On 20 July 2017 Hannover Re acquired all the shares in Argenta Holdings Limited, London, UK. The purchase price of the shares amounted to EUR 162.2 million. Along with this company, Hannover Re also acquired its interests in various subsidiaries. The primary business object of these companies is the assumption of insurance risks and management of Syndicate 2121 at Lloyd’s. In addition, third-party services are performed for other Lloyd’s syndicates and companies.
The business was included in the consolidated financial statement for the first time as at 1 July 2017. For the purposes of initial consolidation and in accordance with appropriate measurement methods, the fair values of the acquired assets and assumed liabilities were to some extent established on the basis of assumptions and estimations. The assumptions and estimates that had been made were put into concrete terms as at the balance sheet date, and initial consolidation was therefore finalised within the measurement period.
The assets and liabilities of the acquired business as at the date of initial consolidation are as follows:
|Assets and liabilities of the acquired business|
|in EUR thousand||1.7.2017|
|Fixed-income securities – available for sale||70,792|
|Equity securities – available for sale||11,506|
|Other invested assets||1|
|Cash and cash equivalents||70,781|
|Reinsurance recoverables on unpaid claims||41,757|
|Deferred tax assets||3,759|
|Accrued interest and rent||180|
|Loss and loss adjustment expense reserve||164,006|
|Deferred tax liabilities||15,000|
In view of the fact that the fair values of the recognised, identifiable assets, liabilities and contingent commitments fall short of the acquisition costs associated with the transaction, the capital consolidation gave rise to positive goodwill of EUR 28.8 million which in accordance with IFRS 3.32 results in an intangible asset and is tested annually for impairment pursuant to IAS 36. The other assets include gross receivables of EUR 11.3 million, for which no bad debt provisions were established.
The gross written premium of the assumed business from the date of initial consolidation until the balance sheet date amounted to EUR 62.3 million. For the same period a positive result in a minimal amount was booked from the assumed business.
Within the 95.2%-owned US subgroup Hannover Re Real Estate Holdings, Inc., the special purpose property company 320AUS LLC, Wilmington, was established via the subsidiary GLL HRE CORE Properties, L.P., for the purpose of real estate acquisition. An amount of roughly EUR 83.3 million was invested in this connection. In addition, Hannover Re Real Estate Holdings, Inc., Orlando, acquired an interest in HR US Infra Equity LP, Wilmington, the business object of which is to participate in US infrastructure investments.
In the third quarter of 2017 Hannover Re Global Alternatives GmbH & Co. KG, Hannover, took a 100% stake in the company PAG Real Estate Asia Select Fund Limited, George Town, Cayman Islands, for the purpose of acquiring real estate. The company acquired 99.7% of the shares in Orion No. 1 Professional Investors Private Real Estate Investment LLC, Seoul, South Korea, and 99.0% of the shares in Peace G.K., Tokyo, Japan. A total amount in the order of EUR 113.6 million was invested in this connection. In addition, Hannover Re Global Alternatives GmbH & Co. KG participated in HR US Infra Debt LP, George Town, Cayman Islands, which enters into US infrastructure investments.
In the fourth quarter of 2017 all shares in the special purpose property companies 3541 PRG s.r.o. as well as Škodův palác s.r.o., both Prague, Czech Republic, were acquired via HR GLL Europe Holding S.à.r.l., Luxembourg, for the purpose of acquiring real estate. Škodův palác was subsequently merged into 3541 PRG with no effect on Group net income. In addition, HR GLL Europe Holding S.à.r.l., Luxembourg, and HR GLL Central Europe GmbH & Co. KG, Munich, acquired all shares in the special purpose property company 92601 BTS s.r.o., Bratislava, Slovakia, in December 2017, again for the purpose of acquiring real estate. Altogether, an amount of around EUR 135 million was invested in this connection.