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4.4 Major disposals

On 21 December 2010 Hannover Re reached agreement on the sale of its US subgroup Clarendon Insurance Group, Inc., Wilmington (CIGI), to Enstar Group Ltd., Hamilton, a Bermuda-based company specialising in the run-off of insurance business. Hannover Re holds all shares of CIGI indirectly through the intermediate holding company Hannover Finance, Inc., Wilmington (HFI), which is also included in full in the consolidated financial statement. The buyer is to acquire all shares of CIGI at a purchase price equivalent to EUR 162.5 million before final price determination, which will take place upon adoption of the local annual financial statement as at 31 December 2010. As at the balance sheet date the transaction was still subject to the customary regulatory approvals. Closing of the transaction and the associated deconsolidation from Hannover Re are anticipated in the second quarter of 2011.

Pursuant to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” CIGI was classified as at the balance sheet date as a disposal group, which is to be measured at the lower of the carrying amount and fair value less costs to sell. This measurement gave rise to the recognition of impairment losses in an amount of EUR 10.2 million, which were carried in other income and expenses.

In addition, a miscellaneous liability of EUR 4.1 million was recognised for selling expenditures and a sundry provision of EUR 54.9 million was constituted for expenses in connection with measurement of the disposal group. The corresponding expenses were recognised in other income and expenses.

The cumulative other comprehensive income of –EUR 28.8 million arising out of the currency translation of the assets and liabilities belonging to the disposal group will only be realised in the context of deconsolidation. Profits and losses from the measurement of available-for-sale financial assets in an amount of EUR 2.5 million as at the balance sheet date will also only be realised at the time of deconsolidation.

In compliance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” we recognise the assets and liabilities of the 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 “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.

Assets and liabilities of the disposal group in EUR thousand 31.12.2010
Assets  
Total investments 643,060
Cash 27,474
Reinsurance recoverables on unpaid claims 831,093
Accounts receivable 16,916
Other assets 10,812
Assets held for sale 1,529,355
   
Liabilities  
Technical provisions 1,309,860
Funds withheld 26,713
Reinsurance payable 17,612
Other liabilities 26,935
Liabilities related to assets held for sale 1,381,120

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