talanx group annual report 2011 en

78
The Talanx Group Strategy Enterprise
management
Talanx Group. Annual Report 2011
Research and
development
Talanx AG has concluded a firm agreement with a broad consortium
of banks regarding a floating-rate line of credit that may be
drawn upon as necessary. At the balance-sheet date we had used
one tranche amounting to altogether EUR 550 million. The nominal
amount of the line of credit was EUR 1.5 billion as at the balancesheet
date. In 2011 Talanx AG concluded agreements on two syndicated
variable-interest credit lines in the amounts of EUR 500 million
and EUR 650 million, respectively, each with a term of five
years. These are follow-on funding agreements that come into effect
only when the existing credit line matures or is cancelled or when
the new credit line is paid out.
Various financial institutions have given us guarantees in the
form of letters of credit as surety for our technical liabilities. At the
balance-sheet date, the amount available totalled EUR 3,2 (2,8) billion.
Among these are unsecured letter of credit facilities with various
terms (maturing at the latest in 2021) and a total volume equivalent
to EUR 2,403 (1,207) million issued by financial institutions on a
bilateral basis to cover liabilities in the reinsurance sector. The Life/
Health and Non-Life Reinsurance segment has a credit line in the
amount of EUR 773 million in the form of an unsecured syndicated
guarantee facility to replace the syndicated (LoC) facilities from
2005 and 2006. This features an initial maturity of 2017 with extension
options. Several bilateral credit agreements have also been
concluded. After interim maturities, the 2005 syndicated facility
amounted to EUR 27 million at the balance-sheet date and finally
runs out in early January 2012. The syndicated LoC from 2006 was
repaid in full in the course of the refinancing operation. Furthermore,
a longterm unsecured line of credit with a total volume
equivalent to at most EUR 386 (566) million was concluded in
December 2009; this is intended specifically for US life reinsurance
business.
For further information on the letters of credit provided please see
our explanatory remarks in the item of the Notes entitled “Other information
– Contingent liabilities and other financial commitments.”
A number of LoC facilities include standard market clauses that
grant rights of cancellation to the issuing banks in the event
of material changes in our shareholding structure or trigger a
requirement on the part of Hannover Re to furnish collateral upon
materialisation of major events, for example if our rating is significantly
downgraded.
More detailed information on our liquidity management is provided
in the section on liquidity risks in the risk report.
Markets and
general conditions
Business
development
Assets and
financial position
Analysis of debt
With the aim of optimising the capital structure, our subordinated
bonds and debentures (abbreviated for present purposes to: subordinated
debt) complement our shareholders’ equity and help to
ensure liquidity at all times. We refer to this subordinated debt and
other bank borrowings that serve to finance corporate acquisitions
as our “strategic debt.”
Of the credit line in the amount of EUR 1.5 billion provided by a
broad consortium of banks in 2009, Talanx AG had at the balancesheet
date used one tranche amounting to EUR 550 million, unchanged
from the previous year. This line of credit matures at the
latest on 31 July 2012 and can be called at three months’ notice. Arrangements
for follow-on funding have been made as described in
the previous section. Another EUR 9 million of Talanx AG’s liabilities
is attributable to intra-Group bearer debentures. Furthermore, several
Group companies have taken up longterm debt – principally
in the form of mortgage loans – amounting to EUR 203 (188) million.
Effective 14 March 2011, the subordinated debt of nominally
EUR 138 million issued in September 2001 through Hannover
Finance (Luxembourg) S. A. was called as scheduled and fully repaid
(EUR 33 million).
Issued debt was repurchased only on a minor scale in 2011.
Changes in the strategic debt 2011 2010 2009
Figures in EUR million
Subordinated bonds of Hannover Finance
(Luxembourg) S. A.
Subordinated bonds of HDI-Gerling
1,732 1,869 1,365
Industrie Versicherung AG
Subordinated bonds of HDI-Gerling
261 265 269
Lebensversicherung AG
Subordinated bonds of Talanx Finanz
113 115 105
(Luxemburg) S. A. 209 242 264
Subordinated bonds of Talanx AG 300 300 —
Bank borrowings of Talanx AG
Mortgage loans of Hannover Re Real Estate
550 550 550
Holdings, Inc., Orlando 203 188 116
Other bank borrowings of Talanx AG — — 57
Other 9 9 9
Total 3,377 3,538 2,735
For further explanations please see our remarks in the Notes on
items 16 “Shareholders’ equity,” 17 “Subordinated liabilities,” 25 “Notes
payable and loans,” 26 “Other liabilities” and under “Other information
– Contingent liabilities and other financial commitments.”