talanx group annual report 2011 en

Overall assessment of
the economic situation
Non-financial
performance indicators
Corporate Governance Remuneration report Events of special
significance
ment GmbH in order to ensure consistent limit controlling across
the Group. Overshoots and undershoots are flagged on a same-day
basis, thereby facilitating the definition of measures to rectify limit
violations without delay. In addition, thresholds are specified for
key indicators, upon attainment of which steps can be taken in a
timely manner in order to prevent a possible overstep of limits or
jeopardising of targets at an early stage.
Movements in investments
Breakdown of the investment portfolio
Figures in EUR million
Funds held by ceding companies
Assets under own management
1) Adjusted on the basis of IAS 8
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The investment portfolio continued to grow in 2011, on balance
posting a rise of almost 5% to close the year at EUR 87.5 billion.
This development was the result of an increase in the funds held
by ceding companies to EUR 11.7 billion (+6.9%), together with
growth of 4.5% in the volume of assets under own management
to EUR 75.8 billion. Besides the company acquisitions made in the
reporting period, the expansion of the portfolio of assets under
own management was largely due to cash inflows from underwriting
business which were reinvested in accordance with corporate
guidelines.
Market developments also resulted in changes in the portfolio. The
second half of 2011, in particular, saw interest rates fall significantly
across all maturities and this was reflected in a corresponding
increase in the fair values of our fixed-income investments. With
interest rates already low, two-year German government bonds
lost around 75 basis points, closing the year at 0.1%. The cut in the
interest rate for ten-year maturities amounted to around 100 basis
points, with the interest rate slumping to 1.8% by the turn of the
year.
Risk report Forecast and
opportunities report
In addition to these influencing factors, the movement in the USD
exchange rate had a direct effect on our invested assets, too. The
USD stood at 1.34 to the euro on 31 December 2010 and rose in the
first six months of 2011 to over 1.45 to the euro, before the trend
reversed completely in the second half of the year. Slumping to 1.29
to the euro on 31 December 2011, the USD was therefore worth less
than it had been at the same period in the preceding year. Exchange
rate fluctuations alone resulted in an increase in value of almost
4% in our USD holdings after translation into the Group reporting
currency (euros). At the end of the year, our portfolio of USD holdings
was worth EUR 11.4 billion, 15% of the total assets under own
management.
In recent years, fixed-income investments have always been the
most significant category of asset, but in 2011 they became even
more important. The proportion of the total investment portfolio
attributable to fixed-income securities was 78%, a rise of 2 percentage
points on the preceding year. The contribution made by this
category of asset to earnings amounted to EUR 2.7 billion, and this
sum was reinvested in the year under review. The Group actively
reduced its equity exposure to a minimum in the course of 2011, the
equity ratio amounting to 1.0% by the end of the year. Although the
proportion of the total investment portfolio attributable to alternative
investments and real estate remained low, these investments
did help to diversify and thus stabilise the various portfolios.
In compliance with all legal requirements and internal Group
guidelines, the diversification of the investment portfolio as at
31 December 2011 compared to year-end 2010 was as follows:
Breakdown of the investment portfolio
In %
9
2
12 2
75
7
2
13 2
76
2009 2010 2011
Other
Real estate
Funds held by ceding companies
Equities and other variable-yield investments
Fixed-income securities
6
2
13 1
78
Talanx Group. Annual Report 2011
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