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4.2 Consolidated companies and complete list of shareholdings
In addition to Hannover Rück SE as the parent company of the Group, the scope of consolidation of the Hannover Re Group encompasses the companies listed in the table below.
Information on subsidiaries
| Scope of consolidation | ||
| Number of companies | 2016 | 2015 |
|---|---|---|
| Consolidated companies (Group companies) | ||
| Germany | 21 | 25 |
| Abroad | 65 | 66 |
| Total | 86 | 91 |
| Companies included at equity | ||
| Germany | 2 | 3 |
| Abroad | 4 | 7 |
| Total | 6 | 10 |
Information on the non-controlling interests in shareholders’ equity and profit or loss as well as on the major non-controlling interests is provided in Section 6.14 “Non-controlling interests”. On the balance sheet date there were no significant restrictions on access to or the use of Group assets due to protective rights in favour of non-controlling interests.
The sale or transfer of shares of E+S Rückversicherung AG takes place by way of an endorsement and is permissible only with the approval of the company’s Supervisory Board. The Supervisory Board enjoys the right to grant or deny approval unconditionally, without being obliged to state reasons in the event of denial.
National provisions of company law or requirements of supervisory law may in certain countries limit the ability of the Hannover Re Group to transfer assets between companies belonging to the Group. These limitations result principally from local minimum capital and solvency requirements as well as to a lesser extent from foreign exchange restrictions.
As security for our technical liabilities and as collateral for liabilities arising out of existing derivative transactions Hannover Re has established blocked custody accounts and trust accounts in certain countries, while for liabilities in connection with real estate transactions – to the extent that is customary under such transactions – it has pledged assets in favour of third parties outside the Group. For further information please see our explanatory remarks in Section 8.7 “Contingent liabilities and commitments”.
List of shareholdings
The following list of shareholdings is provided in the present Group annual financial report in accordance with § 313 Para. 2 German Commercial Code (HGB). In the year under review, in the context of initial application of the provisions amended by the Accounting Directive Implementing Act (BilRUG), all companies were included in this list in which shares are held with the intention of serving the investor’s own business interests through creation of a lasting relationship. Previously applicable participation thresholds no longer apply. The number of companies to be listed in the Group annual financial report has consequently increased slightly. The stipulations of IFRS 12.10 and IFRS 12.21 have also been observed.
The figures for the capital and reserves as well as the result for the last financial year are taken from the local financial statements drawn up by the companies.
With regard to the major acquisitions and disposals in the year under review please see our remarks in the following paragraphs of this section.
| List of shareholdings | ||||
| Name and registered office of the company in currency units of 1,000 |
Participation in % |
Currency | Capital and reserves |
Result for the last financial year |
|---|---|---|---|---|
| Domestic companies | ||||
| Affiliated consolidated companies | ||||
| Hannover Rück Beteiligung Verwaltungs-GmbH, Hannover / Germany1,2 | 100.00 | EUR | 2,341,925 | – |
| Hannover Life Re AG. Hannover / Germany1,2 | 100.00 | EUR | 1,873,188 | – |
| HILSP Komplementär GmbH, Hannover / Germany3 | 100.00 | EUR | 33 | 3 |
| International Insurance Company of Hannover SE, Hannover / Germany1,2 | 100.00 | EUR | 165,845 | – |
| Hannover Insurance‑Linked Securities GmbH & Co. KG, Hannover / Germany3 | 100.00 | EUR | 20,388 | 53 |
| FUNIS GmbH & Co. KG, Hannover / Germany1 | 100.00 | EUR | 75,123 | 3,875 |
| HR Verwaltungs-GmbH, Hannover / Germany1 | 100.00 | EUR | 12 | (1) |
| Hannover America Private Equity Partners II GmbH & Co. KG, Hannover / Germany1 | 95.42 | EUR | 237,381 | 40,194 |
| HAPEP II Holding GmbH, Hannover / Germany1 | 95.42 | EUR | 6,010 | 909 |
| Hannover Re Global Alternatives GmbH & Co KG, Hannover / Germany1 | 94.72 | EUR | 41,628 | 2,852 |
| Hannover Re Euro PE Holdings GmbH & Co. KG, Hannover / Germany1 | 91.20 | EUR | 251,203 | 20,291 |
| Hannover Re Euro RE Holdings GmbH, Hannover / Germany1 | 87.68 | EUR | 886,721 | 21,602 |
| HR GLL Central Europe GmbH & Co. KG, Munich / Germany1 | 87.67 | EUR | 326,930 | 4,334 |
| HR GLL Central Europe Holding GmbH, Munich / Germany1 | 87.67 | EUR | 61,419 | 1,183 |
| HAPEP II Komplementär GmbH, Hannover / Germany1 | 82.40 | EUR | 39 | 3 |
| Hannover Euro Private Equity Partners III GmbH & Co. KG, Cologne / Germany1 | 67.54 | EUR | 633 | 11,738 |
| HEPEP III Holding GmbH, Cologne / Germany1 | 67.54 | EUR | 2,627 | 1,618 |
| E+S Rückversicherung AG, Hannover / Germany1 | 64.79 | EUR | 696,413 | 125,000 |
| Hannover Euro Private Equity Partners IV GmbH & Co. KG, Cologne / Germany1 | 60.58 | EUR | 5,434 | 10,848 |
| Hannover Euro Private Equity Partners II GmbH & Co. KG, Cologne / Germany1 | 57.89 | EUR | 1,226 | 1,044 |
| HEPEP II Holding GmbH, Cologne / Germany1 | 57.89 | EUR | 22 | (1,760) |
| Affiliated non-consolidated companies | ||||
| International Hannover Holding AG, Hannover / Germany4,5 |
100.00 | EUR | 39 | (2) |
| Oval Office Grundstücks GmbH, Hannover / Germany1,4,6 | 50.00 | EUR | 1,589 | (21) |
| Associated companies | ||||
| WeHaCo Unternehmensbeteiligungs-GmbH, Hannover / Germany7 |
32.96 | EUR | 83,207 | 11,857 |
| HANNOVER Finanz GmbH, Hannover / Germany7 |
27.78 | EUR | 74,801 | 11,324 |
| Other participations | ||||
| b2b protect GmbH, Hildesheim / Germany7 |
48.98 | EUR | 378 | (361) |
| Internationale Schule Hannover Region GmbH, Hannover / Germany8,9 |
9.17 | EUR | 3,689 | 302 |
| FinLeap GmbH, Berlin / Germany1,10 |
8.26 | EUR | 25,253 | (3,470) |
| Nürnberger Beteiligungs-AG, Nuremberg / Germany7,9 |
1.75 | EUR | 630,154 | 44,618 |
| Foreign companies | ||||
| Affiliated consolidated companies | ||||
| Hannover Finance (Luxembourg) S.A., Luxembourg / Luxembourg1 | 100.00 | EUR | 34,647 | 288 |
| Hannover Finance (UK) Limited, London / United Kingdom1 | 100.00 | GBP | 2,703 | (18) |
| Hannover Life Reassurance Bermuda Ltd., Hamilton / Bermuda1 | 100.00 | USD | 391,271 | 34,588 |
| Hannover Life Reassurance Company of America, Orlando / USA1 | 100.00 | USD | 333,442 | 25,033 |
| Hannover Life Reassurance Company of America (Bermuda) Ltd., Hamilton / Bermuda1 | 100.00 | USD | 9,233 | 2,395 |
| Hannover Re (Ireland) Designated Activity Company, Dublin / Ireland1 |
100.00 | USD | 1,709,897 | 105,225 |
| Hannover Life Re of Australasia Ltd, Sydney / Australia1 | 100.00 | AUD | 480,863 | 2,466 |
| Hannover Re (Bermuda) Ltd., Hamilton / Bermuda1 | 100.00 | USD | 1,237,845 | 201,363 |
| Hannover ReTakaful B.S.C. (c), Manama / Bahrain1 | 100.00 | BHD | 65,810 | 4,080 |
| Hannover Services (UK) Limited, London / United Kingdom1 | 100.00 | GBP | 794 | (66) |
| Inter Hannover (No.1) Limited, London / United Kingdom1 | 100.00 | GBP | (35) | – |
| Integra Insurance Solutions Limited, Bradford / United Kingdom7 |
100.00 | GBP | 2,789 | 2,748 |
| The Congregational & General Insurance Public Limited Company, Bradford / United Kingdom1 |
100.00 | GBP | 11,920 | 2,891 |
| Glencar Underwriting Managers, Inc., Chicago / USA7 |
100.00 | USD | 5,985 | 757 |
| Leine Investment General Partner S.à r.l., Luxembourg / Luxembourg1,11 |
100.00 | EUR | 550 | 509 |
| Leine Investment SICAV-SIF, Luxembourg / Luxembourg1,11 |
100.00 | USD | 65,509 | 3,095 |
| LI RE, Hamilton / Bermuda1,11 | 100.00 | USD | – | – |
| Fracom FCP, Paris / France12 | 100.00 | EUR | 1,219,475 | 18,479 |
| Hannover Finance, Inc., Wilmington / USA1,11 | 100.00 | USD | 163,451 | 7,617 |
| Sand Lake Re, Inc., Burlington / USA1 | 100.00 | USD | 11,883 | (117) |
| Hannover Reinsurance Group Africa (Pty) Ltd., Johannesburg / South Africa1 | 100.00 | ZAR | 219,820 | 209,916 |
| Hannover Life Reassurance Africa Limited, Johannesburg / South Africa1 | 100.00 | ZAR | 555,797 | 31,770 |
| Hannover Reinsurance Africa Limited, Johannesburg / South Africa1 | 100.00 | ZAR | 728,000 | 59,243 |
| Compass Insurance Company Limited, Johannesburg / South Africa1 | 100.00 | ZAR | 195,883 | 33,692 |
| Peachtree (Pty) Ltd., Johannesburg / South Africa4,13 | 100.00 | ZAR | – | – |
| Hannover Re Real Estate Holdings, Inc., Orlando / USA11 | 95.25 | USD | 654,438 | 8,864 |
| GLL HRE CORE Properties, L.P., Wilmington / USA1,11 | 95.15 | USD | 557,316 | (310) |
| 101BOS LLC, Wilmington / USA1,11 |
95.15 | USD | 51,322 | 445 |
| 11 Stanwix, LLC, Wilmington / USA1,11 | 95.15 | USD | 36,373 | 1,411 |
| 402 Santa Monica Blvd, LLC, Wilmington / USA1,11 | 95.15 | USD | 775 | 823 |
| 300 California, LLC, Wilmington / USA14 | 95.15 | USD | – | – |
| 111ORD LLC, Wilmington / USA1,11 | 95.15 | USD | 73,529 | 2,418 |
| 140EWR LLC, Wilmington / USA1,11 | 95.15 | USD | 79,402 | (2,589) |
| 7550IAD LLC, Wilmington / USA1,11 | 95.15 | USD | 76,260 | 1,151 |
| Nashville West, LLC, Wilmington / USA1,11 | 95.15 | USD | 29,140 | 987 |
| 1225 West Washington, LLC, Wilmington / USA1,11 | 95.15 | USD | 24,082 | 1,020 |
| 975 Carroll Square, LLC, Wilmington / USA1,11 | 95.15 | USD | 51,145 | 1,156 |
| Broadway 101, LLC, Wilmington / USA1, 11 | 95.15 | USD | 12,518 | 626 |
| River Terrace Parking, LLC, Wilmington / USA1,11 | 95.15 | USD | 20,028 | 364 |
| 3290ATL LLC, Wilmington / USA1,11 | 95.15 | USD | 69,861 | 160 |
| Commercial & Industrial Acceptances (Pty) Ltd., Johannesburg / South Africa | 88.00 | ZAR | 6,680 | 25,811 |
| Kaith Re Ltd., Hamilton / Bermuda1 | 88.00 | USD | 915 | (327) |
| HR GLL Roosevelt Kft, Budapest / Hungary1 | 87.67 | HUF | 19,635,268 | 1,388,757 |
| HR GLL Liberty Corner SPÓLKA Z OGRANICZONA ODPOWIEDZIALNÓSCIA, Warsaw / Poland1 | 87.67 | PLN | 45,973 | (2,185) |
| HR GLL Griffin House SPÓLKA Z OGRANICZONA ODPOWIEDZIALNÓSCIA, Warsaw / Poland1 | 87.67 | PLN | 34,480 | (3,629) |
| Akvamarín Beta s.r.o., Prague / Czech Republic1 | 87.67 | CZK | 87,899 | 34,132 |
| HR GLL Europe Holding S.à r.l., Luxembourg / Luxembourg1 | 87.67 | EUR | 159,740 | 932 |
| HR GLL CDG Plaza S.r.l., Bucharest / Romania1 | 87.67 | RON | 155,292 | 6,219 |
| Pipera Business Park S.r.l., Bucharest / Romania1 | 87.67 | RON | 94,520 | 8,930 |
| Mustela s.r.o., Prague / Czech Republic1 | 87.67 | CZK | 1,276,016 | 19,021 |
| Lireas Holdings (Pty) Ltd., Johannesburg / South Africa1 | 70.00 | ZAR | 199,372 | 34,180 |
| MUA Insurance Acceptances (Pty) Ltd., Cape Town / South Africa1 | 70.00 | ZAR | 8,925 | 4,709 |
| Cargo Transit Insurance (Pty) Ltd., Helderkruin / South Africa4,15 | 56.00 | ZAR | (4,499) | – |
| Svedea AB, Stockholm / Sweden7 | 53.00 | SEK | 6,119 | 626 |
| SUM Holdings (Pty) Ltd., Johannesburg / South Africa1 | 50.54 | ZAR | 20,150 | 12,628 |
| Firedart Engineering Underwriting Managers (Pty) Ltd., Johannesburg / South Africa1 | 49.00 | ZAR | 610 | 127 |
| Garagesure Consultants and Acceptances (Pty) Ltd., Johannesburg / South Africa1 | 49.00 | ZAR | 1,464 | 2,887 |
| Thatch Risk Acceptances (Pty) Ltd., Johannesburg / South Africa1 | 49.00 | ZAR | 2,733 | 2,135 |
| Landmark Underwriting Agency (Pty) Ltd., Bloemfontein / South Africa1 |
45.85 | ZAR | 4,490 | 2,988 |
| Hospitality Industrial and Commercial Underwriting
Managers (Pty) Ltd., Johannesburg / South Africa1 |
45.49 | ZAR | 1,327 | 5,043 |
| Construction Guarantee (Pty) Ltd., Johannesburg / South Africa4,15 | 42.00 | ZAR | – | – |
| Transit Underwriting Managers (Pty) Ltd., Cape Town / South Africa |
39.67 | ZAR | 415 | 201 |
| Envirosure Underwriting Managers (Pty) Ltd., Durban / South Africa | 35.70 | ZAR | 3,212 | 1,944 |
| Synergy Targeted Risk Solutions (Pty) Ltd, Johannesburg / South Africa | 35.70 | ZAR | 2,042 | – |
| Film & Entertainment Underwriters SA (Pty) Ltd., Johannesburg / South Africa1 |
35.70 | ZAR | (709) | 583 |
| Affiliated non-consolidated companies | ||||
| International Mining Industry Underwriters Limited, London / United Kingdom1 | 100.00 | GBP | 131 | 23 |
| HR Hannover Re, Correduría de Reaseguros, S.A., Madrid / Spain1 | 100.00 | EUR | 424 | 47 |
| LRA Superannuation Plan Pty Ltd., Sydney / Australia14 | 100.00 | AUD | – | – |
| Mediterranean Reinsurance Services Ltd., Hong Kong / China4,7 | 100.00 | USD | 52 | – |
| Hannover Re Services Japan, Tokio / Japan1 | 100.00 | JPY | 114,354 | 11,892 |
| Hannover Re Consulting Services India Private Limited, Mumbai / India16 | 100.00 | INR | 101,793 | 10,523 |
| Hannover Services (México) S.A. de C.V., Mexico City / Mexico7 | 100.00 | MXN | 8,025 | (909) |
| Hannover Re Services USA, Inc., Itasca / USA | 100.00 | USD | 3,474 | (31) |
| Hannover Rück SE Escritório de Representação no Brasil Ltda., Rio de Janeiro / Brazil7 | 100.00 | BRL | 2,923 | 483 |
| L & E Holdings Limited, London / United Kingdom1 | 100.00 | GBP | 5 | – |
| London & European Title Insurance Services Limited, London / United Kingdom1 | 100.00 | GBP | 390 | 91 |
| Iconica Business Services Limited, Bradford / United Kingdom7 |
100.00 | GBP | 1,760 | 122 |
| Hannover Re Risk Management Services India Private Limited, New Delhi / India16 | 100.00 | INR | 67,945 | 15,719 |
| Hannover Re Services Italy S.r.l., Milan / Italy | 99.65 | EUR | 365 | 102 |
| Dowset Investments Spólka z organiczona
odpowiedzialnoscia, Warsaw / Poland1 |
87.67 | PLN | (22) | (27) |
| U FOR LIFE SDN. BHD., Petaling Jaya / Malaysia7 | 60.00 | MYR | (6,177) | (5,487) |
| HMIA Pty Ltd, Sydney / Australia7 | 55.00 | AUD | (313) | (185) |
| Svedea Skadeservice AB, Stockholm / Sweden17 | 53.00 | SEK | 284 | 234 |
| Associated companies | ||||
| ITAS Vita S.p.A., Trento / Italy7 | 34.88 | EUR | 98,161 | 4,014 |
| Clarendon Transport Underwriting Managers (Pty) Ltd., Johannesburg / South Africa1 | 26.11 | ZAR | 17,431 | 12,782 |
| Clarenfin (Pty) Ltd., Johannesburg / South Africa1 | 26.11 | ZAR | 126 | (30) |
| Vela Taxi Finance (Pty) Ltd, Johannesburg / South Africa1 | 14.36 | ZAR | (2,849) | (2,036) |
| Other participations | ||||
| Reaseguradora del Ecuador S.A., Guayaquil / Ecuador7 | 30.00 | USD | 10,433 | 1,092 |
| Energi, Inc., Peabody / USA7 | 28.50 | USD | 20,168 | (1,437) |
| Energi Insurance Services, Inc., Peabody / USA7 | 28.50 | USD | 1,021 | 289 |
| Energi of Canada Ltd., Toronto / Canada7 | 28.50 | CAD | 42 | (559) |
| Energi Re, LLC, Wilmington / USA7 | 28.50 | USD | 22,264 | 749 |
| Hurst Holme Insurance Company Limited – account 2006-03 SCC, Hamilton / Bermuda4,7 | 28.50 | USD | 160 | (69) |
| E Claims Management, Inc., Peabody / USA14 | 28.50 | USD | – | – |
| E-Marketing Strategies, Inc., Peabody / USA18 | 28.50 | USD | – | – |
| E-Risk Solutions, Inc., Peabody / USA18 | 28.50 | USD | – | – |
| E-Technology Services, Inc., Peabody / USA18 |
28.50 | USD | – | – |
| David Edwards Insurance Brokers Limited, Solihull / United Kingdom1,16 |
21.00 | GBP | 148 | 191 |
| Meribel Topco Limited, St. Helier / Jersey1 |
20.11 | EUR | 2,490 | 20,543 |
| Meribel Midco Limited, St. Helier / Jersey1 |
20.11 | EUR | 57,248 | 92,352 |
| Monument Insurance Group Limited, Hamilton / Bermuda18 |
20.00 | USD | – | – |
| Monument Midco Limited, Hamilton / Bermuda18 |
20.00 | USD | – | – |
| Monument Finco Limited, George Town / Cayman Islands18 |
20.00 | USD | – | – |
| Monument Re Limited, Hamilton / Bermuda18 |
20.00 | USD | – | – |
| Inlife Holding (Liechtenstein) AG, Triesen / Liechtenstein9,19 |
15.00 | CHF | 10,713 | 7,450 |
| Life Invest Holding AG, Zurich / Switzerland1,9,20 |
15.00 | CHF | 38,776 | 36,776 |
| Sureify Labs, Inc., Wilmington / USA1,8,10 |
14.82 | USD | (456) | (364) |
| Somerset Reinsurance Ltd., Hamilton / Bermuda7,10,21 |
12.31 | USD | 34,418 | (9,262) |
| Weisshorn Re AG, Zurich / Switzerland7,10 |
12.31 | CHF | 20,608 | (18) |
| Acte Vie S.A., Schiltigheim / France7 |
9.38 | EUR | 9,088 | 92 |
| Liberty Life Insurance Public Company Ltd, Nicosia / Cyprus7,9 |
3.30 | EUR | 11,427 | 821 |
| 1 Provisional (unaudited) figures 2 Year-end result after profit transfer 3 Financial year as at 30 September 2016 4 Company is in liquidation 5 Abbreviated financial year from 1 January 2015 to 30 June 2015 6 Abbreviated financial year from 1 April 2016 to 31 December 2016 7 Figures as at 31 December 2015 8 Financial year as at 31 July 2016 9 Listed for the first time based on requirement of Accounting Directive Implementing Act (BilRUG) 10 Addition in 2016 financial year, listed based on requirement of Accounting Directive Implementing Act (BilRUG) 11 IFRS figures 12 Financial year as at 31 October 2016 13 Figures as at 31 December 2014 14 Company is inactive 15 Figures as at 31 December 2013 16 Financial year as at 31 March 2016 17 Financial year from 7 October 2014 to 31 December 2015 18 Company was newly established in 2016; an annual financial statement is not yet available. 19 Financial year from 24 August 2015 to 31 December 2015 20 Financial year from 5 June 2015 to 31 December 2016 21 Formerly Weisshorn Re Ltd., Hamilton / Bermuda |
||||
Material branches of the Group
We define the branch of a Group company as an unincorporated business unit that is physically and organisationally separate from the Group company, is bound by the latter’s instructions in their internal relationship and has its own independent market presence.
The Hannover Re Group companies listed in the following table maintain branches that we consider to be material to an understanding of the Group’s position.
| Material branches of the Group | ||||
|---|---|---|---|---|
| Group company / Branch | Gross written premium1 | Net income1 | ||
| Figures in EUR thousand | 2016 | 2015 | 2016 | 2015 |
| Hannover Rück SE | ||||
| Hannover Rueck SE Australian Branch, Sydney / Australia |
170,556 | 135,928 | 11,261 | 30,686 |
| Hannover Rück SE Canadian Branch, Toronto / Canada |
254,702 | 206,295 | 34,712 | 35,161 |
| Hannover Rück SE, Hong Kong Branch, Wanchai / Hong Kong |
260,814 | 171,721 | 17,858 | 6,999 |
| Hannover Rueck SE Malaysian Branch, Kuala Lumpur / Malaysia |
427,194 | 354,915 | 27,222 | 23,345 |
| Hannover Rück SE, Tyskland Filial, Stockholm / Sweden |
235,154 | 220,102 | 21,719 | 2,895 |
| Hannover Rück SE Succursale Francaise, Paris / France |
710,352 | 710,849 | 34,762 | (26,442) |
| Hannover Rueck SE Bahrain Branch, Manama / Bahrain |
129,902 | 145,992 | 1,258 | (2,707) |
| Hannover Rück SE Shanghai Branch, Shanghai / China |
697,727 | 1,254,150 | 11,466 | 20,465 |
| Hannover Rück SE Korea Branch, Seoul / South Korea |
46,789 | 46,013 | 2,086 | 2,631 |
| Hannover Re UK Life Branch, London / United Kingdom |
284,357 | 299,435 | 12,356 | 2,114 |
| International Insurance Company of Hannover SE | ||||
| International Insurance Company of Hannover SE, Australian Branch, Sydney / Australia |
32,558 | 23,966 | 59 | 789 |
| International Insurance Company of Hannover SE, Canadian Branch, Toronto / Canada |
65,761 | 33,450 | 1,036 | (247) |
| International Insurance Company of Hannover SE, Italian Branch, Milan / Italy2 |
||||
| International Insurance Company of Hannover SE, Scandinavian Branch, Stockholm / Sweden |
192,910 | 186,020 | 4,249 | 4,359 |
| International Insurance Company of Hannover SE, UK Branch, London / United Kingdom |
333,358 | 412,952 | 3,532 | (1,078) |
| 1 Figures before consolidation 2 Branch is in liquidation. |
||||
In addition, other companies belonging to the Hannover Re Group maintain further branches in New Zealand, Canada and Bahrain that both individually and collectively are to be classified as immaterial to the Group.
Consolidation of structured entities
Business relations with structured entities are to be examined in accordance with IFRS 10 with an eye to their implications for consolidation. In the context of their operational activities some companies belonging to the Hannover Re Group enter into business relations with structured entities that are to be analysed and accounted for according to these new provisions.
Structured entities are entities designed in such a way that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity frequently has some or all of the following features or attributes:
- Restricted activities;
- A narrow and well-defined business objective;
- Insufficient equity to allow it to finance its activities without subordinated financial support;
- Financing in the form of multiple contractually linked instruments issued to investors that create concentrations of credit or other risks (tranches).
In accordance with the consistent consolidation model, a structured entity – just like a subsidiary – must be consolidated if Hannover Re gains control over the said entity. With regard to the criteria for control please see also Section 4.1 “Consolidation principles”. Within the Hannover Re Group the requirement to consolidate structured entities is examined as part of an analysis that encompasses both transactions in which a structured entity is initiated by us with or without the involvement of third parties and those in which we enter into contractual relations with an already existing structured entity with or without the involvement of third parties. Consolidation decisions are reviewed as necessary and at least once a year. The list of all consolidated structured entities forms part of the list of shareholdings.
Consolidated structured entities
The following structured entities were consolidated as at the balance sheet date:
- Kaith Re Ltd., Hamilton, Bermuda
- LI RE, Hamilton, Bermuda
Kaith Re Ltd. is a so-called segregated accounts company (SAC), the sole object of which is the securitisation of reinsurance risks in the form of investment products. Under this transformation a complete underwriting risk transfer always takes place to the investor in question. In a SAC further segregated accounts exist under a general account; it is in these segregated accounts, which for liability purposes are entirely separate from one another and from the general account, that the aforementioned securitisations take place for the investors.
Pursuant to IFRS 10 we consider the general account and the segregated accounts to be separate units to which the principles of so-called “silo accounting” are applied. In accordance with this concept, Hannover Re is required to consolidate the general account of Kaith Re Ltd. and is contractually responsible for the fees due to external service providers that are to be covered from the general account’s own funds. Each individual segregated account is to be examined separately by the parties concerned (investors) with an eye to a consolidation requirement and is to be consolidated according to the particular contractual arrangements in each case.
LI RE is a segregated account of Kaith Re Ltd., the purpose of which – as with all segregated accounts under Kaith Re Ltd. – is the securitisation of underwriting risks. In contrast to the other segregated accounts, the sole investor and hence the risk carrier of LI RE is the Hannover Re Group through its subsidiary Leine Investment SICAV-SIF, Luxembourg.
As at the balance sheet date Hannover Re had not rendered any financial or other support for a consolidated structured entity. Hannover Re does not intend to render financial or other support for one or more of such entities without being contractually required to do so.
Unconsolidated structured entities
The business relations of Hannover Re Group companies with structured entities set out below do not give rise to consolidation because the criteria for control pursuant to IFRS 10 contained in our consolidation principles are not met.
Investing activities and investments in catastrophe bonds (ILS)
Within the scope of its investment activities Hannover Re has participated since 1988 inter alia in numerous structured entities. These are predominantly special purpose entities in the form of funds, which for their part transact certain types of equity and debt capital investments. These investments encompass private equity funds, fixed income funds, collateralised debt obligations, real estate funds, index funds and other public funds. The volume of these transactions is derived from the book values of the respective investments and amounted to EUR 3,239.4 million (EUR 2,893.3 million) as at the balance sheet date. The maximum risk of loss corresponds to the book values.
Hannover Re participates through its subsidiary Leine Investment SICAV-SIF, Luxembourg, in a number of structured entities that issue catastrophe bonds for the securitisation of catastrophe risks by investing in such bonds. Leine Investment General Partner S.à r.l. is the managing partner of the asset management company Leine Investment SICAV-SIF, the business object of which is to build, hold and manage a portfolio of insurance-linked securities (catastrophe bonds) – including for third-party investors outside the Group. In addition, a portfolio of such securities is also managed by Hannover Insurance-Linked Securities GmbH & Co. KG, Hannover. The volume of these transactions is derived from the book values of the respective investments and amounted to EUR 70.3 million (EUR 108.3 million) as at the balance sheet date. The maximum risk of loss corresponds to the book values.
Retrocession and securitisation of reinsurance risks
The securitisation of reinsurance risks is largely structured through the use of structured entities.
The catastrophe bond (CAT bond) Eurus III was issued by Hannover Re for the purpose of transferring to the capital market peak natural catastrophe exposures deriving from European windstorm events. The CAT bond, which had a volume of nominally EUR 100.0 million and a maturity date of 31 March 2016, was placed by Eurus III Ltd., a special purpose entity domiciled in Hamilton / Bermuda. The structured entity was fully funded by contractually defined investments in the form of cash and equivalent liquid assets. Given that the maximum liability of the structured entity was therefore wholly collateralised, there was no risk of loss for Hannover Re. The transaction had ended as at the balance sheet date.
By way of its “K” transactions Hannover Re has raised underwriting capacity for catastrophe risks on the capital market. The “K Cession”, which was placed with investors in North and South America, Europe and Asia, involves a quota share cession on worldwide natural catastrophe business as well as aviation and marine risks. Of the total volume of the “K Cession”, a large part equivalent to EUR 384.4 million (EUR 304.0 million) was securitised via structured entities as at the balance sheet date. The transaction has an indefinite term and can be cancelled annually by the investors. Segregated accounts of Kaith Re Ltd. are used for transformer purposes for part of this transaction. Hannover Re also uses further segregated accounts of Kaith Re Ltd. and other structured entities outside the Group for various retrocessions of both its traditional and ILS covers, which in each case are passed on to institutional investors in securitised form. The volume of these transactions is measured by the ceded exposure limit of the underlying retrocession agreements and amounted to altogether EUR 1,844.7 million (EUR 1,872.6 million) as at the balance sheet date. The structured entities are in all cases fully funded by contractually defined investments in the form of cash and equivalent liquid assets. Given that the entire exposure limit of the structured entities is therefore wholly collateralised in each case, there is no risk of loss for Hannover Re.
Collateralised fronting (ILS))
As part of its extended Insurance-Linked Securities (ILS) activities, Hannover Re has concluded so-called collateralised fronting arrangements under which risks assumed from ceding companies are passed on to institutional investors outside the Group using structured entities. The purpose of such transactions is to directly transfer clients’ business. The volume of the transactions is derived from the ceded exposure limit of the underlying retrocession agreements and amounted to EUR 4,914.2 million (EUR 4,701.0 million) as at the balance sheet date. Part of the ceded exposure limit is funded and collateralised by contractually defined investments in the form of cash and equivalent liquid assets, while a further part remains uncollateralised or is collateralised by less liquid assets. The maximum risk of loss from these transactions is derived from the uncollateralised exposure limit and the credit risk of the collateral and amounted to EUR 2,860.6 million (EUR 2,779.9 million) as at the balance sheet date. This does not, however, correspond to the economic risk of loss, which is established using recognised actuarial methods. The expected loss on a modelled basis in a worst-case scenario of 10,000 years amounts to at most EUR 50.0 million (EUR 50.0 million).
The book values of the assets and liabilities from the specified transactions with unconsolidated structured entities were as follows as at the balance sheet date:
| Book values from business relations with unconsolidated structured entities | ||||||
| 31.12.2016 | ||||||
|---|---|---|---|---|---|---|
| in EUR thousand | General investing activities | Investment in catastrophe bonds (ILS) | Retrocession: securitisations and ILS transactions |
|||
| Assets | ||||||
| Fixed-income securities – held to maturity | 996 | – | – | |||
| Fixed-income securities – loans and receivables | 11,870 | – | – | |||
| Fixed-income securities – available for sale | 1,782,279 | – | – | |||
| Fixed-income securities – at fair value through profit or loss | – | 70,291 | – | |||
| Equity securities – available for sale | 255,853 | – | – | |||
| Real estate and real estate funds | 390,207 | – | – | |||
| Other invested assets | 712,434 | – | – | |||
| Short-term investments | 85,778 | – | – | |||
| Reinsurance recoverables on unpaid claims | – | – | 398,113 | |||
| Prepaid reinsurance premium | – | – | 49,037 | |||
| Accounts receivable | – | – | 7,558 | |||
| Total assets | 3,239,417 | 70,291 | 454,708 | |||
| Liabilities | ||||||
| Reinsurance payable | – | – | 241,597 | |||
| Total liabilities | – | – | 241,597 | |||
| Book values from business relations with unconsolidated structured entities | ||||||
| 31.12.2015 | ||||||
|---|---|---|---|---|---|---|
| in EUR thousand | General investing activities | Investment in catastrophe bonds (ILS) | Retrocession: securitisations and ILS transactions |
|||
| Assets | ||||||
| Fixed-income securities – held to maturity | 968 | – | – | |||
| Fixed-income securities – loans and receivables | 16,357 | – | – | |||
| Fixed-income securities – available for sale | 1,628,911 | – | – | |||
| Fixed-income securities – at fair value through profit or loss | – | 108,273 | – | |||
| Equity securities – available for sale | 139,745 | – | – | |||
| Real estate and real estate funds | 371,254 | – | – | |||
| Other invested assets | 717,253 | – | – | |||
| Short-term investments | 18,763 | – | – | |||
| Reinsurance recoverables on unpaid claims | – | – | 137,892 | |||
| Prepaid reinsurance premium | – | – | 29,869 | |||
| Accounts receivable | – | – | 188 | |||
| Total assets | 2,893,251 | 108,273 | 167,949 | |||
| Liabilities | ||||||
| Reinsurance payable | – | – | 32,256 | |||
| Total liabilities | – | – | 32,256 | |||
The income and expenses from business relations with unconsolidated structured entities are shown in investment income insofar as they result from general investment activities or investments in catastrophe bonds and are recognised in the technical account insofar as they are attributable to retrocessions and securitisations.
As at the balance sheet date Hannover Re had not rendered any financial or other support for an unconsolidated structured entity. Hannover Re does not intend to render financial or other support for one or more of such entities without being contractually required to do so.
With regard to commitments and obligations that we do not consider to be support, particularly outstanding capital commitments from special investments, please see our remarks in Section 8.7 “Contingent liabilities and commitments”.