751 | 2 | 2,644 | 3 | 2,416 | 3 | |
| Liabilities | 9,969 | 9 | 10,829 | 10 | 9,750 | 10 | 9,625 | 10 | |
| Provisions for deferred taxes | 1,550 | 1 | 1,444 | 1 | 1,510 | 1 | 1,377 | 1 | |
| Debts of disposal groups classifi ed as held for sale | 120 | <1 | 1,381 | 1 | — | — | — | — | |
| Total liabilities | 113,303 | 100 | 111,100 | 100 | 101,298 | 100 | 94,193 | 100 |
1) Adjusted on the basis of IAS 8
Currency-related interdependencies inevitably exist between the assets and fi nancial position in view of the international orientation of the insurers brought together in the Talanx Group.
In principle, however, the internationally operating insurers normally receive payments and reimburse claims in their respective national currency. This means that assets to cover liabilities are also held in foreign currencies (matching currency coverage). For the purposes of the consolidated fi nancial statement the relevant national currencies are presented in the Notes under "Summary of major accounting policies – Currency translation".
In the period just-ended the shareholders' equity increased by a substantial EUR 411 million – or 5% – to EUR 8,391 (7,980) million. The Group's share amounted to EUR 5,257 (4,945) million.
Eff ective 6 April 2011 the conditional capital increase of up to EUR 26 million divided into up to 26,000 registered nopar shares that was approved at the General Meeting on 15 November 2010 came into force. This had no implications for the balance sheet in the period under review; for further explanation please see our remarks under item 6 of the Notes "Shareholders' equity".
Particularly due to the cancellation and repayment of guaranteed subordinated debt of Hannover Finance (Luxembourg) S. A., the portfolio of subordinated liabilities contracted by 6% relative to the comparable period to stand at EUR 2.6 billion. The features of the bonds are described in the remarks on item 7 of the Notes "Subordinated liabilities".
In addition, a line of credit is available to Talanx AG with a volume of nominally EUR 1.5 billion, of which – as in the previous period – an amount of EUR 550 million was utilized. The available fl oating-rate loan has a term ending at the latest on 31 July 2012. In addition, eff ective 13 July 2011 Talanx AG concluded a contract regarding a syndicated fl oating-rate line of credit with a volume of EUR 500 million and a term of fi ve years. This is intended to be used for short- and mediumterm corporate fi nancing. This is follow-up fi nancing, which under the terms of the contract only comes into eff ect if the existing line of credit has expired or was cancelled or if it expires upon disbursement of the new line of credit.
With respect to further loan agreements and letters of credit we would refer the reader to the presentation of off -balance sheet fi nancial instruments as well as the explanatory remarks in the Notes.
The provisions connected with the insurance business aft er consolidation and allowing for the shares of reinsurers can be broken down as follows:
| 30.9. 2011 |
20101) | 20091) | 2008 | |
|---|---|---|---|---|
| Figures in EUR billion | ||||
| Benefi t reserve | 43.3 | 41.5 | 39.0 | 35.5 |
| Loss and loss adjustment | ||||
| expense reserve | 25.6 | 24.5 | 22.5 | 21.7 |
| Unearned premium reserve | 5.7 | 5.0 | 4.6 | 4.5 |
| Provision for premium | ||||
| refunds | 1.1 | 0.8 | 1.0 | 0.9 |
| Other technical provisions | 0.4 | 0.3 | 0.3 | 0.2 |
| Total | 76.1 | 72.1 | 67.4 | 62.8 |
1) Adjusted on the basis of IAS 8
In this respect, the existing liabilities to policyholders are to be covered by assets in at least the same amount. The proportion of net provisions connected with the insurance business relative to the total assets as at the balance sheet date – including funds held by ceding companies – stood at 88 (87)%. Surplus coverage of the provisions thus exists in an amount of EUR 10.5 (11.3) billion.
The provisions are available to the Group in accordance with the corresponding time to maturity.
The major movements in shareholders' equity were driven by the following factors:
The Group net income attributable to our shareholders climbed sharply by 186% to EUR 329 (115) million and was allocated in full to retained earnings.
"Cumulative other comprehensive income (other reserves)" decreased by 4% relative to the consolidated fi nancial statement as at 31 December 2010 to stand at EUR 370 million. Crucial to this development was the sharp decline in other changes in shareholders' equity (–EUR 139 million), which principally consist of the policyholder participation/shadow accounting. The measurement gains from cash fl ow hedges (EUR 98 million) and the gains/losses on investments recognized directly in equity, in which policyholders to some extent participate, only partially off set this development.
The non-controlling interests in shareholders' equity increased by EUR 99 million – or 3% – to EUR 3,134 million. The non-controlling interest in net income for the period amounted to EUR 237 (358) million. The dividends paid to non-Group shareholders, principally from the Hannover Re Group in an amount of EUR 182 million, further reduced the shareholders' equity.
| 2011 | 20101) 2009 | 2008 | 2007 | ||
|---|---|---|---|---|---|
| Figures in EUR million | |||||
| Common shares | 260 | 260 | 260 | 260 | 260 |
| Additional paid-in capital | 630 | 630 | 630 | 630 | 630 |
| Retained earnings | 3,997 | 3,668 | 3,474 | 2,977 | 2,799 |
| Cumulative other compre hensive income and other |
|||||
| reserves | 370 | 387 | 210 | –241 | 43 |
| Non-controlling interests in shareholders' equity |
3,134 | 3,035 | 2,579 | 2,092 | 2,431 |
| Total | 8,391 | 7,980 | 7,153 | 5,718 | 6,163 |
1) Adjusted on the basis of IAS 8
We generate liquidity primarily from our operational insurance and reinsurance business, the current income on our investments and from fi nancing measures. Through regular liquidity planning and an investment strategy geared inter alia to liquidity requirements, we ensure that the Talanx Group is able to make the necessary payments at all times. Liquidity shortages consequently did not arise.
The cash fl ows are shown in full in the cash fl ow statement in the Notes; they are presented in summary form in the table below:
| 1.1.–30.9. 2011 |
1.1.–30.9. 2010 |
|
|---|---|---|
| Figures in EUR million | ||
| Cash fl ow from operating activities | 3,180 | 3,828 |
| Cash fl ow from investing activities | –2,612 | –4,557 |
| Cash fl ow from fi nancing activities | –448 | 285 |
| Change in cash and cash | ||
| equivalents | 120 | –444 |
The cash fl ow from operating activities, which also includes infl ows from the generated investment income, declined relative to the corresponding period of the previous year to stand at EUR 3,180 (3,828) million. The calculation adjusts the net income for the period of EUR 566 (473) million in the consolidated cash fl ow statement to allow for the increase in the technical provisions (net perspective) (EUR 4.2 billion). The decrease with respect to the "Changes in funds held and in accounts receivable and payable" in an amount of –EUR 2,486 million relative to the corresponding period of the previous year as well as the decrease in the change in "Other non-cash expenses and income" of –EUR 756 million could not be made up for by the increase in "Net changes in contract deposits" of +EUR 1,930 million.
The cash outfl ow from investing activities is determined by payments made to purchase investments. As in the comparable period of the previous year, the outfl ows associated with the purchase of investments exceeded the infl ows from sales and maturities by an amount of EUR 2.2 billion, as against EUR 3.4 billion in 2010. In addition, the cash outfl ows are driven by payments for other invested assets. They increased on balance by EUR 585 million to –EUR 832 million. The corporate acquisitions described in chapter V "Business combinations in the period under review" led to a further cash outfl ow of EUR 153 million. An infl ow of EUR 137 million was recorded in the period under review in connection with the sale of consolidated companies.
The cash outfl ow from fi nancing activities was crucially shaped in the year under review by the dividends paid in an amount of EUR 182 (162) million as well as the "Net changes from other fi nancing activities" amounting to −EUR 266 million, as against +EUR 449 million in the corresponding period of the previous year. The decrease was attributable above all to the repayment of the subordinated debt called by Hannover Finance (Luxembourg) S. A.
Cash and cash equivalents increased by altogether EUR 102 million in the third quarter to EUR 1.4 billion. An amount of EUR 13 million was deducted from the cash and cash equivalents for disposal groups pursuant to IFRS 5 "Noncurrent assets held for sale and discontinued operations". Detailed information on disposal groups is provided in the Notes (chapter VI).
The risk reporting in the interim report focuses on material changes in the risk position that have occurred since compilation of the Talanx Group Annual Report 2010. For a thorough presentation of the various types of risk, which is omitted here, the reader is referred to the detailed information contained in the Annual Report.
Despite the considerable prevailing uncertainties, the German economy continues to be in robust shape overall. There are, however, widespread predictions of a cyclical cooldown in light of the soft er growth in the global economy and doubts as to the viability of public fi nances in some countries.
The tensions in some Arab and North African nations led to higher commodity prices. Shortages in the global supply of primary products for the electrotechnical industry were the direct consequence of the earthquake and nuclear disaster in Japan.
The protracted dispute between the US Administration and the opposition over the country's debt ceiling prompted the rating agency Standard & Poor's to downgrade the United States from the highest level of AAA to AA+. The long-term outlook was also assessed as "negative". This means that the United States is faced with the prospect of a further downgrade within the next two years. The rating agency Moody's also lowered the long-term debt ratings of some of the largest US banks by one notch in view of the fact that the likelihood of assistance from the government was assessed as minimal.
The sovereign debt crisis within the Eurozone similarly remains unresolved. Greece, Ireland and Portugal are already refi nancing through European and international rescue funds. In Greece, in particular, the urgently needed consolidation of public fi nances has been made more diffi cult by the deep and protracted recession combined with further increases in government spending. The fair value of the investments held by the Talanx Group in Greek government bonds amounted to around EUR 6 million as at the balance sheet date of 30 September 2011. S&P downgraded its rating for Italy in the quarter under review and assessed the outlook as negative. As at the end of the quarter under review the Talanx Group held investments (government and semi-governmental debt securities) in the so-called GIIPS countries with fair values of EUR 1,3 billion (thereof Italy 604 million, Spain 413 million, Ireland 233 million, Portugal EUR 46 million – excluding units in unit trusts attributable to policyholders), as a result of which creditworthiness-related defaults may arise. Particularly with respect to debt securities of GIIPS states other than Greece, safeguards on the European level (European Financial Stability Facility) currently rule out any impending risk of default and the decrease in value is therefore considered temporary.
As a consequence of the banking and economic crisis as well as emerging developments in supervisory law, a growing tendency can be observed on international markets towards the raising of capital requirements by local regulators. This trend could also aff ect individual foreign subsidiaries of the Group and necessitate capital measures. Against the backdrop of
the fi nancial crisis the G20 nations are contemplating the adoption of surcharges on capital for systemically relevant insurers similar to those introduced for banks. Just what form such a capital surcharge is supposed to take for insurance companies apparently still remains to be seen. According to press reports, another possibility is the adoption of regulations that will prevent an insurer becoming systemically relevant. No decision has been taken as yet regarding the precise measures.
Based on the information available to date, the severe earthquake on 22 February 2011 in Christchurch/New Zealand will result Group-wide in strains totaling some EUR 110 million for net account. It is still not possible at this time to make an exact estimate of the burden of losses associated with the loss events in Japan. We nevertheless anticipate net claims expenditure in the region of EUR 283 million before tax for our Group.
Following a landmark decision by the European Court of Justice (ECJ) on 1 March 2011, insurance undertakings will no longer be permitted from 21 December 2012 onwards to allow gender to be used as one of several risk factors for the calculation of premiums and benefi ts. With respect to in-force contracts, the ruling could have implications for the available contractual options that can be exercised by existing customers and for the contractually agreed future conversions of in-force contracts. What is more, there may be repercussions for the premium calculation as well as risks resulting from coverage adjustments, increased lapse rates or a contraction in new business.
The "Foreign Account Tax Compliance Act" (FATCA), which was passed into law in the United States back in March 2010, enters into force on 1 January 2013. The new FATCA rules tighten up US tax reporting by foreign fi nancial institutions (including insurers) with the aim of combatting eff orts to evade tax by parties liable to US taxation through assets held abroad. It has still not been unambiguously clarifi ed which insurance products are covered by the envisaged reporting duties. Based on the information available to date, term life insurance policies, property insurances and reinsurance products are to be exempted from the rules, whereas all so-called cash value products and insurance policies with an investment component will be included. We continue to monitor this issue.
No specifi c risks can as yet be discerned that could pose an existential threat to the Talanx Group's assets, fi nancial position or net income. Particularly with an eye to the further unfolding of the banking and economic crisis, however, there is a considerable degree of uncertainty; this can also have implications for the behavior of policyholders. The same is true of ongoing developments in the legal framework governing our entrepreneurial activities. Substantial capital, reserves and underwriting provisions have been constituted in order to cover for the fi nancial consequences of conceivable risks.
The risk situation of the Talanx Group can be broken down into the risk categories described below. They are based on German Accounting Standard DRS 5-20 as well as the risk catalog contained in the Minimum Requirements for Risk Management in Insurance Undertakings (MaRisk (VA)).
| 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 modeling 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 Interest rate hedges Adjustment of the surplus distribution Cost controlling, focus on variable sales costs Careful selection of intermediaries Systematic monitoring of the MCEV |
|
| Life/health reinsurance: | ||
| Changes in the 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 Eff ective dunning and reduction of outstandings Establishment of adequate general bad debt provisions |
|
| Investment risks | ||
| Across segments: Potential losses due to adverse changes in market prices (interest rates, 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 markdowns |
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 Inclusion of ratings (rating agencies, internal ratings) in investment decisions Liquid asset structure |
| Risk category | Material risks | Major risk management measures |
|---|---|---|
| Operational risks | ||
| Across segments: | ||
| Risk of losses due to the failure of persons, systems | Multi-faceted and cause-based risk management | |
| or processes or on account of external events | Internal control system | |
| Other risks | ||
| Across segments: | ||
| Participation risks of Talanx AG: instability in the | Appropriate tools in the areas of controlling, | |
| performance of subsidiaries and/or the portfolio of | internal auditing and risk management | |
| participating interests | Segmental and regional diversifi cation | |
| Investments in growth markets and in product | ||
| and portfolio segments that stabilize results | ||
| Due diligence checks | ||
| Liquidity analyses and forecasts | ||
| Emerging risks, the content of which is not as yet | Various management measures, such as | |
| reliably known and the implications of which are | reinsurance, diversifi cation, risk exclusions, | |
| diffi cult to assess | safety margins, contingency plans, etc. | |
| Strategic risks: the risk of an imbalance between | At least annual review of the corporate | |
| the corporate strategy and the constantly changing | and risk strategy | |
| general business environment | Adjustment of processes and structures as required | |
| Reputational risks: possible damage to the company's | Set communication channels | |
| name as a consequence of an unfavorable public | Professional approach to corporate communications | |
| perception | Tried and tested processes for defi ned crisis scenarios | |
| Established Code of Conduct |
We consider opportunity and risk management to be one of our core tasks. A central mandate performed by Talanx AG is the comprehensive monitoring and exact management of our risk position within the Group and the divisions with the aim of avoiding developments that could jeopardize the Group's continued existence while at the same time maximizing available opportunities.
The risk strategy defi ned by the Talanx Board of Management in conformity with the business strategy expresses the fundamental approach to identifying and dealing with risks and opportunities. It establishes the point of departure for the
Group-wide implementation of risk management and forms an integral part of our entrepreneurial actions. The paramount objective is to ensure adherence to the risk position strategically defi ned by way of the risk budget. The principles defi ned in the umbrella strategy of Talanx AG are refl ected in risk-strategy measures and the risk management activities derived therefrom. Risk management supports, monitors and reports on the accomplishment of these strategic objectives.
For the Group-wide risk management of Talanx we aspire – on the basis of the rating agencies' Enterprise Risk Management (ERM) criteria – to a rating of "strong". In the medium term we are seeking approval from the Federal Financial Supervisory Authority (BaFin) for an internal risk model as well as corresponding recognition from the rating agencies.
Risk management at Talanx draws on appropriate quantitative simulation models. As we transition towards an internal Solvency II-compliant system, it is at present still based in key areas on the so-called GDV (German Insurance Association) standard model and is used to analyze and evaluate risk categories as well as the Group's entire risk position. The purpose of risk quantifi cation is to calculate the risk-based capital on the basis of a Value at Risk with a confi dence level of 99.97%, given an observation period of one year. A stochastic, riskbased capital model is currently under development that will facilitate the Talanx-wide use of internal models. It is already undergoing the BaFin approval process.
The hallmark of risk management within the Talanx Group is its decentralized organizational structure. Thus, responsibilities are split into local risk management on the level of the divisions and central risk management on the Group level. At Talanx AG responsibility for risk management rests with the Chief Financial Offi cer.
On the Group level the following instances are integrated into the risk management process:
| Controlling elements | 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 nition of the risk strategy Responsible for the 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 steering measures within the Group with an eye to risks that could threaten the Group's continued existence |
| Chief Risk Offi cer | Responsible for holistic risk monitoring across divisions (systematic identifi cation and assessment, control/ monitoring and reporting of risks) of all material risks from the Group perspective |
| Central Risk Management |
Group-wide 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 determination of the required risk-based capital across the Group |
| Local Risk Management |
Risk monitoring function in the divisions Observance of centrally defi ned guidelines, methods and processes as well as systems of limits and thresholds that serve as a framework for local implementation, monitoring and reporting |
| Internal Auditing | Process-independent review of the functional areas of the Group |
The forward-looking statements contained in this outlook are subject to the reservation that they are guided by expectations and assessments based on certain assumptions. Although we arrived at the underlying assumptions with great diligence and to the best of our knowledge, the possibility cannot be ruled out – in view of the fundamental uncertainties applicable to statements regarding the future – that actual developments may diverge from the developments anticipated here.
We expect the pace of growth to slow further in developed markets in 2012, as already suggested by many leading indicators. Given that the resources of both fi scal and monetary policy are largely exhausted, economic stimulus through recovery packages or interest rate cuts is hardly possible going forward. We therefore consider a return to "normal economic cycles" to be likely. The labor markets in countries on
the Eurozone periphery, in particular, will probably remain under pressure on account of stringent austerity eff orts. The same is true of the US labor market, which has been fl agging for some time now.
In a climate of declining growth rates we do not see any signifi cant upward price trend. On the contrary, infl ation rates should settle on a level below the central bank target of 2%.
The sovereign debt crisis within the Eurozone in combination with a renewed banking crisis will remain the major risk factor for the near future. Now more than ever, policymakers will face considerable challenges if they are to use all available resources to avert a "Financial Crisis Version 2.0". Memories of Lehman Brothers are still omnipresent. Yet emerging markets are unlikely in future to serve as lifelines in the same way as they did during the last crisis, since their economic prospects have taken an appreciably darker turn in recent months – accompanied in some cases by dramatic falls in exchange rates. This may give rise to further turmoil on global markets.
The unresolved debt issue, the negative sentiment in the banking sector and the appreciably gloomier economic expectations overall suggest that the low interest rate environment will remain intact in the months ahead. In the United States there is virtually a consensus that key interest rates should be left on a low level for the next two years. Stabilization of the general risk situation can only be achieved if politicians succeed – by way of measures and framework conditions that meet with corresponding acceptance – in restoring sustained confi dence among market players.
The situation on equity markets continues to be extremely strained in the prevailing mood of considerable uncertainty. In this respect, we consider the management of the current crisis of confi dence to be the greatest infl uencing factor on markets. The possibility of surprise political moves at any time will probably keep volatility on a relatively high level.
Since economic growth is also continuing to lose impetus, stock markets will again pose considerable risks as 2012 unfolds. Corporate growth has already passed its high point, and earnings prospects may therefore prove disappointing. In this complex constellation equities are therefore facing a diffi cult year overall.
It is our expectation that our Group's gross written premium on a consolidated basis will increase in the 2011 fi nancial year – despite the weakening of the US dollar against the euro – to more than EUR 23 billion (2010: EUR 22.9 billion). We anticipate that above-average premium growth should be attainable in the Industrial Lines division and especially in the composite business written by the Retail International division. The planned acceleration of foreign growth is in line with our strategic objective of generating half of the Group's entire primary insurance premiums in international markets over the medium term. The Non-Life Reinsurance and Life/ Health Reinsurance divisions will also play their part in growing the Group's premium volume.
On the premium side the Industrial Lines division will profi t in the year under review from the acquisition of Nassau Verzekering Maatschappij N. V. as well as from the securing of lead mandates in France. A stable to modestly positive development is expected for the European foreign companies in Austria, the Netherlands, Belgium and Spain. Growth prospects are identifi ed above all in international business. Through the expansion of HDI Seguros Madrid (Spain) – a subsidiary of HDI-Gerling Industrie Versicherung AG – into a hub for industrial insurance solutions in Latin America and thanks to the strategic partnership with Petro Vietnam Insurance Holdings (formerly Petrovietnam Insurance Joint Stock Corporation/PVI) in Vietnam, we are on the right track.
For 2011 we anticipate a minimal premium decrease compared to the previous year. This will result largely from life insurance products, since many contracts taken out in 1999 in the run-up to tax changes that were under discussion at the time are scheduled to mature aft er twelve years. The rise in new business from life insurance and composite products will, however, have a compensatory eff ect. The restructuring of the Group is continuing in this segment in the year under review: the goal is to align the business processes and organization with the wishes of customers and sales partners in order to create one of the most effi cient and customerfocused insurers in Germany. The restructuring is expected to result in further appreciable extraordinary expenses in the year under review, which could not be recognized in the current quarterly fi nancial statement owing to the fact that negotiations with the employee representatives have only just got under way. With this in mind, the result generated in this division in the third quarter cannot be extrapolated on a linear basis to the expected result for the full fi nancial year.
In the Retail International division, which the Group has defi ned as a strategic growth segment, we expect – allowing for the acquisitions in Argentina and Uruguay – to generate signifi cant premium growth year-on-year. In this context, the strong growth potential of our Brazilian subsidiary is likely to be refl ected in a disproportionately vigorous premium increase. Sales of life insurance products by our Italian company are fl agging aft er the appreciable surge of 2010, while sales of property/casualty products are set to pick up in the year under review. The closing of the Mexican insurer Metropolitana Compañia de Seguros (premium volume in 2010: equivalent to EUR 72 million), which was acquired in July, is not expected until the beginning of 2012.
In light of the market opportunities in the two divisions of Non-Life and Life/Health Reinsurance and given our very good positioning, it is our expectation that we shall achieve our growth and profi t targets for the full 2011 fi nancial year. In non-life reinsurance the bottom line is that market conditions remain good. In view of the heavy losses suff ered by the (re)insurance industry from natural catastrophe events (especially in the fi rst quarter of 2011), it is our expectation that the market hardening observed across the board – albeit to varying degrees – in the renewals during the year will be sustained. This tendency was underscored not only by the industry gatherings in September in Monte Carlo and in October in Baden-Baden and the United States, but also by the recent round of renewals completed in October in North America. In aviation business, too – a line in which Hannover Re ranks among the market leaders – we continue to see good prospects; this is especially true of the so-called BRIC markets. In total non-life reinsurance we anticipate net premium growth of 8% to 10% in the original currencies in the current fi nancial year.
The prospects in international life/health reinsurance remain favorable. In major markets for our company, such as the United States, risk-oriented reinsurance solutions are taking on greater importance. Business involving longevity risks also off ers healthy growth opportunities, particularly in the United Kingdom; this applies both to enhanced annuities and the assumption of risks associated with existing pension funds. For the current fi nancial year we are looking to grow net premium in Life/Health Reinsurance by more than 5% at constant exchange rates.
In view of the expected positive cash fl ow we expect to generate modest growth in our portfolio of investments under own management in the year under review. At the end of 2010 the volume stood at EUR 74.5 billion. Based on our current assessment, income from investments under own management will – despite higher ordinary income – come in slightly lower than in the previous year, in which sizeable non-recurring income was booked from the sale of equities. The average return on investments under own management is thus likely to decline somewhat in the year under review relative to the previous year (2010: 4.2%).
| Assets | Note | 30.9.2011 | 31.12.2010 1) | ||
|---|---|---|---|---|---|
| Figures in EUR million | |||||
| A. Intangible assets | 1 | ||||
| a. Goodwill | 700 | 589 | |||
| b. Other intangible assets | 1,510 | 1,583 | |||
| 2,210 | 2,172 | ||||
| B. Investments | |||||
| a. Investment property | 857 | 860 | |||
| b. Investments in affi liated companies and participating interests |
79 | 74 | |||
| c. Investments in associated companies | 151 | 144 | |||
| d. Loans and receivables | 2 | 33,126 | 32,343 | ||
| e. Other fi nancial instruments | |||||
| i. Held to maturity | 3 | 2,862 | 2,999 | ||
| ii. Available for sale | 4 | 32,214 | 30,635 | ||
| iii. At fair value through profi t or loss | 5 | 942 | 1,221 | ||
| f. Other invested assets | 5,025 | 4,185 | |||
| Investments under own management | 75,256 | 72,461 | |||
| g. Funds held by ceding companies | 11,323 | 10,961 | |||
| Total investments | 86,579 | 83,422 | |||
| C. Investments for the account and risk of holders | |||||
| of life insurance policies | 5,924 | 6,414 | |||
| D. Reinsurance recoverables on technical provisions | 6,462 | 5,523 | |||
| E. Accounts receivable on insurance business | 4,594 | 5,011 | |||
| F. Deferred acquisition costs | 3,998 | 3,715 | |||
| G. Cash | 1,367 | 1,265 | |||
| H. Deferred tax assets | 287 | 268 | |||
| I. Other assets | 1,736 | 1,781 | |||
| J. Non-current assets and assets of disposal groups classifi ed as | |||||
| held for sale | 146 | 1,529 | |||
| Total assets | 113,303 | 111,100 |
1) Adjusted on the basis of IAS 8
| Liabilities Note |
30.9.2011 | 31.12.2010 1) | ||
|---|---|---|---|---|
| Figures in EUR million | ||||
| A. Shareholders' equity 6 |
||||
| a. Common shares | 260 | 260 | ||
| Nominal value: 260 |
||||
| Conditional capital: 26 | ||||
| b. Reserves | 4,997 | 4,685 | ||
| Shareholders' equity excluding non-controlling interests | 5,257 | 4,945 | ||
| c. Non-controlling interests | 3,134 | 3,035 | ||
| Total shareholders' equity | 8,391 | 7,980 | ||
| B. Subordinated liabilities 7 |
2,628 | 2,791 | ||
| C. Technical provisions 8 |
||||
| a. Unearned premium reserve | 6,332 | 5,411 | ||
| b. Benefi t reserve | 44,185 | 42,466 | ||
| c. Loss and loss adjustment expense reserve | 30,529 | 28,538 | ||
| d. Provision for premium refunds | 1,078 | 845 | ||
| e. Other technical provisions | 274 | 250 | ||
| 82,398 | 77,510 | |||
| D. Technical provisions in the area of life insurance insofar as | ||||
| the investment risk is borne by policyholders | 5,924 | 6,414 | ||
| E. Other provisions | ||||
| a. Provision for pensions | 1,326 | 1,316 | ||
| b. Provision for taxes | 442 | 743 | ||
| c. Sundry provisions | 555 | 692 | ||
| 2,323 | 2,751 | |||
| F. Liabilities | ||||
| a. Notes payable and loans | 766 | 747 | ||
| b. Funds held under reinsurance treaties | 4,782 | 5,224 | ||
| c. Other liabilities | 4,421 | 4,858 | ||
| 9,969 | 10,829 | |||
| G. Deferred tax liabilities | 1,550 | 1,444 | ||
| Total liabilities/provisions | 104,792 | 101,739 | ||
| H. Liabilities of disposal groups classifi ed as held for sale | 120 | 1,381 | ||
| Total equity and liabilities | 113,303 | 111,100 |
1) Adjusted on the basis of IAS 8
| 1.1.– | 1.1.– | 1.7.– | 1.7.– | |
|---|---|---|---|---|
| Note | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 |
| Figures in EUR million | ||||
| 1. Gross written premium including premium from unit-linked life and annuity insurance |
17,843 | 17,255 | 5,421 | 5,335 |
| 2. Savings elements of premium from unit-linked life |
||||
| and annuity insurance | 824 | 821 | 253 | 330 |
| 3. Ceded written premium |
2,083 | 2,119 | 615 | 641 |
| 4. Change in gross unearned premium |
–959 | –587 | 348 | 424 |
| 5. Change in ceded unearned premium |
–137 | –142 | 87 | 46 |
| Net premium earned 9 |
14,114 | 13,870 | 4,814 | 4,742 |
| 6. Claims and claims expenses (gross) |
14,184 | 13,035 | 4,273 | 4,499 |
| Reinsurers' share | 2,026 | 1,206 | 383 | 476 |
| Claims and claims expenses (net) 12 |
12,158 | 11,829 | 3,890 | 4,023 |
| 7. Acquisition costs and administrative expenses (gross) |
3,491 | 3,761 | 1,263 | 1,359 |
| Reinsurers' share | 303 | 417 | 112 | 156 |
| Acquisition costs and administrative expenses (net) 13 |
3,188 | 3,344 | 1,151 | 1,203 |
| 8. Other technical income |
23 | 43 | 5 | 8 |
| Other technical expenses | 155 | 336 | –5 | 192 |
| Other technical result | –132 | –293 | 10 | –184 |
| Net technical result | –1,364 | –1,596 | –217 | –668 |
| 9. a. Income from investments b. Expenses for investments 1) |
2,683 | 2,585 | 914 | 871 |
| Net income from investments under own management | 556 2,127 |
378 2,207 |
280 634 |
78 793 |
| Income/expense on funds withheld | ||||
| and contract deposits | 225 | 197 | 79 | 63 |
| Net investment income 10/11 |
2,352 | 2,404 | 713 | 856 |
| thereof income from investments in | ||||
| associated companies using the equity method | 4 | 1 | 1 | — |
| 10. a. Other income | 505 | 750 | 113 | 212 |
| b. Other expenses 1) | 773 | 800 | 320 | 201 |
| Other income/expenses | –268 | –50 | –207 | 11 |
| Profi t before goodwill impairments | 720 | 758 | 289 | 199 |
| 11. Goodwill impairments | — | — | — | — |
| Operating profi t/loss (EBIT) | 720 | 758 | 289 | 199 |
| 12. Financing costs | 124 | 94 | 41 | 34 |
| 13. Taxes on income 14 |
30 | 191 | 37 | –6 |
| Net income | 566 | 473 | 211 | 171 |
| thereof attributable to non-controlling interests | 237 | 358 | 92 | 185 |
| thereof Group net income | 329 | 115 | 119 | –14 |
1) The expenses for the management of non-Group investments are recognized under the other expenses. The previous year was adjusted accordingly (1.1.−31.9.2010: EUR 34 million; 1.7.−30.9.2010: EUR 11 million)
| 1.1.– | 1.1.– | 1.7.– | 1.7.– | |
|---|---|---|---|---|
| 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | |
| Figures in EUR million | ||||
| Net income | 566 | 473 | 211 | 171 |
| 1. Unrealized gains and losses on investments | ||||
| Gains/losses recognized directly in equity during the period | 186 | 665 | 184 | 395 |
| Reclassifi cation of net realized gain/loss | –14 | –185 | –11 | –65 |
| Tax income (expense) | –59 | –116 | –55 | –39 |
| 113 | 364 | 118 | 291 | |
| 2. Currency translation | ||||
| Gains/losses recognized directly in equity during the period | –53 | 160 | 84 | –195 |
| Reclassifi cation of net realized gain/loss | 23 | — | 23 | 6 |
| Tax income (expense) | — | –7 | –15 | 16 |
| –30 | 153 | 92 | –173 | |
| 3. Changes from cash fl ow hedges | ||||
| Gains/losses recognized directly in equity during the period | 107 | –11 | 94 | –9 |
| Reclassifi cation of net realized gain/loss | — | — | — | — |
| Tax income (expense) | –9 | –1 | –1 | –2 |
| 98 | –12 | 93 | –11 | |
| 4. Changes in policyholder participation/shadow accounting | ||||
| Gains/losses recognized directly in equity during the period | –134 | –44 | –160 | –140 |
| Tax income (expense) | –2 | 7 | 1 | 6 |
| –136 | –37 | –159 | –134 | |
| 5. Changes from the measurement of associated companies | ||||
| Gains/losses recognized directly in equity during the period | — | — | — | — |
| Reclassifi cation of net realized gain/loss | — | — | — | — |
| Tax income (expense) | — | — | — | — |
| — | — | — | — | |
| 6. Other changes | ||||
| Gains/losses recognized directly in equity during the period | –25 | –9 | –23 | 1 |
| Reclassifi cation of net realized gain/loss | — | — | — | — |
| Tax income (expense) | 7 | 3 | 6 | — |
| –18 | –6 | –17 | 1 | |
| Taxes on income and expense recognized in equity | ||||
| via other income/expenses | –63 | –114 | –64 | –19 |
| Income and expense recognized during the period in equity | ||||
| via other income/expenses after taxes | 27 | 462 | 127 | –26 |
| Total recognized income and expense during the period | 593 | 935 | 338 | 145 |
| thereof attributable to non-controlling interests | 281 | 580 | 205 | 151 |
| thereof attributable to the Group | 312 | 355 | 133 | –6 |
| Cumulative other comprehensive income (other reserves) |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Common | Addi tional paid-in |
Retained | Unrealized gains/ losses on |
Gains/ losses from currency |
Other changes in share hol d |
Measure ment gains and losses from cash |
Share holders' |
Non-con trolling |
Total share holders' |
|
| shares | capital | earnings | investments | translation | ers' equity | flow hedges | equity | interests | equity | |
| Figures in EUR million | ||||||||||
| Balance at 31.12.2009 | 260 | 630 | 3,474 | 667 | –140 | –294 | –23 | 4,574 | 2,579 | 7,153 |
| Adjustments pursuant to IAS 8 | — | — | –22 | 29 | — | –26 | — | –19 | — | –19 |
| Adjusted balance at 1.1.2010 | 260 | 630 | 3,452 | 696 | –140 | –320 | –23 | 4,555 | 2,579 | 7,134 |
| Changes in ownership interest1) | — | — | — | — | — | — | — | — | 7 | 7 |
| Result for the period | — | — | 115 | — | — | — | — | 115 | 358 | 473 |
| Income and expenses recognized | ||||||||||
| in other income/expenses | — | — | — | 180 | 93 | –21 | –12 | 240 | 222 | 462 |
| thereof currency translation | — | — | — | — | 93 | — | — | 93 | 60 | 153 |
| thereof unrealized gains and losses on investments |
— | — | — | 180 | — | — | — | 180 | 184 | 364 |
| thereof change from cash fl ow hedges |
— | — | — | — | — | — | –12 | –12 | — | –12 |
| thereof sundry changes2) | — | — | — | — | — | –21 | — | –21 | –22 | –43 |
| Total recognized income | ||||||||||
| and expense | — | — | 115 | 180 | 93 | –21 | –12 | 355 | 580 | 935 |
| Dividends paid to shareholders | — | — | — | — | — | — | — | — | –162 | –162 |
| Capital reduction | — | — | — | — | — | — | — | — | –2 | –2 |
| Other changes | — | — | — | — | — | –1 | — | –1 | 1 | — |
| Balance at 30.9.2010 3) | 260 | 630 | 3,567 | 876 | –47 | –342 | –35 | 4,909 | 3,003 | 7,912 |
| Balance at 31.12.2010 | 260 | 630 | 3,678 | 522 | 4 | –15 | –123 | 4,956 | 3,035 | 7,991 |
| Adjustments pursuant to IAS 8 | — | — | –10 | — | –1 | — | — | –11 | — | –11 |
| Adjusted balance at 31.12.2010 | 260 | 630 | 3,668 | 522 | 3 | –15 | –123 | 4,945 | 3,035 | 7,980 |
| Balance at 1.1.2011 | 260 | 630 | 3,668 | 522 | 3 | –15 | –123 | 4,945 | 3,035 | 7,980 |
| Result for the period | — | — | 329 | — | — | — | — | 329 | 237 | 566 |
| Income and expenses recognized | ||||||||||
| in other income/expenses | — | — | — | 38 | –14 | –139 | 98 | –17 | 44 | 27 |
| thereof currency translation | — | — | — | — | –14 | — | — | –14 | –16 | –30 |
| thereof unrealized gains and | ||||||||||
| losses on investments | — | — | — | 38 | — | — | — | 38 | 75 | 113 |
| thereof change from cash fl ow hedges |
— | — | — | — | — | — | 98 | 98 | — | 98 |
| thereof sundry changes2) | — | — | — | — | — | –139 | — | –139 | –15 | –154 |
| Total recognized income | ||||||||||
| and expense | — | — | 329 | 38 | –14 | –139 | 98 | 312 | 281 | 593 |
| Dividends paid to shareholders | — | — | — | — | — | — | — | — | –182 | –182 |
| Balance at 30.9.2011 | 260 | 630 | 3,997 | 560 | –11 | –154 | –25 | 5,257 | 3,134 | 8,391 |
1) Changes in ownership interest with no change of control status
2) The sundry changes consist of the policyholder participation/shadow accounting as well as other changes
3) Adjusted on the basis of IAS 8
| 1.1.– | 1.1.– | |
|---|---|---|
| 30.9.2011 | 30.9.2010 1) | |
| Figures in EUR million | ||
| I. 1. Net income | 566 | 473 |
| I. 2. Changes in technical provisions | 4,232 | 3,441 |
| I. 3. Changes in deferred acquisition costs | –334 | 130 |
| I. 4. Changes in funds held and in accounts receivable and payable | –1,777 | 709 |
| I. 5. Net changes in contract deposits | 746 | –1,184 |
| I. 6. Changes in other receivables and liabilities | 448 | 254 |
| I. 7. Changes in fi nancial assets held for trading | 66 | 23 |
| I. 8. Net gains and losses on investments | –201 | –323 |
| I. 9. Changes in other balance sheet items | –188 | –73 |
| I. 10. Other non-cash expenses and income | ||
| as well as adjustments to net income | –378 | 378 |
| I. Cash fl ows from operating activities | 3,180 | 3,828 |
| II. 1. Cash infl ow/outfl ow from the sale of consolidated companies | 137 | 47 |
| II. 2. Cash infl ow/outfl ow from the purchase of consolidated companies | –153 | — |
| II. 3. Cash infl ow from the sale of real estate | 84 | 32 |
| II. 4. Cash outfl ow from the purchase of real estate | –142 | –149 |
| II. 5. Cash infl ow from the sale and maturity of fi nancial instruments | 14,345 | 12,943 |
| II. 6. Cash outfl ow from the purchase of fi nancial instruments | –16,524 | –16,388 |
| II. 7. Changes in investments for the account and | ||
| risk of holders of life insurance policies | 473 | –795 |
| II. 8. Changes in other invested assets | –832 | –247 |
| II. Cash fl ows from investing activities | –2,612 | –4,557 |
| III. 1. Cash infl ow from capital increases/cash outfl ow from capital reductions | — | –2 |
| III. 2. Dividends paid | –182 | –162 |
| III. 3. Net changes from other fi nancing activities | –266 | 449 |
| III. Cash fl ows from fi nancing activities | –448 | 285 |
| Change in cash and cash equivalents (I.+II.+III.) | 120 | –444 |
| Cash and cash equivalents at the beginning of the fi nancial year | 1,290 | 1,685 |
| Cash and cash equivalents − exchange rate diff erences on cash | –13 | 45 |
| Cash and cash equivalents of companies no longer included in the consolidated fi nancial statement | –17 | — |
| Cash and cash equivalents at the end of the reporting period | 1,380 | 1,286 |
| Cash and cash equivalents of disposal groups | 13 | — |
| Cash and cash equivalents at the end of the reporting period excluding disposal groups | 1,367 | 1,286 |
| Additional information | ||
| Income taxes paid (on balance) | 175 | 226 |
| Interest paid | 249 | 235 |
| thereof from fi nancing activities | 124 | 94 |
| thereof from operating activities | 125 | 141 |
1) Adjusted on the basis of IAS 8
The cash fl ow statement shows how the cash and cash equivalents of the Group changed in the course of the year under review due to infl ows and outfl ows. In this context a distinction is made between cash fl ow movements from operating activities and those from investing and fi nancing activities.
The cash fl ows are presented in accordance with IAS 7 "Statement of Cash Flows" and the principles set out in German Accounting Standard (DRS) No. 2 regarding the preparation of cash fl ow statements, which were supplemented and specifi ed more closely by DRS 2-20 for insurance enterprises.
The cash fl ow statement was drawn up using the indirect method. The liquid funds are limited to cash and cash equivalents and correspond to the balance sheet item "Cash".
The cash fl ow movements of the Group are infl uenced principally by the business model of an insurance and reinsurance enterprise. Normally, we fi rst receive premiums for risk assumption and subsequently make payments for claims. The eff ects of exchange rate diff erences and the infl uences of changes in the consolidated group are eliminated in the cash fl ow statement. The acquisition of new companies is shown in the line "Cash infl ow/outfl ow from the purchase of consolidated companies"; the sum total of purchase prices paid less acquired cash and cash equivalents is recognized here.
Income taxes paid are allocated to the cash fl ows from operating activities (IAS 7.35).
The total cash outfl ows for business combinations amounted to EUR 232 million. In this context, cash and cash equivalents worth altogether EUR 79 million were acquired, as a consequence of which the cash outfl ow amounted to EUR 153 million aft er allowance for the cash and cash equivalents received. In the context of disposals an infl ow of EUR 137 million resulted aft er allowance for the purchase price paid.
The informational value of the cash fl ow statement for the Group is to be considered minimal. For us, it is not a substitute for liquidity and fi nancial planning, nor is it used as a management tool.
As the parent company of the Talanx Group, Talanx AG has drawn up a consolidated fi nancial statement pursuant to § 290 of the German Commercial Code (HGB).
The consolidated quarterly fi nancial report as at 30 September 2011 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 report, 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 selected explanatory notes, refl ects in particular the requirements of IAS 34 "Interim Financial Reporting".
We have observed all new or revised IFRS, application of which is mandatory as at 30 September 2011, and the interpretations thereof issued by the International Financial Reporting Interpretation Committee (IFRIC) (see also the section "Newly applic able standards/interpretations and changes in standards"). In addition, the accounting policies and the consolidation principles for already existing and unchanged IFRS correspond to those of our consolidated fi nancial statement as at 31 December 2010.
In conformity with IAS 34.41, in our preparation of the consolidated quarterly fi nancial statement we draw on estimates and planned fi gures to a greater extent than is the case with the 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 – with the exception of the circumstances specifi ed in section II "Accounting policies" – did not arise. The tax expenditure (domestic income taxes, comparable taxes on income at foreign subsidiaries and changes in deferred taxes) is calculated within 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. The actuarial pension assumptions are not updated within the full fi nancial year.
Since 2002 the standards adopted by the International Accounting Standards Board (IASB) have been referred to as IFRS (International Financial Reporting Standards); the standards approved in earlier years still bear the name IAS (International Accounting Standards). Standards are cited in our Notes accordingly; in cases where the Notes do not make explicit reference to a particular standard, the term IFRS is used. Insurance-specifi c transactions for which IFRS do not contain any separate standards are recognized in compliance with IFRS 4 "Insurance Contracts" according to the pertinent provisions of United States Generally Accepted Accounting Principles (US GAAP).
The interim fi nancial statement was 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.
The revised IAS 24 "Related Party Disclosures" was ratifi ed by the EU on 20 July 2010. A major new feature is the requirement for disclosures of "commitments" such as guarantees and undertakings as well as other commitments which are dependent upon whether (or not) a particular event occurs in the future. The defi nitions of a related entity or a related person are also clarifi ed. Talanx applied the revised IAS 24 for the fi rst time in the quarterly fi nancial statement as at 31 March 2011. There were no signifi cant implications.
"Improvements to IFRSs" (published in May 2010) is a collective standard containing numerous minor IFRS amendments published as part of the IASB annual improvement process. The amendments are for the most part applicable to fi nancial years beginning on or aft er 1 January 2011; the standard was adopted in European law in February 2011. Overall, the amendments have no signifi cant implications for the assets, fi nancial position or net income of the Talanx Group.
The following additional standards and interpretations applicable with eff ect from 1 January 2011 also had no implications for the Talanx Group:
In November 2009 the IASB published a new standard on the classifi cation and measurement of fi nancial instruments, which was expanded in October 2010 to include rules governing the accounting of fi nancial liabilities and derecognition of fi nancial instruments. IFRS 9 is the fi rst step in a three-phase project intended to replace IAS 39 "Financial Instruments: Recognition and Measurement". The new standard introduces a revised classifi cation of fi nancial assets. In future, the standard envisages only two categories of fi nancial assets: those measured at "fair value" and at "amortized costs". Reclassifi cation will only be possible if the business model changes signifi cantly. Equity investments that fall within the scope of application of IFRS 9 are to be measured at fair value in the balance sheet, with value changes recognized in profi t or loss. An exception in this regard is an equity investment which an entity elects to measure at fair value through other comprehensive income (FVTOCI). The Group has still to analyze the full implications of IFRS 9. It is, however, already becoming clear that the revised rules will have an infl uence, inter alia, on the accounting of fi nancial assets within the Group. The standard does not apply until fi nancial years beginning on or aft er 1 January 2013; it has still to be adopted in European law. The IASB has currently published an Exposure Draft which will result in deferral of the date of application to fi nancial years beginning on or aft er 1 January 2015.
In August 2010 and September 2010 the IASB published draft amendments to IFRS 1 "First-time Adoption of International Financial Reporting Standards" dealing respectively with the removal of fi xed transition dates for fi rst-time adopters and the resumption of IFRS accounting aft er severe hyperinfl ation. The amendments have still to be adopted by the EU. Among other things, the fi rst of these amendments replaced the previously used reference to "1 January 2004" as a fi xed transition date with a more general formulation. In addition, guidance was for the fi rst time included in this standard for cases where an entity was unable to comply with the requirements of IFRS for a period of time prior to transition because its functional currency was subject to hyperinfl ation. The amendments enter into force for fi nancial years beginning on or aft er 1 July 2011. We do not expect the application of these amendments to have any infl uence on the consolidated fi nancial statement.
On 7 October 2010 the IASB published amendments to IFRS 7 "Financial Instruments: Disclosures" which are applicable to fi nancial years beginning on or aft er 1 July 2011. The amendments concern disclosure requirements in connection with the transfer of fi nancial assets. A transfer of fi nancial assets exists, for example, where receivables are sold or in the case of asset-backed securities (ABS) transactions. The amendments have still to be ratifi ed by the EU. We are currently reviewing the implications for the consolidated fi nancial statement.
In December 2010 the IASB published amendments to IAS 12 "Income Taxes", which have still to be adopted by the EU. These new rules include clarifi cation of the treatment of temporary tax diff erences in connection with measurement using the fair value model of IAS 40 "Investment Property". The amendment enters into force for reporting years beginning on or aft er 1 January 2012. We do not expect these amendments to have any eff ect on the consolidated fi nancial statement.
On 12 May 2011 the IASB published three new and two revised standards governing consolidation and the accounting of investments in associated companies and joint ventures as well as the related disclosure requirements in the notes:
IFRS 10 "Consolidated Financial Statements" replaces the previous standards contained in IAS 27 "Consolidated and Separate Financial Statements" and SIC-12 "Consolidation – Special Purpose Entities" and establishes a consistent defi nition of control and hence a consistent basis for verifying the existence of a parent-subsidiary relationship. We are currently reviewing the implications of the new IFRS 10 for the consolidated fi nancial statement.
The revised IAS 27 will henceforth only contain standards governing the accounting of interests in subsidiaries, associates and joint ventures in the separate fi nancial statements of the parent company. The wording of the previous standard was carried over with only minimal changes.
IFRS 11 "Joint Arrangements" governs the accounting of situations in which an entity exercises joint control over a joint venture or a joint operation. The new standard replaces the stipulations contained in this regard in IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly Controlled Entities – Non-Monetary Contributions by Venturers". In accordance with IFRS 11 a proportionate inclusion of interests in joint ventures will no longer be permissible. Rather, interests in joint ventures must be accounted for in future using the equity method. Based on current knowledge, we are aff ected in only one case (Credit Life International Services GmbH).
The revised version of IAS 28 "Investments in Associates and Joint Ventures" is extended to include rules governing the accounting of investments in joint ventures. In future, application of the equity method is required on a uniform basis. The disclosure requirements associated with the consolidation and accounting of interests in associates and joint ventures are to be combined in future in IFRS 12 "Disclosure of Interests in Other Entities". With the aim of clarifying for the users of fi nancial statements the nature of an entity's interest in other entities as well as the eff ects of those interests on its fi nancial position, fi nancial performance and cash fl ows, signifi cantly expanded disclosures of information are required in comparison with the previous requirements.
The requirements of IFRS 10, 11 and 12 as well as the revised IAS 27 and 28 are to be applied to fi nancial years beginning on or aft er 1 January 2013. All of these standards have still to be ratifi ed by the EU.
IFRS 13 "Fair Value Measurement", a new standard also published by the IASB on 12 May 2011, establishes a consistent defi nition of fair value across the various standards as well as of the methods that are used to measure it. The fair value is defi ned as the exit price, the calculation of which shall be based as far as possible on relevant observable inputs. In addition, extensive explanatory and qualitative disclosures are required; these are intended, in particular, to describe the quality of the calculation of fair value. We are currently reviewing the implications of the new IFRS 13; it is, however, our assumption that its application will not lead to any signifi cant changes in accounting. IFRS 13 must be applied to fi nancial years beginning on or aft er 1 January 2013 and has still to be ratifi ed by the EU.
In June 2011 the IASB published amendments to IAS 1 "Presentation of Financial Statements" and IAS 19 "Employee Benefi ts".
IAS 1 requires entities to group items presented in OCI based on whether they are potentially reclassifi able to profi t or loss subsequently, i.e. those that might be reclassifi ed and those that will not be reclassifi ed. Tax associated with items presented before tax is to be shown separately for each of the two groups of OCI items. The amendments to IAS 1 are to be applied to fi nancial years beginning on or aft er 1 July 2012. The principal new feature of the revised IAS 19 is the elimination of the option to recognize future actuarial gains and losses either directly in other comprehensive income (OCI) or on a deferred basis using the so-called "corridor approach". Actuarial gains and losses will therefore have to be recognized entirely in OCI; the corridor method is no longer permissible. In addition, interest on plan assets will no longer be calculated using the expected rate of return on investments but rather the discount rate of the liability. Furthermore, extensive disclosure requirements are prescribed to refl ect the purpose of the revised standard. Since the Group currently uses the corridor approach, corresponding implications – which are currently being explored – are to be anticipated. It is envisaged that the amended IAS 19 will be applicable for the fi rst time to fi nancial years beginning on or aft er 1 January 2013.
The amendments to IAS 1 and IAS 19 have still to be ratifi ed by the EU.
In the 2011 fi nancial year we adjusted the previous year's fi gures with respect to the following circumstances retrospectively in accordance with the requirements of IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Insofar as the corrections relate to adjustments already made in the previous year with a knock-on eff ect for the comparable quarter as at 30 September 2010, the reader is also referred to the 2010 Annual Report (chapter: "Accounting policies", section: "Changes in accounting policies and accounting errors").
The adjustments that were made have the following eff ects on items of the consolidated balance sheet as at 30 September 2010 and 31 December 2010:
| 30.9.2010 as | Changes from adjustments | ||
|---|---|---|---|
| Consolidated balance sheet as at 30 September 2010 | reported | pursuant to IAS 8 | 30.9.2010 |
| Figures in EUR million | Re d) | ||
| A.b. Other intangible assets | 1,941 | –281 | 1,660 |
| C.d. Provision for premium refunds | 1,427 | –281 | 1,146 |
| Consolidated balance sheet as at 31 December 2010 | 30.12.2010 as reported |
Changes from adjustments | pursuant to IAS 8 | 30.12.2010 |
|---|---|---|---|---|
| Figures in EUR million | Re c) | Re d) | ||
| A.b. Other intangible assets | 1,851 | — | –268 | 1,583 |
| A.b. Reserves | 4,696 | –11 | — | 4,685 |
| G. Provision for deferred taxes |
1,433 | 11 | — | 1,444 |
| C.d. Rückstellung für Beitragsrückerstattung | 1,113 | — | –268 | 845 |
We corrected the following circumstance in the fourth quarter of 2010 through adjustment of the opening balances as at 1 January 2010; retrospective application to prior periods was omitted, since in this regard determination of the period-related adjustments was not feasible or did not seem advisable aft er weighing up cost/benefi t considerations.
In connection with a changeover in data delivery for a certain investment portfolio, the measurement of fi nancial assets – in the performance of which policyholders also participate – was converted to uniform methods. This procedure served to reduce the retained earnings by EUR 3 million; the other reserves increased by the same amount (cf. here the 2010 Annual Report, page 127, letter b).
This adjustment had the following implication for the 2010 opening balance sheet:
| Consolidated balance sheet | Adjustments 2010 |
|---|---|
| Figures in EUR million | |
| A.b. Reserves – retained earnings | –3 |
| A.b. Reserves – other reserves | 3 |
With respect to collateralized debt obligations, collateralized loan obligations and high-yield funds, the Group has adjusted the calculation logic used for model-based fair value measurement and for establishing the share of fair value changes attributable to impairments with the aim of measuring such items on a more market-oriented basis. This represents a change in an accounting estimate, which pursuant to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" is to be performed prospectively in the period under review without adjustment of the comparative fi gures for previous years. Retention of the parameters and methods used until 31 December 2010 would have reduced the impairments in the period under review by EUR 3 million and increased the write-ups by EUR 1 million. The amount recognized for the fair values of the specifi ed instruments would have been EUR 1 million higher. The eff ect of this adjustment of the calculation logic in future reporting periods could only have been determined with a disproportionately high eff ort.
Items in the fi nancial statements of Group companies are measured on the basis of the currency corresponding to the currency of the primary economic environment in which the company operates (functional currency). The consolidated fi nancial statement is prepared in the euro, which constitutes the functional currency and the reporting currency of the Talanx Group.
The Group companies' statements of income prepared in the national currencies are converted into euro at the average rates of exchange and transferred to the consolidated fi nancial statement. The conversion of foreign currency items in the balance sheets of the individual companies and the transfer of these items to the consolidated fi nancial statement are eff ected at the mean rates of exchange on the balance sheet date. All resulting currency translation diff erences – including those arising out of the capital consolidation – are recognized as a separate item within the other reserves in shareholders' equity.
The exchange rates for the Talanx Group's key foreign currencies are as follows:
| Balance sheet (balance sheet date) | Statement of income (average) | |||
|---|---|---|---|---|
| Exchange rates | 30.9.2011 | 31.12.2010 | 1.1.–30.9.2011 | 1.1.–30.9.2010 |
| 1 EUR corresponds to: | ||||
| ARS Argentina | 5.6756 | — | 5.7621 | — |
| AUD Australia | 1.3890 | 1.3068 | 1.3525 | 1.4776 |
| BHD Bahrain | 0.5087 | 0.4997 | 0.5312 | 0.4999 |
| BRL Brazil | 2.4824 | 2.2085 | 2.3060 | 2.3582 |
| CAD Canada | 1.4110 | 1.3259 | 1.3813 | 1.3815 |
| CLP Chile | 693.7529 | 619.9699 | 668.1091 | 687.1050 |
| CNY China | 8.6117 | 8.7511 | 9.1514 | 9.0193 |
| GBP United Kingdom | 0.8657 | 0.8585 | 0.8752 | 0.8603 |
| HKD Hong Kong | 10.5129 | 10.3146 | 10.9713 | 10.3031 |
| HUF Hungary | 292.6541 | 280.1572 | 272.2937 | 275.5768 |
| KRW South Korea | 1,593.6819 | 1,501.6346 | 1,547.4153 | 1,547.0884 |
| MXN Mexico | 18.6312 | 16.4031 | 17.0934 | 16.9104 |
| MYR Malaysia | 4.3077 | 4.0869 | 4.2747 | 4.3269 |
| PLN Poland | 4.4194 | 3.9678 | 4.0330 | 4.0132 |
| SEK Sweden | 9.2583 | 9.0119 | 9.0061 | 9.6719 |
| TRY Turkey | 2.5103 | 2.0597 | 2.2965 | 2.0134 |
| UAH Ukraine | 10.8020 | 10.5603 | 11.2409 | 10.5298 |
| UYU Uruguay | 26.9190 | — | 26.9459 | — |
| USD United States | 1.3493 | 1.3254 | 1.4091 | 1.3261 |
| ZAR South Africa | 10.9499 | 8.7907 | 9.8247 | 9.8600 |
As a fi rst step, in accordance with its internal organizational structure, the Talanx Group has split its business activities into the areas of insurance and corporate operations. Insurance activities are 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.
Refl ecting its diff erent products and business groups, reinsurance business continues to be split into the two segments of Non-Life Reinsurance and Life/Health Reinsurance. On account of their management according to customer groups and geographical regions (domestic versus international) – which therefore spans the various lines of business –, insurance activities in the primary sector have been structured in accordance with the following three reportable segments: "Industrial Lines", "Retail Germany" and "Retail International". The segmentation in primary insurance corresponds to the responsibilities of the members of the Board of Management.
The area of "Corporate Operations" constitutes another reportable segment. Altogether, then, the Group has identifi ed six reportable segments in conformity with IFRS 8 "Operating Segments".
The major products and services with 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, marine, special lines and engineering insurance for large and mid-sized enterprises in Germany and abroad. In addition, reinsurance in various classes of insurance is granted.
Retail Germany: Insurance activities serving German retail and commercial customers that span the various lines of business, including the bancassurance business transacted Germany-wide – i.e. insurance products sold over the counter at banks –, are managed in this reportable segment. In addition to traditional composite insurance products, numerous life insurance products are off ered in the form of individual, group and collective policies for a single or regular premium: endowment, annuity and term life insurance, accident insurance, unit-linked life insurance, occupational disability and strict "any occupation" disability insurance, foreign travel insurance and occupational retirement provision.
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 broad selection of insurance products largely refl ects those off ered in the Retail Germany segment.
Non-Life Reinsurance: The most important activities concentrate on property and casualty business with retail, commercial and industrial customers – fi rst and foremost in the US and German markets –, marine and aviation business, credit/surety business, facultative business and catastrophe business.
Life/Health Reinsurance: The segment consists of the international activities of the Hannover Re Group in the life, health, annuity and accident lines.
Contrary to the corresponding segmentation within the Hannover Re Group, we assign holding functions of this group to the Non-Life Reinsurance segment. Loans across segments within the Hannover Re Group are allocated to the two reinsurance segments within the Talanx consolidated fi nancial statement (consolidated fi nancial statement of Hannover Re: consolidation column). As a result, divergences in the segment results between the consolidated fi nancial statements of Talanx AG and of Hannover Re are unavoidable.
Corporate Operations: The Corporate Operations segment encompasses – in contrast to the fi ve operating segments – management and other functional activities in support of the business conducted by the Group, primarily relating to asset management, the run-off and placement of portions of reinsurance cessions for the primary insurance companies as well as Group fi nancing. Central service companies that perform specifi c service functions – such as IT services, collections, personnel and accounting tasks – on an at-cost basis principally for the primary insurers based in Germany are also allocated to this segment.
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. Such intra-group transactions between segments are eliminated within the scope of consolidation – in the consolidation column, insofar as they are cross-segment transactions. For reasons of consistency and comparability, we have adjusted the consolidated statement of income in line with the segment statement of income; the same applies to the consolidated balance sheet and the segment balance sheet. Non-current assets are considered largely to consist of intangible assets and own-use real estate/investment property.
Depending upon the nature and timeframe of the commercial activities, various management ratios and performance indicators are used to assess the fi nancial success of the reportable segments within the Group; the operating profi t (EBIT) – determined from IFRS profi t contributions – is, however, used as a consistent measurement basis. The 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).
| Industrial Lines | Retail Germany 1) | Retail International | |||||
|---|---|---|---|---|---|---|---|
| Assets | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | |
| Figures in EUR million | |||||||
| A. Intangible assets | |||||||
| a. Goodwill | 153 | 60 | 408 | 397 | 116 | 124 | |
| b. Other intangible assets | 29 | 8 | 1,268 | 1,361 | 28 | 29 | |
| 182 | 68 | 1,676 | 1,758 | 144 | 153 | ||
| B. Investments | |||||||
| a. Investment property | 37 | 39 | 378 | 449 | 71 | 69 | |
| b. Investments in affi liated companies | |||||||
| and participating interests | 9 | 9 | 23 | 24 | — | — | |
| c. Investments in associated companies | 12 | — | 44 | 9 | 22 | 24 | |
| d. Loans and receivables | 2,722 | 3,084 | 26,968 | 26,993 | 3 | 3 | |
| e. Other fi nancial instruments | |||||||
| i. Held to maturity | 120 | 121 | 290 | 295 | 245 | 71 | |
| ii. Available for sale | 2,980 | 2,764 | 9,133 | 8,599 | 2,176 | 2,444 | |
| iii. At fair value through profi t or loss | 7 | 16 | 267 | 445 | 496 | 487 | |
| f. Other invested assets | 785 | 559 | 1,659 | 849 | 302 | 224 | |
| Investments under own management | 6,672 | 6,592 | 38,762 | 37,663 | 3,315 | 3,322 | |
| g. Funds held by ceding companies | 31 | 43 | 3 | 3 | — | — | |
| Total investments | 6,703 | 6,635 | 38,765 | 37,666 | 3,315 | 3,322 | |
| C. Investments for the account and risk of holders | |||||||
| of life insurance policies | — | — | 4,926 | 5,419 | 998 | 995 | |
| D. Reinsurance recoverables on technical provisions | 4,346 | 3,866 | 2,510 | 2,797 | 719 | 713 | |
| E. Accounts receivable on insurance business | 995 | 1,675 | 479 | 368 | 386 | 354 | |
| F. Deferred acquisition costs | 36 | 26 | 1,640 | 1,498 | 193 | 202 | |
| G. Cash | 320 | 242 | 236 | 337 | 214 | 204 | |
| H. Deferred tax assets | 25 | 25 | 22 | 22 | 65 | 59 | |
| I. Other assets | 488 | 448 | 867 | 1,412 | 213 | 210 | |
| J. Non-current assets and assets of disposal groups | |||||||
| classifi ed as held for sale | 2 | — | 171 | — | — | — | |
| Total assets | 13,097 | 12,985 | 51,292 | 51,277 | 6,247 | 6,212 |
1) Adjusted on the basis of IAS 8
| Life/Health | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Life Reinsurance | Reinsurance | Corporate Operations | Consolidation | Total | |||||
| 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 |
| 23 | 8 | — | — | — | — | — | — | 700 | 589 |
| 26 | 29 | 105 | 108 | 54 | 48 | — | — | 1,510 | 1,583 |
| 49 | 37 | 105 | 108 | 54 | 48 | — | — | 2,210 | 2,172 |
| 369 | 301 | 2 | 2 | — | — | — | — | 857 | 860 |
| 18 | 11 | 1 | — | 28 | 30 | — | — | 79 | 74 |
| 121 | 85 | 12 | 12 | 13 | 14 | –73 | — | 151 | 144 |
| 3,457 | 2,270 | 29 | 45 | — | 1 | –53 | –53 | 33,126 | 32,343 |
| 2,740 | 3,024 | 2 | 4 | 17 | 46 | –552 | –562 | 2,862 | 2,999 |
| 12,471 | 12,096 | 5,155 | 4,409 | 299 | 323 | — | — | 32,214 | 30,635 |
| 131 | 181 | 39 | 92 | 2 | — | — | — | 942 | 1,221 |
| 1,987 | 2,352 | 340 | 273 | 508 | 413 | –556 | –485 | 5,025 | 4,185 |
| 21,294 | 20,320 | 5,580 | 4,837 | 867 | 827 | –1,234 | –1,100 | 75,256 | 72,461 |
| 791 | 696 | 12,137 | 11,940 | — | — | –1,639 | –1,721 | 11,323 | 10,961 |
| 22,085 | 21,016 | 17,717 | 16,777 | 867 | 827 | –2,873 | –2,821 | 86,579 | 83,422 |
| — | — | — | — | — | — | — | — | 5,924 | 6,414 |
| 1,522 | 941 | 491 | 515 | — | — | –3,126 | –3,309 | 6,462 | 5,523 |
| 2,049 | 1,806 | 962 | 1,036 | — | — | –277 | –228 | 4,594 | 5,011 |
| 445 | 362 | 1,461 | 1,472 | — | — | 223 | 155 | 3,998 | 3,715 |
| 412 | 328 | 124 | 118 | 61 | 36 | — | — | 1,367 | 1,265 |
| 27 | 10 | 13 | 2 | 135 | 181 | — | –31 | 287 | 268 |
| 1,102 | 970 | 62 | 47 | 376 | 474 | –1,372 | –1,780 | 1,736 | 1,781 |
| — | 1,529 | — | — | — | — | –27 | — | 146 | 1,529 |
| 27,691 | 26,999 | 20,935 | 20,075 | 1,493 | 1,566 | –7,452 | –8,014 | 113,303 | 111,100 |
| Industrial Lines | Retail Germany 1) | Retail International 1) | |||||
|---|---|---|---|---|---|---|---|
| Liabilities | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | |
| Figures in EUR million | |||||||
| B. Subordinated liabilities | 262 | 265 | 164 | 165 | — | — | |
| C. Technical provisions | |||||||
| a. Unearned premium reserve | 991 | 713 | 2,114 | 1,835 | 1,035 | 1,008 | |
| b. Benefi t reserve | 1 | — | 33,140 | 32,333 | 1,766 | 1,752 | |
| c. Loss and loss adjustment expense reserve | 8,066 | 7,777 | 2,583 | 2,696 | 1,149 | 1,129 | |
| d. Provision for premium refunds | 11 | 13 | 1,045 | 793 | 22 | 39 | |
| e. Other technical provisions | 31 | 31 | 7 | 8 | 15 | 15 | |
| 9,100 | 8,534 | 38,889 | 37,665 | 3,987 | 3,943 | ||
| D. Technical provisions in the area of life insurance insofar as the investment risk |
|||||||
| is borne by policyholders | — | — | 4,926 | 5,419 | 998 | 995 | |
| E. Other provisions | |||||||
| a. Provision for pensions | 441 | 438 | 121 | 133 | 8 | 8 | |
| b. Provision for taxes | 108 | 117 | 90 | 142 | 31 | 40 | |
| c. Sundry provisions | 91 | 92 | 216 | 283 | 37 | 33 | |
| 640 | 647 | 427 | 558 | 76 | 81 | ||
| F. Liabilities | |||||||
| a. Notes payable and loans | — | — | — | — | 8 | 17 | |
| b. Funds held under reinsurance treaties | 14 | 4 | 2,031 | 2,224 | 324 | 345 | |
| c. Other liabilities | 1,241 | 1,835 | 2,144 | 2,321 | 326 | 298 | |
| 1,255 | 1,839 | 4,175 | 4,545 | 658 | 660 | ||
| G. Deferred tax liabilities | 99 | 88 | 279 | 290 | 17 | 20 | |
| Total liabilities/provisions | 11,356 | 11,373 | 48,860 | 48,642 | 5,736 | 5,699 | |
| H. Liabilities of disposal groups classifi ed as held for sale |
— | — | 122 | — | — | — |
| Life/Health | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Life Reinsurance | Reinsurance | Corporate Operations | Consolidation | Total | |||||
| 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 |
| 1,734 | 1,869 | 91 | 92 | 518 | 542 | –141 | –142 | 2,628 | 2,791 |
| 2,158 | 1,813 | 111 | 98 | — | — | –77 | –56 | 6,332 | 5,411 |
| — | — | 9,822 | 8,941 | — | — | –544 | –560 | 44,185 | 42,466 |
| 17,299 | 15,634 | 2,586 | 2,431 | — | — | –1,154 | –1,129 | 30,529 | 28,538 |
| — | — | — | — | — | — | — | — | 1,078 | 845 |
| 141 | 131 | 59 | 51 | — | — | 21 | 14 | 274 | 250 |
| 19,598 | 17,578 | 12,578 | 11,521 | — | — | –1,754 | –1,731 | 82,398 | 77,510 |
| — | — | — | — | — | — | — | — | 5,924 | 6,414 |
| 67 | 64 | 19 | 18 | 670 | 655 | — | — | 1,326 | 1,316 |
| 119 | 263 | 20 | 24 | 74 | 157 | — | — | 442 | 743 |
| 85 | 135 | 18 | 23 | 109 | 128 | –1 | –2 | 555 | 692 |
| 271 | 462 | 57 | 65 | 853 | 940 | –1 | –2 | 2,323 | 2,751 |
| 207 | 188 | 254 | 168 | 1,304 | 1,304 | –1,007 | –930 | 766 | 747 |
| 381 | 320 | 4,944 | 5,572 | — | — | –2,912 | –3,241 | 4,782 | 5,224 |
| 738 | 620 | 1,340 | 1,139 | 386 | 757 | –1,754 | –2,112 | 4,421 | 4,858 |
| 1,326 | 1,128 | 6,538 | 6,879 | 1,690 | 2,061 | –5,673 | –6,283 | 9,969 | 10,829 |
| 779 | 716 | 344 | 310 | 11 | 4 | 21 | 16 | 1,550 | 1,444 |
| 23,708 | 21,753 | 19,608 | 18,867 | 3,072 | 3,547 | –7,548 | –8,142 | 104,792 | 101,739 |
| — | 1,381 | — | — | — | — | –2 | — | 120 | 1,381 |
Shareholders' equity 2) 8,391 7,980
Total equity and liabilities 113,303 111,100
1) Adjusted on the basis of IAS 8
2) Group shareholders' equity incl. non-controlling interests
| Industrial Lines | Retail Germany | Retail International | |||||
|---|---|---|---|---|---|---|---|
| 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | ||
| 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | ||
| Figures in EUR million | |||||||
| 1. Gross written premium including premium from unit-linked life and annuity insurance |
2,556 | 2,527 | 5,006 | 5,067 | 1,774 | 1,651 | |
| thereof: with other segments | 19 | 15 | 44 | 16 | — | — | |
| with third parties | 2,537 | 2,512 | 4,962 | 5,051 | 1,774 | 1,651 | |
| 2. Savings elements of premium from unit-linked | |||||||
| life and annuity insurance | — | — | 642 | 680 | 182 | 141 | |
| 3. Ceded written premium | 1,334 | 1,322 | 296 | 418 | 172 | 149 | |
| 4. Change in gross unearned premium | –229 | –211 | –273 | –97 | –81 | 96 | |
| 5. Change in ceded unearned premium | –102 | –90 | –2 | 49 | –23 | 138 | |
| Net premium earned | 1,095 | 1,084 | 3,797 | 3,823 | 1,362 | 1,319 | |
| 6. Claims and claims expenses (gross) | 1,850 | 1,499 | 4,121 | 4,355 | 1,092 | 1,139 | |
| Reinsurers' share | 1,089 | 683 | 146 | 185 | 76 | 62 | |
| Claims and claims expenses (net) | 761 | 816 | 3,975 | 4,170 | 1,016 | 1,077 | |
| 7. Acquisition costs and administrative expenses | |||||||
| (gross) | 438 | 400 | 855 | 1,035 | 388 | 583 | |
| Reinsurers' share | 203 | 186 | 111 | 246 | 19 | 248 | |
| Acquisition costs and administrative expenses (net) | 235 | 214 | 744 | 789 | 369 | 335 | |
| 8. Other technical income | 6 | 6 | 5 | 17 | 7 | 11 | |
| Other technical expenses thereof: amortization PVFP |
31 — |
73 — |
55 41 |
186 101 |
33 1 |
24 1 |
|
| Other technical result | –25 | –67 | –50 | –169 | –26 | –13 | |
| Net technical result | 74 | –13 | –972 | –1,305 | –49 | –106 | |
| 9. a. Income from investments | 209 | 196 | 1,385 | 1,392 | 153 | 132 | |
| b. Expenses for investments 1) | 59 | 24 | 214 | 133 | 40 | 15 | |
| Net income from investments under | |||||||
| own management | 150 | 172 | 1,171 | 1,259 | 113 | 117 | |
| Income/expense on funds withheld | |||||||
| and contract deposits | 1 | — | –22 | –25 | –1 | –1 | |
| Net investment income | 151 | 172 | 1,149 | 1,234 | 112 | 116 | |
| thereof: interest and similar income | 164 | 166 | 1,149 | 1,106 | 108 | 90 | |
| impairments/depreciation | |||||||
| on investments write-ups on investments |
25 2 |
5 — |
74 17 |
54 10 |
15 1 |
5 — |
|
| profi t/loss from investments in | |||||||
| associated companies | — | — | 2 | — | –2 | –1 | |
| 10. a. Other income | 96 | 169 | 117 | 316 | 26 | 46 | |
| b. Other expenses 1) | 153 | 146 | 183 | 247 | 71 | 85 | |
| Other income/expenses | –57 | 23 | –66 | 69 | –45 | –39 | |
| thereof: interest and similar income | 4 | 1 | 6 | 4 | 4 | 14 | |
| write-ups on accounts receivable | |||||||
| and other assets | — | — | 1 | — | — | — | |
| interest and similar expenses | 21 | 24 | 11 | 21 | 1 | 9 | |
| write-downs on accounts receivable | |||||||
| and other assets | 59 | 5 | 16 | 11 | 8 | 11 | |
| amortization on acquired insurance portfolios |
— | — | — | — | — | — | |
| Profit before goodwill impairments | 168 | 182 | 111 | –2 | 18 | –29 | |
| 11. Goodwill impairments | — | — | — | — | — | — | |
| Operating profit/loss (EBIT) | 168 | 182 | 111 | –2 | 18 | –29 | |
| 12. Financing costs | 10 | 10 | 7 | 7 | — | — | |
| 13. Taxes on income | 33 | 53 | 12 | 31 | 8 | 19 | |
| Net income | 125 | 119 | 92 | –40 | 10 | –48 | |
| thereof attributable to non-controlling interests | — | — | 6 | –1 | –2 | –1 | |
| thereof Group net income | 125 | 119 | 86 | –39 | 12 | –47 |
1) Expenses for the administration of non-Group investments are recognized under other expenses. The previous year was adjusted accordingly (EUR 34 million)
| Non-Life Reinsurance | Life/Health Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– | 1.1.– |
| 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 |
| 5,220 | 4,826 | 3,844 | 3,730 | — | 2 | –557 | –548 | 17,843 | 17,255 |
| 307 | 298 | 187 | 217 | — | 2 | –557 | –548 | — | — |
| 4,913 | 4,528 | 3,657 | 3,513 | — | — | — | — | 17,843 | 17,255 |
| — | — | — | — | — | — | — | — | 824 | 821 |
| 504 | 457 | 342 | 316 | — | — | –565 | –543 | 2,083 | 2,119 |
| –380 | –373 | –17 | –11 | — | — | 21 | 9 | –959 | –587 |
| –55 | –72 | –2 | –2 | — | — | 47 | –165 | –137 | –142 |
| 4,391 | 4,068 | 3,487 | 3,405 | — | 2 | –18 | 169 | 14,114 | 13,870 |
| 4,286 | 3,257 | 3,112 | 2,985 | — | 1 | –277 | –200 | 14,184 | 13,035 |
| 781 | 256 | 236 | 242 | — | — | –302 | –222 | 2,026 | 1,206 |
| 3,505 | 3,001 | 2,876 | 2,743 | — | 1 | 25 | 22 | 12,158 | 11,829 |
| 1,168 | 1,098 | 852 | 908 | — | — | –210 | –263 | 3,491 | 3,761 |
| 54 | 69 | 49 | 73 | — | — | –133 | –405 | 303 | 417 |
| 1,114 | 1,029 | 803 | 835 | — | — | –77 | 142 | 3,188 | 3,344 |
| 1 –3 |
–1 7 |
6 7 |
11 40 |
— — |
— 1 |
–2 32 |
–1 5 |
23 155 |
43 336 |
| — | — | 2 | 3 | — | — | — | — | 44 | 104 |
| 4 | –8 | –1 | –29 | — | –1 | –34 | –6 | –132 | –293 |
| –224 | 30 | –193 | –202 | — | — | — | –1 | –1,364 | –1,596 |
| 763 | 717 | 198 | 179 | 18 | 9 | –43 | –40 | 2,683 | 2,585 |
| 165 | 197 | 85 | 32 | 45 | 43 | –52 | –66 | 556 | 378 |
| 598 | 520 | 113 | 147 | –27 | –34 | 9 | 26 | 2,127 | 2,207 |
| 10 | 7 | 237 | 216 | — | — | — | –1 | 225 | 197 |
| 608 | 527 | 350 | 363 | –27 | –34 | 9 | 25 | 2,352 | 2,404 |
| 517 | 504 | 480 | 411 | 4 | 2 | –49 | –48 | 2,373 | 2,231 |
| 21 | 19 | — | — | 5 | 7 | — | — | 140 | 90 |
| 17 | 14 | — | — | — | — | — | — | 37 | 24 |
| 5 | 2 | — | — | 1 | — | –2 | — | 4 | 1 |
| 171 | 292 | 38 | 98 | 456 | 442 | –399 | –613 | 505 | 750 |
| 203 | 180 | 48 | 46 | 488 | 647 | –373 | –551 | 773 | 800 |
| –32 | 112 | –10 | 52 | –32 | –205 | –26 | –62 | –268 | –50 |
| 70 | 80 | 2 | — | 9 | 10 | –6 | –9 | 89 | 100 |
| 12 | 59 | — | — | — | — | — | — | 13 | 59 |
| 9 | 16 | 23 | 5 | 52 | 41 | –11 | –13 | 106 | 103 |
| 23 | 17 | 9 | 8 | 3 | 2 | — | — | 118 | 54 |
| — | — | — | — | — | — | — | — | — | — |
| 352 | 669 | 147 | 213 | –59 | –239 | –17 | –39 | 720 | 758 |
| — | — | — | — | — | — | — | — | — | — |
| 352 | 669 | 147 | 213 | –59 | –239 | –17 | –39 | 720 | 758 |
| 78 | 64 | 4 | 2 | 60 | 46 | –35 | –35 | 124 | 94 |
| –36 | 108 | 25 | 44 | –18 | –65 | 6 | 1 | 30 | 191 |
| 310 | 497 | 118 | 167 | –101 | –220 | 12 | –5 | 566 | 473 |
| 176 134 |
275 222 |
57 61 |
85 82 |
— –101 |
— –220 |
— 12 |
— –2 |
237 329 |
358 115 |
| Industrial Lines | Retail Germany | Retail International | |||||
|---|---|---|---|---|---|---|---|
| 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | ||
| Figures in EUR million | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | |
| 1. Gross written premium including premium | |||||||
| from unit-linked life and annuity insurance | 550 | 498 | 1,482 | 1,547 | 580 | 530 | |
| thereof: with other segments | 6 | 1 | 33 | 6 | — | — | |
| with third parties | 544 | 497 | 1,449 | 1,541 | 580 | 530 | |
| 2. Savings elements of premium from unit-linked | |||||||
| life and annuity insurance | — | — | 196 | 268 | 57 | 62 | |
| 3. Ceded written premium | 390 | 361 | 91 | 120 | 52 | 51 | |
| 4. Change in gross unearned premium | 306 | 307 | 95 | 160 | –24 | –1 | |
| 5. Change in ceded unearned premium Net premium earned |
99 367 |
64 380 |
13 1,277 |
90 1,229 |
5 442 |
13 403 |
|
| 6. Claims and claims expenses (gross) | 427 | 516 | 1,367 | 1,482 | 349 | 335 | |
| Reinsurers' share | 226 | 235 | 43 | 55 | 25 | 33 | |
| Claims and claims expenses (net) | 201 | 281 | 1,324 | 1,427 | 324 | 302 | |
| 7. Acquisition costs and administrative expenses | |||||||
| (gross) | 159 | 119 | 345 | 460 | 144 | 154 | |
| Reinsurers' share | 87 | 69 | 54 | 159 | 17 | 37 | |
| Acquisition costs and administrative expenses (net) | 72 | 50 | 291 | 301 | 127 | 117 | |
| 8. Other technical income | 1 | 2 | 2 | 2 | — | 3 | |
| Other technical expenses | –48 | 48 | 39 | 132 | 10 | 13 | |
| thereof: amortization PVFP | — | — | 33 | 53 | — | — | |
| Other technical result | 49 | –46 | –37 | –130 | –10 | –10 | |
| Net technical result | 143 | 3 | –375 | –629 | –19 | –26 | |
| 9. a. Income from investments | 69 | 66 | 475 | 451 | 54 | 46 | |
| b. Expenses for investments 1) | 42 | 7 | 84 | 28 | 28 | 7 | |
| Net income from investments under | |||||||
| own management | 27 | 59 | 391 | 423 | 26 | 39 | |
| Income/expense on funds withheld and | |||||||
| contract deposits | — | — | –6 | –9 | — | — | |
| Net investment income | 27 | 59 | 385 | 414 | 26 | 39 | |
| thereof: interest and similar income impairments/depreciation |
55 | 56 | 384 | 384 | 43 | 20 | |
| on investments | 19 | 2 | 40 | 7 | 12 | 1 | |
| write-ups on investments | — | — | 2 | — | — | — | |
| profi t/loss from investments in | |||||||
| associated companies | — | — | 2 | — | –1 | — | |
| 10. a. Other income | 25 | 64 | 36 | 210 | 11 | 28 | |
| b. Other expenses 1) | 87 | 32 | 48 | 81 | 25 | 33 | |
| Other income/expenses | –62 | 32 | –12 | 129 | –14 | –5 | |
| thereof: interest and similar income | 1 | 1 | 1 | 3 | 1 | 5 | |
| write-ups on accounts receivable | |||||||
| and other assets | — | — | — | –3 | — | — | |
| interest and similar expenses | 6 | 17 | 5 | 11 | 1 | 3 | |
| write-downs on accounts receivable | |||||||
| and other assets amortization on acquired insurance |
21 | 1 | 5 | 3 | 2 | 3 | |
| portfolios | — | — | — | — | — | — | |
| Profit before goodwill impairments | 108 | 94 | –2 | –86 | –7 | 8 | |
| 11. Goodwill impairments | — | — | — | — | — | — | |
| Operating profit/loss (EBIT) | 108 | 94 | –2 | –86 | –7 | 8 | |
| 12. Financing costs | 3 | 3 | 3 | –4 | — | — | |
| 13. Taxes on income | 19 | 40 | –17 | –32 | — | 8 | |
| Net income | 86 | 51 | 12 | –50 | –7 | — | |
| thereof attributable to non-controlling interests | — | — | 2 | –4 | –1 | –1 | |
| thereof Group net income | 86 | 51 | 10 | –46 | –6 | 1 |
1) Expenses for the administration of non-Group investments are recognized under other expenses. The previous year was adjusted accordingly (EUR 11 million)
| Non-Life Reinsurance | Life/Health Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– | 1.7.– |
| 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 | 30.9.2011 | 30.9.2010 |
| 1,676 | 1,553 | 1,344 | 1,319 | — | 1 | –211 | –113 | 5,421 | 5,335 |
| 98 | 29 | 74 | 76 | — | — | –211 | –113 | — | — |
| 1,578 | 1,524 | 1,270 | 1,243 | — | 1 | — | — | 5,421 | 5,335 |
| — | — | — | — | — | — | — | — | 253 | 330 |
| 149 | 133 | 143 | 89 | — | — | –210 | –113 | 615 | 641 |
| 4 | 2 | –14 | –8 | — | — | –19 | –36 | 348 | 424 |
| –12 | –6 | –2 | –1 | — | — | –16 | –114 | 87 | 46 |
| 1,543 | 1,428 | 1,189 | 1,223 | — | 1 | –4 | 78 | 4,814 | 4,742 |
| 1,164 | 1,158 | 1,069 | 1,049 | — | — | –103 | –41 | 4,273 | 4,499 |
| 91 | 118 | 103 | 82 | — | — | –105 | –47 | 383 | 476 |
| 1,073 | 1,040 | 966 | 967 | — | — | 2 | 6 | 3,890 | 4,023 |
| 416 | 386 | 286 | 307 | — | — | –87 | –67 | 1,263 | 1,359 |
| 17 399 |
26 360 |
24 262 |
20 287 |
— — |
— — |
–87 — |
–155 88 |
112 1,151 |
156 1,203 |
| — | –1 | 1 | 3 | — | — | 1 | –1 | 5 | 8 |
| — | 2 | –1 | 12 | — | 1 | –5 | –16 | –5 | 192 |
| — | — | 1 | 1 | — | — | — | — | 34 | 54 |
| — | –3 | 2 | –9 | — | –1 | 6 | 15 | 10 | –184 |
| 71 | 25 | –37 | –40 | — | — | — | — | –217 | –668 |
| 233 | 255 | 84 | 58 | 14 | 3 | –15 | –8 | 914 | 871 |
| 56 | 55 | 67 | –2 | 21 | 10 | –18 | –27 | 280 | 78 |
| 177 | 200 | 17 | 60 | –7 | –7 | 3 | 19 | 634 | 793 |
| 4 | — | 82 | 73 | — | — | –1 | –1 | 79 | 63 |
| 181 | 200 | 99 | 133 | –7 | –7 | 2 | 18 | 713 | 856 |
| 182 | 163 | 154 | 108 | 2 | 1 | –15 | –10 | 805 | 722 |
| 5 | 3 | — | — | 5 | — | — | — | 81 | 13 |
| 2 | 3 | — | — | — | — | — | — | 4 | 3 |
| 2 6 |
— 81 |
— 11 |
— 12 |
— 164 |
— 159 |
–2 –140 |
— –342 |
1 113 |
— 212 |
| 74 | –4 | 12 | 14 | 177 | 366 | –103 | –321 | 320 | 201 |
| –68 | 85 | –1 | –2 | –13 | –207 | –37 | –21 | –207 | 11 |
| 3 | 76 | 1 | — | 4 | 2 | –2 | — | 9 | 86 |
| 3 | 9 | — | — | — | — | — | — | 3 | 6 |
| 3 | –11 | 19 | 2 | 12 | 14 | –4 | –1 | 42 | 35 |
| 4 | 3 | 3 | 2 | –10 | 1 | — | — | 25 | 13 |
| — | — | — | — | — | — | — | — | — | — |
| 184 | 310 | 61 | 91 | –20 | –214 | –35 | –3 | 289 | 199 |
| — | — | — | — | — | — | — | — | — | — |
| 184 | 310 | 61 | 91 | –20 | –214 | –35 | –3 | 289 | 199 |
| 26 | 24 | 2 | 1 | 21 | 15 | –14 | –5 | 41 | 34 |
| 19 | 20 | 19 | 22 | 3 | –64 | –6 | — | 37 | –6 |
| 139 | 266 | 40 | 68 | –44 | –165 | –15 | 2 | 211 | 171 |
| 71 68 |
154 112 |
20 20 |
36 32 |
— –44 |
— –165 |
— –15 |
— 1 |
92 119 |
185 –14 |
The geographical breakdown shown below is based on the regional origin of the investments and the gross written premium with respect to external clients. No transactions with external clients amounting to at least 10% of total gross premium occurred during the reporting period. Segmentation has essentially been condensed into the areas of primary insurance, reinsurance and corporate operations.
In addition, we are reporting the gross written premium broken down according to types and lines of insurance on the Group level.
| Corporate | 30.9.2011 | |||
|---|---|---|---|---|
| Primary insurance | Reinsurance | Operations | Total | |
| Figures in EUR million | ||||
| Germany | 29,247 | 6,008 | 369 | 35,624 |
| United Kingdom | 2,272 | 2,086 | 176 | 4,534 |
| Rest of Europe | 14,641 | 7,123 | 313 | 22,077 |
| United States | 835 | 6,651 | 3 | 7,489 |
| Rest of North America | 87 | 960 | 1 | 1,048 |
| Asia and Australia | 256 | 2,582 | 1 | 2,839 |
| Rest of the world | 761 | 883 | 1 | 1,645 |
| Total | 48,099 | 26,293 | 864 | 75,256 |
| Corporate | 31.12.2010 | |||
|---|---|---|---|---|
| Primary insurance | Reinsurance | Operations | Total | |
| Figures in EUR million | ||||
| Germany | 30,795 | 6,064 | 465 | 37,324 |
| United Kingdom | 1,371 | 1,705 | 46 | 3,122 |
| Rest of Europe | 12,842 | 6,993 | 316 | 20,151 |
| United States | 839 | 6,052 | — | 6,891 |
| Rest of North America | 103 | 987 | — | 1,090 |
| Asia and Australia | 240 | 2,121 | — | 2,361 |
| Rest of the world | 756 | 766 | — | 1,522 |
| Total | 46,946 | 24,688 | 827 | 72,461 |
1) Aft er elimination of internal transactions within the Group across segments. Divergences fr om the fi gures presented in the management report may therefore arise
| 1.1.–30.9.2011 | 1.1.–30.9.2010 | 1.7.–30.9.2011 | 1.7.–30.9.2010 | |
|---|---|---|---|---|
| Figures in EUR million | ||||
| Industrial Lines | 2,537 | 2,512 | 544 | 496 |
| Retail Germany | 4,962 | 5,051 | 1,448 | 1,542 |
| Retail International | 1,774 | 1,651 | 580 | 530 |
| Non-Life Reinsurance | 4,913 | 4,528 | 1,578 | 1,524 |
| Life/Health Reinsurance | 3,657 | 3,513 | 1,271 | 1,243 |
| Total | 17,843 | 17,255 | 5,421 | 5,335 |
1) Aft er elimination of internal transactions within the Group across segments. Divergences fr om the fi gures
presented in the management report may therefore arise
| Primary insurance | Reinsurance | 1.1.–30.9.2011 Total |
|
|---|---|---|---|
| Figures in EUR million | |||
| Germany | 6,274 | 599 | 6,873 |
| United Kingdom | 84 | 1,801 | 1,885 |
| Rest of Europe | 2,045 | 1,532 | 3,577 |
| United States | 91 | 1,992 | 2,083 |
| Rest of North America | — | 326 | 326 |
| Asia and Australia | 55 | 1,399 | 1,454 |
| Rest of the world | 724 | 921 | 1,645 |
| Total | 9,273 | 8,570 | 17,843 |
| 1.1.–30.9.2010 | |||
|---|---|---|---|
| Primary insurance | Reinsurance | Total | |
| Figures in EUR million | |||
| Germany | 6,258 | 590 | 6,848 |
| United Kingdom | 142 | 1,702 | 1,844 |
| Rest of Europe | 2,125 | 1,304 | 3,429 |
| United States | 97 | 2,227 | 2,324 |
| Rest of North America | — | 304 | 304 |
| Asia and Australia | 35 | 1,072 | 1,107 |
| Rest of the world | 557 | 842 | 1,399 |
| Total | 9,214 | 8,041 | 17,255 |
1) Aft er elimination of internal transactions within the Group across segments. Divergences fr om the fi gures presented in the management report may therefore arise
| 1.7.–30.9.2011 | |||
|---|---|---|---|
| Primary insurance | Reinsurance | Total | |
| Figures in EUR million | |||
| Germany | 1,681 | 151 | 1,832 |
| United Kingdom | 21 | 616 | 637 |
| Rest of Europe | 570 | 491 | 1,061 |
| United States | 14 | 653 | 667 |
| Rest of North America | — | 113 | 113 |
| Asia and Australia | 18 | 516 | 534 |
| Rest of the world | 268 | 309 | 577 |
| Total | 2,572 | 2,849 | 5,421 |
| 1.7.–30.9.2010 | ||
|---|---|---|
| Primary insurance | Reinsurance | Total |
| 1,736 | 147 | 1,883 |
| 40 | 621 | 661 |
| 545 | 415 | 960 |
| 26 | 750 | 776 |
| — | 111 | 111 |
| 10 | 387 | 397 |
| 211 | 336 | 547 |
| 2,568 | 2,767 | 5,335 |
1) Aft er elimination of internal transactions within the Group across segments. Divergences fr om the fi gures presented in the management report may therefore arise
| 1.1.–30.9.2011 | 1.1.–30.9.2010 | 1.7.–30.9.2011 | 1.7.–30.9.2010 | |
|---|---|---|---|---|
| Figures in EUR million | ||||
| Property/casualty primary insurance | 5,122 | 4,806 | 1,261 | 1,126 |
| Life primary insurance | 4,151 | 4,408 | 1,312 | 1,442 |
| Non-Life Reinsurance | 4,913 | 4,528 | 1,577 | 1,524 |
| Life/Health Reinsurance | 3,657 | 3,513 | 1,271 | 1,243 |
| Total | 17,843 | 17,255 | 5,421 | 5,335 |
1) Aft er elimination of internal transactions within the Group across segments. Divergences fr om the fi gures presented in the management report may therefore arise
As at the balance sheet date 121 individual companies as well as three foreign subgroups – collectively as a group (incl. any existing associated companies) – were included in full in the Talanx consolidated fi nancial statement; one company was consolidated proportionately and seven associated companies were included at equity.
The major changes in the scope of consolidation/interests held as well as with respect to special purpose entities relative to year-end 2010 are set out below.
On 1 April 2011 Talanx International AG (TINT), Hannover, acquired all the shares of Saint Honoré Iberia SL, Madrid, Spain. As a holding company, the latter holds interests of 99.231% in the intermediate holding company Protecciones Esenciales S. A., Buenos Aires, Argentina, and 10% in the insurance company L'Union de Paris Cía. Uruguaya de Seguros S. A., Montevideo, Uruguay. The intermediate holding company itself holds a stake of 98.771% in the hitherto privately owned L'Union de Paris Cía. Argentina de Seguros S. A., Buenos Aires, Argentina. For its part, L'Union de Paris Cía. Argentina de Seguros S.A. holds a 90% stake in the hitherto privately owned L'Union de Paris Cía. Uruguaya de Seguros S. A.
On the same date our Chilean subsidiary Inversiones HDI Limitada, Santiago, Chile, acquired interests of 0.769% in the intermediate holding company Protecciones Esenciales S. A. and 1.229% in the Argentinian company L'Union de Paris Cía. Argentina de Seguros S. A. All four companies were consolidated for the fi rst time in the second quarter of 2011 (see also our remarks in chapter V of the Notes, "Business combinations in the reporting period").
TINT raised its stake in HDI Seguros S. A., São Paulo, Brazil, from 99.9977% to 99.9979% through two capital increases implemented in the fi rst quarter of 2011 in which the minority shareholders did not participate. By way of a capital increase implemented in March 2011 at HDI STRAKHUVANNYA, Kiev, Ukraine, TINT increased its participation in the company from 99.2240% to 99.2795%.
With eff ect from the closing on 27 April 2011 HDI-Gerling Industrie Versicherung AG (HG-I), Hannover, acquired all the shares of Nassau Verzekering Maatschappij N. V. (Nassau), Rotterdam. Once the insurance portfolio of its German branch has been spun off , it is envisaged that the acquired company will be merged in 2011 with retroactive eff ect as at 1 January 2011 into our Dutch insurance company HDI-Gerling Verzekeringen N. V., Rotterdam. Further information on the initial consolidation of Nassau is provided in the chapter of the Notes entitled "Business combinations in the reporting period".
Nassau also holds a stake of 25% in VOV Verwaltungsorganisation für Vermögensschadenhaft pfl icht-Versicherungen für Mitglieder von Organen juristischer Personen GmbH, Cologne. Since it is immaterial to the assets, fi nancial position and net income of the Group, this company is not consolidated at equity in the consolidated fi nancial statement.
International Hannover Holding AG was established in the second quarter with registered offi ce in Hannover. The company, the share capital of which amounts to EUR 50,000, is a wholly owned subsidiary of International Insurance Company of Hannover Ltd., Bracknell, United Kingdom, which in turn is wholly owned by Hannover Re. The business object of the company is to hold, acquire and sell participating interests in other companies.
In the course of the second quarter Funis GmbH & Co. KG, a wholly owned subsidiary of Hannover Re, acquired a participating interest in Glencar Underwriting Managers, Inc., based in Chicago, United States, with a capital contribution of USD 98,000 (corresponding to 49% of the share capital). The business object of the company will primarily be to underwrite specialty lines as well as property and casualty program business. Preference shares in an amount of roughly USD 2.3 million were purchased in the course of the third quarter of 2011.
Since they are immaterial to the assets, fi nancial position and net income of the Group, International Hannover Holding AG and Glencar Underwriting Managers, Inc. are not included in the consolidated fi nancial statement.
On 25 August 2011 Talanx Deutschland Bancassurance GmbH was established with registered offi ce in Hilden through the spinoff of participating interests in joint-stock companies of Talanx Deutschland AG; Talanx Deutschland AG holds 100% of the shares in Talanx Deutschland Bancassurance GmbH. The business object of the new company is principally – as a management holding company – to hold participating interests in German and foreign insurance companies and in particular – through the provision of coordinating advice – to ensure consistent management at the companies in which it holds a majority stake.
Funis GmbH & Co. KG, a wholly owned subsidiary of Hannover Re, acquired roughly 75% of the shares in Integra Insurance Solutions Ltd. eff ective 18 August 2011. As an agency, Integra mediates insurance business to International Insurance Company of Hannover Ltd., which is also a company belonging to the Hannover Re Group (see also further information on initial consolidation in chapter V "Business combinations in the reporting period").
With the approval of anti-trust authorities, Talanx Deutschland AG (TD), Hannover, sold all its shares in Clarus AG, Wiesbaden, to Clarus Holding GmbH, Wiesbaden, with eff ect from the closing on 28 June 2011 (segment: Retail Germany). This transaction gave rise to a disposal loss of EUR 0.2 million. In the context of the sale a provision for contingent losses, inter alia for guaranteed rehabilitation subsidies, was also constituted in an amount of EUR 13 million. As part of this disposal transaction TD acquired 25.1% of the interests of EUR 25,000 in Clarus Holding GmbH from Aragon AG, Wiesbaden. Clarus Holding GmbH is an associated company of the Talanx Group, which is not consolidated at equity in the consolidated fi nancial statement since it is immaterial to the assets, fi nancial position and net income of the Group.
Once the customary regulatory approvals had been received on 8 July 2011 Hannover Re closed the sale of the operational companies of its US subgroup Clarendon Insurance Group, Inc. (CIGI), Wilmington, and completed the associated deconsolidation on 12 July 2011. Hannover Re holds all shares of CIGI indirectly through the intermediate holding company Hannover Finance, Inc., Wilmington, which is also included in full in the consolidated fi nancial statement of Hannover Re. For further details of deconsolidation please see our remarks in chapter VI "Non-current assets held for sale and disposal groups".
Gerling Insurance Agency, Inc., Chicago, and HDI-Gerling Australia Insurance Company Pty. Ltd. (HDI-GAUS), Sydney, are no longer included in the consolidated fi nancial statement with eff ect from the fi rst quarter of 2011 – inter alia on account of the transfer of the insurance portfolio of HDI-GAUS to HDI-Gerling Industrie Versicherungs AG (Australian branch) in the previous year –, since based on their total assets and result they no longer reach the materiality threshold for full consolidation. They are therefore to be regarded as immaterial to the assessment of the Group's assets, fi nancial position and net income. The deconsolidation of HDI-GAUS gave rise to income of EUR 4 million.
In April 2011 Proactiv IT Servicegesellschaft mbH, Munich, was merged into Proactiv Servicegesellschaft mbh, Hilden, with legal eff ect from 1 January 2011.
The Zurich-based HDI-Gerling Versicherungs-Service AG, which was not previously included in the consolidated fi nancial statement, has been liquidated and was deleted from the offi cial register in Switzerland on 20 April 2011.
HDI-Gerling Leben Vertriebsservice AG, Cologne, was merged into HDI-Gerling Vertrieb Firmen und Privat AG, Cologne, at the end of September 2011 with legal eff ect from 1 January 2011.
| Individual companies | Subgroups | |||
|---|---|---|---|---|
| Consolidated subsidiaries (fully consolidated) | Domestic | Foreign 1) | Foreign | Total |
| 31.12.2010 | 70 | 49 | 3 | 122 |
| Additions | — | — | — | — |
| Retirements | — | 2 | — | 2 |
| 31.3.2011 | 70 | 47 | 3 | 120 |
| Additions | — | 5 | — | 5 |
| Retirements | 2 | — | — | 2 |
| 30.6.2011 | 68 | 52 | 3 | 123 |
| Additions | 1 | 1 | — | 2 |
| Retirements | 1 | — | — | 1 |
| 30.9.2011 | 68 | 53 | 3 | 124 |
The scope of consolidation as at the balance sheet date encompassed the following companies:
1) 30.9.2011: Consists of 51 individual companies and two special purpose entities
In addition, 19 special funds and one public fund were included in the consolidated fi nancial statement; of these, 12 were domestic funds. One special equity fund (PBVL-Aktien) was liquidated in the fi rst quarter of 2011, while another (HG-LV Corporate) was liquidated in the third quarter.
With regard to the consolidation of special purpose entities, the Group makes a distinction below between the areas of investments (excluding special and public funds), securitization of reinsurance risks, retrocessions and insurance-linked securities (ILS). Such special purpose entities are to be examined in accordance with SIC-12 "Consolidation – Special Purpose Entities" with an eye to their consolidation requirement. In cases where IFRS do not currently contain any specifi c standards, our analysis also falls back – in application of IAS 8 – on the relevant standards of US GAAP.
Within the scope of its asset management activities our subsidiary Hannover Re, Hannover, has participated since 1988 in numerous special purpose entities – predominantly funds –, which for their part transact certain types of equity and debt capital investments. On the basis of our analysis of the relations with these entities we concluded that the Group does not exercise a controlling infl uence in any of these transactions and a consolidation requirement therefore does not exist.
Hannover Re participates – primarily through the companies Secquaero ILS Fund Ltd. and Hannover Insurance-Linked Securities GmbH & Co. KG – in a number of special purpose entities for the securitization of catastrophe risks. Since Hannover Re does not exercise a controlling infl uence in any of these transactions either there is no consolidation requirement.
The securitization of reinsurance risks is largely structured through the use of special purpose entities.
Eff ective 30 March 2011 a structured transaction was entered into by Hannover Re in order to fi nance the statutory reserves (socalled XXX reserves) of a US cedant. The structure necessitates the involvement of a special purpose entity, namely the Delaware-based Maricopa LLC. The special purpose entity carries extreme mortality risks securitized by the cedant above a contractually defi ned retention and transfers these risks by way of a fi xed/fl oating swap with a ten-year term to a group company of the Hannover Re Group. The maximum capacity of the transaction is USD 500 million; an amount of USD 250 million was initially taken up upon contract closing. The variable payments to the special purpose entity guaranteed by Hannover Re cover its payment obligations. By way of a compensation agreement Hannover Re is reimbursed by the cedant's parent company for all payments resulting from the swap in the event of a claim. Since Hannover Re does not bear the majority of the economic risks or benefi ts arising out of its business relations with the special purpose entity and does not exercise a controlling infl uence over it, there is no consolidation requirement for Hannover Re. Under IAS 39 this transaction is to be recognized at fair value as a fi nancial guarantee. To this end Hannover Re uses the net method, according to which the present value of the agreed fi xed swap premiums is netted with the present value of the guarantee commitment. The fair value on initial recognition therefore amounted to zero. The higher of the fair value and the amount carried as a provision on the liabilities side pursuant to IAS 37 is recognized at the point in time when utilization is considered probable. In this case the reimbursement claims from the compensation agreement are to be capitalized separately from and up to the amount of the provision.
In July 2009 Hannover Re issued a catastrophe ("CAT") bond with the aim of transferring to the capital market peak natural catastrophe exposures deriving from European winterstorm events. The term of the CAT bond, which has a volume of nominally EUR 150 million, runs until 31 March 2012; it was placed with institutional investors from Europe and North America by Eurus II Ltd., a special purpose entity domiciled in the Cayman Islands. Hannover Re does not exercise a controlling infl uence over the special purpose entity. Under IFRS this transaction is to be recognized as a fi nancial instrument.
Eff ective 1 January 2009 Hannover Re raised further underwriting capacity for catastrophe risks on the capital market by way of the "K6" transaction. This securitization, which was placed with institutional investors in North America, Europe and Asia, involves a quota share cession on worldwide natural catastrophe business as well as aviation and marine risks. The volume of "K6", which has been increased on multiple occasions, was equivalent to EUR 248 (249) million as at the balance sheet date.
The planned term of the transaction runs until 31 December 2011 or in the case of the new shares placed in the years 2010/2011 until 31 December 2012/2013. Kaith Re Ltd., a special purpose entity domiciled in Bermuda, is being used for the securitization.
Hannover Re also uses the special purpose entity Kaith Re Ltd. for various retrocessions of its traditional covers to institutional investors. In accordance with SIC-12 Kaith Re Ltd. is included in the consolidated fi nancial statement.
In the course of 2010, as part of its extended insurance-linked securities (ILS) activities, Hannover Re wrote a number of socalled collateralized fronting arrangements under which risks assumed from ceding companies were passed on to institutional investors outside the Group using special purpose entities. The purpose of such transactions is to directly transfer clients' business. Due to the lack of a controlling infl uence over the special purpose entities involved, there is no consolidation requirement for Hannover Re with respect to these structures.
A major transaction in this connection is "FacPool Re", under which Hannover Re transferred a portfolio of facultative reinsurance risks to the capital market from September 2009 until January 2011. The contracts, which are now in run-off , were mediated by an external reinsurance intermediary, written by Hannover Re and placed on the capital market in conjunction with a service provider. The "FacPool Re" transaction consisted of a quota share reinsurance arrangement and two non-proportional cessions. A number of special purpose entities participated in the reinsurance cessions within "FacPool Re"; Hannover Re did not hold any shares in these special purpose entities and did not bear the majority of the economic benefi ts or risks arising out of their activities through any of its business relations.
In connection with the sale of the operational companies of the subgroup Clarendon Insurance Group, Inc. (CIGI), Wilmington, to Enstar Group Ltd., Hamilton/Bermuda, a partial portfolio of CIGI was retroceded to a special purpose entity. Since Hannover Re is not the major benefi ciary of the special purpose entity and does not exercise either indirect or direct control over it, there is no requirement to consolidate this special purpose entity.
HDI-Direktversicherung AG, Hannover, acquired a participation of 28% in Aspect Online AG, Augsburg, as part of a consortium by subscribing to a capital increase on 1 July 2011 and concluding a share purchase and transfer agreement on 15 July 2011. Aspect Online AG is the operator of an online comparison portal for all types of insurance, energy and fi nancial services. In the third quarter of 2011 we included this participating interest in the consolidated fi nancial statement for the fi rst time as an associated company.
Four domestic and three foreign associated companies were therefore consolidated at equity as at the balance sheet date. The fi gures are exclusive of foreign subgroups.
As in the 2010 annual fi nancial statement, Credit Life International Services GmbH, Neuss, continues to be included in the consolidated fi nancial statement on a proportionate basis as a joint venture.
On 1 April 2011 (closing date) Talanx International AG (TINT), Hannover, acquired all the shares of Saint Honoré Iberia SL, Madrid, Spain, for a purchase price of USD 34.6 million. With regard to the detailed shareholder structure please see our remarks in chapter IV "Consolidation", section "Scope of consolidation".
With eff ect from the same date our Chilean subsidiary Inversiones HDI Limitada, Santiago, Chile, acquired stakes of 0.769% in the intermediate holding company Protecciones Esencial S. A. for a purchase price of USD 152,000 as well as 1.229% in the Argentinian company L'Union de Paris Cía. Argentina de Seguros S. A. for a purchase price of USD 248,000. Altogether, the Talanx companies in question paid the equivalent of EUR 25 million for the four companies and as a result TINT holds all voting rights at all the companies.
In Argentina the company transacts primarily motor and life insurance business (along with marine, fi re and accident), while in Uruguay the bulk of the insurance business is conducted in the marine and motor lines (together with fi re and accident). Both companies work together with independent agents. The purpose of these acquisitions is to move forward with further internationalization in the Retail International segment. The Group has expanded its presence in Latin America through these acquisitions and is thus able to make the most of the available opportunities in local markets.
This transaction gave rise to goodwill – stemming inter alia from the regional expansion in Latin America – in an amount of EUR 6 million. The goodwill is not tax-deductible.
The amounts recognized under IFRS at the acquisition date for each main group of acquired assets and assumed liabilities are presented below; fi gures have been combined as permitted by IFRS 3.B65. We acquired assets in the form of investments (EUR 31 million), accounts receivable on insurance business (EUR 15 million), reinsurance recoverables on technical provisions (EUR 13 million), cash (EUR 1 million), deferred tax assets (EUR 1 million) and other assets (EUR 7 million) as well as liabilities in the form of technical provisions (EUR 35 million), other provisions (EUR 3 million), liabilities (EUR 8 million) and provisions for deferred taxes (EUR 3 million). The acquired assets include intangible and tangible assets of EUR 9 million. The IFRS equity amounted to EUR 19 million at the acquisition date.
The amount recognized for the accounts receivable corresponds to the fair value. No further payment defaults are anticipated.
Contingent liabilities were identifi ed in an insignifi cant amount (EUR 0.4 million); conditional payments, indemnifi cation assets and separate transactions as defi ned by IFRS 3 were not brought to account. The gross written premium until 30 September 2011 totaled EUR 29 million. If the companies had been included as at 1 January 2011, the gross written premium would have amounted to EUR 43 million. The result generated by the companies before tax stood at EUR 2 million as at 30 September 2011. Had the acquisition taken place on 1 January 2011, it would have amounted to EUR 3 million.
On 27 April 2011 (closing date) HDI-Gerling Industrie Versicherung AG (HG-I), Hannover, acquired all the shares of the Dutch property/casualty insurer Nassau Verzekering Maatschappij N. V. (Nassau), Rotterdam, for a purchase price of EUR 198 million (segment: Industrial Lines). The insurer acquired by our subsidiary is an established niche insurer which has specialized in the Netherlands and beyond in specialty lines such as professional indemnity, D&O and crisis management. The end customers are small to mid-sized enterprises. Nassau has branches in Germany, France and Denmark. The acquired company is to be subsequently merged with retroactive eff ect as at 1 January 2011 into the Dutch insurer HDI Verzekeringen N. V., a wholly owned subsidiary of HG-I. The German insurance portfolio – predominantly D&O business – was transferred to HDI-Gerling Firmen und Privat Versicherung AG (HG-FP), Hannover, in the period under review.
Initial accounting in the second quarter of 2011 was based on a provisional purchase price allocation, since – most notably – the accounting of intangible assets and tax items had not yet been completed.
The total goodwill provisionally recognized in connection with this transaction amounted to EUR 121 million. Of this, based on the planned portfolio transfer to HG-FP and the requirements of the management approach under IFRS 8 "Reporting Segments", an amount of EUR 13 million was allocated to the Retail Germany segment in the context of initial consolidation. The acquisition of Nassau is intended fi rst and foremost to advance the further internationalization of the Industrial Lines segment. Goodwill additionally derives from the anticipated synergistic eff ects associated with the combining of business processes at our Dutch subsidiaries. The goodwill is not tax-deductible.
The amounts recognized under IFRS at the acquisition date for each main group of acquired assets and assumed liabilities were as follows on a provisional basis. We acquired assets in the form of investments (EUR 75 million), accounts receivable on insurance business (EUR 38 million), reinsurance recoverables on technical provisions (EUR 42 million), cash (EUR 77 million) and other assets (EUR 9 million) as well as liabilities in the form of technical provisions (EUR 143 million), other provisions (EUR 6 million), liabilities (EUR 13 million) and provisions for deferred taxes (EUR 2 million). The acquired assets include tangible assets of EUR 6 million. The IFRS equity amounted to EUR 77 million at the acquisition date.
The acquired accounts receivable consist largely of accounts receivable from direct written business, with an amount of EUR 34 million attributable to accounts receivable from insurance intermediaries and EUR 4 million attributable to accounts receivable from business ceded. The amount of the recognized accounts receivable corresponds to the fair value. No further payment defaults are anticipated.
Following completion of the purchase price allocation in the period under review we adjusted the provisional fi gures on the date of acquisition against the goodwill outside the statement of income. The adjustments relate principally to the recognition of intangible assets in an amount of EUR 23 million, the increase of EUR 6 million in deferred tax liabilities and the increase of EUR 17 million in equity. The goodwill is consequently reduced by altogether EUR 17 million and is attributable in amounts of EUR 11 million to the Retail Germany segment and EUR 93 million to the Industrial Lines segment. The intangible assets are comprised of other intangible assets of EUR 16 million and insurance-related intangible assets (PVFP) of EUR 7 million. The IFRS equity amounts to EUR 94 million aft er the adjustments.
Contingent liabilities, conditional payments, indemnifi cation assets and separate transactions as defi ned by IFRS 3 were not brought to account. The gross written premium until 30 September 2011 totaled EUR 27 million. If the company had been included as at 1 January 2011, the gross written premium would have amounted to EUR 98 million. The result generated by the company before tax stood at –EUR 0.4 million as at 30 September 2011. Had the acquisition taken place on 1 January 2011, it would have amounted to EUR 4 million.
Funis GmbH & Co. KG, a wholly owned subsidiary of Hannover Re, acquired roughly 75% of the shares in Integra Insurance Solutions Ltd. for a purchase price of GBP 7.5 million eff ective 18 August 2011. Incidental acquisition costs of EUR 0.1 million were recognized as other expenses in the statement of income. As an agency, Integra mediates insurance business to International Insurance Company of Hannover Ltd., which is also a company belonging to the Hannover Re Group. In addition, a contingent purchase price payment of at most GBP 11.3 million was agreed; this is conditional principally on the volume and profi tability of the business acquired by Integra until 2014. Based on the probable business experience, the fair value of the contingent purchase price payments at the time of acquisition was around GBP 5.1 million, thereby increasing the diff erence arising in the context of initial consolidation.
The acquired equity of Integra amounted to GBP 0.1 million. The company's assets are comprised largely of accounts receivable and payable. In the context of allocation of the purchase price, no eff ects arose out of the measurement of the assumed assets, nor was it possible to identify any intangible assets or liabilities that had hitherto not been brought to account. For this reason, the diff erence of GBP 12.6 million arising in the context of initial consolidation was recognized in full as goodwill. In the period of its affi liation with the Group Integra generated a positive result aft er tax of GBP 0.1 million.
The sale of items of real estate of HDI-Gerling Lebensversicherung AG (total book value of EUR 50 million) in the second quarter of 2011, which we had already recognized as "held for sale" in the reporting as at 31 March 2011, produced a disposal gain of EUR 9 million. The company is allocated to the Retail Germany segment. In addition, the company generated a disposal gain of EUR 4 million in the third quarter of 2011 from the sale of further real estate in Cologne with book values of EUR 6 million, which we had already recognized as "held for sale" in the reporting as at 30 June 2011.
Clarus AG, Wiesbaden, which was sold by Talanx Deutschland AG, Hannover, under a contract dated 29 March 2011 and which we measured and recognized as a disposal group in the fi rst quarter of 2011, was deconsolidated in the second quarter of 2011. Further information is provided in chapter IV "Consolidation", section "Scope of consolidation".
On 21 December 2010 Hannover Re reached agreement on the sale of the operational companies of its US subgroup Clarendon Insurance Group, Inc. (CIGI), Wilmington, to Enstar Group Ltd., Hamilton/Bermuda, a company specializing in the run-off of insurance business. The transaction received the customary regulatory approvals on 8 July 2011; closing of the transaction and deconsolidation of CIGI subsequently took place on 12 July 2011. Hannover Re holds all shares of CIGI indirectly through the intermediate holding company Hannover Finance, Inc. (HFI), Wilmington, which is also included in full in the consolidated fi nancial statement. The agreed purchase price is USD 219 million.
Pursuant to IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" the subsidiaries of CIGI constituted a disposal group, which was to be measured at the lower of the carrying amount and fair value less costs to sell. The measurement of the disposal group gave rise to income of EUR 8 million in the current fi nancial year. The income was recognized in other income and expenses.
The cumulative other comprehensive income of –EUR 23 million (31 December 2010: –EUR 29 million) arising out of the currency translation of the assets and liabilities belonging to the disposal group was realized in the context of deconsolidation. Profi ts from the measurement of available-for-sale fi nancial assets were realized in an amount of EUR 5 million (31 December 2010: EUR 3 million) upon deconsolidation.
In compliance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" we recognized the assets and liabilities of the disposal group in corresponding balance sheet items that were distinct from continuing operations. Transactions between the disposal group and the Group's continuing operations were entirely eliminated in conformity with IAS 27 "Consolidated and Separate Financial Statements".
The assets and liabilities of the disposal group are presented in the following table and broken down into their major components.
| 30.9.2011 | 31.12.2010 | |
|---|---|---|
| Figures in EUR million | ||
| Assets | ||
| Total investments | 577 | 643 |
| Cash | 16 | 27 |
| Reinsurance recoverables on unpaid claims | 783 | 831 |
| Accounts receivable | 4 | 17 |
| Other assets | 16 | 11 |
| Assets held for sale | 1,396 | 1,529 |
| Liabilities | ||
| Loss and loss adjustment expense reserve | 1,206 | 1,310 |
| Funds withheld | 18 | 27 |
| Reinsurance payable | 11 | 17 |
| Other liabilities | 21 | 27 |
| Liabilities related to assets held for sale | 1,256 | 1,381 |
In the third quarter of 2011 HDI-Gerling Industrie Versicherung AG (segment: Industrial Lines) and HDI-Gerling Lebensversicherung AG (segment: Retail Germany) classifi ed items of real estate in Cologne with book values of EUR 2 million and in Krefeld with book values of EUR 5 million as "held for sale". In view of the deterioration in the rental situation and high administrative expenditure, these properties were sold at prices of EUR 2 million and EUR 4 million respectively with purchase dates of 27 and 26 September 2011. The transfer of rights and obligations will take place on 1 December 2011 and 1 November 2011 respectively.
In accordance with a notarized agreement dated 5 May 2011 HDI-Gerling Firmen und Privat Versicherung AG (HG-FP), Hannover, and Talanx Deutschland AG (TD), Hannover, sold all shares of HDI-Gerling Rechtsschutz Versicherung AG (HG-RS), Hannover, and HDI-Gerling Rechtsschutz Schadenregulierungs-GmbH (HG-RSG), Hannover, to ROLAND Rechtsschutz-Versicherungs-AG, Cologne, for purchase prices of EUR 36 million and EUR 100,000 respectively. The shares in HG-RS are held by HG-FP, while those of HG-RSG are held by TD. The companies sold are both allocated to the Retail Germany segment. The transaction closed on 1 October 2011 and the associated deconsolidation took place in the fourth quarter of 2011.
Pursuant to IFRS 5 each of the two companies constitutes a disposal group, which is to be measured at the lower of the carrying amount and fair value less costs to sell. The valuation of HG-RSG results in a measurement expense of EUR 0.3 million in the year under review owing to the establishment of a provision. The corresponding expenditures are recognized in other income and expenses. The assets of the company classifi ed as a disposal group are attributable in an amount of EUR 1 million to cash. The liabilities in an amount of EUR 1 million are attributable to the other provisions.
The profi ts of the disposal group (HG-RS) accruing as at 30 September 2011, which are recognized directly in equity, amount to EUR 1 million. No amounts were recognized with respect to HG-RSG.
In compliance with IFRS 5 we recognize the assets and liabilities of each disposal group in corresponding balance sheet items that are distinct from continuing operations. Transactions between the disposal group and the Group's continuing operations continue to be entirely eliminated in conformity with IAS 27.
The assets and liabilities of the disposal group (HG-RS) are presented in the following table and broken down into their major components.
| 30.9.2011 | |
|---|---|
| Figures in EUR million | |
| Assets | |
| Total investments | 121 |
| Accounts receivable | 2 |
| Deferred acquisition costs | 3 |
| Cash | 12 |
| Assets held for sale | 138 |
| Liabilities | |
| Technical provisions | 112 |
| Other provisions | 5 |
| Other liabilities | 2 |
| Liabilities related to assets held for sale | 119 |
In addition, we are currently reviewing the saleability of our wholly owned subsidiary PARTNER OFFICE AG, Cologne (segment: Retail Germany). All shares are held by HDI-Gerling Vertrieb Firmen und Privat AG, Hannover. Given that the requirements pursuant to IFRS 5 had not been fully satisfi ed on the balance sheet date, separate disclosure as "long-term assets held for sale" was omitted as at 30 September 2011.
The main items of the consolidated balance sheet can be broken down as follows:
| 31.12.20101) | ||
|---|---|---|
| Figures in EUR million | ||
| a. Goodwill | 700 | 589 |
| b. Other intangible assets | 1,510 | 1,583 |
| thereof: | ||
| Insurance-related intangible assets | 1,323 | 1,400 |
| Software | 128 | 143 |
| Other | 59 | 40 |
| Total | 2,210 | 2,172 |
1) Adjusted on the basis of IAS 8
The increase in goodwill of EUR 111 million resulted mainly from acquisitions recognized in the period under review in the segments Industrial Lines, Retail Germany and Retail International. Please see our presentation in chapter V "Business combinations in the reporting period".
The "insurance-related intangible assets" (= PVFP) with respect to life insurance undertakings derived principally from the insurance portfolios of the former Gerling Group acquired in 2006 (EUR 775 million) and the portfolios of BHW Lebensversicherung AG (EUR 265 million) and PB Lebensversicherung AG (EUR 55 million) purchased in 2007 as well as from neue leben Lebensversicherung AG (EUR 97 million). In addition, an amount of EUR 96 million is apportionable to Hannover Life Reassurance (Ireland) Ltd. (Life/Health Reinsurance segment) as well as an amount of EUR 7 million to Nassau Verzekering Maatschappij N. V. (Netherlands) from the insurance portfolio acquired in 2011.
The PVFP is composed of a shareholders' portion – on which deferred taxes are established – and a policyholders' portion. It is capitalized in order to spread the charge to Group shareholders' equity under IFRS upon acquisition of an insurance portfolio equally across future periods in step with the amortization. Only the amortization of the shareholders' portion results in a charge to future earnings. The PVFP in favor of policyholders is recognized by life insurance companies that are obliged to enable their policyholders to participate in all results through the establishment of a provision for deferred premium refunds.
| PVFPs for life insurance companies | 30.9.2011 | 31.12.2010 1) |
|---|---|---|
| Figures in EUR million | ||
| Shareholders' portion | 679 | 720 |
| Policyholders' portion | 543 | 583 |
| Balance | 1,222 | 1,303 |
1) Adjusted on the basis of IAS 8
Of the amortization on insurance-related intangible assets totaling altogether EUR 81 (30 September 2010: 180) million, an amount of EUR 44 (30 September 2010: 104) million was attributable to the shareholders' portion and EUR 37 (30 September 2010: 76) million to the policyholders' portion; it relates almost entirely to the Retail Germany segment. The amortization on the shareholders' portion is recognized in the statement of income in the item "Other technical expenses".
| Amortized cost | Unrealized gains/losses | Fair value | |||||
|---|---|---|---|---|---|---|---|
| 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | ||
| Figures in EUR million | |||||||
| Mortgage loans | 1,138 | 1,239 | 126 | 106 | 1,264 | 1,345 | |
| Loans and prepayments on | |||||||
| insurance policies | 197 | 200 | — | — | 197 | 200 | |
| Loans and receivables due from govern | |||||||
| mental or semi-governmental entities 1) | 10,366 | 9,728 | 853 | 304 | 11,219 | 10,032 | |
| Corporate securities | 6,818 | 7,342 | 226 | 97 | 7,044 | 7,439 | |
| Covered bonds, asset-backed securities | 14,273 | 13,491 | 1,213 | 341 | 15,486 | 13,832 | |
| Participation rights | 334 | 343 | –21 | –6 | 313 | 337 | |
| Total | 33,126 | 32,343 | 2,397 | 842 | 35,523 | 33,185 |
1) The debt securities issued by semi-governmental entities include securities of EUR 2,054 (2,114) million which 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 14,249 (13,464) million (99 (99)%).
| Amortized cost | Unrealized gains/losses | Fair value | |||||
|---|---|---|---|---|---|---|---|
| 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | ||
| Figures in EUR million | |||||||
| Government debt securities of EU | |||||||
| member states | 389 | 438 | 22 | 13 | 411 | 451 | |
| US treasury notes | 383 | 386 | 44 | 45 | 427 | 431 | |
| Other foreign government | |||||||
| debt securities | 30 | 11 | 1 | 1 | 31 | 12 | |
| Debt securities issued by | |||||||
| semi-governmental entities 1) | 577 | 726 | 39 | 34 | 616 | 760 | |
| Corporate securities | 493 | 429 | 7 | 18 | 500 | 447 | |
| Covered bonds, asset-backed securities | 990 | 1,009 | 46 | 44 | 1,036 | 1,053 | |
| Total | 2,862 | 2,999 | 159 | 155 | 3,021 | 3,154 |
1) The debt securities issued by semi-governmental entities include securities of EUR 106 (191) million which 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 978 (998) million (99 (99)%).
| Amortized cost | Unrealized gains/losses | Fair value | ||||
|---|---|---|---|---|---|---|
| 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | 30.9.2011 | 31.12.2010 | |
| Figures in EUR million | ||||||
| Government debt securities of EU member states | 4,185 | 4,719 | 55 | –65 | 4,240 | 4,654 |
| US treasury notes | 1,874 | 2,059 | 78 | 66 | 1,952 | 2,125 |
| Other foreign government debt securities | 1,086 | 950 | 31 | 14 | 1,117 | 964 |
| Debt securities issued by | ||||||
| semi-governmental entities 1) | 5,063 | 5,165 | 242 | 98 | 5,305 | 5,263 |
| Corporate securities | 11,483 | 9,538 | 75 | 115 | 11,558 | 9,653 |
| Investment funds | 648 | 640 | 5 | –3 | 653 | 637 |
| Covered bonds/asset-backed securities | 5,663 | 4,742 | 130 | 80 | 5,793 | 4,822 |
| Participation rights | 178 | 210 | 1 | 2 | 179 | 212 |
| Total fixed-income securities | 30,180 | 28,023 | 617 | 307 | 30,797 | 28,330 |
| Equities | 410 | 926 | 134 | 250 | 544 | 1,176 |
| Investment funds | 804 | 1,035 | 33 | 58 | 837 | 1,093 |
| Participation rights | 36 | 36 | — | — | 36 | 36 |
| Other | — | — | — | — | — | — |
| Total variable-yield securities | 1,250 | 1,997 | 167 | 308 | 1,417 | 2,305 |
| Total securities | 31,430 | 30,020 | 784 | 615 | 32,214 | 30,635 |
1) The debt securities issued by semi-governmental entities include securities of EUR 2,629 (3,039) million
which 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 5,235 (4,220) million (90 (88)%).
| 30.9.2011 | 31.12.2010 | |
|---|---|---|
| Figures in EUR million | ||
| Government debt securities of EU member states | 5 | 14 |
| Other foreign government debt securities | 118 | 34 |
| Debt securities issued by semi-governmental entities | 50 | 97 |
| Corporate securities | 332 | 467 |
| Investment funds | 80 | 30 |
| Covered bonds/asset-backed securities | 79 | 230 |
| Participation rights | 89 | 102 |
| Total fixed-income securities | 753 | 974 |
| Investment funds (variable-yield securities) | 18 | 15 |
| Other variable-yield securities | — | — |
| Total financial assets classified at fair value through profit or loss | 771 | 989 |
| Government debt securities of EU member states | 2 | 3 |
| Other foreign government debt securities | 16 | 49 |
| Debt securities issued by semi-governmental entities | 5 | 9 |
| Corporate securities | 10 | 7 |
| Other securities | 1 | 1 |
| Total fi xed-income securities | 34 | 69 |
| Investment funds (variable-yield securities) | 89 | 83 |
| Derivatives | 48 | 80 |
| Total fi nancial assets held for trading | 171 | 232 |
| Total securities | 942 | 1,221 |
The item "Covered bonds/asset-backed securities" includes German covered bonds (Pfandbriefe) with a carrying amount of EUR 11 (121) million (14 (53)%).
Shareholders' equity is shown as a separate component of the consolidated fi nancial statement in accordance with IAS 1 "Presentation of Financial Statements" and IAS 32 "Financial Instruments: Disclosure and Presentation" in conjunction with IAS 39 "Financial Instruments: Recognition and Measurement". The change in shareholders' equity comprises not only the net income deriving from the statement of income but also the changes in the value of asset and liability items not recognized in the statement of income.
The share capital of Talanx AG remains unchanged at EUR 260 million and is divided into 260,000 registered no-par shares. The share capital is fully paid up. With regard to the composition of the shareholders' equity, please see the "Consolidated statement of changes in shareholders' equity".
Conditional capital is available in an amount of up to EUR 26 million, divided into up to 26,000 registered no-par shares. The Board of Management was authorized by a resolution of the General Meeting dated 15 November 2010 to issue or guarantee this contingent capital until 14 November 2015. Eff ective 6 April 2011 the amendment to the Articles of Association of Talanx AG came into force by way of entry in the commercial register. The conditional capital increase serves to grant shares to holders of convertible bonds.
| Non-controlling interests in equity | 30.9.2011 | 31.12.2010 |
|---|---|---|
| Figures in EUR million | ||
| Unrealized gains and losses from investments | 300 | 225 |
| Non-controlling interest in net profi t | 237 | 450 |
| Other shareholders' equity | 2,597 | 2,360 |
| Total | 3,134 | 3,035 |
Non-controlling interests in equity refer principally to shares held by companies outside the Group in the shareholders' equity of the Hannover Re Group.
| Nominal | ||||||
|---|---|---|---|---|---|---|
| amount | Coupon | Maturity | Rating | 30.9.2011 | 31.12.2010 | |
| EUR million | EUR million | EUR million | ||||
| 2005/no | ||||||
| fi xed (5%), then | fi nal | |||||
| Hannover Finance (Luxembourg) S. A. | 500 | fl oating rate | maturity | (a; A) 3) | 487 | 484 |
| fi xed (5.75%), then | ||||||
| Hannover Finance (Luxembourg) S. A. | 500 | fl oating rate | 2010/2040 | (a; A) 3) | 500 | 500 |
| fi xed (5.75%), then | ||||||
| Hannover Finance (Luxembourg) S. A. | 750 | fl oating rate | 2004/2024 | (a; A) 3) | 747 | 747 |
| fi xed (6.25%), then | ||||||
| Hannover Finance (Luxembourg) S. A.1) | — | fl oating rate | 2001/2031 | (a; A) 3) | — | 138 |
| fi xed (7%), then | ||||||
| HDI-Gerling Industrie Versicherung AG | 250 | fl oating rate | 2004/2024 | (bbb+; A–) 3) | 262 | 265 |
| 2005/no | ||||||
| fi nal | ||||||
| HDI-Gerling Lebensversicherung AG | 110 | fi xed (6.75%) | maturity | (—; A–) 3) | 114 | 115 |
| 2010/no | ||||||
| fi xed, then | fi nal | |||||
| Talanx AG | 300 | fl oating rate | maturity | (—; BBB) 3) | 300 | 300 |
| Talanx Finanz 2) | 218 | fi xed (4.5%) | 2005/2025 | (bbb; BBB) 3) | 218 | 242 |
| Total | 2,628 | 2,791 |
1) In the fi rst quarter of 2011 the issuer exercised the call option and repaid in full the remaining debt volume
2) In the fi rst quarter of 2011 Group companies purchased portions of the debt in a nominal amount of EUR 24 million;
the remaining volume was reduced accordingly
3) (Debt rating A.M. Best; debt rating S&P)
| 30.9.2011 | 31.12.20101) | |||||
|---|---|---|---|---|---|---|
| Gross | Re | Net | Gross | Re | Net | |
| Figures in EUR million | ||||||
| a. Unearned premium reserve | 6,332 | 560 | 5,772 | 5,411 | 406 | 5,005 |
| b. Benefi t reserve | 44,185 | 915 | 43,270 | 42,466 | 977 | 41,489 |
| c. Loss and loss adjustment expense reserve (loss reserve) | 30,529 | 4,905 | 25,624 | 28,538 | 4,073 | 24,465 |
| d. Provision for premium refunds | 1,078 | 1 | 1,077 | 845 | 1 | 844 |
| e. Other technical provisions | 274 | –78 | 352 | 250 | –84 | 334 |
| Total | 82,398 | 6,303 | 76,095 | 77,510 | 5,373 | 72,137 |
1) Adjusted on the basis of IAS 8
Of the technical provisions where the investment risk is borne by policyholders amounting to EUR 5,924 (6,414) million, an amount of EUR 159 (150) is attributable to reinsurers.
The major items of the consolidated statement of income can be broken down as follows:
The gross written premium includes the savings elements of premiums under unit-linked life and annuity policies. These savings elements were eliminated from the net premium earned.
| Industrial | Retail | Retail | Non-Life | Life/Health | Corporate | ||
|---|---|---|---|---|---|---|---|
| 1.1.–30.9.2011 1) | Lines | Germany | International | Reinsurance | Reinsurance | Operations | Total |
| Figures in EUR million | |||||||
| Gross written premium includ | |||||||
| ing premium from unit-linked | |||||||
| life and annuity insurance | 2,537 | 4,962 | 1,774 | 4,913 | 3,657 | — | 17,843 |
| Savings elements of premium | |||||||
| from unit-linked life and annuity | |||||||
| insurance | — | 642 | 182 | — | — | — | 824 |
| Ceded written premium | 1,083 | 127 | 76 | 490 | 307 | — | 2,083 |
| Change in gross unearned | |||||||
| premium | –228 | –273 | –82 | –359 | –17 | — | –959 |
| Change in ceded unearned | |||||||
| premium | –90 | 3 | 5 | –53 | –2 | — | –137 |
| Net premium earned | 1,316 | 3,917 | 1,429 | 4,117 | 3,335 | — | 14,114 |
1) Presentation aft er elimination of intra-Group relations between segments
| 1.1.–30.9.2010 1) | Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total |
|---|---|---|---|---|---|---|---|
| Figures in EUR million | |||||||
| Gross written premium includ ing premium from unit-linked life and annuity insurance |
2,512 | 5,051 | 1,651 | 4,528 | 3,513 | — | 17,255 |
| Savings elements of premium from unit-linked life and annuity insurance |
— | 680 | 141 | — | — | — | 821 |
| Ceded written premium | 1,076 | 219 | 68 | 448 | 308 | — | 2,119 |
| Change in gross unearned premium |
–211 | –97 | 97 | –365 | –11 | — | –587 |
| Change in ceded unearned premium |
–80 | –18 | 31 | –73 | –2 | — | –142 |
| Net premium earned | 1,305 | 4,073 | 1,508 | 3,788 | 3,196 | — | 13,870 |
| Industrial | Retail | Retail Inter | Non-Life | Life/Health | Corporate | ||
|---|---|---|---|---|---|---|---|
| 1.1.–30.9.2011 1) | Lines | Germany | national | Reinsurance | Reinsurance | Operations | Total |
| Figures in EUR million | |||||||
| Income from real estate | 4 | 29 | 1 | 27 | — | — | 61 |
| Dividends 2) | 6 | 17 | 1 | 9 | — | 14 | 47 |
| Current interest income | 153 | 1,133 | 108 | 485 | 154 | 4 | 2,037 |
| Other income | 3 | 9 | — | 32 | 1 | — | 45 |
| Ordinary investment income | 166 | 1,188 | 110 | 553 | 155 | 18 | 2,190 |
| Appreciation | 2 | 17 | 1 | 17 | — | — | 37 |
| Realized gains on investments | 32 | 140 | 24 | 167 | 27 | — | 390 |
| Unrealized gains on investments | — | 23 | 18 | 9 | 16 | — | 66 |
| Investment income | 200 | 1,368 | 153 | 746 | 198 | 18 | 2,683 |
| Realized losses on investments | 21 | 81 | 6 | 76 | 5 | — | 189 |
| Unrealized losses on investments | 3 | 21 | 13 | 23 | 72 | 1 | 133 |
| Total | 24 | 102 | 19 | 99 | 77 | 1 | 322 |
| Impairments/depreciation on investment property |
|||||||
| Scheduled | 1 | 5 | — | 6 | — | — | 12 |
| Unscheduled | 1 | 13 | — | — | — | — | 14 |
| Impairments on equity securities | 16 | 45 | 15 | 1 | — | 5 | 82 |
| Impairments on fi xed-income | |||||||
| securities | 6 | 5 | 1 | 5 | — | — | 17 |
| Impairments on other | |||||||
| investments | 1 | 6 | — | 9 | — | — | 16 |
| Expenses for the administration | |||||||
| of investments 3) | 4 | 6 | 1 | 11 | 2 | 34 | 58 |
| Other expenses | 2 | 8 | 2 | 17 | 2 | 4 | 35 |
| Other investment expenses/ | |||||||
| impairments | 31 | 88 | 19 | 49 | 4 | 43 | 234 |
| Investment expenses | 55 | 190 | 38 | 148 | 81 | 44 | 556 |
| Net income from investments | |||||||
| under own management | 145 | 1,178 | 115 | 598 | 117 | –26 | 2,127 |
| Interest income on funds | |||||||
| withheld and contract deposits | 2 | 2 | — | 15 | 317 | — | 336 |
| Interest expense on funds | |||||||
| withheld and contract deposits | 1 | 17 | — | 5 | 88 | — | 111 |
| Net interest income on funds | |||||||
| withheld and contract deposits | 1 | –15 | — | 10 | 229 | — | 225 |
| Net investment income | 146 | 1,163 | 115 | 608 | 346 | –26 | 2,352 |
1) Presentation aft er elimination of intra-Group relations between segments
2) The profi t or loss on investments in associated companies using the equity method amounts to EUR 4 (1) million and is recognized under dividends
3) Expenses for the administration of non-Group investments are recognized under other expenses with eff ect fr om the current reporting period.
The previous year was adjusted accordingly (EUR 34 million)
The reallocations between levels of the fair value hierarchy used to establish the fair value of fi nancial instruments that were made in the reporting period as well as changes in the classifi cation of fi nancial assets were of immaterial insignifi cance to the Group's assets, fi nancial position and net income.
| Industrial | Retail | Retail Inter | Non-Life | Life/Health | Corporate | ||
|---|---|---|---|---|---|---|---|
| 1.1.–30.9.2010 1) | Lines | Germany | national | Reinsurance | Reinsurance | Operations | Total |
| Figures in EUR million | |||||||
| Income from real estate | 4 | 36 | 1 | 22 | — | — | 63 |
| Dividends 2) | 8 | 19 | 3 | 4 | — | 6 | 40 |
| Current interest income | 156 | 1,090 | 90 | 476 | 139 | 2 | 1,953 |
| Other income | 2 | 9 | — | 5 | 2 | 1 | 19 |
| Ordinary investment income | 170 | 1,154 | 94 | 507 | 141 | 9 | 2,075 |
| Appreciation | — | 10 | — | 14 | — | — | 24 |
| Realized gains on investments | 14 | 164 | 21 | 172 | 31 | — | 402 |
| Unrealized gains on investments | 2 | 49 | 18 | 9 | 6 | — | 84 |
| Investment income | 186 | 1,377 | 133 | 702 | 178 | 9 | 2,585 |
| Realized losses on investments | 9 | 20 | 2 | 40 | 7 | — | 78 |
| Unrealized losses on investments | — | 9 | 5 | 98 | 11 | — | 123 |
| Total | 9 | 29 | 7 | 138 | 18 | — | 201 |
| Impairments/depreciation on | |||||||
| investment property | |||||||
| Scheduled | 1 | 5 | — | 5 | — | — | 11 |
| Unscheduled | — | 4 | — | − | — | — | 4 |
| Impairments on equity securities | 2 | 23 | 5 | 1 | — | 6 | 37 |
| Impairments on fi xed-income | |||||||
| securities | — | 9 | — | 8 | — | — | 17 |
| Impairments on other | |||||||
| investments | 2 | 13 | — | 6 | — | — | 21 |
| Expenses for the administration | |||||||
| of investments 3) | 1 | 10 | 1 | 8 | 1 | 34 | 55 |
| Other expenses | 2 | 10 | 1 | 16 | 1 | 2 | 32 |
| Other investment expenses/ | |||||||
| impairments | 8 | 74 | 7 | 44 | 2 | 42 | 177 |
| Investment expenses | 17 | 103 | 14 | 182 | 20 | 42 | 378 |
| Net income from investments | |||||||
| under own management | 169 | 1,274 | 119 | 520 | 158 | –33 | 2,207 |
| Interest income on funds | |||||||
| withheld and contract deposits | — | — | — | 15 | 263 | — | 278 |
| Interest expense on funds | |||||||
| withheld and contract deposits | — | 18 | — | 8 | 55 | — | 81 |
| Net interest income on funds | |||||||
| withheld and contract deposits | — | −18 | — | 7 | 208 | — | 197 |
| Net investment income | 169 | 1,256 | 119 | 527 | 366 | –33 | 2,404 |
1) Presentation aft er elimination of intra-Group relations between segments
2) The profi t or loss on investments in associated companies using the equity method amounts to EUR 4 (1) million and is recognized under dividends
3) Expenses for the administration of non-Group investments are recognized under other expenses with eff ect fr om the current reporting period.
The previous year was adjusted accordingly (EUR 34 million)
Of the unscheduled impairments totaling EUR 129 million, an amount of EUR 82 million was attributable to equity secur ities and EUR 12 million to private equity. The impairments on fi xed-income securities of EUR 17 million were taken predominantly on structured assets (EUR 9 million) and on loans and receivables (EUR 8 million). This contrasted with appreciation of EUR 37 million on investments that had been written down in previous periods; this total volume was attributable principally to real estate (EUR 13 million) and fi xed-income securities (EUR 17 million).
As at the balance sheet date the portfolio did not contain any other overdue, unadjusted securities because overdue securities are written down immediately.
| 30.9.2011 | 30.9.2010 | |
|---|---|---|
| Figures in EUR million | ||
| Investments in affiliated companies and participating interests | 4 | 2 |
| Loans and receivables | 1,032 | 1,055 |
| Financial assets held to maturity | 101 | 95 |
| Financial assets available for sale | ||
| Fixed-income securities | 972 | 954 |
| Variable-yield securities | –19 | 100 |
| 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 | 33 | 68 |
| Variable-yield securities | — | 1 |
| Financial assets held for trading | ||
| Fixed-income securities | 2 | 5 |
| Variable-yield securities | –1 | 1 |
| Derivatives | 12 | 41 |
| Other invested assets, insofar as they are fi nancial assets | 103 | 15 |
| Other 1) | –19 | –43 |
| Investments under own management | 2,220 | 2,294 |
| Funds held by ceding companies/funds held under reinsurance treaties | 225 | 197 |
| Total | 2,445 | 2,491 |
1) For the purposes of reconciliation with the consolidated statement of income, the "Other" item combines the gains on investment property, associated companies 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
Making allowance for expenses for the administration of investments (EUR 58 (55) million) and other expenses (EUR 35 (32) million), the total net investment income as at the balance sheet date amounted to EUR 2,352 (2,404) million.
| 1.1.–30.9.2011 1) | Industrial Lines |
Retail Germany |
Retail International |
Non-Life Reinsurance |
Life/Health Reinsurance |
Corporate Operations |
Total |
|---|---|---|---|---|---|---|---|
| Figures in EUR million | |||||||
| Gross | |||||||
| Claims and claims expenses paid | 1,617 | 2,788 | 970 | 2,369 | 2,435 | — | 10,179 |
| Change in loss and loss | |||||||
| adjustment expense reserve | 202 | –39 | 75 | 1,744 | 181 | — | 2,163 |
| Change in benefi t reserve | — | 870 | 37 | — | 453 | — | 1,360 |
| Expenses for premium refunds | 3 | 470 | 9 | — | — | — | 482 |
| Total | 1,822 | 4,089 | 1,091 | 4,113 | 3,069 | — | 14,184 |
| Reinsurers' share | |||||||
| Claims and claims expenses paid | 617 | 200 | 22 | 276 | 224 | — | 1,339 |
| Change in loss and loss | |||||||
| adjustment expense reserve | 322 | –76 | 7 | 482 | –12 | — | 723 |
| Change in benefi t reserve | — | –41 | — | — | –2 | — | –43 |
| Expenses for premium refunds | 1 | — | 6 | — | — | — | 7 |
| Total | 940 | 83 | 35 | 758 | 210 | — | 2,026 |
| Net | |||||||
| Claims and claims expenses paid | 1,000 | 2,588 | 948 | 2,093 | 2,211 | — | 8,840 |
| Change in loss and loss | |||||||
| adjustment expense reserve | –120 | 37 | 68 | 1,262 | 193 | — | 1,440 |
| Change in benefi t reserve | — | 911 | 37 | — | 455 | — | 1,403 |
| Expenses for premium refunds | 2 | 470 | 3 | — | — | — | 475 |
| Total | 882 | 4,006 | 1,056 | 3,355 | 2,859 | — | 12,158 |
| Industrial | Retail | Retail | Non-Life | Life/Health | Corporate | ||
|---|---|---|---|---|---|---|---|
| 1.1.–30.9.2010 1) | Lines | Germany | International | Reinsurance | Reinsurance | Operations | Total |
| Figures in EUR million | |||||||
| Gross | |||||||
| Claims and claims expenses paid | 1,514 | 2,566 | 799 | 2,523 | 2,203 | — | 9,605 |
| Change in loss and loss | |||||||
| adjustment expense reserve | –21 | –11 | 93 | 594 | 256 | –5 | 906 |
| Change in benefi t reserve | — | 1,137 | 239 | — | 484 | — | 1,860 |
| Expenses for premium refunds | 3 | 654 | 7 | — | — | — | 664 |
| Total | 1,496 | 4,346 | 1,138 | 3,117 | 2,943 | –5 | 13,035 |
| Reinsurers' share | |||||||
| Claims and claims expenses paid | 591 | 99 | 20 | 312 | 201 | — | 1,223 |
| Change in loss and loss | |||||||
| adjustment expense reserve | –27 | 66 | 2 | –53 | 8 | — | –4 |
| Change in benefi t reserve | — | –45 | — | — | 29 | — | –16 |
| Expenses for premium refunds | 1 | — | 2 | — | — | — | 3 |
| Total | 565 | 120 | 24 | 259 | 238 | — | 1,206 |
| Net | |||||||
| Claims and claims expenses paid | 923 | 2,467 | 779 | 2,211 | 2,002 | — | 8,382 |
| Change in loss and loss | |||||||
| adjustment expense reserve | 6 | –77 | 91 | 647 | 248 | –5 | 910 |
| Change in benefi t reserve | — | 1,182 | 239 | — | 455 | — | 1,876 |
| Expenses for premium refunds | 2 | 654 | 5 | — | — | — | 661 |
| Total | 931 | 4,226 | 1,114 | 2,858 | 2,705 | –5 | 11,829 |
| Industrial | Retail | Retail | Non-Life | Life/Health | ||
|---|---|---|---|---|---|---|
| 1.1.–30.9.2011 1) | Lines | Germany | International | Reinsurance | Reinsurance | Total |
| Figures in EUR million | ||||||
| Gross | ||||||
| Payments | 283 | 756 | 298 | 1,063 | 658 | 3,058 |
| Change in deferred acquisition costs | –22 | –127 | –11 | –86 | –32 | –278 |
| Administrative expenses | 172 | 221 | 102 | 121 | 95 | 711 |
| Total acquisition costs and | ||||||
| administrative expenses | 433 | 850 | 389 | 1,098 | 721 | 3,491 |
| Reinsurers' share | ||||||
| Payments | 166 | 25 | 13 | 52 | 2 | 258 |
| Change in deferred acquisition costs | –16 | 7 | 11 | –2 | 45 | 45 |
| Total acquisition costs | 150 | 32 | 24 | 50 | 47 | 303 |
| Net | ||||||
| Payments | 117 | 731 | 285 | 1,011 | 656 | 2,800 |
| Change in deferred acquisition costs | –6 | –134 | –22 | –84 | –77 | –323 |
| Administrative expenses | 172 | 221 | 102 | 121 | 95 | 711 |
| Total acquisition costs and | ||||||
| administrative expenses | 283 | 818 | 365 | 1,048 | 674 | 3,188 |
1) Presentation aft er elimination of intra-Group relations between segments
| Industrial | Retail | Retail | Non-Life | Life/Health | ||
|---|---|---|---|---|---|---|
| 1.1.–30.9.2010 1) | Lines | Germany | International | Reinsurance | Reinsurance | Total |
| Figures in EUR million | ||||||
| Gross | ||||||
| Payments | 290 | 713 | 272 | 947 | 616 | 2,838 |
| Change in deferred acquisition costs | –58 | 35 | 227 | –38 | 20 | 186 |
| Administrative expenses | 164 | 284 | 85 | 119 | 85 | 737 |
| Total acquisition costs and | ||||||
| administrative expenses | 396 | 1,032 | 584 | 1,028 | 721 | 3,761 |
| Reinsurers' share | ||||||
| Payments | 165 | 60 | 21 | 71 | 40 | 357 |
| Change in deferred acquisition costs | –30 | 24 | 38 | –5 | 33 | 60 |
| Total acquisition costs | 135 | 84 | 59 | 66 | 73 | 417 |
| Net | ||||||
| Payments | 125 | 653 | 251 | 876 | 576 | 2,481 |
| Change in deferred acquisition costs | –28 | 11 | 189 | –33 | –13 | 126 |
| Administrative expenses | 164 | 284 | 85 | 119 | 85 | 737 |
| Total acquisition costs and | ||||||
| administrative expenses | 261 | 948 | 525 | 962 | 648 | 3,344 |
On the basis of a decision of the Federal Fiscal Court (BFH) in October 2010 regarding the taxation of investment income generated by the Group's reinsurance subsidiaries domiciled in Ireland as foreign-sourced income pursuant to the Foreign Transactions Tax Act, taxes already paid for earlier years were in large measure refunded in the fi rst quarter. Assessments regarding the taxation of foreign-sourced income for the companies Hannover Reinsurance (Ireland) Ltd. and Hannover Life Reassurance (Ireland) Ltd. were rendered immaterial by cancellation notices dated 8 February 2011 and 31 March 2011 respectively. Subsequent assessment notices regarding corporation tax were issued for Hannover Re and E+S Rück in the period under review. The trade tax eff ects were also off set in the third quarter of 2011 by the controlling company HDI Haft pfl ichtverband der Deutschen Industrie V. a. G. In total, aft er allowance for non-controlling interests in equity, the refund of taxes and interest resulted in an improvement of EUR 64 million in Group net income in the period under review.
The average number of staff employed throughout the reporting period can be broken down as follows:
| 30.9.2011 | 31.12.2010 | |
|---|---|---|
| Industrial Lines | 2,664 | 2,441 |
| Retail Germany | 5,970 | 6,792 |
| Retail International | 5,006 | 4,746 |
| Reinsurance companies | 2,208 | 2,130 |
| Corporate Operations | 2,116 | 1,671 |
| Total excluding apprentices and student trainees | 17,964 | 17,780 |
| Apprentices and student trainees | 458 | 442 |
| Total | 18,422 | 18,222 |
As at the balance sheet date a total workforce of 17,149 (16,874) was employed by the Talanx Group; this fi gure refers to full-time equivalents (FTEs).
The related entities within the Talanx Group are comprised of HDI Haft pfl ichtverband der Deutschen Industrie Versicherungsverein auf Gegenseitigkeit (HDI V. a. G.), which directly holds all shares of Talanx, as well as all unconsolidated subsidiaries – which essentially encompasses the subsidiaries not included in the consolidated fi nancial statement due to their insignifi cant status – and the associated companies recognized at equity. In addition, there are the provident funds that pay benefi ts in favor of employees of Talanx AG or one of its related parties aft er termination of the employment relationship.
Transactions between Talanx AG and its subsidiaries are eliminated through consolidation and hence not discussed in the Notes. Business relations existing with unconsolidated companies or with associated companies are of minor importance overall.
There have been no signifi cant changes in related party disclosures in the course of the 2011 fi nancial year relative to the position as at 31 December 2010.
As a consequence of the merger with Gerling Konzern Allgemeine Versicherungs-AG, HDI-Gerling Industrie Versicherung AG – as the acquirer – became party to anti-trust administrative proceedings. In March 2005 the Federal Cartel Offi ce had imposed a fi ne of EUR 19 million on Gerling Konzern Allgemeine Versicherungs-AG – along with other German insurers – on account of alleged cartel agreements in the German industrial insurance market. In January 2010 the Dusseldorf Higher Regional Court (OLG) cleared HDI-Gerling Industrie Versicherung AG of the cartel accusations because liability as the legal successor to Gerling Konzern Allgemeine Versicherungs-AG was out of the question. The chief public prosecutor's offi ce in Dusseldorf then appealed the ruling, as a result of which the matter is now before the Federal Court of Justice awaiting a decision.
The Italian anti-trust authority imposed a fi ne of EUR 6 million on HDI-Gerling Industrie Versicherung AG in September 2011 on account of alleged cartel agreements in the region of Campania. The company is currently considering its options for appealing this decision.
With the exception of the aforementioned proceedings, no signifi cant court cases were pending during the period under review or as at the balance sheet date – with the exception of proceedings within the scope of ordinary insurance and reinsurance business activities.
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:
| 30.9.2011 | 31.12.2010 | |
|---|---|---|
| Figures in EUR million | ||
| Trust accounts (master trust, supplemental trust and single trust funds) | ||
| as security for technical liabilities to US clients | 2,932 | 2,884 |
| Sureties in the form of letters of credit furnished by various fi nancial institutions | ||
| as security for technical liabilities | 3,081 | 2,842 |
| Guarantees for subordinated debts issued: | ||
| The guarantees cover the relevant bond volumes as well as interest due. | 1,968 | 2,131 |
| Blocked custody accounts and other trust accounts as collateral in favor of reinsurers | ||
| and ceding companies: | ||
| The securities held in the blocked custody accounts and trust accounts are largely | ||
| recognized in the investment portfolio as "fi nancial instruments available for sale". | 2,092 | 1,902 |
| Commitments arising out of rental/lease agreements1) | 492 | 492 |
| Funding commitments and contribution payments pursuant | ||
| to §§ 124 et seq. Insurance Supervision Act (VAG) as a member of the Security Fund for Life Insurers | 388 | 372 |
| Outstanding capital commitments with respect to existing investment exposures: | ||
| The commitments involve primarily private equity funds and venture capital fi rms | ||
| in the form of private limited companies | 479 | 333 |
| Collateral for liabilities to various banks in connection with participating interests | ||
| in real estate companies and real estate transactions | 330 | 258 |
| Commitments based on service agreements – primarily in connection with IT outsourcing contracts | 191 | 186 |
| Obligations in connection with structured securities through issuers' rights to take delivery: | ||
| The potential amounts that could be utilized total EUR 25 (31 December 2010: 159) million for 2011 | ||
| and EUR 11 (31 December 2010: 11) million for 2012. | 36 | 170 |
| Other commitments | 34 | 36 |
| Total | 12,023 | 11,606 |
1) Fresh data is collected only at year-end
As guarantor institutions for Gerling Versorgungskasse VVaG, various Group companies are liable pro rata for any defi cits that may be incurred by Gerling Versorgungskasse.
Several Group companies are members of the association for the reinsurance of pharmaceutical risks, the association for the insurance of German nuclear reactors and the traffi c accident pool Verkehrsopferhilfe e. V. In the event of one of the other pool members failing to meet its liabilities, an obligation exists to take over such other member's share within the framework of the quota participation.
In a press release dated 17 August 2011 our subsidiary HDI-Gerling Industrie Versicherung AG announced that in the context of a capital increase at PVI Holdings (Petro Vietnam Insurance Holdings), Hanoi, Vietnam, it had acquired a stake of 25% in the company and had thus become the strategic partner of PVI Holdings. The purchase price is equivalent to EUR 65 million. This transaction closed on 20 October 2011; the company will therefore be included in the consolidated fi nancial statements as an associated company for the fi rst time as at year-end.
A listed company with 25 branches throughout Vietnam, PVI Holdings is a leading property and industrial insurer with a market share of 24%. The premium volume in 2010 amounted to USD 183 million. In making this acquisition HDI-Gerling Industrie Versicherung AG is pursuing its strategy of globalization.
Hannover Re anticipates a notable major loss as a consequence of the severe fl ooding in Thailand in October 2011.
Drawn up and released for publication in Hannover, 10 November 2011.
Hannover, 10 November 2011
Board of Management
Haas Dr. Hinsch Leue Dr. Noth
Dr. Querner Dr. Roß Wallin
Riethorst 2 30659 Hannover Germany Telephone +49 511 3747-0 Fax +49 511 3747-2525 E-mail [email protected] www.talanx.com
Thomas von Mallinckrodt Telephone +49 511 3747-2020 Fax +49 511 3747-2025 E-mail [email protected]
Dr. Wolfram Schmitt Telephone +49 511 3747-2185 Fax +49 511 3747-2286 E-mail [email protected]
This is a translation of the original German text; the German version shall be authoritative in case of any discrepancies in the translation.
http://www.talanx.com/en/publikationen/index.jsp
22 March 11.00 a.m.: Press briefi ng on the 2011 annual results
16 May Interim Report as at 31 March 2012
13 August Interim Report as at 30 June 2012
Interim Report as at 30 September 2012
Talanx AG Riethorst 2 30659 Hannover Germany Telephone +49 511 3747-0 Fax +49 511 3747-2525 E-mail [email protected] www.talanx.com
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