talanx group annual report 2011 en

Overall assessment of
the economic situation
Non-financial
performance indicators
Corporate Governance Remuneration report Events of special
significance
tion to industrial bonds, were increasingly favoured as investment
targets due to their positive risk-return credentials. Investments in
government bonds were somewhat limited in the wake of downgrading
by the rating agencies in the course of the year. Thus, our
portfolio of government securities or securities with a similar level
of security in this category of holdings amounted to EUR 10.2 billion
or 13% of the total investment portfolio.
By the end of the year, the Group had only minor exposure to
government bonds from the so-called GIIPS countries. At the end
of the year, our investment exposure to these countries was worth
EUR 1.3 billion, 1.7% of the total assets under own management.
Our Italian exposure (market value of EUR 634 million) is due to
the Group’s presence in this country. As part of our ongoing risk
management, we intend to reduce this exposure nominally by
EUR 86 million by the end of the first quarter of 2012. Given the
inherent risk factor, we intend to adhere to our current strategy of
not expanding our investment exposure to the GIIPS countries any
further. At this point, we refer to our remarks on page 104 of the
risk report.
2011 also witnessed an increase in our investment portfolio in the
“Financial assets held to maturity” category, which was largely
attributable to the two reinsurance segments. The increase in this
item was made possible by divestments and reclassifications in
“Financial assets available for sale”. In the reinsurance segment, the
Group reclassified fixed-income securities with a total market value
of EUR 1.3 billion from “Financial assets available for sale” to the
“held to maturity” category. The option and intention of holding
these assets to maturity enables the companies to reduce the volatility
of their balance sheets due to interest rate movements.
Rating of fixed-income securities
In %
BBB or lower
A
AA
AAA
11
18
28
11
19
26
43 44
2009 2010 2011
14
20
28
38
Risk report Forecast and
opportunities report
The Talanx Group continues to pursue a conservative investment
policy. For detailed information on the quality of our investments,
please see pages 197 – 205 of the Notes.
The funds withheld by ceding companies with respect to collateral
furnished for the technical reserves of cedants in the Reinsurance
segment climbed from EUR 11.0 billion at year-end 2010 to
EUR 11.7 billion. Allowing for increased total asset holdings, this
corresponds to a ratio of 13%, as in the previous year.
Equities and equity funds
In 2011, European equity markets were pulled into a downward spiral
of global proportions. In the first half of the year, the trend was
set in motion by the disasters in Japan while, in the second, it was
further fuelled by the escalation of the European sovereign debt
and banking crises. Reflecting developments in the markets, our
equity portfolios – valued at EUR 1.9 billion at the start of the year –
were reduced significantly in the first quarter of 2011. The remaining
equities are held mainly in equity funds, where they are hedged
accordingly. Most of the equities are held in portfolios belonging to
our companies in the Retail Germany and Retail International segments.
The other portfolios are attributable strategic commitments.
At the end of the financial year, the Group’s equities exposure
amounted to EUR 0.9 billion, an equity ratio of 1.0%.
The net balance of unrealised gains and losses on holdings within
the Group (excluding other invested assets) fell by EUR 179 million
and now amount to EUR 129 (308) million.
Real estate including shares in real estate funds
Investment property with a value of EUR 1.1 billion was held at the
end of 2011, a minor increase of EUR 5 million compared with the
preceding year. Along with scheduled depreciation of EUR 20 million,
impairments of EUR 19 million were taken in the year under
review on the basis of market valuations. These write-downs were
opposed by write-ups in the same amount.
The real estate allocation, which also includes investments in real
estate funds, was unchanged at 2%.
Talanx Group. Annual Report 2011
67