talanx group annual report 2011 en
talanx group annual report 2011 en
talanx group annual report 2011 en
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78<br />
The Talanx Group Strategy Enterprise<br />
managem<strong>en</strong>t<br />
Talanx Group. Annual Report <strong>2011</strong><br />
Research and<br />
developm<strong>en</strong>t<br />
Talanx AG has concluded a firm agreem<strong>en</strong>t with a broad consortium<br />
of banks regarding a floating-rate line of credit that may be<br />
drawn upon as necessary. At the balance-sheet date we had used<br />
one tranche amounting to altogether EUR 550 million. The nominal<br />
amount of the line of credit was EUR 1.5 billion as at the balancesheet<br />
date. In <strong>2011</strong> Talanx AG concluded agreem<strong>en</strong>ts on two syndicated<br />
variable-interest credit lines in the amounts of EUR 500 million<br />
and EUR 650 million, respectively, each with a term of five<br />
years. These are follow-on funding agreem<strong>en</strong>ts that come into effect<br />
only wh<strong>en</strong> the existing credit line matures or is cancelled or wh<strong>en</strong><br />
the new credit line is paid out.<br />
Various financial institutions have giv<strong>en</strong> us guarantees in the<br />
form of letters of credit as surety for our technical liabilities. At the<br />
balance-sheet date, the amount available totalled EUR 3,2 (2,8) billion.<br />
Among these are unsecured letter of credit facilities with various<br />
terms (maturing at the latest in 2021) and a total volume equival<strong>en</strong>t<br />
to EUR 2,403 (1,207) million issued by financial institutions on a<br />
bilateral basis to cover liabilities in the reinsurance sector. The Life/<br />
Health and Non-Life Reinsurance segm<strong>en</strong>t has a credit line in the<br />
amount of EUR 773 million in the form of an unsecured syndicated<br />
guarantee facility to replace the syndicated (LoC) facilities from<br />
2005 and 2006. This features an initial maturity of 2017 with ext<strong>en</strong>sion<br />
options. Several bilateral credit agreem<strong>en</strong>ts have also be<strong>en</strong><br />
concluded. After interim maturities, the 2005 syndicated facility<br />
amounted to EUR 27 million at the balance-sheet date and finally<br />
runs out in early January 2012. The syndicated LoC from 2006 was<br />
repaid in full in the course of the refinancing operation. Furthermore,<br />
a longterm unsecured line of credit with a total volume<br />
equival<strong>en</strong>t to at most EUR 386 (566) million was concluded in<br />
December 2009; this is int<strong>en</strong>ded specifically for US life reinsurance<br />
business.<br />
For further information on the letters of credit provided please see<br />
our explanatory remarks in the item of the Notes <strong>en</strong>titled “Other information<br />
– Conting<strong>en</strong>t liabilities and other financial commitm<strong>en</strong>ts.”<br />
A number of LoC facilities include standard market clauses that<br />
grant rights of cancellation to the issuing banks in the ev<strong>en</strong>t<br />
of material changes in our shareholding structure or trigger a<br />
requirem<strong>en</strong>t on the part of Hannover Re to furnish collateral upon<br />
materialisation of major ev<strong>en</strong>ts, for example if our rating is significantly<br />
downgraded.<br />
More detailed information on our liquidity managem<strong>en</strong>t is provided<br />
in the section on liquidity risks in the risk <strong>report</strong>.<br />
Markets and<br />
g<strong>en</strong>eral conditions<br />
Business<br />
developm<strong>en</strong>t<br />
Assets and<br />
financial position<br />
Analysis of debt<br />
With the aim of optimising the capital structure, our subordinated<br />
bonds and deb<strong>en</strong>tures (abbreviated for pres<strong>en</strong>t purposes to: subordinated<br />
debt) complem<strong>en</strong>t our shareholders’ equity and help to<br />
<strong>en</strong>sure liquidity at all times. We refer to this subordinated debt and<br />
other bank borrowings that serve to finance corporate acquisitions<br />
as our “strategic debt.”<br />
Of the credit line in the amount of EUR 1.5 billion provided by a<br />
broad consortium of banks in 2009, Talanx AG had at the balancesheet<br />
date used one tranche amounting to EUR 550 million, unchanged<br />
from the previous year. This line of credit matures at the<br />
latest on 31 July 2012 and can be called at three months’ notice. Arrangem<strong>en</strong>ts<br />
for follow-on funding have be<strong>en</strong> made as described in<br />
the previous section. Another EUR 9 million of Talanx AG’s liabilities<br />
is attributable to intra-Group bearer deb<strong>en</strong>tures. Furthermore, several<br />
Group companies have tak<strong>en</strong> up longterm debt – principally<br />
in the form of mortgage loans – amounting to EUR 203 (188) million.<br />
Effective 14 March <strong>2011</strong>, the subordinated debt of nominally<br />
EUR 138 million issued in September 2001 through Hannover<br />
Finance (Luxembourg) S. A. was called as scheduled and fully repaid<br />
(EUR 33 million).<br />
Issued debt was repurchased only on a minor scale in <strong>2011</strong>.<br />
Changes in the strategic debt <strong>2011</strong> 2010 2009<br />
Figures in EUR million<br />
Subordinated bonds of Hannover Finance<br />
(Luxembourg) S. A.<br />
Subordinated bonds of HDI-Gerling<br />
1,732 1,869 1,365<br />
Industrie Versicherung AG<br />
Subordinated bonds of HDI-Gerling<br />
261 265 269<br />
Leb<strong>en</strong>sversicherung AG<br />
Subordinated bonds of Talanx Finanz<br />
113 115 105<br />
(Luxemburg) S. A. 209 242 264<br />
Subordinated bonds of Talanx AG 300 300 —<br />
Bank borrowings of Talanx AG<br />
Mortgage loans of Hannover Re Real Estate<br />
550 550 550<br />
Holdings, Inc., Orlando 203 188 116<br />
Other bank borrowings of Talanx AG — — 57<br />
Other 9 9 9<br />
Total 3,377 3,538 2,735<br />
For further explanations please see our remarks in the Notes on<br />
items 16 “Shareholders’ equity,” 17 “Subordinated liabilities,” 25 “Notes<br />
payable and loans,” 26 “Other liabilities” and under “Other information<br />
– Conting<strong>en</strong>t liabilities and other financial commitm<strong>en</strong>ts.”