Hannover Re2011年年度報告.pdf

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1、Annual Report 2011Annual Report 2011in EUR million2011+/previous year2010200920082007Gross written premium9,130.2+5.9%8,618.28,329.97,328.76,652.6Net premium earned6,965.6+9.4%6,366.66,357.65,429.44,979.3Underwriting result(151.9)18.4(14.5)78.9(111.1)Allocation to the equalisation reserve and simila

2、r provisions292.6+107.1%141.3170.633.6(309.1)Investment result 953.9+10.0%867.2740.066.9451.2Pre-tax profit 273.553.6%589.8363.7(104.2)438.1Profit or loss for the financial year270.233.5%406.3259.0(209.6)272.0Investments27,005.6+15.8%23,330.920,723.217,885.118,106.1Capital and reserve11,381.71,380.9

3、1,378.81,378.81,585.8Subordinated liabilities1,300.01,300.0800.0500.0500.0Equalisation reserve and similar provisions2,044.6+16.7%1,752.01,610.71,440.11,406.5Net technical provisions21,142.7+20.1%17,605.715,817.914,145.013,286.7Total capital,reserves and technical provisions25,869.0+17.4%22,038.619,

4、607.417,463.916,779.0Number of employees1,041+241,017931855787Retention77.5%76.4%77.8%75.2%73.9%Loss ratio275.8%73.0%75.4%74.0%80.0%Expense ratio226.9%26.6%25.9%24.5%25.2%Combined ratio2102.7%99.6%101.3%98.5%105.2%Key figures 1 Excluding disposable profit2 Excluding life reinsurance 1Hannover Re ann

5、ual report 2011 CONTENTSBoards and officers 25 Management report 656Macroeconomic climate 7Business development 9Development of the individual lines of business 11Investments 15Human resources 16Sustainability 18Risk report 21Enterprise management 29Forecast 49Other information 55Accounts 5763Balanc

6、e sheet 58Profit and loss account 62 Notes 6482Valuation of assets 64Valuation of liabilities 65Currency conversion 66Miscellaneous 66Notes on assets 67Notes on liabilities 72Notes on the profit and loss account 77Other information 80 Further information 8392Auditors report 83Responsibility statemen

7、t 84Report of the Supervisory Board 85Glossary 89ContentsManagement reportAccountsNotesFurther informationBoards and officers2Hannover Re annual report 2011BOARDS AND OFFICERS EXECUTIVE BOARD Executive Board(Vorstand)Ulrich Wallin Chairman of the Executive Board Hannover Rckversicherung AG,HannoverC

8、hairman of the Executive Board E+S Rckversicherung AG,Hannover Chairman of the Board of Directors Hannover Life Reassurance Company of America,Orlando,USAChairman of the Board of Directors Hannover Reinsurance(Ireland)Limited,Dublin,Ireland Chairman of the Board of Directors Hannover Re(Bermuda)Ltd.

9、,Hamilton,BermudaMember of the Board of Directors Hannover Life Reassurance(Ireland)Limited,Dublin,IrelandMember of the Board of Directors Hannover Life Re of Australasia Ltd,Sydney,AustraliaMember of the Board of Management Talanx AG,HannoverMember of the Advisory Board Barmenia Allgemeine Versiche

10、rungs-AG,Wuppertal1Member of the Advisory Board Barmenia Krankenversicherung a.G.,Wuppertal1Member of the Advisory Board Barmenia Lebensversicherung a.G.,Wuppertal1Andr ArragoMember of the Executive Board Hannover Rckversicherung AG,HannoverMember of the Executive Board E+S Rckversicherung AG,Hannov

11、erChairman of the Board of Directors Hannover ReTakaful B.S.C.(c),Manama,BahrainDeputy Chairman of the Board of Directors Hannover Re(Bermuda)Ltd.,Hamilton,BermudaMember of the Board of Directors Hannover Re Services Japan K.K.,Tokyo,JapanMember of the Board of Directors Sciemus Power MGA Ltd.,Londo

12、n,United Kingdom1Member of the Supervisory Board April Group,Lyon,France1Member of the Supervisory Board Groupement Franais de Caution,Grenoble,France1Member of the Supervisory Board Mutuelle des Transports Assurances(MTA),Paris,France1Dr.Wolf BeckeMember of the Executive Board(until 31 December 201

13、1)Hannover Rckversicherung AG,HannoverMember of the Executive Board(until 31 December 2011)E+S Rckversicherung AG,HannoverChairman of the Board of Directors Hannover Life Reassurance Africa Limited,Johannesburg,South AfricaChairman of the Board of Directors Hannover Life Reassurance Bermuda Ltd.,Ham

14、ilton,BermudaChairman of the Board of Directors Hannover Life Reassurance(Ireland)Limited,Dublin,IrelandVice Chairman of the Board of Directors Hannover Life Reassurance Company of America,Orlando,USADeputy Chairman of the Board of Directors Hannover Life Re of Australasia Ltd,Sydney,AustraliaMember

15、 of the Board of Directors Hannover Reinsurance Group Africa(Pty)Limited,Johannesburg,South AfricaManaging Director(until 31 December 2011)Hannover Rck Beteiligung Verwaltungs-GmbH,HannoverBoards and officers3Hannover Re annual report 2011 EXECUTIVE BOARD BOARDS AND OFFICERSClaude ChvreMember of the

16、 Executive Board(since 1 November 2011)Hannover Rckversicherung AG,HannoverMember of the Executive Board(since 1 November 2011)E+S Rckversicherung AG,HannoverMember of the Board of Directors Hannover Life Re of Australasia Ltd,Sydney,AustraliaMember of the Board of Directors Hannover Re Services Jap

17、an K.K.,Tokyo,JapanMember of the Supervisory Board Hannover Life Re AG,HannoverJrgen Grber Member of the Executive Board Hannover Rckversicherung AG,HannoverMember of the Executive Board E+S Rckversicherung AG,HannoverChairman of the Board of Directors Hannover Reinsurance Africa Limited,Johannesbur

18、g,South AfricaChairman of the Board of Directors Hannover Reinsurance Group Africa(Pty)Limited,Johannesburg,South AfricaChairman of the Board of Directors International Insurance Company of Hannover Limited,Bracknell,United KingdomMember of the Board of Directors Energi Holdings Inc.,Peabody,USAMemb

19、er of the Board of Directors Hannover Re(Guernsey)PCC Ltd.,St.Peter Port,GuernseyMember of the Board of Directors Hannover Reinsurance(Ireland)Limited,Dublin,IrelandMember of the Supervisory Board Talanx International AG,HannoverDr.Klaus Miller Member of the Executive Board Hannover Rckversicherung

20、AG,HannoverMember of the Executive Board E+S Rckversicherung AG,HannoverChairman of the Board of Directors Hannover Life Reassurance(UK)Limited,Virginia Water,United KingdomChairman of the Supervisory Board Hannover Life Re AG,HannoverDr.Michael Pickel Member of the Executive Board Hannover Rckversi

21、cherung AG,HannoverMember of the Executive Board E+S Rckversicherung AG,HannoverChairman of the Board of Directors Glencar Underwriting Managers,Inc.,Itasca,USAChairman of the Board of Directors Hannover Re Services Italy S.r.l.,Milan,ItalyChairman of the Board of Directors Hannover Re Services USA,

22、Inc.,Illinois,USAChairman of the Board of Directors Mediterranean Reinsurance Services Ltd.,Hong Kong,ChinaManaging Director Hannover Rck Beteiligung Verwaltungs-GmbH,HannoverRoland Vogel Member of the Executive Board Hannover Rckversicherung AG,HannoverMember of the Executive Board E+S Rckversicher

23、ung AG,HannoverChairman of the Board of Directors Hannover Finance,Inc.,Wilmington,USAChairman of the Board of Directors Hannover Finance(Luxembourg)S.A.,LuxembourgChairman of the Board of Directors Hannover Finance(UK)Limited,Virginia Water,United KingdomDeputy Chairman of the Board of Directors Ha

24、nnover Life Reassurance Bermuda Ltd.,Hamilton,BermudaMember of the Board of Directors Hannover Life Reassurance Company of America,Orlando,USAMember of the Board of Directors Hannover Life Reassurance(Ireland)Limited,Dublin,IrelandMember of the Board of Directors Hannover Life Reassurance(UK)Limited

25、,Virginia Water,United KingdomMember of the Board of Directors Hannover Re(Bermuda)Ltd.,Hamilton,BermudaMember of the Board of Directors Hannover Reinsurance(Ireland)Limited,Dublin,IrelandMember of the Board of Directors International Insurance Company of Hannover Limited,Bracknell,United KingdomMem

26、ber of the Supervisory Board Hannover Life Re AG,HannoverMember of the Supervisory Board Talanx Asset Management GmbH,CologneMember of the Advisory Board Hannover Finanz GmbH,HannoverMember of the Advisory Board WeHaCo Unternehmensbeteiligungs-GmbH,Hannover1 Memberships of supervisory boards and com

27、parable control boards required by law at other companies in Germany and abroadBoards and officers4Hannover Re annual report 2011BOARDS AND OFFICERS SUPERVISORy BOARDSupervisory Board(Aufsichtsrat)Herbert K.Haas1,2,4 BurgwedelChairman Chairman of the Board of Management Talanx AGChairman of the Boar

28、d of Management HDI Haftpflichtverband der Deutschen Industrie V.a.G.Chairman of the Supervisory Board E+S Rckversicherung AG,HannoverChairman of the Supervisory Board HDI Direkt Versicherung AG,HannoverChairman of the Supervisory Board HDI-Gerling Firmen und Privat Versicherung AG,HannoverChairman

29、of the Supervisory Board HDI-Gerling Industrie Versicherung AG,HannoverChairman of the Supervisory Board HDI-Gerling Lebensversicherung AG,CologneChairman of the Supervisory Board HDI-Gerling Leben Betriebsservice GmbH,CologneChairman of the Supervisory Board Talanx Deutschland AG,HannoverChairman o

30、f the Supervisory Board Talanx International AG,HannoverChairman of the Supervisory Board Talanx Systeme AG,HannoverMember of the Advisory Board Norddeutsche Landesbank Girozentrale,Hannover5Dr.Klaus Sturany1,4 DortmundDeputy ChairmanMember of various Supervisory Boards Member of the Supervisory Boa

31、rd Bayer AG,Leverkusen5Member of the Supervisory Board Heidelberger Druckmaschinen Aktiengesellschaft,Heidelberg5Member of the Supervisory Board sterreichische Industrieholding AG,Vienna,Austria5Member of the Administrative Board Sulzer AG,Winterthur,Switzerland5Wolf-Dieter Baumgartl1,2,4BergChairma

32、n of the Supervisory Board Talanx AGChairman of the Supervisory Board HDI Haftpflichtverband der Deutschen Industrie V.a.G.Member of the Advisory Board E+S Rckversicherung AG,HannoverMember of the Administrative Board HDI Assicurazioni S.p.A.,Rome,ItalyUwe Kramp6HannoverKarl Heinz Midunsky4Gauting(u

33、ntil 3 May 2011)Former Corporate Vice President and Treasurer Siemens AG Ass.jur.Otto Mller6HannoverMember of the Supervisory Board Talanx AG,Hannover5Hannover Re annual report 2011SUPERVISORy BOARD BOARDS AND OFFICERSDr.Andrea PollakVienna,Austria(since 3 May 2011)Independent Management Consultant

34、Chairwoman of the Advisory Board Kuchen-Peter Backwaren GmbH,Hagenbrunn,Austria5Deputy Chairwoman of the Supervisory Board Birner Gesellschaft m.b.H.,Perchtoldsdorf,Austria5Dr.Immo Querner HannoverMember of the Board of Management Talanx AGMember of the Board of Management HDI Haftpflichtverband der

35、 Deutschen Industrie V.a.G.Chairman of the Supervisory Board Talanx Asset Management GmbH,CologneDeputy Chairman of the Supervisory Board AmpegaGerling Investment GmbH,CologneDeputy Chairman of the Supervisory Board ASPECTA Assurance International AG(Liechtenstein),LiechtensteinDeputy Chairman of th

36、e Supervisory Board ASPECTA Assurance International AG(Luxembourg)S.A.,LuxembourgDeputy Chairman of the Supervisory Board HDI Asekuracja T.U.S.A.,Warsaw,PolandDeputy Chairman of the Supervisory Board HDI-Gerling Lebensversicherung AG,CologneDeputy Chairman of the Supervisory Board Talanx Immobilien

37、Management GmbH,CologneDeputy Chairman of the Supervisory Board Talanx Reinsurance Broker AG,HannoverMember of the Supervisory Board E+S Rckversicherung AG,HannoverMember of the Supervisory Board HDI Direkt Versicherung AG,HannoverMember of the Supervisory Board HDI-Gerling Firmen und Privat Versich

38、erung AG,HannoverMember of the Supervisory Board HDI-Gerling Leben Betriebsservice GmbH,CologneMember of the Supervisory Board HDI-Gerling Zycie T.U.S.A.,Warsaw,PolandMember of the Supervisory Board Talanx Deutschland AG,HannoverMember of the Supervisory Board Talanx Finanz(Luxembourg)S.A.,Luxembour

39、gMember of the Supervisory Board Talanx International AG,HannoverMember of the Supervisory Board Talanx Service AG,HannoverMember of the Supervisory Board Talanx Systeme AG,HannoverDr.Erhard Schipporeit2,3HannoverMember of various Supervisory Boards Member of the Supervisory Board BDO AG,Hamburg5 Me

40、mber of the Supervisory Board Deutsche Brse AG,Frankfurt am Main5Member of the Supervisory Board Fuchs Petrolub AG,Mannheim5Member of the Supervisory Board HDI Haftpflichtverband der Deutschen Industrie V.a.G.,HannoverMember of the Supervisory Board SAP AG,Walldorf5Member of the Supervisory Board Ta

41、lanx AG,HannoverMember of the Board of Directors Fidelity Funds SICAV,Luxembourg5Member of the Board of Directors TUI Travel,PLC,London,United Kingdom5Gert Wchtler6Burgwedel1 Member of the Standing Committee2 Member of the Finance and Audit Committee3 Independent financial expert on the Finance and

42、Audit Committee4 Member of the Nomination Committee5 Memberships of supervisory boards and comparable control boards required by law at other companies in Germany and abroad6 Staff representativeBoards and officers6Hannover Re annual report 2011For the reinsurance industry the 2011 financial year wa

43、s most notable for extraordinarily heavy strains from natural disasters.Only in 2005 were the insured catastrophe losses even higher.For Hannover Re,too,the year under review was the second most expensive in its history with net major loss expenditure of EUR 552 million.Despite a protracted difficul

44、t capital market climate,the 2011 investment result increased by 10 percent.Given the challenging nature of the year under review overall,it is highly gratifying that Hannover Re was able to generate a profit for the financial year of EUR 270 million.The companys financial strength was also further

45、boosted in 2011.Total capital,reserves and technical provisions grew by 17 percent to around EUR 26 billion.Management report of Hannover Re7Hannover Re annual report 2011MACROECONOMIC CLIMATE MANAgEMENT REpORThealthy public finances and a strong ability to compete inter-nationally,such as Germany,t

46、he Netherlands,Finland and Austria,delivered above-average increases in output.The situ ation was a different one in Greece,Ireland,Portugal and Spain,where the tendencies towards recession became more marked on account of intensive consolidation efforts.Particu-larly dramatic in 2011 was the plight

47、 of Greece,which was only able to avert a sovereign default thanks to considerable assistance from the European Union.The onset of this eco-nomic slowdown was also apparent on labour markets.Most notably,countries on the Eurozone periphery were faced with high jobless levels that continued to rise.G

48、ermanyIn Germany the economic upswing was sustained in the year under review.According to figures published by the Federal Statistical Office,real gross domestic product grew by 3.0%in the full year.Germany was thus a front-runner among the major industrial nations and delivered healthy growth contr

49、ibutions to gross domestic product within the area of the single currency.The most significant driver of growth for the German econ-omy was domestic demand.Private consumption de veloped fa vourably and disposable incomes rose.The state of the la-bour market,which benefited from the surging economy,

50、also im proved.The consistently good year-end results cannot,how-ever,conceal the fact that in Germany too economic prospects had become gloomier by the close of the year.AsiaChina continued to enjoy very vigorous expansion,although the pace slowed somewhat as the year progressed owing to a more res

51、trictive monetary policy.All in all,the economic outlook remains positive.The Japanese economy was heavily affected by the earthquake and nuclear reactor disaster in the first half of 2011.After suffering a slump in output,Japans economy moved back into growth in the third quarter.The labour market

52、also saw a revival.Capital marketsThe European sovereign debt crisis became a renewed focus of concern for investors from August 2011 onwards.Overall,the 2011 financial year was again characterised by an expan-sionary monetary policy in our main currency areas.In the Eurozone the first steps towards

53、 a more restrictive monetary policy were undone in the second half of the year,causing the key interest rate for the euro area to slip back to the level at the end of 2010.The yield on 10-year German government bonds fell to 1.7%for a time.This level was assisted not only Macroeconomic climateA more

54、 restrictive economic policy as well as debt problems affecting many advanced national economies led to a slow-down in the economic recovery in the year under review.Uncertainties as to the outlook for the global economy caused the climate in the major economic areas to deteriorate overall in the co

55、urse of the year.The European sovereign debt crisis was a particularly significant factor in this regard.Yet doubts about the state of the financial sector also played a part in the more depressed mood.Economic developments again varied widely from region to region.Emerging markets once more proved

56、to be a pillar of the global economy in 2011,although they were unable to maintain the strong growth of previous years.It remains the case that Asian countries recorded the most vigorous growth rates among the emerging markets.The industrial nations were faced with considerable difficulties.Nagging

57、structural problems and the necessity of fiscal consolidation were re-flected in sometimes sharp drops in economic output.All in all,the global economy is estimated to have grown by around 3.8%compared to 5.1%in the previous year.USAIn the United States the economic upturn gathered pace as the year

58、progressed,and the risk of sliding back into recession consequently receded into the background.Most sig nificantly,private consumption remained robust despite muted income growth.A key pillar of the US economy,however,was gross investment in fixed assets,which includes the acquisition of durable an

59、d reproducible means of production;such invest-ments made an appreciable contribution to the growth in gross domestic product(GDP)recorded in 2011.Prospects on the labour market have also picked up again of late,thereby con-firming the at least moderate expansion of the US econ omy.Nevertheless,the

60、US still struggled in the face of struc tural difficulties,levels of personal and public debt continued to be high and sales figures on real estate markets remained very subdued.Overall,GDP rose by 1.7%in the year under review.EuropeEconomic developments in the Eurozone showed a very mixed picture i

61、n the year under review.The economy cooled appre-ciably after a brisk start to 2011.An increasingly restrictive financial policy as well as uncertainties surrounding the un-folding of the European sovereign debt crisis crippled internal economic activity.Export-oriented countries with relatively Man

62、agement report8Hannover Re annual report 2011MANAgEMENT REpORT MACROECONOMIC CLIMATEby a monetary policy that remained committed to a strong supply of liquidity but also by a preference among investors for government bonds of the highest quality.Government bonds issued by a number of other European

63、countries came under increasing pressure on account of inadequate actions to bring about fiscal consolidation;this was reflected accordingly in the spreads on bond markets.The European Central Bank sought to stabilise the capital market by buying up govern-ment bonds.US treasury bonds also fell to r

64、ecord lows with yields of less than 2%.Despite the move by Standard&Poors to downgrade the credit rating of the United States to“AA+”,the US profited from the dollars status as the global reserve currency and the perception of US treasuries as a safe haven investment.The picture on equity markets wa

65、s a mixed one.Considerable volatility and uncertainty were the hallmarks of the market environment.The losses seen in March in response to the nuclear disaster in Japan were initially made good again.In the second half of the year,however,the mood again became darker;along with the European sovereig

66、n debt crisis,equity markets were increasingly weighed down by fears of reces-sion.While the DAX closed 2011 with a loss of 15%,the US Dow Jones Index surpassed the 2010 year-end mark by 5%.After showing strength early on in the year,the euro ultim-ately remained broadly unchanged against the US dol

67、lar,pound sterling and the Canadian and Australian dollar over the course of the full 2011 financial year.Industry-specific environment 2011 was a challenging year for the international insurance industry.Owing to numerous natural disasters,it went down as the second-most expensive year in industry

68、history.Experts anticipate insured catastrophe losses of around USD 110 bil-lion;in 2005 the figure was in the order of USD 125 billion.Yet international insurers proved to be robust:despite consid-erable loss burdens the capital resources of primary insurers and reinsurers remained on a high level.

69、Overall,in a difficult environment insurance undertakings demonstrated their role as a stabilising element for the economy.The European Commissions Solvency II Directive continues to be of great significance to the insurance industry.Solvency II is intended to introduce European insurance regulation

70、 and a risk-based solvency system;these moves will change the insurance landscape in Europe.The specifics are currently under consideration by various government bodies in consult-ation with the insurance industry.The new regulatory model of Solvency II is to be implemented from 2013 onwards and wil

71、l be fully effective from 2014.Even at this late stage before its launch,the European insurance and reinsurance federation still sees some imperfections in the regulations that need to be remedied.The Solvency II Directive will be implemented in German law through an amendment to the Insurance Super

72、-vision Act(VAG).In the United States the National Association of Insurance Commissioners(NAIC)adopted its“Credit for Reinsurance Model Law”in 2011.While this model law is not binding upon the individual states,some have already announced their in-tention to implement it in 2012.Upon adoption of the

73、 model law,the collateral requirements for loss reserves of foreign reinsurers in the state in question would be reduced from the current level of 100%.Some US states,such as Florida and New York,had already eased their collateral requirements for financially strong foreign reinsurers.In Germany dem

74、and for insurance protection was stable.In-vestments,the profitability of the industry and employment in the insurance sector also remained largely unchanged.The industry has hitherto coped well with the challenges of the recent financial and economic crisis.The German Insurance Association(GDV)neve

75、rtheless expects premiums for 2011 to decline by 1.2%.This decrease is attributable to a nor-malisation of income from single premium business in life insurance and had already been anticipated by the GDV in the previous year.9Hannover Re annual report 2011BUSINESS DEVELOPMENT MANAgEMENT REpORTThe t

76、reaty renewals once again demonstrated that ceding companies continue to attach great importance to a reinsurers financial strength.A very good rating is indispensable for a re-insurer seeking to be offered and awarded the entire spectrum of business.With its outstanding ratings(“AA”from Standard&Po

77、ors and“A”from A.M.Best)Hannover Re is one of the reinsurers that meets this requirement without reservation.All in all,the markets were highly attractive for our company,enabling us to grow profitably in the year under review and expand our market share.We anticipate growth stimuli from the more ex

78、acting require-ments placed on the risk capital resources of insurance under-takings as a consequence of the introduction of Solvency II;for such companies,the transfer of risk to reinsurers with good ratings constitutes an economically attractive alternative.Even though the hurricane season in Nort

79、h and Central America again passed off thoroughly moderately,the(re)in-surance industry was nevertheless faced with extraordinar ily heavy burdens in the year under review.The largest loss event for the insurance industry was the earthquake in Japan and the resulting tsunami.This event produced a ne

80、t strain for our company of EUR 113.7 million.Yet the flooding in Thailand also resulted in considerable losses.The associ ated expend-itures incurred by Hannover Re amounted to EUR 124.7 mil-lion.These and other major losses produced a net burden of catastrophe losses and major claims totalling EUR

81、 552.0 million for the year under review.In life reinsurance business the markets of the United States,United Kingdom,Germany,France and Scandinavia continue to play a pivotal role for our company.We appreciably stepped up our involvement in the emerging markets of Eastern Eur-ope and Asia.Overall,w

82、e are satisfied with the development of our life reinsurance portfolio.Some adverse developments were recorded in the year under review,however,including for example in Australian disability business for which we constituted additional reserves.Since the business is in run-off we do not anticipate a

83、ny appreciable implications for the future.The biometric risk experience in the United Kingdom,Germany,Scandinavia and France,on the one hand,was ex-ceptionally pleasing across the board.Our profit expectations here were realised,in some cases even surpassed.Claims ex-periences in the emerging marke

84、ts of Asia,Africa and Latin America similarly remained favourable.Business developmentSince 1 January 1997 the parent company has with certain exceptions transacted the Groups active reinsurance solely in foreign markets.Our subsidiary E+S Rckversicherung AG,on the other hand,bears responsibility wi

85、thin the Hannover Re Group for German business.Geographical risk spreading between Hannover Re and E+S Rck is ensured by means of reciprocal retrocessions.The(re)insurance industry was faced with exceptionally heavy strains in the year under review,especially from natural dis-asters.Not only that,th

86、e sovereign debt of some European countries led to difficult conditions on international capital markets,which significantly reduced the investment income generated by companies.In view of these circumstances,we are satisfied with the development of our business.Gross written premium in total busine

87、ss grew by 5.9%to EUR 9.1 billion(EUR 8.6 billion).The level of retained pre-mium climbed from 76.4%to 77.5%.Net premium earned in creased by 9.4%to EUR 7.0 billion(EUR 6.4 billion).Non-life reinsurance markets developed more favourably in the year under review than initially expected.In the treaty

88、re-newals as at 1 January 2011 prices and conditions essentially remained stable.The severe natural disasters that occurred in the first quarter ushered in something of a trend reversal.In the aftermath of the devastating earthquake in Japan in March of the year under review,as anticipated,price in

89、creases were pushed through for non-proportional earthquake covers as well as improved conditions under proportional treaties.Prices also rose in personal accident reinsurance and for in-dustrial fire programmes.During the renewals our company set great store by supporting our Japanese clients in th

90、ese difficult times and providing them with the necessary capacity.The treaty negotiations for Australia and New Zealand as at 1 April and 1 July 2011 similarly brought about substantial price adjustments,both for loss-impacted programmes and those that had been spared losses.This was especially tru

91、e of New Zealand,which suffered extensive damage from earth-quakes in both 2010 and 2011.We were also satisfied with the treaty renewals in other Asian markets;here,too,we slightly enlarged our premium volume.In North America we were similarly able to secure rate improve ments over the course of the

92、 year.This was the result both of strains incurred by the US insurance industry from tornado and flood events as well as model adjustments made by the agency Risk Management Solutions(RMS).Management report10Hannover Re annual report 2011MANAgEMENT REpORT BUSINESS DEVELOPMENTThe underwriting result

93、for total business(before changes in the equalisation reserve)contracted sharply in the year under review owing to the enormous burden of natural catastrophe losses.It closed with a deficit of EUR 151.9 million(+EUR 18.4 million).An amount of EUR 292.6 million(EUR 141.3 million)was allocated to the

94、equalisation reserve and similar provisions.We are very satisfied with our investment performance.Risk premiums on corporate bonds increased for the most part in both US and European markets as the year progressed.The resulting negative fair value effects were,however,more than offset by yield decli

95、nes on US treasuries and German govern-ment bonds.In March we sold our portfolio of listed equities with a gain of EUR 11.6 million.We decided to take this step because of the uncertain extended implications for capital and reinsurance markets of the still ongoing Fukushima nuclear disaster.The deci

96、sion had become necessary in the context of our system-atic approach to risk management.Since then we have only retained a minimal holding of listed equities as part of stra-tegic participations.In the area of bonds our policy continues to be geared towards maintaining a well-diversified portfolio.T

97、he regional spread of our government bonds was largely unchanged in the reporting period.It remains the case that our exposure to countries on the Eurozone periphery(Ireland,Italy,Portugal and Spain)is relatively low measured by our total investment portfolio.Our portfolio does not contain any bonds

98、 of Greek issuers.The positive cash flow from the technical account helped to substantially boost the book value of our assets under own management to EUR 17.5 billion by year-end,an increase of 10.5%compared to the level as at 31 December 2010(EUR 15.8 billion).Ordinary investment income including

99、deposit interest surpassed the previous year at EUR 912.4 million(EUR 807.1 million).Net gains of EUR 64.0 million(EUR 107.6 million)were real-ised on disposals.Write-downs of EUR 33.1 million(EUR 76.3 million)were taken on our investments.Write-ups of EUR 88.1 million(EUR 100.9 million)were also ma

100、de.Our net invest-ment result thus recorded a pleasing increase to EUR 953.9 million(EUR 867.2 million).All in all,we are very satisfied with our total result for the 2011 financial year.The profit on ordinary activities was assisted by the refund of excess taxes and interest paid thereon;this gave

101、rise to an amount of EUR 101.6 million.The profit on ordinary activities contracted in the year under review to EUR 273.5 million(EUR 589.8 million).In light of the considerable strains from major losses,however,this was still a very good result.The 2011 financial year closed with a profit for the y

102、ear of EUR 270.2 million(EUR 406.3 million).The Executive Board and Supervisory Board intend to propose to the Annual General Meeting that a dividend of EUR 2.10 per share should be paid.Our capital and reserves excluding the disposable profit remained virtually unchanged from the previous year at E

103、UR 1,381.7 million.The total capital,reserves and technical pro-visions comprised of the capital and reserves excluding dis-posable profit,the subordinated liabilities,the equalisation reserve and similar provisions as well as the net technical pro-visions grew during the year under review by EUR 3,

104、830.4 million to EUR 25,869.0 million.The technical provisions rose particularly sharply.Based on the increase in the total capital,reserves and technical provisions,the balance sheet total of Hannover Re grew to EUR 30.2 billion(EUR 26.1 billion).11Hannover Re annual report 2011Development of the i

105、ndividual lines of businessThe following section describes the development of the vari-ous lines of business.Through intra-Group retrocessions from E+S Rck we also participate in the German reinsurance mar-ket.The proportion of the parent companys gross written pre-mium attributable to business acce

106、pted from E+S Rck stood at 4.6%(4.9%)in the year under review.We are very satisfied both with our result and with the development of business in our domestic market.FireFire insurance is one of the largest lines in our portfolio;we write this business worldwide.The United States remains our largest

107、single market,followed by the United Kingdom,where we generated further growth in the year under review.In our domestic market,too,we enlarged our premium volume.Total gross premium for the fire line grew by a sizeable 12.2%in the year under review to EUR 1,044.5 million(EUR 931.4 mil-lion).On the r

108、esults side,the fire line came under strain from losses due to the natural disasters in Japan and New Zealand.The net loss ratio consequently rose in the year under review from 65.9%to 77.9%.After an underwriting profit of EUR 60.6 million in the previ-ous year,the year under review closed with a de

109、ficit of EUR 29.8 million.An amount of EUR 1.0 million was withdrawn from the equalisation reserve and similar provisions,com-pared with an allocation of EUR 57.0 million in the previous year.CasualtyWe are satisfied with the development of the casualty line.Following on from more marked growth in p

110、revious years,gross premium volume increased by a modest 2.6%in the 2011 financial year.The largest single market for our company in the casualty line is the United States,accounting for around one third of total premium.The results trend here was also sat-isfactory.Attractive market opportunities o

111、pened up in South DEVELOPMENT OF THE INDIVIDUAL LINES OF BUSINESS MANAgEMENT REpORTAmerica,prompting us to substantially enlarge our portfolio in this region.Growth was also generated in France,where our underwriting policy is focused on liability business.We are one of the leading providers there f

112、or builders risk covers.Our gross premium volume in casualty business grew by a modest 2.6%to EUR 1,120.4 million(EUR 1,091.7 million).The loss ratio decreased from 93.0%to 87.0%.The under-writing result consequently improved to EUR 88.9 million(EUR 148.8 million).An amount of EUR 85.4 million was a

113、llocated to the equalisa-tion reserve and similar provisions in the year under review;the allocation in the previous year had totalled EUR 29.5 mil-lion.AccidentOur accident business,which we regard as one of our tar-get lines,developed highly satisfactorily.After very strong growth in the previous

114、year,the premium volume in the year under review fell short of 2010.Particularly in South Ameri-ca and China,appreciable declines in premium income were re corded.On the other hand,we were able to enlarge our portfolio in the United States and to a slight extent in Germany.In France,where we are one

115、 of the leading accident reinsurers,our premium volume remained constant.Gross premium decreased by 11.3%year-on-year to EUR 293.9 million(EUR 331.2 million).Profitability was most grati-fying:after a very good loss ratio of 64.8%in the previous year,the year under review closed with an even better

116、58.5%.On this basis we generated a pleasing underwriting result of EUR 14.0 million(EUR 6.3 million).An amount of 4.7 million was allocated to the equalisation reserve and similar provisions,as against a withdrawal of EUR 9.4 million in the previous year.Fire in EUR million20112010Gross written prem

117、ium 1,044.5931.4Loss ratio(%)77.965.9Underwriting result(net)(29,8)60.6Casualty in EUR million20112010Gross written premium 1,120.41,091.7Loss ratio(%)87.093.0Underwriting result(net)(88.9)(148.8)Accident in EUR million20112010Gross written premium 293.9331.2Loss ratio(%)58.564.8Underwriting result(

118、net)14.0(6.3)Management report12Hannover Re annual report 2011MotorWe are broadly satisfied with developments in motor business.Our portfolio performed very well in the United States and Canada.In China we wrote a large-volume arrangement involving structured reinsurance covers,causing our premium i

119、ncome here to surge sharply.In the year under review we again stepped up our involve-ment in European motor business.Attractive rates in the United Kingdom prompted us to further significantly enlarge our portfolio here.Germany saw the onset of the anticipated trend reversal in premium income in the

120、 year under review.Both in motor liability and own damage business premiums rose by 3.5%.The claims situation in the own damage sector nevertheless remained tense.As a further factor,hail damage in August and September took a toll on this line.The premium volume in the motor line grew by 19.3%to EUR

121、 731.8 million(EUR 613.5 million).The loss ratio decreased slightly from 78.0%to 74.0%.The underwriting result declined from EUR 12.5 million to EUR 26.8 million.An amount of EUR 41.8 million(EUR 5.5 million)was contrib-uted to the equalisation reserve and similar provisions.AviationHannover Re rank

122、s among the leading reinsurers worldwide in aviation and space business.Although the year under review was notable for a number of basic losses,these had no major implications for reinsurers because for the most part they remained within the retention carried by primary insurers.For this reason,and

123、also due to a further rise in reinsurance capacities,the pressure on prices increased as the year under review progressed.Against this backdrop our goal was essentially to maintain our current market shares and prices.Gross written premium remained virtually on a par with the previous year at EUR 36

124、7.8 million.The major loss experience was again unremarkable.The largest single loss was an acci-dent during an air show in the United States.The net loss ratio moved slightly higher to 64.6%(61.4%).The underwriting result came in at EUR 38.8 million(EUR 46.3 million).Following an allocation of EUR

125、20.9 million in the previous year,we boosted the equalisation reserve and similar provi-sions by an amount of EUR 10.1 million in the year under review.MANAgEMENT REpORT DEVELOPMENT OF THE INDIVIDUAL LINES OF BUSINESSMotor in EUR million20112010Gross written premium 731.8613.5Loss ratio(%)74.078.0Un

126、derwriting result(net)(26.8)(12.5)FireCasualtyAccidentMotorAviationMarineLifeOther lines50454035302520151050 2011 2010Development of the total portfolio by line of business 10.83.23.84.04.34.04.537.337.119.819.712.312.78.07.1 in%11.413Hannover Re annual report 2011LifeOn account of the comparatively

127、 low volatility and long-term nature of life and annuity insurance,this line is vital to the superb diversification of our overall portfolio and therefore enjoys considerable strategic importance.Along with direct acceptances made by Hannover Home Of-fice and our international branches in France,Swe

128、den,Korea,Malaysia,Hong Kong and China,the business written also includes retrocessions from our foreign life subsidiaries based in Australia,Bermuda,the United Kingdom,Ireland,South Africa and the United States as well as a quota share retro-cession of the German life and annuity business written b

129、y our subsidiary E+S Rck.The year under review was overshadowed by the protracted tensions on capital and money markets as well as the sover-eign debt crisis in Europe.In this challenging market climate we stood by our clients as a financially strong business part-ner,as a result of which we can loo

130、k back on a business result that came in within the bounds of our expectations.The growing importance attached by policyholders to insur-ance products for retirement provision had favourable impli-cations for our business.In this segment we further stepped up our activities in the field of enhanced

131、annuities especially in the United Kingdom and rank among the leading reinsur-ance providers.In the United Kingdom our business with longevity swaps(block assumption transactions involving longevity risks)also fared well.In this context we assume the commitments asso-ciated with annuities that are a

132、lready being paid out by large pension funds in exchange for an agreed fixed premium.Although the market for longevity swaps is still in its infancy in many countries,we are confident of being able to expand our business in other markets too going forward thanks to our considerable expertise and pos

133、itive experiences in the UK.Bancassurance business,i.e.the sale of life and annuity prod-ucts through banks,continued to flourish in the year under re-view with favourable implications above all for profitability.In this segment we are especially active in France,Spain,Italy and Eastern European mar

134、kets such as Poland and Hungary.In Asian markets,too,we further stepped up our efforts in this area in the year under review.MarineIn global marine reinsurance,too,Hannover Re ranks among the market leaders.Demand was stable in the year under review.A primary object-ive of our underwriting policy in

135、 the 2011 financial year was to push through improved conditions for offshore risks.We were largely successful in achieving this aim.We neverthe-less wrote such risks very prudently and tended to reduce our limits of liability.Most notably,we kept our exposure in the Gulf of Mexico on a low level.Ou

136、r other marine business,by contrast,was expanded for reasons of better diversification.On the claims side the year under review was characterised by a high frequency of smaller and mid-sized losses.The largest single event involved the damaging and putting out of oper-ation of a large Danish FPSO(fl

137、oating production,storage and offloading)unit,causing a market loss of some USD 1 bil-lion.For Hannover Re this gave rise to a major loss with net expend iture of EUR 12.9 million.Gross written premium contracted by 7.4%to EUR 363.1 mil-lion(EUR 392.1 million).The net loss ratio improved markedly fr

138、om 86.6%to 67.6%.Against this backdrop the underwriting result improved from EUR 15.7 million to EUR 27.1 million.An amount of EUR 62.8 million(EUR 15.3 million)was allo-cated to the equalisation reserve and similar provisions.DEVELOPMENT OF THE INDIVIDUAL LINES OF BUSINESS MANAgEMENT REpORTAviation

139、 in EUR million20112010Gross written premium 367.8370.1Loss ratio(%)64.661.4Underwriting result(net)38.846.3Marine in EUR million20112010Gross written premium 363.1392.1Loss ratio(%)67.686.6Underwriting result(net)27.1(15.7)Management report14Hannover Re annual report 2011In addition,we expanded our

140、 position in the area of financing arrangements in the United States,United Kingdom,Germany,South Africa and the Asian region.Demand for financially-ori-ented reinsurance solutions was particularly vigorous in China(including Hong Kong).Our gross premium income increased slightly by 6.7%,en-abling u

141、s to show a premium volume of EUR 3.4 billion(EUR 3.2 billion)for the year under review.The biometric results for the risks of mortality,morbidity and longevity were broadly in line with our expectations.Posi-tive results in Europe,Africa and Asia did not,however,suf-fice to offset the below-average

142、 risk experience of Australian disability business.The net underwriting result consequently declined in the year under review to EUR 24.1 million(EUR 6.4 million).Other linesThe lines of health,credit and surety,other indemnity insur-ance and other property insurance are reported together under othe

143、r lines.Other property insurance consists of the extended coverage,comprehensive householders(contents),comprehensive householders(buildings),burglary and rob-bery,water damage,plate glass,engineering,loss of profits,hail,livestock and windstorm lines.Other indemnity insurance encompasses legal prot

144、ection,fidelity as well as other pure financial losses and property damage.In health insurance the focus of our underwriting in the US market continues to be on the reinsurance of private supple-mentary covers for seniors issued to some 49 million US citi-zens in connection with the federal Medicare

145、 programme.In addition,we participated highly selectively in health business in some Asian markets(such as Hong Kong)and Latin America as well as the United Kingdom and France.In Germany our activities in the health line are restricted merely to a few selected non-proportional covers.Gross premium i

146、n the year under review was influenced,on the one hand,by the cancellation of a US treaty and,on the other,by significant increases in Asia and France.Overall,this caused premium to decline to EUR 291.9 million(EUR 327.5 million).The underwriting result retreated accordingly to stand at EUR 6.1 mill

147、ion(EUR 14.3 million)for the year under review.In credit and surety insurance the consolidation moves made by insurers and reinsurers had positive effects,as a conse-quence of which claims rates in credit insurance remained below the pre-crisis level of 2008 in the year under review.In surety busine

148、ss,too,results were scarcely impacted.Given the significant improvement in claims rates in original busi-ness,surplus capacities were common on the reinsurance side.On the heels of vigorous expansion in the previous two years,Hannover Re stabilised its portfolio in the year under review.We are thoro

149、ughly satisfied with the development of our business in the 2011 financial year.The credit line profited from an appreciable reduction in claims rates as the econ-omy began to bounce back.The surety line and business with political risks also developed satisfactorily,with claims rates on a stable le

150、vel.Gross premium in credit and surety business grew from EUR 519.9 million to EUR 543.3 million.The underwriting result in the credit sector improved from EUR 23.1 million to EUR 41.1 million,while the result in the surety line totalled EUR 25.3 million(EUR 15.6 million).The total premium volume in

151、 the other lines increased by 6.3%to EUR 1,799.8 million(EUR 1,693.8 million).The loss ratio slipped back to 74.4%(63.0%).The underwriting result closed at EUR 62.2 million,after+EUR 88.4 million in the previous year.An amount of EUR 88.7 million(EUR 22.5 million)was allo-cated to the equalisation r

152、eserve and similar provisions in the other lines in the year under review.MANAgEMENT REpORT DEVELOPMENT OF THE INDIVIDUAL LINES OF BUSINESSOther lines in EUR million20112010Gross written premium 1,799.81,693.8Loss ratio(%)74.463.0Underwriting result(net)(62.2)88.4Life in EUR million20112010Gross wri

153、tten premium 3,408.93,194.4Underwriting result(net)(24.1)6.415Hannover Re annual report 2011Ordinary investment income including deposit interest sur-passed the previous year at EUR 912.4 million(EUR 807.1 million).The balance of deposit interest and expenses stood at EUR 230.3 million(EUR 245.9 mil

154、lion).Given identical or-dinary income,the decline was attributable to write-ups made in the previous year.We took write-downs on investments totalling EUR 33.1 mil-lion(EUR 76.3 million),principally on fixed-income secur ities.The write-downs contrasted with write-ups of EUR 88.1 mil-lion(EUR 100.9

155、 million)taken on account of increased fair values.This was especially true of shares in affiliated com-panies and fixed-income securities that had been written down in previous periods.Net gains of EUR 64.0 million(EUR 107.6 million)were realised on the disposal of investments.All in all,our net in

156、vestment result therefore improved to EUR 953.9 million(EUR 867.2 million).Hannover Res investment policy continues to be guided by the following core principles:generation of stable and risk-commensurate returns while at the same time maintaining the high quality standard of the portfolio;ensuring

157、the liquidity and solvency of Hannover Re at all times;high diversification of risks;limitation of currency exposures and maturity risks in ac-cordance with the principle of matching currencies and ma-turities.With these goals in mind we engage in active risk manage-ment on the basis of balanced ris

158、k/return analyses.In this con-text we observe centrally implemented investment guidelines and are guided by the insights of dynamic financial analysis.These measures,combined with positive cash flows from the technical account,ensure that we are able to meet our pay-ment obligations at all times.Wit

159、hin the scope of our asset/liability management(ALM)the allocation of investments by currencies and maturities is de-termined by the technical liabilities.The modified duration of our bond portfolio is geared largely to the average maturity of the technical liabilities.We thereby adjust the maturity

160、 pat-tern of the fixed-income securities to the expected payment patterns of our liabilities and reduce the economic exposure to the interest rate risk.In addition,through active and regu-lar management of the currency spread in our fixed-income portfolio we bring about extensive matching of currenc

161、ies InvestmentsWe are thoroughly satisfied with the development of our in-vestments in the year under review.Driven primarily by posi-tive operating cash flows,our portfolio of assets under own management grew to EUR 17.5 billion;this is equivalent to an increase of 10.5%relative to the level as at

162、31 December 2010(EUR 15.8 billion).Deposits with ceding companies also rose sharply from EUR 7.5 billion to EUR 9.5 billion.The US Federal Reserve left key interest rates unchanged at 0%to 0.25%during the year under review.The European Central Bank,on the other hand,reduced key interest rates to 1%i

163、n the second half of the year after making initial rate hikes and supported the European bond market by buying up government bonds.The return on ten-year German government bonds declined from 3.0%to 1.8%in the course of the year.A comparable trend was also observed for US treasury bonds,with a mar-g

164、inally more marked decrease from 3.3%to 1.9%.Bonds issued by some European countries carried substantial risk premiums,especially in the second half of the year,leading to a patchy and volatile yield environment in Europe.Risk premiums on corporate bonds increased for the most part in both US and Eu

165、ropean markets as the year progressed.The resulting negative fair value effects were,however,more than offset by the yield declines on US treasuries and German government bonds across virtually all maturity segments dur-ing the year.Altogether,the net valuation reserves of our fixed-income portfolio

166、 increased to EUR 394.8 million(EUR 343.3 million)over the year.In March we sold our portfolio of listed equities with a gain of EUR 11.6 million.We decided to take this step because of the uncertain extended implications for capital and reinsurance markets of the still ongoing Fukushima nuclear dis

167、aster.The decision had become necessary in the context of our system-atic approach to risk management.Since then we have only re-tained a minimal holding of listed equities as part of strategic participations.In the area of bonds our policy remains geared towards a well-diversified portfolio.The reg

168、ional spread of our government bonds was largely unchanged in the year under review.Our exposure to countries on the Eurozone periphery(Ireland,Italy,Portugal and Spain)continues to be compara-tively low relative to our total investments.Our portfolio does not contain any bonds of Greek issuers.INVE

169、STMENTS MANAgEMENT REpORTManagement report16Hannover Re annual report 2011MANAgEMENT REpORT HUMAN RESOURCESon the assets and liabilities sides of the balance sheet,as a consequence of which fluctuations in exchange rates have no significant influence on our result.Human resourcesOur staffAs part of

170、the review of the corporate strategy,we also revised our human resources strategy in 2011.The core of our human resources strategy nevertheless remained essentially un-changed since it has proven itself in the past.What has now been brought out more clearly is that the success of our com-pany is dir

171、ectly dependent on the successful work of our people.We therefore pay special attention to the qualifica-tions,experience and drive to perform of our staff and foster these attributes through excellent personnel development and leadership activities.Special importance attaches in this re-gard to our

172、 managerial staff.They lead their teams in the spirit of our management principles.For some years now we have used management feedback as a means of reviewing suc-cessful leadership.In the year under review we once again reworked this management feedback process.We are thus aligning our personnel de

173、velopment tools even more system-atically with the human resources strategy.Further matters dealt with were the revision of the remuneration structure for executive staff,a pilot project for the launch of“blended learn-ing”,a linking of traditional face-to-face learning activities with virtual e-lea

174、rning as well as the roll-out of state-of-the-art software to enhance the new appointments process.Key personnel ratiosHannover Re employed 1,041(1,017)staff as at 31 Decem ber 2011.The turnover ratio at Home Office in Hannover of 4.3%(1.9%)was appreciably higher than in the previous year.The rate o

175、f absenteeism at 3.4%was slightly higher than in the previous year(3.0%).The turnover ratio and rate of absentee-ism nevertheless continued to be below the industry average.Management feedback more strategically focusedSince 2001 our company has used the personnel development tool of management feed

176、back for executives.This offers both the staff and superiors of our executives the opportunity to formulate criteria-driven feedback on an executives manage-ment style as they perceive it.The participating executives thus receive structured feedback on their managerial impact as well as on any possi

177、ble need for development.The management feedback tool was extensively overhauled for the second time since its adoption.The focus was on its rigorous orientation towards our companys management principles.These are picked up on by way of targeted ques-tions and their degree of fulfilment is made mea

178、surable.The additional assessment of the individual significance of the various management principles for each feedback provider simplifies both the identification of topical concentrations for the follow-up team discussion and the elaboration of personal development measures.The intention thereby i

179、s to directly support implementation of the strategy item“We want successful employees”;pivotal importance attaches in this regard both to our managerial staff and to team interaction.New remuneration model for executive staffIn order to satisfy the requirements of the Regulation on the Supervisory

180、Law Requirements for Remuneration Schemes in the Insurance Sector(VersVergV),which entered into force on 13 October 2010,a consistent worldwide remuneration system has been in effect since 1 January 2012 for all Hannover Re Turnover AbsenteeismStaff turnover/absenteeism in%20075432104.42.53.32.72.33

181、.21.93.020082009201020114.33.417Hannover Re annual report 2011HUMAN RESOURCES MANAgEMENT REpORTYet we have not only refined the look and text-based presenta-tion of our Web presence,we have also brought the technol-ogy into line with the very latest state of the art.To this end,we rolled out softwar

182、e in the year under review to enhance the new applications process;candidates are able to input their profile intuitively and with less effort at the front end.This enables them,inter alia,to apply for several vacancies at the same time or to set up a so-called“job subscription service”in order to r

183、eceive alerts of suitable new openings by e-mail.Needless to say,our applicants can also manage their applica-tions themselves and check their processing status at any time.Last but not least,we should also mention our applicant pool.Jobseekers whom we are unfortunately unable to offer an ap-propria

184、te position at the time of their application are included in this medium,known as Talentpool.Our colleagues in re-cruiting search these profiles on a preferential basis when new job requirements arise and check their suitability.Word of thanks to our staffThe Executive Board would like to thank all

185、employees for their dedication in the past year.At all times the workforce identified with the companys objectives and purposefully pur-sued them.We would also like to express our appreciation to the representatives of staff and senior management who par-ticipated in our co-determination bodies for

186、their critical yet always constructive cooperation.managers;it satisfies the special requirements of 4 Vers-VergV in its principles and parameters and is applied in an appropriate form according to the particular level of manage-ment.For further information please see the section“Remu-neration repor

187、t”from page 32 onwards.Blended learning successfully implementedIn 2011 we successfully implemented another state-of-the-art learning method,namely“blended learning”.This enables us to even better integrate our staff into internal training activ-ities.In blended learning,a seminar unit consists of a

188、 linkage be-tween tutor-supported e-learning self-tuition phases and face-to-face training sessions.We thus exploit modern technical capabilities to make learning less place-and time-bound.Not only that,we are responding to the demands of a new gener-ation that is already accustomed to learning and

189、communi-cating by electronic means.In the year under review we unveiled German-and English-language reinsurance seminars in the blended learning for-mat.In addition,a learning program was developed under the auspices of our IT colleagues that provides training in the use of our electronic administra

190、tion system for reinsurance treaties.Both blended learning courses were completed by members of staff at various locations.Despite all the advantages of modern technology,we are still aware of the communicative,uniting and motivational value of traditional face-to-face instruction and we shall conti

191、nue to use this where it is didactically appropriate for example in new seminars that further reinforce the intercultural skills of our employees or their customer orientation.Applicant targeting and Talentpool upgradedComplementing its successfully launched employer branding campaign in 2010,Hannov

192、er Re went live with a new look to the career section of the company website in the year under review.The emphasis is on a combination of colourful images(natural phenomena),eye-catching multi-titles and stimulating task descriptions.We also let our employees speak for us:their descriptions of their

193、 journey through life and their successful entry into Hannover Re round off the information provided.Management report18Hannover Re annual report 2011MANAgEMENT REpORT SUSTAINABILITySustainabilityThe sustainability strategy of Hannover Re Profit and value creation are indispensable prerequisites for

194、 sustainable development in the interests of our clients,shareholders,staff and business partners.As a leading player in the reinsurance industry,our commercial success is cru-cially dependent on the correct assessment of present and emerging risks.With this in mind,sustainability aspects are increa

195、singly reflected in these risks.The issue therefore has a direct bear ing on the operational activities of Hannover Re and hence forms part of how we see our business.Our goal is to generate economic success on the basis of a solid business model in conformity with legal regulations and the needs of

196、 our staff and the company,while also giving due consideration to conservation of the environment and natural resources.In so doing,our premises of financing growth through self-gen-erated profits and avoiding imbalances that could necessitate capital measures continue to apply unchanged.Our operati

197、ons are thus guided primarily by profitability considerations and we concentrate on attractive segments of reinsurance business.In September 2011 Hannover Re explicitly committed to its strategic objective of sustainable value creation in the context of a sustainability strategy.The sustainability s

198、trategy is based on good and sustainable compliance and puts into more con-crete terms the higher-level corporate strategy of Hannover Re.Within the scope of the strategy,altogether five action fields as well as concrete measures and targets have been defined for the period up until 2015.Governance

199、and dialogueEntrepreneurial success is only sustainable if it is achieved on the basis of ethical behaviour.As an internationally operating company,Hannover Re bears responsibility in various senses.This is true of its compliance with relevant laws and regula-tions,but also applies to its relationsh

200、ip with staff,sharehold-ers,the public at large and the cultural circles in which the company operates.In the context of face-to-face discussions,joint events,membership of societies and associations and regu lar surveys,we maintain an open and ongoing dialogue with our stakeholder groups whose trus

201、t is a vital prerequis-ite for our entrepreneurial success.The considerable import-ance that we attach to this issue is also reflected in the as-sociated responsibility within the organisation:the Executive Board of the company jointly drives and tracks implementa-tion of the sustainability strategy

202、.As a company based in Germany,the formal framework that shapes our corporate governance is determined by German law.With one exception Hannover Re fulfils all the recommen-dations of the German Corporate Governance Code.Further details in this regard are provided in the section“Enterprise managemen

203、t”on page 29.What is more,our Code of Conduct which we adopted Group-wide in 2003 serves as a further guide for our day-to-day activities.With effect from the autumn of 2012 we shall report on the degree of goal accomplishment as well as on the develop-ment of key performance indicators in an annual

204、ly published sustainability report.In so doing,we shall be guided from the outset by the internationally recognised guidelines of the Global Reporting Initiative(GRI).Product responsibilityOur range of reinsurance products and services is geared to the needs of the market and our clients.In response

205、 to changing social challenges,new economic,social and ecologic al risks are increasingly reflected in our risk assessment.We use these internally and externally acquired insights in order to be able to offer better insurance solutions.We devote special attention to protecting against risks that res

206、ult from climate change and providing insurance coverage for socially vulnerable groups in developing countries.We additionally include the management of our asset portfolio under product responsibility.Our investment strategy is de-signed to generate a commensurate market return in the inter-ests o

207、f our clients,institutional investors and private investors.Nevertheless,going forward we shall seek to give even greater consideration to environmental,social and governance(ESG)criteria in our investment policy.Successful staffThe success of our company is directly dependent on the suc-cessful wor

208、k of our staff.We therefore pay special attention to their skills,experience and commitment and we attach con-siderable importance to superb personnel development and management activities.In this context,the work/life balance of our employees is especially significant.By way of flexible working-tim

209、e models such as part-time employment and tele-commuting Hannover Re promotes the compatibility of both these elements.19Hannover Re annual report 2011SUSTAINABILITy MANAgEMENT REpORTSince 2008 members of staff at Hannover Home Office have also been able to entrust the care of their children to trai

210、ned childcare nurses at the public day nursery supported by the City of Hannover and the Federal State of Lower Saxony as well as Hannover Re and Concordia Versicherung AG.Set up on the premises of Hannover Re,the daycare centre provides all-day supervision for infants from the first to third year o

211、f life.The nursery is able to accept infants on a year-round basis in order to enable parents to return to work without delay.Procurement and environmental protectionIt is a stated aim of Hannover Re to keep the negative eco-logical impacts of its business activities as low as possible.The focus of

212、our environmental efforts is on reducing CO2 emissions caused by supplying power and heat to our prem-ises as well as by our business travel.In addition,we make every effort to use(raw)materials in our offices in the most economic and environmentally friendly manner possible.In our procurement we pa

213、y close attention to compliance with social and environmental standards when it comes to selecting products and vendors.Not only that,Hannover Re is a partner in numerous initia-tives for climate and environmental protection such as the“Ecological Project for Integrated Environmental Technology”(Eco

214、profit)and the“Climate Alliance Hannover 2020”.The energy-saving successes already achieved are regularly pub-licised in the relevant project publications.Resources consumed at Hannover Home Office201122010220092200812007Electricity(in kWh)8,214,9178,055,4298,014,9467,624,7096,041,890Heat(in kWh)1,8

215、59,1192,383,9182,314,0092,051,5011,749,160Water(in l)14,464,50014,722,00012,100,00014,505,00016,571,000Paper(in sheets)9,172,1809,074,3008,488,3689,174,2608,934,350Waste(in kg)257,400297,000327,000no datano dataBusiness trips(in km)17,658,59816,018,50015,179,74514,766,59813,379,064CO2-emissions3(in

216、kg)8,123,0007,685,0009,005,0009,838,0009,917,0001 Karl-Wiechert-Allee 50 and Roderbruchstrasse 26,Hannover2 Karl-Wiechert-Allee 50,Roderbruchstrasse 26 and infant daycare centre,Hannover3 Radiative Forcing Index:2.7Since 2008 the company has also compensated for the CO2 pollution caused by business

217、flights through voluntary off-setting payments to the international organisation“atmos-fair”,thereby supporting selected climate protection projects in developing and emerging countries.We pay similar volun-tary offsets for the CO2 emissions from train travel as well.In addition,we purchased RECS(Re

218、newable Energy Certificate System)certificates from our electricity supplier to promote the use of renewable forms of energy.From 2012 onwards Hannover Re will cover the power requirements at its Hanno-ver location exclusively through renewable energies.Hannover Re reviews other activities that cont

219、ribute to the conservation and sustainable preservation of resources within the scope of regular Business Excellence assessments.The carbon dioxide emissions of 8,123 tonnes caused by Han-nover Re in 2011 at the Hannover Home Office location were 98%offset.All in all,CO2 pollution increased by 438 t

220、onnes or 5.7%relative to the previous year.In the year under re-view,as in past years,Hannover Re again participated in the survey conducted as part of the“Carbon Disclosure Project”(CDP).The CDP serves to gather and publish qualitative data on the subject of climate change in order to motivate inve

221、st-ors,businesses and countries to contribute actively to climate protection.Through our involvement we receive information on where we stand with our efforts to economise especially as regards carbon dioxide emissions relative to international standards.Management report20Hannover Re annual report

222、2011MANAgEMENT REpORT SUSTAINABILITyThe table on page 19 below breaks down Hannover Res con-sumption and emissions and presents the total figures for electricity,heat,water,paper,waste,business trips and CO2 emissions.Social commitmentHannover Res commitment as a sponsor of learning,art,cul-ture and

223、 social projects dates back to its founding in 1966.Es-sentially,our social involvement is subdivided into four areas:sponsorship,foundation support,donations and assistance through words and deeds.The latter encompasses the volun-tary activities performed by our staff as well as their passing on of

224、 know-how at our various locations worldwide.Sponsorship Hannover Re already maintains long-standing partnerships with various areas of society in the role of sponsor.Particularly close to our heart is support for research and learning as well as for music and art.Research and learningThe reinsuranc

225、e of catastrophe risks forms part of Hannover Res core business.In order to correctly assess risks,a constant transfer of knowledge between business and research which enables Hannover Re to apply the very latest insights is of crucial importance.In this context the company supports the highly renow

226、ned Geo Research Center in Potsdam,an insti-tution that engages in the systematic investigation and early detection of earthquakes.Since 2009 Hannover Re has also supported the Global Earth-quake Model(GEM)project initiated by the OECD with finan-cial backing of altogether EUR 1 million.The model,wh

227、ich is scheduled to be developed by 2013,is intended among other things to help local authorities in earthquake-exposed zones to draw up more efficient contingency plans and,if disaster strikes,to facilitate the more rapid delivery of aid.Dialogue with universities is another cornerstone of our sup-

228、port for research and learning.Among other things,Hannover Re sponsors an endowed professorship in actuarial science at the University of Hannover.ArtHannover Re also supports the Kestnergesellschaft,an art as-sociation whose roots in Hannover go back to 1916,through its participation in the latters

229、 partner programme:in its role as a“kestnerpartner”the company is able to promote the societys work on a continuous and lasting basis.FoundationIn 1991,on the occasion of the companys twenty-fifth anni-versary,Hannover Re launched an art foundation that benefits the Sprengel Museum in Hannover.The S

230、prengel Museum ranks among the foremost German museums of twentieth-century art thanks to its extensive collection and diverse range of temporary exhibitions.The Foundations mission is to pro-mote Hannover as a centre for the fine arts through the acqui-sition of contemporary pieces,which are then m

231、ade available to the Sprengel Museum on permanent loan.The Foundation is further tasked with financing publications and events to accompany the exhibitions.DonationsIn the year under review Hannover Re and E+S Rck jointly donated an amount of altogether EUR 121,000 to projects in the following categ

232、ories:Social and scientific causes Staff(further and advanced training,compatibility of work and family life)Protection and welfare of young people Advancement of medicine/humanitarian projectsThe awarding of donations is guided above all by the criterion of benefit to the public.We do not donate to

233、 organisations or projects in the following areas:politics,churches and reli-gious movements,protection of historical buildings or animal welfare.21Hannover Re annual report 2011RISK REPORT MANAgEMENT REpORTRisk report Principles for the handling of opportunities and risks With a view to accomplishi

234、ng our business objectives we enter into a broad variety of risks which,on the one hand,open up opportunities for profit but,on the other hand,can also have adverse implications for our company.Our goal is to make optimal use of opportunities while at the same time adequately controlling and managin

235、g the risks associated with our com-mercial activities.Crucial importance therefore attaches to the qualitative and quantitative elements of our risk management.The parameters and decisions of the Executive Board with respect to the risk appetite of Hannover Re are fundamental to the acceptance of r

236、isks.The risk strategy derived from the cor-porate strategy constitutes the basis for our handling of oppor-tunities and risks.We act on opportunities only by weighing up the associated risks.The risk strategy and the guidelines derived from it,such as the framework guideline on risk man-agement and

237、 the central system of limits and thresholds,are subject to regular review.In this way,we ensure that our as-sumptions and hence also our risk management system are kept up-to-date.Operationalisation of our corporate strat-egy takes place on multiple levels and ultimately leads into local guidelines

238、,including for example the local underwriting guide lines used by our treaty departments.Functions within the risk management systemThere is an interplay between the individual bodies and func-tions in our risk management system.Their roles and respon-sibilities are clearly defined.Quantitative and

239、qualitative risk manage-ment methodsFor many years Hannover Re has managed and monitored its risks with the aid of quantitative methods.Compliance with re-gulatory solvency requirements is regularly monitored as part of Hannover Res risk management.Qualitative methods and practices are a fundamental

240、 element of our internal risk ma-nagement and control system as well as the future Own Risk and Solvency Assessment(ORSA)pursuant to Article 45 of the Solvency II Directive.Systematic risk identification,analy-sis,measurement,steering and monitoring as well as risk re-porting are crucial to the effe

241、ctiveness of risk management as a whole.Only by giving prompt consideration to risks can the continued existence of Hannover Re be assured.The sys-tem that is in place in common with the corporate and risk strategy is subject to a constant cycle of planning,action,control and improvement.The Risk Ma

242、nagement Framework Guideline describes the existing elements of the risk man-agement system that has been put in place.It is intended to establish homogeneous standards for risk management.The Central elements of the risk management systemBody/functionKey risk management tasksSupervisory Board Advis

243、ing and supervising the Executive Board in its management of the company,inter alia with respect to risk management,on the basis of the Supervisory Boards Rules of ProcedureExecutive Board Overall responsibility for risk management Responsibility for the proper functioning of risk management Definit

244、ion of the risk strategyRisk Committee Operational risk management,monitoring and coordinating body Implementation and safeguarding of a consistent Group-wide risk management culture Chief Risk Officer Responsibility for risk monitoring across the business groups(systematic identification and assess

245、ment,control/monitoring and reporting)of all material risks(technical risks in life/health and non-life reinsurance,market risks,credit risks,operational risks and other risks)Group Risk Management Risk monitoring across the business groups of all material risks from the company perspective Methodol

246、ogical expertise in the development of processes and methods for risk analysis,assessment and management as well as for risk limitation and reportingBusiness units1 Risk steering:primary responsibility for risk identification and assessment on the departmental level based on the guidelines of Group

247、Risk Management Setting up and monitoring of the departments internal control system(ICS)Internal Auditing Process-independent and Group-wide supervision on behalf of the Executive Board1 Treaty departments and service departments in the non-life and life/health reinsurance business groups as well a

248、s the investments sectorManagement report22Hannover Re annual report 2011MANAgEMENT REpORT RISK REPORTFramework Guideline defines,among other things,the major tasks,rights and responsibilities,the organisational frame-work conditions and the risk control process.Principles are also set out governing

249、 the evaluation of new products in light of risk considerations as well as risk reporting.Internal risk reporting safeguards systematic and timely communication within the company about all material risks.Risk reporting covers inter alia the defined limits and thresholds,expert as-sessments(e.g.emer

250、ging risks)and a summary presentation of the risk situation.The regular reporting is supplemented as necessary by immediate internal reporting on material risks and limit oversteps that emerge at short notice.The criteria for this reporting are also specified in the Risk Management Framework Guideli

251、ne.Within the central system of limits and thresholds for the material risks,key ratios have been spe-cified for steering and monitoring.Risk steering and moni-toring is operationalised through the specification of suitable limits and thresholds for quantitatively measurable material risks.Material

252、risks that cannot be quantified or are difficult to quantify(such as operational risks or reputational risks)are primarily steered using appropriate processes and practices and are monitored with the aid of qualitative measurement methods,such as expert assessments.Internal control systemAnother key

253、 element of the overall system is the Framework Guideline on the Internal Control System(ICS).The purpose of this set of rules is to systematically steer and monitor the execution of our corporate strategy.The Framework Guide-line defines concepts,stipulates responsibilities and provides a guide for

254、 the description of controls.In addition,it forms the basis for the accomplishment of internal objectives and the fulfilment of external requirements imposed on Hannover Re.The ICS consists of systematically structured organisational and technical measures and controls within the enterprise.It serve

255、s,inter alia,to safeguard compliance with guidelines and to reduce risks in the interests of secure execution of corpor-ate strategy.This includes,among other things:documentation of the controls within processes,especially in accounting,principle of dual control,separation of functions,technical pl

256、ausibility checks and access privileges within the systems.In the area of accounting,processes with integrated con-trols ensure the completeness and accuracy of the financial statement.These processes for the organisation and imple-mentation of consolidation tasks and for the preparation of the fina

257、ncial statement as well as the accompanying controls are documented and subject to regular review.All accounting principles are collated in an Accounting Manual that is availa-ble in IT-supported form to all relevant organisational units.Material risksTechnical risks in non-life reinsuranceWe make a

258、 fundamental distinction here between risks that result from business operations of past years(reserving risk)and those stemming from activities in the current or future years(price/premium risk).In the latter case,special import-ance attaches to the catastrophe risk.A significant technical risk is

259、the reserving risk,i.e.the risk of under-reserving losses and the associated strain on the under writing result.In order to counter this risk we calculate our loss reserves based on our own actuarial loss estimations;where necessary we also establish additional reserves supple-mentary to those poste

260、d by our cedants as well as an IBNR(incurred but not reported)reserve for losses that have already occurred but have not yet been reported to us.Liability claims have a major influence on the IBNR reserve.The IBNR reserve is calculated on a differentiated basis ac-cording to risk categories and regi

261、ons.The statistical run-off triangles used by our company are another monitoring tool.They show the changes in the reserve over time as a conse-quence of paid claims and in the recalculation of the reserves to be established as at each balance sheet date.Their ad-equacy is monitored using actuarial

262、methods.Our own actu-arial calculations regarding the adequacy of the reserves are also subject to annual quality assurance reviews conducted by external actuaries and auditors.Licensed scientific simulation models,supplemented by the expertise of our own specialist departments,are used to as-sess o

263、ur material catastrophe risks from natural hazards(es-pecially earthquake,windstorm and flood).Furthermore,we establish the risk to our portfolio from various scen arios in the form of probability distributions.The monitoring of the natural hazards exposure of the portfolio(accumulation con-trol)is

264、rounded out by realistic extreme loss scenarios.Within the scope of accumulation controlling,the Executive Board de fines the risk appetite for natural perils once a year on the basis of the risk strategy by specifying the portion of the economic capital that is available to cover risks from natural

265、 perils.This is a key basis for our underwriting approach in this segment.For the purposes of risk limitation,maximum 23Hannover Re annual report 2011RISK REPORT MANAgEMENT REpORTunderwriting limits(capacities)are stipulated for various ex-treme loss scenarios and return periods in light of profitab

266、il-ity criteria.Adherence to these limits is continuously verified by Group Risk Management.The Risk Committee,Executive Board and Non-Life Executive Committee are kept regularly updated on the degree of capacity utilisation.The price/premium risk lies primarily in the possibility of a random claims

267、 realisation that diverges from the claims ex-pectancy on which the premium calculation was based.Regu-lar and independent reviews of the models used for treaty quotation as well as central and local underwriting guidelines are vital management components.In addition,regular re-ports are prepared on

268、 the progress of the respective re newals.The reporting in this regard makes reference inter alia to sig-nificant changes in conditions,risks(such as inadequate pre-miums)as well as to emerging market opportunities and the strategy pursued in order to accomplish targets.Technical risks in life and h

269、ealth reinsurance All risks directly connected with the life of an insured person are referred to as biometric risks(especially the miscalcula-tion of mortality,life expectancy,morbidity and occupational disability);they constitute material risks for our company in the area of life and health reinsu

270、rance.Counterparty,lapse and catastrophe risks are also material since we additionally prefinance our cedants new business acquisition costs.As in non-life reinsurance,the reserves are essentially calculated according to information provided by our clients and are also determined on the basis of sec

271、ure biometric actuarial bases.Through our quality assurance measures we ensure that the reserves established by ceding companies in accordance with local accounting principles satisfy all requirements with re-spect to the calculation methods used and assumptions made(e.g.use of mortality and morbidi

272、ty tables,assumptions re-garding the lapse rate).New business is written in all regions in compliance with underwriting guidelines applicable world-wide,which set out detailed rules governing the type,quality,level and origin of risks.These global guidelines are revised annually and approved by the

273、Executive Board.Special under-writing guidelines give due consideration to the particular fea-tures of individual markets.By monitoring compliance with these underwriting guidelines we minimise the risk of an inability to pay or deterioration in the financial status of cedants.Regular reviews and ho

274、listic analyses(e.g.with an eye to lapse risks)are carried out with respect to new business activities.The interest rate risk,which in the primary sector is important in life business owing to the guarantees that are given,is of only minimal relevance to our company thanks to the structure of our co

275、ntracts.The Market Consistent Embedded Value(MCEV)is a ratio used for the valuation of life insurance and reinsurance business;it is calculated as the present value of the future shareholders earnings from the worldwide life and health reinsurance port-folio plus the allocated capital.The calculatio

276、n makes allow-ance as far as possible for all risks included in this business.The Market Consistent Embedded Value is estab lished on the basis of the principles of the CFO Forum published in October 2009.For more detailed information please see the Market Consistent Embedded Value Report 2010.Marke

277、t risks We pursue an investment policy in which the primary em-phasis is on the stability of the generated return.With this in mind,our portfolio is guided by the principles of broad diversification and a balanced risk/return ratio.Risks in the investment sector consist primarily of market,credit de

278、fault and liquidity risks.The most significant market price risks are share price,interest rate and currency risks.Despite the sometimes difficult capital market environment in the year under review,our early-warning system consistently remained above the escalation levels.The short-term“Value at Ri

279、sk”(VaR)is another vital tool used for monitoring and managing market price risks.The VaR is determined on the basis of historical data,e.g.the volatility of the securities positions under own management and the correlation between these risks.As part of these calcula tions the decline in the fair v

280、alue of our portfolio is simulated with a certain probability and within a certain period.The VaR determined in accordance with these principles specifies the decrease in the fair value of our securities portfolio under own management that with a probability of 95%will not be exceeded within ten tra

281、ding days.A multi-factor model is used to calculate the VaR indicators.It is based on time series of se-lected representative market parameters(equity prices,yield curves,spread curves,exchange rates,commodity prices and macro-economic variables).All asset positions are mapped on the level of indivi

282、dual positions within the multi-factor model;residual risks(e.g.market price risks that are not directly ex-plained by the multi-factor model)can be determined through back-calculation and are incorporated into the overall calcu-lation.Management report24Hannover Re annual report 2011MANAgEMENT REpO

283、RT RISK REPORTStress tests are conducted in order to be able to map extreme scenarios as well as normal market scenarios for the purpose of calculating the Value at Risk.In this context,the loss po-tentials for fair values are simulated on the basis of already occurred or notional extreme events.Fur

284、ther significant risk management tools along with various stress tests used to estimate the loss potential under extreme market conditions include sensitivity and duration analyses and our asset/liability management(ALM).Share price risks derive from the possibility of unfavourable changes in the va

285、lue of equities,equity derivatives or equity index derivatives held in the portfolio.In March we disposed of our portfolio of listed equities at a profit.We decided to take this step because of the uncertain extended implications for capital and reinsurance markets of the still ongoing Fukushi-ma nu

286、clear disaster.The decision had become necessary in the context of our systematic approach to risk management.Since that time we have only retained a minimal portfolio of listed equities in the context of strategic participations.The scenarios for changes in equity prices consequently have only extr

287、emely slight implications for our portfolio.We spread the risks through systematic diversification.The portfolio of fixed-income securities is exposed to the inter est rate risk.Declining market yields lead to increases and rising market yields to decreases in the fair value of the fixed-income secu

288、rities portfolio.The credit spread risk should also be mentioned.The credit spread refers to the interest rate differential between a risk-entailing bond and risk-free bond of the same quality.Changes in these risk premiums,which are observable on the market,result analogously to changes in pure mar

289、ket yields in changes in the fair values of the corresponding securities.Currency risks are especially relevant if there is a currency imbalance between the technical liabilities and the assets.Through extensive matching of currency distributions on the assets and liabilities side,we reduce this ris

290、k on the basis of the individual balance sheets.The short-term Value at Risk therefore does not include quantification of the currency risk.We regularly compare the liabilities per currency with the cov-ering assets and optimise the currency coverage in light of relevant collateral conditions by reg

291、rouping assets.Remaining currency surpluses are systematically quantified and monito-red within the scope of economic modelling.Real estate risks result from the possibility of unfavour able changes in the value of real estate held either directly or through fund units.They may be caused by a deteri

292、oration in particular qualities of a property or by a general downslide in market values(such as the US real estate crash).Real estate risks continued to grow in importance for our portfolio owing to our continuous involvement in this sector.We spread these risks through broadly diversified investme

293、nts in high-quality markets of Germany,Europe as a whole and the United States.We use derivative financial instruments only to a very limited extent.The primary purpose of such financial instruments is to hedge against potentially adverse situations on capital mar-kets.In the year under review we to

294、ok out inflation swaps to hedge part of the inflation risks associated with the loss re-serves in our technical account.In addition,as in the previous year,a modest portion of our cash flows from the insurance business was hedged using forward exchange transactions.The contracts are concluded solely

295、 with first-class counter-parties and exposures are controlled in accordance with the restrictive parameters set out in the investment guidelines so as to avoid credit risks associated with the use of such trans-actions.Scenarios for changes in the fair value of our securities in EUR millionScenario

296、Portfolio change based on fair valueEquity securitiesShare prices 10%1.6Share prices 20%3.2Share prices+10%+1.6Share prices+20%+3.2Fixed-income securitiesyield increase+50 basis points190.7yield increase+100 basis points374.9yield decrease 50 basis points+197.2yield decrease 100 basis points+400.825

297、Hannover Re annual report 2011RISK REPORT MANAgEMENT REpORTCredit risks The credit risk consists primarily of the risk of complete or partial failure of the counterparty and the associated default on payment.Also significant here is the so-called migration risk,which results from the possibility of

298、a deterioration in the counterparty credit quality and is reflected in a change in fair value.Since the business that we accept is not always fully retained,but instead portions are retroceded as necessary,the credit risk is also material for our company in reinsurance transactions.Our retrocession

299、partners are carefully selected and monitored in light of credit considerations in order to keep the risk as small as possible.This is also true of our broker relationships,which entail a risk inter alia through the potential loss of the premium paid by the cedant to the broker or through possible d

300、ouble payments of claims.We minimise these risks,inter alia,by reviewing all broker relationships with an eye to criteria such as the existence of professional in-demnity insurance,payment performance and proper contract implementation.The credit status of retrocessionaires is con-tinuously monitore

301、d.On the basis of this ongoing monitoring a Security Committee decides on measures where necessary to secure receivables that appear to be at risk of default.This process is supported by a Web-based risk management application,which specifies cession limits for the individ-ual retro cessionaires par

302、ticipating in protection cover pro-grammes and determines the capacities still available for short-,medium-and long-term business(cession manage-ment).Depending on the type and expected run-off duration of the reinsured business,the selection of reinsurers takes into account not only the minimum rat

303、ings of the rating agencies Standard&Poors and A.M.Best but also internal and ex-ternal expert assessments(e.g.market information from brokers).Overall,retrocessions conserve our capital,stabilise and optimise our results and enable us to act on opportunities across a broader front,e.g.following a c

304、atastrophe loss event.Regular visits to our retrocessionaires give us a reliable over-view of the market and put us in a position to respond quickly to capacity changes.Through these close contacts with our retrocessionaires we are able to provide a stable renewals forecast.Alongside traditional ret

305、rocessions in non-life reinsurance we also transfer risks to the capital market.Yet credit risks are relevant to our investments and in life and health reinsur-ance,too,because we prefinance acquisition costs for our ceding companies.Our clients,retrocessionaires and broker relationships as well as

306、our investments are therefore carefully evaluated and limited in light of credit considerations and are constantly monitored and controlled within the scope of our system of limits and thresholds.Credit risks from investments may arise out of the risk of a failure to pay(interest and/or capital repa

307、yment)or a change in the credit status(rating downgrade)of issuers of secur ities.We attach equally vital importance to exceptionally broad di-versification as we do to credit assessment conducted on the basis of the quality criteria set out in the investment guide-lines.We measure credit risks in t

308、he first place using the standard market credit risk components,especially the probability of default and the potential amount of loss making allowance for any collateral and the ranking of the individual instruments depending on their effect in each case.We then assess the credit risk first on the

309、level of individual securities(issues)and in subsequent steps on a combined basis on the issuer level.In order to limit the risk of counterparty default we define vari-ous limits on the issuer and issue level as well as in the form of dedicated rating quotas.A comprehensive system of risk reporting

310、ensures timely reporting to the functions entrusted with risk management.Operational risksOperational risks refer to the risk of losses occurring because of the inadequacy or failure of internal processes or as a result of events triggered by employee-related,system-induced or external factors.Opera

311、tional risks are monitored primarily by way of appropriate process management.These risk potentials are evaluated on the basis of expert assessments,the plausi-bility of which is verified by central risk management.These assessments enable us to prioritise operational risks.When it comes to the moni

312、toring of such risks,we attach special emphasis to the following individual risks.Business process risks are associated with the risk of inad-equate or deficient internal processes,e.g.as a consequence of poor data quality.Data quality is a critical success factor,es-pecially in risk management,beca

313、use all enterprise processes are based on the information made available.The overriding goal of our data quality management is to bring about sustain-able improvement and to safeguard data quality within Han-nover Re,for example by way of regular data quality checks.In addition,as part of our proces

314、s management,overarching and company-wide processes are continuously optimised and standardised.Management report26Hannover Re annual report 2011MANAgEMENT REpORT RISK REPORTCompliance risks are associated with the risk of breaches of standards and requirements,non-compliance with which may entail l

315、awsuits or official proceedings with not inconsiderable detrimental implications for the business activities of Hanno-ver Re(e.g.tax,anti-trust or regulatory law).Upon suspicion of breaches of the law pertaining to Hannover Re,our employ-ees and business partners are able to report such suspi cions

316、anonymously using our electronic whistleblower system.These tips are brought to the attention of the companys Com-pliance Office,which is thus able to investigate the grounds for suspicion.Responsibilities within the compliance organ-isation are clearly regulated and documented in a manual.The proce

317、ss is documented in regular compliance reports and complemented by training activities.It is our assump-tion that the implementation of Solvency II will be accom-panied not only by improved business opportunities but also by more exact ing requirements for our risk management.We have therefore put i

318、n place extensive internal controls and ad vanced risk management methods and are tracking,for ex-ample,developments in connection with the“Own Risk and Solvency Assessment”very closely.As a reinsurance specialist,we transact primary insurance business that complements our reinsurance activities in

319、se-lected market niches.In so doing,just as on the reinsurance side,we always work together with partners from the primary sector such as insurance brokers and underwriting agencies.This gives rise to risks associated with such sales channels,although these are minimised through the careful selectio

320、n of agencies,mandatory underwriting guidelines and regular checks.Fraud risks refer to the risk of intentional violations of laws or regulations by members of staff(internal fraud)and/or by externals(external fraud).This risk is reduced by the process-integrated internal control system as well as b

321、y the audits conducted by Internal Auditing on a line-independent basis.The proper functioning and competitiveness of Hannover Re can be attributed in large measure to the expertise and dedica-tion of our staff.In order to minimise personnel risks,we pay special attention to the skills,experience an

322、d motiv ation of our employees and foster these qualities through outstanding personnel development and leadership activities.Regular em ployee surveys,the monitoring of turnover rates and the holding of exit interviews ensure that such risks are identified at an early stage and scope to take the ne

323、cessary actions is created.Information technology risks and information security risks arise,inter alia,out of the risk of the inadequate integrity,con-fidentiality or availability of systems and information.Losses and damage caused by unauthorised access to IT systems or by computer viruses,for exa

324、mple,pose a serious threat to Hannover Re.Given the broad spectrum of such risks,a di verse range of steering and monitoring measures and or-ganisational standards have been put in place.Among other things,our employees are made more conscious of such se-curity risks through practically oriented too

325、ls,for example for the secure communication of information by e-mail.When it comes to reducing business interruption risks,the paramount objective is the quickest possible return to normal operations after a crisis,for example through implementation of existing contingency plans.Guided by internatio

326、nally ac-cepted standards,we have defined the basic framework con-ditions for Hannover Re and among other measures we have assembled a crisis team to serve as a temporary body in the event of an emergency.The system is complemented by regular exercises and tests.Rating structure of our fixed-income

327、securities1Rating classesBearer debt securitiesRegistered debt securities/debentures and loansBond fundsSundry loansin%in EUR millionin%in EUR millionin%in EUR millionin%in EUR millionAAA23.42,137.749.1760.0AA34.13,116.244.2683.893.1842.3A26.42,406.53.756.8BBB12.51,137.52.741.7100.030.0 BBB3.6324.60

328、.34.46.962.4Total100.09,122.5100.01,546.7100.0904.7100.030.01 Securities held through investment funds are recognised pro rata with their corresponding individual ratings 27Hannover Re annual report 2011RISK REPORT MANAgEMENT REpORTThe partial or complete outsourcing of functions and/or ser-vices ma

329、y give rise to associated risks.Regulatory and binding internal rules serve to minimise such risks.All risks associated with any instance of outsourcing must be identified,evaluated(e.g.by way of a performance assessment)and appropriately steered and controlled.Other risksOf material importance to o

330、ur company in the category of other risks are primarily emerging risks,strategic risks,repu-tational risks and liquidity risks.The hallmark of emerging risks is that the content of such risks cannot as yet be reliably assessed especially with re spect to our treaty portfolio.Such risks evolve gradua

331、lly from weak sig-nals to unmistakable tendencies.It is therefore vital to detect these risks at an early stage and then determine their rele-vance.For the purpose of early detection we have developed an efficient process that spans divisions and lines of business and we have ensured its linkage to

332、risk management.Oper-ational implementation is handled by an expert working group assembled specially for this task.The analyses per formed by this working group are used in order to pinpoint any necessary measures(e.g.the implementation of contractual exclusions or the development of new reinsuranc

333、e products).By way of example,the risks arising out of the emergence of large cities and urban conurbations so-called megacities are analysed by this working group.The growth of such urban centres goes hand-in-hand with a host of different problems,including a growing demand for food,drinking water,energy and living space.These challenges may also have implications for our treaty portfolio in the