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6.12 Debt and subordinated capital
On 15 September 2014 Hannover Rück SE placed a EUR 500.0 million subordinated bond on the European capital market. The issue has a perpetual maturity with a first scheduled call option on 26 June 2025 and may be redeemed at each coupon date thereafter. It carries a fixed coupon of 3.375% p. a. until 26 June 2025, after which the interest rate basis changes to 3-month EURIBOR + 325 basis points.
On 20 November 2012 Hannover Rück SE placed a EUR 500.0 million subordinated bond in the European capital market via its subsidiary Hannover Finance (Luxembourg) S.A. The bond has a maturity of approximately 30 years with a first scheduled call option on 30 June 2023 and may be redeemed at each coupon date thereafter. It carries a fixed coupon of 5.00% p. a. until this date, after which the interest rate basis changes to a floating rate of 3-month EURIBOR + 430 basis points.
On 14 September 2010 Hannover Rück SE placed a subordinated bond on the European capital market through its subsidiary Hannover Finance (Luxembourg) S.A. This subordinated debt of EUR 500.0 million has a maturity of 30 years with a first scheduled call option after ten years and may be redeemed at each coupon date thereafter. The bond carries a fixed coupon of 5.75% in the first ten years, after which the interest rate basis changes to a floating rate of 3-month EURIBOR + 423.5 basis points.
Altogether three (three) subordinated bonds were recognised as at the balance sheet date with an amortised cost of EUR 1,490.8 million (EUR 1,489.9 million).
| Debt and subordinated capital | |||||||
| in EUR thousand | 2016 | ||||||
|---|---|---|---|---|---|---|---|
| Subordinated loans | Coupon | Maturity | Currency | Amortised cost | Fair value measurement | Accrued interest | Fair value |
| Hannover Rück SE, 2014 | 3.375 | n / a | EUR | 494,471 | 17,154 | 8,692 | 520,317 |
| Hannover Finance (Luxembourg) S.A., 2012 | 5.00 | 2043 | EUR | 497,511 | 81,264 | 12,603 | 591,378 |
| Hannover Finance (Luxembourg) S.A., 2010 | 5.75 | 2040 | EUR | 498,859 | 71,986 | 8,507 | 579,352 |
| 1,490,841 | 170,404 | 29,802 | 1,691,047 | ||||
| Debt | 313,377 | 3,179 | 1,218 | 317,774 | |||
| Total | 1,804,218 | 173,583 | 31,020 | 2,008,821 | |||
| Debt and subordinated capital | |||||||
| in EUR thousand | 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Subordinated loans | Coupon | Maturity | Currency | Amortised cost |
Fair value measurement |
Accrued interest |
Fair value |
| Hannover Rück SE, 2014 | 3.375 | n / a | EUR | 493,950 | 4,025 | 8,668 | 506,643 |
| Hannover Finance (Luxembourg) S.A., 2012 |
5.00 | 2043 | EUR | 497,246 | 82,054 | 12,568 | 591,868 |
| Hannover Finance (Luxembourg) S.A., 2010 |
5.75 | 2040 | EUR | 498,657 | 78,838 | 8,484 | 585,979 |
| 1,489,853 | 164,917 | 29,720 | 1,684,490 | ||||
| Debt | 308,483 | 6,130 | 1,188 | 315,801 | |||
| Other long-term liabilities |
1 | – | – | 1 | |||
| Total | 1,798,337 | 171,047 | 30,908 | 2,000,292 | |||
The aggregated fair value of the extended subordinated loans is based on quoted, active market prices. If such price information was not available, fair value was determined on the basis of the recognised effective interest rate method or estimated using other financial assets with similar rating, duration and return characteristics. Under the effective interest rate method the current market interest rate levels in the relevant fixed-interest- rate periods are always taken as a basis.
| Maturities of financial liabilities | |||||||
| 2016 | |||||||
|---|---|---|---|---|---|---|---|
| in EUR thousand | Less than three months | Three months to one year | One to five years | Five to ten years | Ten to twenty years | More than twenty years | No maturity |
| Other financial liabilities1 | 65,972 | 219,933 | 985 | – | – | 643 | – |
| Debt | 40,165 | 63,754 | 185,234 | 24,224 | – | – | – |
| Subordinated loans | – | – | – | – | – | 996,370 | 494,471 |
| Total | 106,137 | 283,687 | 186,219 | 24,224 | – | 997,013 | 494,471 |
| 1 Excluding minority interests in partnerships, sundry non-technical provisions and derivative financial instruments; the maturities of the latter two items are broken down separately | |||||||
| Maturities of financial liabilities | |||||||
| 2015 | |||||||
| in EUR thousand | Less than three months | Three months to one year | One to five years | Five to ten years | Ten to twenty years | More than twenty years | No maturity |
| Other financial liabilities1 | 55,112 | 256,058 | 893 | – | – | – | – |
| Debt | – | 39,047 | 246,117 | 23,319 | – | – | – |
| Subordinated loans | – | – | – | – | – | 995,903 | 493,950 |
| Other long-term liabilities | – | 1 | – | – | – | – | – |
| Total | 55,112 | 295,106 | 247,010 | 23,319 | – | 995,903 | 493,950 |
| 1 Excluding minority interests in partnerships, sundry non-technical provisions and derivative financial instruments; the maturities of the latter two items are broken down separately | |||||||
| Net gains and losses from debt and subordinated capital | ||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
|---|---|---|---|---|---|---|
| in EUR thousand | Ordinary income / expenses | Amortisation | Net result | |||
| Debt | (11,967) | (11,862) | 780 | 732 | (11,187) | (11,130) |
| Subordinated loans | (70,706) | (80,954) | (987) | (3,362) | (71,693) | (84,316) |
| Total | (82,673) | (92,816) | (207) | (2,630) | (82,880) | (95,446) |
The ordinary expenses principally include interest expenses of nominally EUR 70.7 million (EUR 81.0 million) resulting from the issued subordinated debt.