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6. Notes on the individual items of the balance sheet

6.1 Investments under own management

Investments are classified and measured in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”.

Hannover Re classifies investments according to the following categories: held-to-maturity, loans and receivables, financial assets at fair value through profit or loss and available-for-sale. The allocation and measurement of investments are determined by the investment intent.

The investments under own management also encompass investments in associated companies, real estate and real estate funds (also includes: investment property), other invested assets, shortterm investments and cash.

In the case of financial assets that are not traded on an active market, the fair value is determined using a measurement method (e.g. present-value method). The value determined in this way at time of acquisition can, however, diverge from the actual cost of acquisition. The resulting measurement difference constitutes a theoretical “day-one profit/loss”. As at the balance sheet date this produced only an insignificant loss.

For further explanatory remarks please see Section 3.2 “Summary of major accounting policies”.

The following table shows the regional origin of the investments under own management.

Investments1 in EUR thousand 31.12.2009 31.12.2008
1 After elimination of internal transactions within the Group across segments
Regional origin    
Germany 6,560,026 6,172,406
United Kingdom 1,363,938 1,134,915
France 1,865,540 1,628,884
Other 3,928,606 3,167,276
Europe 13,718,110 12,103,481
     
USA 6,007,409 5,812,077
Other 840,207 695,394
North America 6,847,616 6,507,471
     
Asia 530,497 426,485
Australia 941,664 664,541
Australasia 1,472,161 1,091,026
     
Africa 416,139 230,475
Other 52,986 204,768
     
Total 22,507,012 20,137,221

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Maturities of the fixed-income and variable-yield securities in EUR thousand 2009 2008
  Cost or amortised cost1 Fair value Cost or amortised cost1 Fair value
1 Including accrued interest
2 Including short-term investments and cash
Held to maturity        
due in one year 106,788 117,125 12,087 9,803
due after one through two years 280,725 290,471 29,736 30,260
due after two through three years 469,248 490,878 197,804 206,450
due after three through four years 521,196 542,714 255,693 267,561
due after four through five years 298,115 315,856 297,477 304,497
due after five through ten years 1,259,917 1,319,098 673,498 728,460
due after ten years 17,500 15,852 8,907 8,978
Total 2,953,489 3,091,994 1,475,202 1,556,009
         
Loans and receivables        
due in one year 220,814 221,111 71,859 72,140
due after one through two years 80,127 82,095 136,024 136,654
due after two through three years 41,048 41,219 82,013 83,086
due after three through four years 332,716 339,025 9,898 9,873
due after four through five years 485,554 490,978 198,037 203,531
due after five through ten years 1,294,842 1,323,459 970,241 996,374
due after ten years 246,730 244,384 212,785 209,757
Total 2,701,831 2,742,271 1,680,857 1,711,415
         
Available for sale        
due in one year2 3,890,651 3,926,328 3,496,170 3,473,225
due after one through two years 1,686,180 1,725,646 1,947,238 1,966,672
due after two through three years 1,656,235 1,698,765 1,725,197 1,751,528
due after three through four years 1,718,907 1,782,188 1,217,321 1,239,933
due after four through five years 1,875,448 1,907,847 1,867,138 1,933,328
due after five through ten years 3,151,562 3,196,970 4,021,163 4,059,484
due after ten years 1,383,350 1,377,191 1,344,802 1,296,606
Total 15,362,333 15,614,935 15,619,029 15,720,776
         
Financial assets at fair value through profit or loss        
due in one year 22,145 22,145 68,553 65,907
due after one through two years 70,245 70,245 4,788 4,991
due after two through three years 18,358 18,358 71,132 70,476
due after three through four years 39,155 39,155 641 626
due after four through five years 4,541 4,541 56,687 58,560
due after five through ten years 11,239 11,239 34,675 34,529
due after ten years 69,466 69,466 23,373 19,439
Total 235,149 235,149 259,849 254,528
Maturities of the fixed-income and variable-yield securities in EUR thousand 2009 2008
  Cost or amortised cost1 Fair value Cost or amortised cost1 Fair value
1 Including accrued interest
2 Including short-term investments and cash
Held to maturity        
due in one year 106,788 117,125 12,087 9,803
due after one through two years 280,725 290,471 29,736 30,260
due after two through three years 469,248 490,878 197,804 206,450
due after three through four years 521,196 542,714 255,693 267,561
due after four through five years 298,115 315,856 297,477 304,497
due after five through ten years 1,259,917 1,319,098 673,498 728,460
due after ten years 17,500 15,852 8,907 8,978
Total 2,953,489 3,091,994 1,475,202 1,556,009
         
Loans and receivables        
due in one year 220,814 221,111 71,859 72,140
due after one through two years 80,127 82,095 136,024 136,654
due after two through three years 41,048 41,219 82,013 83,086
due after three through four years 332,716 339,025 9,898 9,873
due after four through five years 485,554 490,978 198,037 203,531
due after five through ten years 1,294,842 1,323,459 970,241 996,374
due after ten years 246,730 244,384 212,785 209,757
Total 2,701,831 2,742,271 1,680,857 1,711,415
         
Available for sale        
due in one year2 3,890,651 3,926,328 3,496,170 3,473,225
due after one through two years 1,686,180 1,725,646 1,947,238 1,966,672
due after two through three years 1,656,235 1,698,765 1,725,197 1,751,528
due after three through four years 1,718,907 1,782,188 1,217,321 1,239,933
due after four through five years 1,875,448 1,907,847 1,867,138 1,933,328
due after five through ten years 3,151,562 3,196,970 4,021,163 4,059,484
due after ten years 1,383,350 1,377,191 1,344,802 1,296,606
Total 15,362,333 15,614,935 15,619,029 15,720,776
         
Financial assets at fair value through profit or loss        
due in one year 22,145 22,145 68,553 65,907
due after one through two years 70,245 70,245 4,788 4,991
due after two through three years 18,358 18,358 71,132 70,476
due after three through four years 39,155 39,155 641 626
due after four through five years 4,541 4,541 56,687 58,560
due after five through ten years 11,239 11,239 34,675 34,529
due after ten years 69,466 69,466 23,373 19,439
Total 235,149 235,149 259,849 254,528

The stated maturities may in individual cases diverge from the contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.

Variable-rate bonds (so-called “floaters”) are shown under the maturities due in one year and constitute our interest-related, within-the-year reinvestment risk.

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Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as held to maturity as well as their fair value
Figures in EUR thousand 2009
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Investments held to maturity          
Fixed-income securities          
Government debt securities of
EU member states		 323,510 3,065 946 6,854 332,483
US treasury notes 351,776 36,182 825 2,808 389,941
Other foreign government debt securities 13,445 664 – 25 14,134
Debt securities issued by
semi-governmental entities		 685,126 30,212 2,052 12,932 726,218
Corporate securities 559,900 27,107 1,121 12,334 598,220
Covered bonds/asset-backed securities 964,236 46,223 4 20,543 1,030,998
Total 2,897,993 143,453 4,948 55,496 3,091,994
Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as held to maturity as well as their fair value
Figures in EUR thousand 2009
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Investments held to maturity          
Fixed-income securities          
Government debt securities of
EU member states		 323,510 3,065 946 6,854 332,483
US treasury notes 351,776 36,182 825 2,808 389,941
Other foreign government debt securities 13,445 664 – 25 14,134
Debt securities issued by
semi-governmental entities		 685,126 30,212 2,052 12,932 726,218
Corporate securities 559,900 27,107 1,121 12,334 598,220
Covered bonds/asset-backed securities 964,236 46,223 4 20,543 1,030,998
Total 2,897,993 143,453 4,948 55,496 3,091,994

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Figures in EUR thousand 2008
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Investments held to maturity          
Fixed-income securities          
Government debt securities of
EU member states		 41,342 3,181 – 641 45,164
US treasury notes 341,902 64,196 – 2,775 408,873
Other foreign government debt securities 14,268 969 – 22 15,259
Debt securities issued by
semi-governmental entities		 432,412 21,532 886 8,797 461,855
Corporate securities 384,156 6,033 14,518 9,142 384,813
Covered bonds/asset-backed securities 234,601 1,390 1,090 5,144 240,045
Total 1,448,681 97,301 16,494 26,521 1,556,009
Figures in EUR thousand 2008
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Investments held to maturity          
Fixed-income securities          
Government debt securities of
EU member states		 41,342 3,181 – 641 45,164
US treasury notes 341,902 64,196 – 2,775 408,873
Other foreign government debt securities 14,268 969 – 22 15,259
Debt securities issued by
semi-governmental entities		 432,412 21,532 886 8,797 461,855
Corporate securities 384,156 6,033 14,518 9,142 384,813
Covered bonds/asset-backed securities 234,601 1,390 1,090 5,144 240,045
Total 1,448,681 97,301 16,494 26,521 1,556,009

The carrying amount of the portfolio held to maturity is arrived at from the cost or amortised cost plus accrued interest.

Hannover Re reclassified fixed-income securities at fair values of altogether EUR 1.5 billion from the available-for-sale to the held-to-maturity portfolio. The securities gave rise to cumulative unrealised losses of EUR 9.7 million, which as a consequence of reclassification are to be amortised in the statement of income across the maturities of the instruments. These securities are permanently available to the relevant companies of the Hannover Re Group in light of cash flow projections. The intention and ability to hold them until maturity enables the companies to reduce balance sheet volatility.

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Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value
Figures in EUR thousand 2009
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Loans and receivables          
Government debt securities of
EU member states		 79,498 1,713 415 739 81,535
Debt securities issued by
semi-governmental entities		 1,148,549 8,579 2,597 11,531 1,166,062
Corporate securities 543,718 16,508 1,163 9,470 568,533
Covered bonds/asset-backed securities 639,446 20,322 2,507 9,279 666,540
Other 200,036 – – 59,565 259,601
Total 2,611,247 47,122 6,682 90,584 2,742,271
Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value
Figures in EUR thousand 2009
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Loans and receivables          
Government debt securities of
EU member states		 79,498 1,713 415 739 81,535
Debt securities issued by
semi-governmental entities		 1,148,549 8,579 2,597 11,531 1,166,062
Corporate securities 543,718 16,508 1,163 9,470 568,533
Covered bonds/asset-backed securities 639,446 20,322 2,507 9,279 666,540
Other 200,036 – – 59,565 259,601
Total 2,611,247 47,122 6,682 90,584 2,742,271

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Figures in EUR thousand 2008
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Loans and receivables          
Government debt securities of
EU member states		 29,410 1,228 – 407 31,045
Debt securities issued by
semi-governmental entities		 300,795 7,069 1,045 4,174 310,993
Corporate securities 545,536 12,509 3,005 9,410 564,450
Covered bonds/asset-backed securities 527,288 20,094 6,292 7,916 549,006
Other 209,102 – – 46,819 255,921
Total 1,612,131 40,900 10,342 68,726 1,711,415
Figures in EUR thousand 2008
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Loans and receivables          
Government debt securities of
EU member states		 29,410 1,228 – 407 31,045
Debt securities issued by
semi-governmental entities		 300,795 7,069 1,045 4,174 310,993
Corporate securities 545,536 12,509 3,005 9,410 564,450
Covered bonds/asset-backed securities 527,288 20,094 6,292 7,916 549,006
Other 209,102 – – 46,819 255,921
Total 1,612,131 40,900 10,342 68,726 1,711,415

The carrying amount of the loans and receivables is arrived at from the cost or amortised cost plus accrued interest.

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Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as available for sale as well as their fair value
Figures in EUR thousand 2009
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Available for sale          
Fixed-income securities          
Government debt securities of
EU member states		 2,179,903 39,399 4,675 28,867 2,243,494
US treasury notes 1,986,505 27,876 13,049 14,483 2,015,815
Other foreign government debt securities 568,788 5,798 3,135 3,044 574,495
Debt securities issued by
semi-governmental entities		 3,755,392 94,194 6,731 53,603 3,896,458
Corporate securities 3,151,323 96,853 27,921 54,645 3,274,900
Covered bonds/asset-backed securities 1,573,093 85,303 50,824 20,937 1,628,509
Investment funds 162,156 27,466 18,245 – 171,377
  13,377,160 376,889 124,580 175,579 13,805,048
           
Equity securities          
Shares 14,086 3,100 189 – 16,997
Investment funds 1,959 479 78 – 2,360
  16,045 3,579 267 – 19,357
           
Short-term investments 1,351,309 354 61 873 1,352,475
           
Total 14,744,514 380,822 124,908 176,452 15,176,880
Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as available for sale as well as their fair value
Figures in EUR thousand 2009
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Available for sale          
Fixed-income securities          
Government debt securities of
EU member states		 2,179,903 39,399 4,675 28,867 2,243,494
US treasury notes 1,986,505 27,876 13,049 14,483 2,015,815
Other foreign government debt securities 568,788 5,798 3,135 3,044 574,495
Debt securities issued by
semi-governmental entities		 3,755,392 94,194 6,731 53,603 3,896,458
Corporate securities 3,151,323 96,853 27,921 54,645 3,274,900
Covered bonds/asset-backed securities 1,573,093 85,303 50,824 20,937 1,628,509
Investment funds 162,156 27,466 18,245 – 171,377
  13,377,160 376,889 124,580 175,579 13,805,048
           
Equity securities          
Shares 14,086 3,100 189 – 16,997
Investment funds 1,959 479 78 – 2,360
  16,045 3,579 267 – 19,357
           
Short-term investments 1,351,309 354 61 873 1,352,475
           
Total 14,744,514 380,822 124,908 176,452 15,176,880

The carrying amounts of the fixed-income securities and equity securities classified as available for sale as well as the short-term investments allocated to this category correspond to their fair values, in the case of interest-bearing assets including accrued interest.

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Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as available for sale as well as their fair value
Figures in EUR thousand 2008
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Available for sale          
Fixed-income securities          
Government debt securities of
EU member states		 2,565,205 74,577 2,000 46,936 2,684,718
US treasury notes 1,831,104 136,650 7 15,269 1,983,016
Other foreign government debt securities 471,278 21,667 1,022 7,694 499,617
Debt securities issued by
semi-governmental entities		 3,654,452 156,244 12,446 61,737 3,859,987
Corporate securities 3,219,639 43,884 192,436 64,724 3,135,811
Covered bonds/asset-backed securities 2,222,092 32,488 121,628 41,675 2,174,627
Investment funds 179,356 11,663 45,963 – 145,056
  14,143,126 477,173 375,502 238,035 14,482,832
           
Equity securities          
Shares 19,711 1,830 734 – 20,807
Investment funds 1,897 82 197 – 1,782
  21,608 1,912 931 – 22,589
           
Short-term investments 806,718 76 – 925 807,719
           
Total 14,971,452 479,161 376,433 238,960 15,313,140
Amortised cost, unrealised gains and losses and accrued interest on the portfolio of investments classified as available for sale as well as their fair value
Figures in EUR thousand 2008
  Cost or
amortised cost		 Unrealised gains Unrealised losses Accrued interest Fair value
Available for sale          
Fixed-income securities          
Government debt securities of
EU member states		 2,565,205 74,577 2,000 46,936 2,684,718
US treasury notes 1,831,104 136,650 7 15,269 1,983,016
Other foreign government debt securities 471,278 21,667 1,022 7,694 499,617
Debt securities issued by
semi-governmental entities		 3,654,452 156,244 12,446 61,737 3,859,987
Corporate securities 3,219,639 43,884 192,436 64,724 3,135,811
Covered bonds/asset-backed securities 2,222,092 32,488 121,628 41,675 2,174,627
Investment funds 179,356 11,663 45,963 – 145,056
  14,143,126 477,173 375,502 238,035 14,482,832
           
Equity securities          
Shares 19,711 1,830 734 – 20,807
Investment funds 1,897 82 197 – 1,782
  21,608 1,912 931 – 22,589
           
Short-term investments 806,718 76 – 925 807,719
           
Total 14,971,452 479,161 376,433 238,960 15,313,140

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Fair value of financial assets at fair value through profit or loss before and after accrued interest as well as accrued interest on such financial assets
  Fair value before accrued interest Accrued interest Fair value
Figures in EUR thousand 2009 2008 2009 2008 2009 2008
Financial assets at fair value through profit or loss            
Fixed-income securities            
Other foreign government debt securities – 2,577 – – – 2,577
Debt securities of semigovernmental entities 7,066 7,767 162 332 7,228 8,099
Corporate securities 121,589 176,237 5,208 3,730 126,797 179,967
Covered bonds/assetbacked securities 100,775 63,880 349 5 101,124 63,885
  229,430 250,461 5,719 4,067 235,149 254,528
               
Other financial assets            
Derivatives 58,273 44,654 – – 58,273 44,654
  58,273 44,654 – – 58,273 44,654
               
Total 287,703 295,115 5,719 4,067 293,422 299,182
Fair value of financial assets at fair value through profit or loss before and after accrued interest as well as accrued interest on such financial assets
  Fair value before accrued interest Accrued interest Fair value
Figures in EUR thousand 2009 2008 2009 2008 2009 2008
Financial assets at fair value through profit or loss            
Fixed-income securities            
Other foreign government debt securities – 2,577 – – – 2,577
Debt securities of semigovernmental entities 7,066 7,767 162 332 7,228 8,099
Corporate securities 121,589 176,237 5,208 3,730 126,797 179,967
Covered bonds/assetbacked securities 100,775 63,880 349 5 101,124 63,885
  229,430 250,461 5,719 4,067 235,149 254,528
               
Other financial assets            
Derivatives 58,273 44,654 – – 58,273 44,654
  58,273 44,654 – – 58,273 44,654
               
Total 287,703 295,115 5,719 4,067 293,422 299,182

The carrying amounts of the financial assets allocated to this category correspond to their fair values including accrued interest.

Under financial assets at fair value through profit or loss Hannover Re recognised as at the balance sheet date the derivative financial instruments originally allocated to this item in an amount of EUR 58.3 million (EUR 44.7 million) as well as fixed-income securities amounting to EUR 235.1 million (EUR 254.5 million) designated in this category.

Analysis of the fair value changes in the portfolio of fixed-income securities at fair value through profit or loss indicated that an amount of –EUR 5.1 million was due to changes in the ratings of callable bonds.

We additionally use an internal rating method to back up this analysis. Our internal rating system is based on the corresponding credit ratings of securities assigned by the agencies Standard & Poor’s and Moody’s and in each case reflects the lowest of the available ratings.

For further information please see the explanatory remarks in Section 8.1 “Derivative financial instruments”.

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Carrying amounts before impairment in EUR thousand 2009 2008
  Carrying amount before impairment Impairment Carrying amount before impairment Impairment
Fixed-income securities – held to maturity 2,954,695 1,206 1,475,202 –
Fixed-income securities – loans and receivables 2,705,515 3,684 1,680,857 –
Fixed-income securities – available for sale 13,845,487 40,439 14,579,773 96,941
Short-term investments 1,352,525 50 807,719 –
Equity securities – available for sale 22,522 3,165 378,641 356,052
Participating interests and other invested assets, real estate funds 725,760 92,709 815,230 26,913
Total 21,606,504 141,253 19,737,422 479,906
Carrying amounts before impairment in EUR thousand 2009 2008
  Carrying amount before impairment Impairment Carrying amount before impairment Impairment
Fixed-income securities – held to maturity 2,954,695 1,206 1,475,202 –
Fixed-income securities – loans and receivables 2,705,515 3,684 1,680,857 –
Fixed-income securities – available for sale 13,845,487 40,439 14,579,773 96,941
Short-term investments 1,352,525 50 807,719 –
Equity securities – available for sale 22,522 3,165 378,641 356,052
Participating interests and other invested assets, real estate funds 725,760 92,709 815,230 26,913
Total 21,606,504 141,253 19,737,422 479,906

For further explanatory remarks on the impairment criteria please see Section 3.2 “Summary of major accounting policies”.

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Valuation of the available-for-sale portfolio affecting shareholders' equity in EUR thousand 2009 2008
Changes in the other comprehensive income from fair value measurement and transactions Other comprehensive incomefrom investments
Allocation to gains/losses from the fair-value measurement of the available-for-sale portfolio 221,550 347,041
Transfer of gains/losses from the fair-value measurement of the available-for-sale portfolio to the result for the period (86,910) (360,132)
total 134,640 (13,091)
Valuation of the available-for-sale portfolio affecting shareholders' equity in EUR thousand 2009 2008
Changes in the other comprehensive income from fair value measurement and transactions Other comprehensive incomefrom investments
Allocation to gains/losses from the fair-value measurement of the available-for-sale portfolio 221,550 347,041
Transfer of gains/losses from the fair-value measurement of the available-for-sale portfolio to the result for the period (86,910) (360,132)
total 134,640 (13,091)

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Rating structure of fixed-incomesecurities
Figures in EuR thousand 2009
  AAA AA A BBB BB B C Other Total
Fixed-income securities – held-to-maturity 1,776,146 579,187 473,858 120,373 3,925 – – – 2,953,489
Fixed-income securities – loans and receivables 1,047,059 972,062 499,329 109,637 161 – – 73,583 2,701,831
Fixed-income securities – available-for-sale 7,946,449 2,432,341 2,276,065 779,432 90,317 221,813 7,594 51,037 13,805,048
Fixed-income securities – at fair value through profit or loss 4,494 10,475 40,392 80,633 46,391 33,442 8,404 10,918 235,149
Total fixed-income ecurities 10,774,148 3,994,065 3,289,644 1,090,075 140,794 255,255 15,998 135,538 19,695,517
Derivatives 12,757 2,903 18,829 3,347 (513) 7 8 765 38,103
total fixed-income securities incl. derivatives 10,786,905 3,996,968 3,308,473 1,093,422 140,281 255,262 16,006 136,303 19,733,620
Rating structure of fixed-incomesecurities
Figures in EuR thousand 2009
  AAA AA A BBB BB B C Other Total
Fixed-income securities – held-to-maturity 1,776,146 579,187 473,858 120,373 3,925 – – – 2,953,489
Fixed-income securities – loans and receivables 1,047,059 972,062 499,329 109,637 161 – – 73,583 2,701,831
Fixed-income securities – available-for-sale 7,946,449 2,432,341 2,276,065 779,432 90,317 221,813 7,594 51,037 13,805,048
Fixed-income securities – at fair value through profit or loss 4,494 10,475 40,392 80,633 46,391 33,442 8,404 10,918 235,149
Total fixed-income ecurities 10,774,148 3,994,065 3,289,644 1,090,075 140,794 255,255 15,998 135,538 19,695,517
Derivatives 12,757 2,903 18,829 3,347 (513) 7 8 765 38,103
total fixed-income securities incl. derivatives 10,786,905 3,996,968 3,308,473 1,093,422 140,281 255,262 16,006 136,303 19,733,620

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Figures in EUR thousand 2008
  AAA AA A BBB BB B C Other Total
Fixed-income securities – held-to-maturity 724,534 343,951 333,878 72,838 – – – – 1,475,202
Fixed-income securities – loans and receivables 410,388 568,548 640,766 53,009 161 21 – 7,964 1,680,857
Fixed-income securities – available-for-sale 9,336,958 2,131,355 2,042,753 728,040 38,772 104,787 55,316 44,851 14,482,832
Fixed-income securities – at fair value through profit or loss 4,863 11,828 68,541 40,072 101,670 23,325 4,229 – 254,528
Total fixed-income securities 10,476,743 3,055,682 3,085,938 893,960 140,603 128,133 59,545 52,815 17,893,419
Derivatives – (5,028) 7,908 (7,899) 115 (1,803) (18) (25,911) (32,636)
total fixed-income securities incl. derivatives 10,476,743 3,050,654 3,093,846 886,061 140,718 126,330 59,527 26,904 17,860,783
Figures in EUR thousand 2008
  AAA AA A BBB BB B C Other Total
Fixed-income securities – held-to-maturity 724,534 343,951 333,878 72,838 – – – – 1,475,202
Fixed-income securities – loans and receivables 410,388 568,548 640,766 53,009 161 21 – 7,964 1,680,857
Fixed-income securities – available-for-sale 9,336,958 2,131,355 2,042,753 728,040 38,772 104,787 55,316 44,851 14,482,832
Fixed-income securities – at fair value through profit or loss 4,863 11,828 68,541 40,072 101,670 23,325 4,229 – 254,528
Total fixed-income securities 10,476,743 3,055,682 3,085,938 893,960 140,603 128,133 59,545 52,815 17,893,419
Derivatives – (5,028) 7,908 (7,899) 115 (1,803) (18) (25,911) (32,636)
total fixed-income securities incl. derivatives 10,476,743 3,050,654 3,093,846 886,061 140,718 126,330 59,527 26,904 17,860,783

The maximum credit risk of the items shown here corresponds to their carrying amounts.

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Investments were held in the following currencies
Figures in EUR thousand 2009
  AUD CAD EuR GBP JPY USD ZAR Other Total
Fixed-income securities – held to maturity 12,693 31,479 1,915,290 77,534 – 908,228 8,265 – 2,953,489
Fixed-income securities – loans and receivables – 6,094 2,172,073 17,188 – 483,745 – 22,731 2,701,831
Fixed-income securities – available-for-sale 890,838 364,124 4,709,837 1,250,538 96,553 5,836,171 202,180 454,807 13,805,048
Fixed-income securities – at fair value through profit or loss – – 89,587 – – 119,977 25,585 – 235,149
Equity securities – available-for-sale – – 14,799 3,734 – 691 133 – 19,357
Other financial assets – at fair value through profit or loss – – 26,161 29,553 – 2,559 – – 58,273
Other invested assets – – 435,905 445 – 486,223 1,403 2 923,978
Short-term investments, cash 120,612 33,822 675,471 88,474 5,810 694,878 88,688 102,132 1,809,887
Total investments and cash 1,024,143 435,519 10,039,123 1,467,466 102,363 8,532,472 326,254 579,672 22,507,012
Investments were held in the following currencies
Figures in EUR thousand 2009
  AUD CAD EuR GBP JPY USD ZAR Other Total
Fixed-income securities – held to maturity 12,693 31,479 1,915,290 77,534 – 908,228 8,265 – 2,953,489
Fixed-income securities – loans and receivables – 6,094 2,172,073 17,188 – 483,745 – 22,731 2,701,831
Fixed-income securities – available-for-sale 890,838 364,124 4,709,837 1,250,538 96,553 5,836,171 202,180 454,807 13,805,048
Fixed-income securities – at fair value through profit or loss – – 89,587 – – 119,977 25,585 – 235,149
Equity securities – available-for-sale – – 14,799 3,734 – 691 133 – 19,357
Other financial assets – at fair value through profit or loss – – 26,161 29,553 – 2,559 – – 58,273
Other invested assets – – 435,905 445 – 486,223 1,403 2 923,978
Short-term investments, cash 120,612 33,822 675,471 88,474 5,810 694,878 88,688 102,132 1,809,887
Total investments and cash 1,024,143 435,519 10,039,123 1,467,466 102,363 8,532,472 326,254 579,672 22,507,012

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Figures in EUR thousand 2008
  AUD CAD EuR GBP JPY USD ZAR Other Total
Fixed-income securities – held to maturity 10,054 27,570 819,602 29,821 – 577,247 10,908 – 1,475,202
Fixed-income securities – loans and receivables – 139 1,530,599 16,189 – 127,702 – 6,228 1,680,857
Fixed-income securities – available-for-sale 679,117 325,065 5,746,278 1,119,426 92,903 6,009,523 163,126 347,394 14,482,832
Fixed-income securities – at fair value through profit or loss – – 66,518 – – 164,860 23,150 – 254,528
Equity securities – available-for-sale 1,916 1,266 15,393 2,855 – 602 557 – 22,589
Other financial assets – at fair value through profit or loss – – 40,740 – – 3,914 – – 44,654
Other invested assets – – 439,864 29 – 497,870 852 – 938,615
Short-term investments, cash 63,181 20,335 159,208 56,893 23,747 730,012 52,060 132,508 1,237,944
Total investments and cash 754,268 374,375 8,818,202 1,225,213 116,650 8,111,730 250,653 486,130 20,137,221
Figures in EUR thousand 2008
  AUD CAD EuR GBP JPY USD ZAR Other Total
Fixed-income securities – held to maturity 10,054 27,570 819,602 29,821 – 577,247 10,908 – 1,475,202
Fixed-income securities – loans and receivables – 139 1,530,599 16,189 – 127,702 – 6,228 1,680,857
Fixed-income securities – available-for-sale 679,117 325,065 5,746,278 1,119,426 92,903 6,009,523 163,126 347,394 14,482,832
Fixed-income securities – at fair value through profit or loss – – 66,518 – – 164,860 23,150 – 254,528
Equity securities – available-for-sale 1,916 1,266 15,393 2,855 – 602 557 – 22,589
Other financial assets – at fair value through profit or loss – – 40,740 – – 3,914 – – 44,654
Other invested assets – – 439,864 29 – 497,870 852 – 938,615
Short-term investments, cash 63,181 20,335 159,208 56,893 23,747 730,012 52,060 132,508 1,237,944
Total investments and cash 754,268 374,375 8,818,202 1,225,213 116,650 8,111,730 250,653 486,130 20,137,221

The maximum credit risk of the items shown here corresponds to their carrying amounts.

Associated companies

Investments in associated companies
Figures in EUR thousand 2009 2008
net book value at 31 December of the previous year 128,680 170,839
Currency translation at 1 january 204 (756)
Balance at 1 january of the year under review 128,884 170,083
Additions 4,225 356
Disposals – 28,545
Adjustment recognised in income (5,470) (11,412)
Adjustment recognised outside income 648 (1,962)
Currency translation at 31 December 29 160
Net book value at 31 December of the year under review 128,316 128,680

Public price listings are not available for companies valued at equity. The net book value of associated companies includes goodwill in the amount of EUR 17.9 million (EUR 17.9 million). For further details of our major participating interests please see Section 4 “Consolidated companies and consolidation principles”.

Real estate

Real estate is divided into real estate for own use and third-party use (investment property). The investment property in the portfolio which is used to generate income is shown under the investments. Real estate is valued at cost of acquisition less scheduled depreciation with useful lives of at most 50 years. Own-use real estate is recognised under other assets.

Income and expenses from rental agreements are included in the investment income.

Development of investment property in EUR thousand 2009 2008
Gross book value at 31 December of the previous year 45,258 41,370
Currency translation at 1 January (214) 431
Gross book value after currency translation at 1 January of the year under review 45,044 41,801
Additions 148,677 7,028
Reclassification – (3,571)
Currency translation at 31 December (3,509) –
Gross book value at 31 December of the year under review 190,212 45,258
     
Cumulative depreciation at 31 December of the previous year 23,640 24,408
Currency translation at 1 January (81) 148
Cumulative depreciation after currency translation at 1 January of the year under review 23,559 24,556
Depreciation 1,078 514
Impairments 175 –
Reclassification 2,813 (1,444)
Currency translation at 31 December (25) 14
Cumulative depreciation at 31 December of the year under review 27,600 23,640
     
Net book value at 31 December of the previous year 21,618 16,962
Net book value at 1 January of the year under review 21,485 17,245
Net book value at 31 December of the year under review 162,612 21,618

In addition, we held indirect real estate investments in the year under review in an amount of EUR 54.2 million (EUR 3.9 million).

The fair value of investment property amounted to EUR 167.3 million (EUR 23.9 million) as at the balance sheet date. The market value of the real estate was determined using the discounted cash flow method.

The additions to this item are attributable to the sharply increased investment activities of Hannover Re Real Estate Holdings, Inc.

Other invested assets

The other invested assets consisted largely of participating interests in partnerships measured at fair value in an amount of EUR 522.6 million (EUR 622.6 million). The amortised cost of these participations amounted to EUR 424.7 million (EUR 504.6 million); in addition, unrealised gains of EUR 98.7 million (EUR 135.8 million) and unrealised losses of EUR 0.8 million (EUR 17.8 million) were recognised from these participations.

Short-term investments

This item comprises investments with a maturity of up to one year at the time of investment.

Fair value hierarchy

For the purposes of the disclosure requirements pursuant to IFRS 7.27 B, the financial instruments to be recognised at fair value in the balance sheet are to be assigned to a three-level fair value hierarchy. This hierarchy, which reflects characteristics of the price data and inputs used for measurement purposes, is structured as follows:

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
  • Level 2: Inputs used for measurement that are based on observable market data and are not included within level 1. This level includes, in particular, prices for comparable assets and liabilities, prices on markets that are not considered active as well as inputs derived from such prices or market data.
  • Level 3: Inputs used for measurement that are not based on observable market data (unobservable inputs).

The following table shows the breakdown of the financial instruments recognised at fair value into the three-level fair value hierarchy.

Figures in EUR thousand 2009
  Level 1 Level 2 Level 3 Total
Fixed-income securities 7,449,589 6,459,155 131,453 14,040,197
Equity securities 18,387 620 350 19,357
Other financial assets – at fair value through profit or loss – 58,273 – 58,273
Other invested assets – – 576,807 576,807
Short-term investments 1,339,985 12,490 – 1,352,475
total assets measured at fair value 8,807,961 6,530,538 708,610 16,047,109
Other liabilities 1,796 19,333 – 21,129
total liabilities measured at fair value 1,796 19,333 – 21,129

The following table provides a reconciliation of the fair values of financial instruments included in level 3 at the beginning of the financial year with the fair values as at 31 December of the financial year.

Figures in EUR thousand 2009
  Fixed-income securities Equities, equity funds and other variable-yield securities Other invested assets
Balance at 1 January of the year under review 118,328 350 621,944
Income and expenses      
recognised in the statement of income (3,227) – (77,410)
recognised directly in shareholders' equity 29,976 – (11,115)
Additions – – 65,524
Disposals 13,538 – 16,861
Transfers to level 3 – – –
Transfers from level 3 – – –
Currency translation at 31 December of the year under review (86) – (5,275)
Net book value at 31 January of the year under review 131,453 350 576,807

The breakdown of income and expenses recognised in the statement of income in the financial year in connection with financial instruments included in level 3 is as follows:

Figures in EUR thousand 2009
  Fixed-income securities Equities, equity funds and other variable-yield securities Other invested assets
Total in the financial year      
Ordinary investment income 21 – –
Total depreciation, impairments and appreciation of investments (3,248) – (77,410)
Thereof attributable to financial instruments included in the portfolio at 31 December of the year under review      
Ordinary investment income 21 – –
Total depreciation, impairments and appreciation of investments (1,003) – (77,410)

If models are used to measure financial instruments included in level 3 under which the adoption of reasonable alternative inputs leads to a material change in fair value, IFRS 7.27 B requires disclosure of the effects of these alternative assumptions. Of the financial instruments included in level 3 with fair values of altogether EUR 708.6 million as at the balance sheet date, Hannover Re measures financial instruments with a volume of EUR 701.9 million using the Net Asset Value method, in respect of which alternative inputs within the meaning of the standard cannot reasonably be established. For the remaining financial instruments included in level 3 with a volume of EUR 6.7 million, the effects of alternative inputs and assumptions are immaterial.

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