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5.1 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, short-term investments and cash.

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

Investments1 in EUR thousand 31.12.2010 31.12.2009
1 After elimination of internal transactions within the Group across segments
Regional origin    
Germany 6,402,667 6,560,026
United Kingdom 1,731,362 1,363,938
France 2,188,048 1,865,540
Other 4,856,718 3,928,606
Europe 15,178,795 13,718,110
     
USA 6,145,130 6,007,409
Other 1,057,850 840,207
North America 7,202,980 6,847,616
     
Asia 673,879 530,497
Australia 1,577,157 941,664
Australasia 2,251,036 1,472,161
     
Africa 409,767 416,139
Other 368,493 52,986
     
Total 25,411,071 22,507,012

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Maturities of the fixed-income and variable-yield securities in EUR thousand
  2010 2009
  Amortised cost1 Fair value Amortised cost1 Fair value
1 Including accrued interest
2 Including short-term investments and cash
Held to maturity        
due in one year 293,247 296,019 106,788 117,125
due after one through two years 481,951 497,863 280,725 290,471
due after two through three years 530,917 556,296 469,248 490,878
due after three through four years 402,290 435,132 521,196 542,714
due after four through five years 842,291 896,024 298,115 315,856
due after five through ten years 458,201 489,910 1,259,917 1,319,098
due after ten years 19,121 18,143 17,500 15,852
Total 3,028,018 3,189,387 2,953,489 3,091,994
         
Loans and receivables        
due in one year 61,280 61,845 220,814 221,111
due after one through two years 129,327 129,184 80,127 82,095
due after two through three years 348,915 356,739 41,048 41,219
due after three through four years 576,421 592,242 332,716 339,025
due after four through five years 330,110 342,088 485,554 490,978
due after five through ten years 806,953 840,900 1,294,842 1,323,459
due after ten years 61,423 58,741 246,730 244,384
Total 2,314,429 2,381,739 2,701,831 2,742,271
         
Available for sale        
due in one year2 4,127,663 4,146,256 3,890,651 3,926,328
due after one through two years 1,856,401 1,892,437 1,686,180 1,725,646
due after two through three years 1,841,265 1,892,893 1,656,235 1,698,765
due after three through four years 2,184,191 2,238,279 1,718,907 1,782,188
due after four through five years 2,277,464 2,294,991 1,875,448 1,907,847
due after five through ten years 3,710,502 3,727,430 3,151,562 3,196,970
due after ten years 1,629,312 1,703,603 1,383,350 1,377,191
Total 17,626,798 17,895,889 15,362,333 15,614,935
         
Financial assets at fair value through profit or loss        
due in one year 76,542 76,542 22,145 22,145
due after one through two years 28,498 28,498 70,245 70,245
due after two through three years 60,257 60,257 18,358 18,358
due after three through four years 4,876 4,876 39,155 39,155
due after four through five years - - 4,541 4,541
due after five through ten years - - 11,239 11,239
due after ten years 47,424 47,424 69,466 69,466
Total 217,597 217,597 235,149 235,149
Maturities of the fixed-income and variable-yield securities in EUR thousand
  2010 2009
  Amortised cost1 Fair value Amortised cost1 Fair value
1 Including accrued interest
2 Including short-term investments and cash
Held to maturity        
due in one year 293,247 296,019 106,788 117,125
due after one through two years 481,951 497,863 280,725 290,471
due after two through three years 530,917 556,296 469,248 490,878
due after three through four years 402,290 435,132 521,196 542,714
due after four through five years 842,291 896,024 298,115 315,856
due after five through ten years 458,201 489,910 1,259,917 1,319,098
due after ten years 19,121 18,143 17,500 15,852
Total 3,028,018 3,189,387 2,953,489 3,091,994
         
Loans and receivables        
due in one year 61,280 61,845 220,814 221,111
due after one through two years 129,327 129,184 80,127 82,095
due after two through three years 348,915 356,739 41,048 41,219
due after three through four years 576,421 592,242 332,716 339,025
due after four through five years 330,110 342,088 485,554 490,978
due after five through ten years 806,953 840,900 1,294,842 1,323,459
due after ten years 61,423 58,741 246,730 244,384
Total 2,314,429 2,381,739 2,701,831 2,742,271
         
Available for sale        
due in one year2 4,127,663 4,146,256 3,890,651 3,926,328
due after one through two years 1,856,401 1,892,437 1,686,180 1,725,646
due after two through three years 1,841,265 1,892,893 1,656,235 1,698,765
due after three through four years 2,184,191 2,238,279 1,718,907 1,782,188
due after four through five years 2,277,464 2,294,991 1,875,448 1,907,847
due after five through ten years 3,710,502 3,727,430 3,151,562 3,196,970
due after ten years 1,629,312 1,703,603 1,383,350 1,377,191
Total 17,626,798 17,895,889 15,362,333 15,614,935
         
Financial assets at fair value through profit or loss        
due in one year 76,542 76,542 22,145 22,145
due after one through two years 28,498 28,498 70,245 70,245
due after two through three years 60,257 60,257 18,358 18,358
due after three through four years 4,876 4,876 39,155 39,155
due after four through five years - - 4,541 4,541
due after five through ten years - - 11,239 11,239
due after ten years 47,424 47,424 69,466 69,466
Total 217,597 217,597 235,149 235,149

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
  2010
  Amortised cost Unrealised gains Unrealised losses Accrued interest Fair value
Investments held to maturity          
Fixed-income securities          
Government debt securities of EU member states 324,564 13,960 1,252 6,884 344,156
US treasury notes 382,844 44,791 - 3,038 430,673
Other foreign government debt securities 11,618 743 - 28 12,389
Debt securities issued by semi-governmental entities 709,181 35,252 978 13,305 756,760
Corporate securities 563,779 26,219 1,132 12,453 601,319
Covered bonds/asset-backed securities 979,452 48,562 4,796 20,872 1,044,090
Total 2,971,438 169,527 8,158 56,580 3,189,387
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
  2010
  Amortised cost Unrealised gains Unrealised losses Accrued interest Fair value
Investments held to maturity          
Fixed-income securities          
Government debt securities of EU member states 324,564 13,960 1,252 6,884 344,156
US treasury notes 382,844 44,791 - 3,038 430,673
Other foreign government debt securities 11,618 743 - 28 12,389
Debt securities issued by semi-governmental entities 709,181 35,252 978 13,305 756,760
Corporate securities 563,779 26,219 1,132 12,453 601,319
Covered bonds/asset-backed securities 979,452 48,562 4,796 20,872 1,044,090
Total 2,971,438 169,527 8,158 56,580 3,189,387

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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
  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
  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

The carrying amount of the portfolio held to maturity 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 loans and receivables as well as their fair value Figures in EUR thousand
  2010
  Amortised cost Unrealised gains Unrealised losses Accrued interest Fair value
Loans and receivables          
Government debt securities of EU member states - - - 305 305
Debt securities issued by semi-governmental entities 996,339 29,986 88 14,622 1,040,859
Corporate securities 467,355 15,317 829 6,335 488,178
Covered bonds/asset-backed securities 818,053 27,541 4,617 11,420 852,397
Total 2,281,747 72,844 5,534 32,682 2,381,739
Amortised cost, unrealised gains and losses and accrued interest on loans and receivables as well as their fair value Figures in EUR thousand
  2010
  Amortised cost Unrealised gains Unrealised losses Accrued interest Fair value
Loans and receivables          
Government debt securities of EU member states - - - 305 305
Debt securities issued by semi-governmental entities 996,339 29,986 88 14,622 1,040,859
Corporate securities 467,355 15,317 829 6,335 488,178
Covered bonds/asset-backed securities 818,053 27,541 4,617 11,420 852,397
Total 2,281,747 72,844 5,534 32,682 2,381,739

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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
  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
  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

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
  2010
  Amortised cost Unrealised gains Unrealised losses Accrued interest Fair value
Available for sale          
Fixed-income securities          
Government debt securities of EU member states 2,091,535 29,356 28,204 27,268 2,119,955
US treasury notes 2,011,438 68,669 3,530 13,532 2,090,109
Other foreign government debt securities 777,750 13,659 1,466 3,922 793,865
Debt securities issued by semi-governmental entities 3,453,861 90,835 10,100 50,883 3,585,479
Corporate securities 4,951,023 105,530 61,778 89,912 5,084,687
Covered bonds/asset-backed securities 2,015,755 100,579 42,381 31,513 2,105,466
Investment funds 90,815 8,773 1,515 - 98,073
  15,392,177 417,401 148,974 217,030 15,877,634
           
Equity securities          
Shares 374,338 29,020 5,038 - 398,320
Investment funds 128,132 10,373 70 - 138,435
  502,470 39,393 5,108 - 536,755
Short-term investments 1,568,528 939 275 1,310 1,570,502
           
Total 17,463,175 457,733 154,357 218,340 17,984,891
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
  2010
  Amortised cost Unrealised gains Unrealised losses Accrued interest Fair value
Available for sale          
Fixed-income securities          
Government debt securities of EU member states 2,091,535 29,356 28,204 27,268 2,119,955
US treasury notes 2,011,438 68,669 3,530 13,532 2,090,109
Other foreign government debt securities 777,750 13,659 1,466 3,922 793,865
Debt securities issued by semi-governmental entities 3,453,861 90,835 10,100 50,883 3,585,479
Corporate securities 4,951,023 105,530 61,778 89,912 5,084,687
Covered bonds/asset-backed securities 2,015,755 100,579 42,381 31,513 2,105,466
Investment funds 90,815 8,773 1,515 - 98,073
  15,392,177 417,401 148,974 217,030 15,877,634
           
Equity securities          
Shares 374,338 29,020 5,038 - 398,320
Investment funds 128,132 10,373 70 - 138,435
  502,470 39,393 5,108 - 536,755
Short-term investments 1,568,528 939 275 1,310 1,570,502
           
Total 17,463,175 457,733 154,357 218,340 17,984,891

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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
  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
  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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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 Figures in EUR thousand
  2010 2009 2010 2009 2010 2009
  Fair value before accrued interest Accrued interest Fair value
Financial assets at fair value through profit or loss            
Fixed-income securities            
Other foreign government debt securities 9,995 - 80 - 10,075 -
Debt securities of semi-governmental entities 97,770 7,066 542 162 98,312 7,228
Corporate securities 108,598 121,589 612 5,208 109,210 126,797
Covered bonds/ asset-backed securities - 100,775 - 349 - 101,124
  216,363 229,430 1,234 5,719 217,597 235,149
             
Other financial assets            
Derivatives 54,756 58,273 - - 54,756 58,273
  54,756 58,273 - - 54,756 58,273
             
Total 271,119 287,703 1,234 5,719 272,353 293,422
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 Figures in EUR thousand
  2010 2009 2010 2009 2010 2009
  Fair value before accrued interest Accrued interest Fair value
Financial assets at fair value through profit or loss            
Fixed-income securities            
Other foreign government debt securities 9,995 - 80 - 10,075 -
Debt securities of semi-governmental entities 97,770 7,066 542 162 98,312 7,228
Corporate securities 108,598 121,589 612 5,208 109,210 126,797
Covered bonds/ asset-backed securities - 100,775 - 349 - 101,124
  216,363 229,430 1,234 5,719 217,597 235,149
             
Other financial assets            
Derivatives 54,756 58,273 - - 54,756 58,273
  54,756 58,273 - - 54,756 58,273
             
Total 271,119 287,703 1,234 5,719 272,353 293,422

The carrying amounts of the financial assets at fair value through profit or loss correspond to their fair values including accrued interest.

Hannover Re recognised in this category as at the balance sheet date derivative financial instruments in an amount of EUR 54.8 million (EUR 58.3 million) that are originally allocable to this item as well as fixed-income securities amounting to EUR 217.6 million (EUR 235.1 million) designated in this category.

Analysis of the fair value changes in the portfolio of fixedincome securities at fair value through profit or loss indicated that an amount of EUR 0.6 million (–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 7.1 “Derivative financial instruments”.

Carrying amounts before impairment Figures in EUR thousand
  2010 2009
  Carrying amount before impairment Impairment Carrying amount before impairment Impairment
Fixed-income securities -
held to maturity		 3,028,149 131 2,954,695 1,206
Fixed-income securities -
loans and receivables		 2,315,964 1,535 2,705,515 3,684
Fixed-income securities -
available for sale		 15,883,874 6,240 13,845,487 40,439
Short-term investments 1,570,502 - 1,352,525 50
Equity securities - available for sale 537,324 569 22,522 3,165
Participating interests and other invested assets, real estate funds 940,538 7,976 725,760 92,709
Total 24,276,351 16,451 21,606,504 141,253

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

Valuation of the available-for-sale portfolio affecting shareholders‘ equity Figures in EUR thousand
  2010 2009
Changes in the other comprehensive income from fair value measurement and transactions Other comprehensive income from investments
Allocation to gains/losses from the fair-value measurement of the available-for-sale portfolio 208,751 221,550
Transfer of gains/losses from the fair-value measurement of the available-for-sale portfolio to the result for the period (55,857) (86,910)
Total 152,894 134,640

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Rating structure of fixed-income securities Figures in EUR thousand
  2010
  AAA AA A BBB BB B C Other Total
Fixed-income securities
- held-to-maturity		 1,685,201 723,446 496,375 115,027 4,000 3,969 - - 3,028,018
Fixed-income securities
- loans and receivables		 1,118,414 776,712 241,609 94,831 5,303 - - 77,560 2,314,429
Fixed-income securities
- available-for-sale		 8,444,249 2,542,309 3,441,409 1,092,359 133,890 59,984 10,643 152,791 15,877,634
Fixed-income securities
- at fair value through profit or loss		 3,306 10,075 26,130 73,000 57,963 39,656 51 7,416 217,597
Total fixed-income securities 11,251,170 4,052,542 4,205,523 1,375,217 201,156 103,609 10,694 237,767 21,437,678
Derivatives 18,121 1,243 (33,080) 4,200 (2,387) 51 25 (10,622) (22,449)
Total fixed-income securities incl. derivatives 11,269,291 4,053,785 4,172,443 1,379,417 198,769 103,660 10,719 227,145 21,415,229
Rating structure of fixed-income securities Figures in EUR thousand
  2010
  AAA AA A BBB BB B C Other Total
Fixed-income securities
- held-to-maturity		 1,685,201 723,446 496,375 115,027 4,000 3,969 - - 3,028,018
Fixed-income securities
- loans and receivables		 1,118,414 776,712 241,609 94,831 5,303 - - 77,560 2,314,429
Fixed-income securities
- available-for-sale		 8,444,249 2,542,309 3,441,409 1,092,359 133,890 59,984 10,643 152,791 15,877,634
Fixed-income securities
- at fair value through profit or loss		 3,306 10,075 26,130 73,000 57,963 39,656 51 7,416 217,597
Total fixed-income securities 11,251,170 4,052,542 4,205,523 1,375,217 201,156 103,609 10,694 237,767 21,437,678
Derivatives 18,121 1,243 (33,080) 4,200 (2,387) 51 25 (10,622) (22,449)
Total fixed-income securities incl. derivatives 11,269,291 4,053,785 4,172,443 1,379,417 198,769 103,660 10,719 227,145 21,415,229

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Rating structure of fixed\xADincome securities 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 securities 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\xADincome securities 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 securities 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

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

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Breakdown of investments by currenciesFigures in EUR thousand
  2010
  AUD CAD EUR GBP JPY USD ZAR Other Total
Fixed-income securities
- held to maturity		 15,593 22,766 1,917,315 81,476 - 986,863 4,005 - 3,028,018
Fixed-income securities
- loans and receivables		 - 6,916 1,683,975 6,280 - 593,892 - 23,366 2,314,429
Fixed-income securities
- available-for-sale		 1,223,302 455,694 5,973,882 1,478,993 100,013 5,772,300 282,866 590,584 15,877,634
Fixed-income securities
- at fair value through profit or loss		 - - 67,433 - - 116,699 33,465 - 217,597
Equity securities -
available-for-sale		 - 11,515 276,625 41,725 6,528 178,737 - 21,625 536,755
Other financial assets
- at fair value through profit or loss		 - - 9,495 - - 45,261 - - 54,756
Other invested assets - - 510,792 19 - 850,963 1,853 - 1,363,627
Short-term investments, cash 145,714 42,632 883,049 131,932 18,432 442,878 120,004 233,614 2,018,255
Total investments and cash 1,384,609 539,523 11,322,566 1,740,425 124,973 8,987,593 442,193 869,189 25,411,071
Breakdown of investments by currenciesFigures in EUR thousand
  2010
  AUD CAD EUR GBP JPY USD ZAR Other Total
Fixed-income securities
- held to maturity		 15,593 22,766 1,917,315 81,476 - 986,863 4,005 - 3,028,018
Fixed-income securities
- loans and receivables		 - 6,916 1,683,975 6,280 - 593,892 - 23,366 2,314,429
Fixed-income securities
- available-for-sale		 1,223,302 455,694 5,973,882 1,478,993 100,013 5,772,300 282,866 590,584 15,877,634
Fixed-income securities
- at fair value through profit or loss		 - - 67,433 - - 116,699 33,465 - 217,597
Equity securities -
available-for-sale		 - 11,515 276,625 41,725 6,528 178,737 - 21,625 536,755
Other financial assets
- at fair value through profit or loss		 - - 9,495 - - 45,261 - - 54,756
Other invested assets - - 510,792 19 - 850,963 1,853 - 1,363,627
Short-term investments, cash 145,714 42,632 883,049 131,932 18,432 442,878 120,004 233,614 2,018,255
Total investments and cash 1,384,609 539,523 11,322,566 1,740,425 124,973 8,987,593 442,193 869,189 25,411,071

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Breakdown of investments by currenciesFigures 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
Breakdown of investments by currenciesFigures 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

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

Associated companies

Investments in associated companies in EUR thousand 2010 2009
Net book value at 31 December of the previous year 128,316 128,680
Currency translation at 1 January 289 204
Balance at 1 January of the year under review 128,605 128,884
Additions 590 4,225
Disposals 50 -
Adjustment recognised in income 1,127 (5,470)
Adjustment recognised outside income (2,643) 648
Currency translation at 31 December 15 29
Net book value at 31 December of the year under review 127,644 128,316

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 18.4 million (EUR 17.9 million). For further details of our major participating interests please see Section 4 “Consolidation”.

Real estate

Real estate is divided into real estate for own use and thirdparty 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 2010 2009
Gross book value at 31 December of the previous year 190,212 45,258
Currency translation at 1 January 11,583 (214)
Gross book value after currency translation at 1 January of the year under review 201,795 45,044
Additions 136,662 148,677
Currency translation at 31 December 177 (3,509)
Gross book value at 31 December of the year under review 338,634 190,212
     
Cumulative depreciation at 31 December of the previous year 27,600 23,640
Currency translation at 1 January 335 (81)
Cumulative depreciation after currency translation at 1 January of the year under review 27,935 23,559
Depreciation 7,120 1,078
Impairments 192 175
Appreciation (52) -
Reclassification - 2,813
Currency translation at 31 December 17 (25)
Cumulative depreciation at 31 December of the year under review 35,212 27,600
     
Net book value at 31 December of the previous year 162,612 21,618
Net book value at 1 January of the year under review 173,860 21,485
Net book value at 31 December of the year under review 303,422 162,612

In addition, we held indirect real estate investments in the year under review in an amount of EUR 90.7 million (EUR 54.2 million).

The fair value of investment property amounted to EUR 305.4 million (EUR 167.3 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 in large part to the sharply increased investment activities of Hannover Re Real Estate Holdings, Inc., and Hannover Re Euro RE Holdings GmbH.

Other invested assets

The other invested assets consisted largely of participating interests in partnerships measured at fair value in an amount of EUR 779.5 million (EUR 522.6 million). The amortised cost of these participations amounted to EUR 536.5 million (EUR 424.7 million); in addition, unrealised gains of EUR 244.5 million (EUR 98.7 million) and unrealised losses of EUR 1.5 million (EUR 0.8 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 “Financial Instruments: Disclosures”, the financial instruments 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.

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

Fair value hierarchy of financial instruments recognised at fair value in EUR thousand
  2010
  Level 1 Level 2 Level 3 Total
Fixed-income securities 7,068,695 8,944,072 82,464 16,095,231
Equity securities 536,059 685 11 536,755
Other financial assets - at fair value through profit or loss - 54,756 - 54,756
Other invested assets - 90,547 779,592 870,139
Short-term investments 1,557,049 13,453 - 1,570,502
Total assets measured at fair value 9,161,803 9,103,513 862,067 19,127,383
Other liabilities 1,755 75,451 - 77,206
Total liabilities measured at fair value 1,755 75,451 - 77,206
Fair value hierarchy of financial instruments recognised at fair value 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

In the year under review financial instruments with a fair value of EUR 289.4 million were no longer allocable to level 1 – as in the previous year – but rather to level 2. The reclassification was necessary owing to the reduced liquidity of the instruments. Financial instruments with a fair value of EUR 21.6 million, which in the previous year were recognised as level 2 instruments, were allocated to level 1 in the current reporting period. The reclassifications principally affected fixed-income securities carried as available for sale.

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.

Development of level 3 financial instruments in EUR thousand 2010
  Fixed-income securities Equities, equity funds and other variable-yield securities Other invested assets
Balance at 1 January of the year under review 131,453 350 576,807
Currency translation at 1 January of the year under review 9,453 1 29,348
Income and expenses      
recognised in the statement of income 6,261 (514) (4,676)
recognised directly in shareholders‘ equity (354) 399 79,456
Additions 18,337 441 152,515
Disposals 78,790 666 56,458
Transfers to level 3 - - -
Transfers from level 3 - - -
Currency translation at 31 December of the year under review (3,896) - 2,600
Net book value at 31 December of the year under review 82,464 11 779,592
Development of level 3 financial instruments 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 December 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 assigned to level 3 is as follows.

Income and expenses from level 3 financial instruments in EUR thousand
  2010
  Fixed-income securities Equities, equity funds and other variable-yield securities Other invested assets
Total in the financial year      
Ordinary investment income 61 - -
Unrealised gains and losses 4,950 - -
Total depreciation, impairments and appreciation of investments 1,250 (514) (4,676)
Thereof attributable to financial instruments included in the portfolio at 31 December of the year under review      
Ordinary investment income 61 - -
Unrealised gains and losses 4,950 - -
Total depreciation, impairments and appreciation of investments 1,250 (514) (6,614)
Income and expenses from level 3 financial instruments 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 “Financial Instruments: Disclosures” requires disclosure of the effects of these alternative assumptions. Of the financial instruments included in level 3 with fair values of altogether EUR 862.1 million (EUR 708.6 million) as at the balance sheet date, Hannover Re measures financial instruments with a volume of EUR 839.4 million (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 22.7 million (EUR 6.7 million), the effects of alternative inputs and assumptions are immaterial.

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