talanx group annual report 2011 en

Overall assessment of
the economic situation
Non-financial
performance indicators
Group solvency
As an insurance holding company, Talanx AG is subject to regulatory
provisions pursuant to §1 b) Insurance Supervision Act (VAG).
For the Talanx Group, supervision is carried out at the Group level
by the Federal Financial Supervisory Authority (BaFin). For this
purpose the parent company HDI V. a. G. reports supplementary information
to the BaFin in accordance with the “adjusted solvency”
rules.
Corporate Governance Remuneration report Events of special
significance
Solvency refers to the ability of an insurer to meet the obligations
assumed under its contracts on a lasting basis. Above all, this entails
fulfilling defined minimum capital requirements. The aim of the
“adjusted solvency” rules is to prevent the multiple use of equity
to cover risks from underwriting business at different levels of the
Group hierarchy. To calculate the adjusted solvency, the minimum
equity required for the volume of business transacted (required
solvency margin) is compared with the eligible equity actually available
(actual solvency margin) on the basis of the IFRS consolidated
financial statements. To determine the eligible capital elements,
the IFRS equity is adjusted; in particular, it is increased by some of
the subordinated liabilities and valuation reserves not included in
equity and is reduced by the intangible assets. The Talanx Group’s
eligible capital is twice as high as legally required.
Adjusted solvency 1) 2011 2010 2009
Eligible capital of the Group In EUR million 6,843 6,363 5,639
Solvency ratio In % 201.8 196.7 184.2
1) Calculated pro rata for Talanx from the adjusted solvency of the HDI Group
The increase in the adjusted solvency ratio from 196.7% to 201.8%
can be attributed essentially to the rise in the IFRS Group shareholders’
equity as a consequence of the Group’s net income being
allocated to the retained earnings. The other items to be deducted
or added were virtually unchanged from the previous year.
Rating of the Group and its major subsidiaries
In the year under review the Talanx Group and its companies again
maintained their very good ratings from the international rating
agencies Standard & Poor’s (S&P) and A. M. Best. It is important
to distinguish between the “Insurer Financial Strength Rating”,
which primarily assesses our ability to meet our obligations to
our policyholders, and the “Issuer Credit Rating” or “Counterparty
Credit Rating”, which provides investors with information from an
independent source about a company’s credit quality in general.
Financial Strength Ratings
of the Talanx Group and its
subgroups
Risk report Forecast and
opportunities report
Standard & Poor’s A. M. Best
Rating Outlook Rating Outlook
Talanx Group 1) A Stable
Talanx Primary Group 2) A+ Stable
Hannover Re subgroup 3) AA– Stable A Positive
1) The designation used by A. M. Best is “HDI V. a. G. and Talanx AG’s leading non-life
direct insurance operation and leading life insurance operation”
2) This rating applies to the subgroup of primary insurers (the Talanx Group divisions
Industrial Lines, Retail Germany and Retail International) as well as its major core
companies
3) This rating applies to Hannover Re and its major core companies. The Hannover Re
subgroup corresponds to the Talanx Group division Reinsurance
The financial stability of the Talanx Group (with respect to both the
primary insurance sector and the reinsurance sector) is assessed by
the rating agency A. M. Best as “Excellent”; with a rating of A it is in
the second-best rating category. The outlook for the rating of Hannover
Re is assessed as positive in light of the company’s excellent
capitalisation, while the outlook for the rating of the primary insurance
companies is stable.
In the case of S&P, the Hannover Re subgroup is awarded a rating
in the second-best rating category at AA– (“Very Strong”), while the
Primary Group was placed within the third-best rating category
with A+ (“Strong”). The outlook for the ratings of both subgroups is
assessed as stable in both cases.
The strong competitive position of both subgroups is highlighted
by S&P as a particularly impressive strength. S&P names the Talanx
Primary Group’s strong capitalisation and conservative investment
strategy as additional strengths. In S&P’s view Hannover Re is
conspicuous for its very good risk management. A. M. Best acknowledges,
among other things, the very good capitalisation of both subgroups
and their excellent competitive positions. In the view of the
rating agencies Talanx Group has benefited also from its restructuring
programme “Fokus”, which it launched in 2009.
Talanx Group. Annual Report 2011
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