5. Segment reporting
Based on the “management approach” of IFRS 8, which requires segment information to be presented as it is reported internally to management and normally used by the chief operating decision maker to decide upon the allocation of resources to a segment and evaluate its performance, Hannover Re has identified the reportable segments of non-life reinsurance and life/health reinsurance. With regard to the object of business operations within the two segments please see the correspondingremarks in the management report.
The segment information shown follows the system used for internal reporting purposes, on the basis of which the full Executive Board regularly evaluates the performance of segments and decides on the allocation of resources to them.
The “Consolidation” column includes not only the elimination of cross-segment transactions but also, more significantly, companies whose business operations cannot be unambiguously allocated to non-life reinsurance or life/health reinsurance. These are principally the service and financing companies belonging to the Group.
During the financial year no material changes occurred in the organisational structure that could have influenced the composition of the segments. Since the performance indicators used to steer the segments correspond to the system according to which the consolidated financial statement is prepared, a separate reconciliation of the segment results with the Group result is not provided.
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| Consolidated segment report as at 31 December 2012 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Segmentation of assets | Non-life reinsurance | Life and health reinsurance | Consolidation | Total | ||||
| in EUR thousand | 31.12.2012 | 31.12.2011 | 31.12.2012 | 31.12.2011 | 31.12.2012 | 31.12.2011 | 31.12.2012 | 31.12.2011 |
| Assets | ||||||||
| Held to maturity | 3,213,397 | 3,704,836 | 199,319 | 199,846 | 193,240 | 251,407 | 3,605,956 | 4,156,089 |
| Loans and receivables | 3,313,608 | 3,486,857 | 75,424 | 27,560 | 26,155 | 10,318 | 3,415,187 | 3,524,735 |
| Available for sale | 15,572,034 | 11,707,340 | 5,805,682 | 5,355,477 | 433,602 | 306,481 | 21,811,318 | 17,369,298 |
| At fair value through profit or loss | 113,030 | 118,327 | 75,731 | 40,346 | 19,487 | 23,483 | 208,248 | 182,156 |
| Other invested assets | 1,679,251 | 1,554,528 | 75,055 | 27,041 | (2,530) | 2,503 | 1,751,776 | 1,584,072 |
| Short-term investments | 325,302 | 638,128 | 183,866 | 339,662 | 550 | 40,096 | 509,718 | 1,017,886 |
| Cash | 407,336 | 385,531 | 161,258 | 118,835 | 3,594 | 2,597 | 572,188 | 506,963 |
| Total investments and cash under own management | 24,623,958 | 21,595,547 | 6,576,335 | 6,108,767 | 674,098 | 636,885 | 31,874,391 | 28,341,199 |
| Funds withheld | 925,312 | 836,170 | 13,702,535 | 12,395,934 | – | (50) | 14,627,847 | 13,232,054 |
| Contract deposits | 25,803 | – | 97,455 | 109,719 | – | – | 123,258 | 109,719 |
| Total investments | 25,575,073 | 22,431,717 | 20,376,325 | 18,614,420 | 674,098 | 636,835 | 46,625,496 | 41,682,972 |
| Reinsurance recoverables on unpaid claims | 1,288,664 | 1,352,406 | 251,161 | 199,332 | (1,610) | (1,151) | 1,538,215 | 1,550,587 |
| Reinsurance recoverables on benefit reserve | – | – | 507,257 | 380,714 | – | – | 507,257 | 380,714 |
| Prepaid reinsurance premium | 135,999 | 89,109 | 2,620 | 2,802 | (246) | (88) | 138,373 | 91,823 |
| Reinsurance recoverables on other reserves | 1,103 | 4,239 | 1,508 | 3,571 | – | – | 2,611 | 7,810 |
| Deferred acquisition costs | 476,592 | 458,651 | 1,364,675 | 1,467,915 | 12 | 4 | 1,841,279 | 1,926,570 |
| Accounts receivable | 1,691,435 | 1,977,106 | 1,375,992 | 1,162,401 | (1,763) | (180) | 3,065,664 | 3,139,327 |
| Other assets in the segment | 1,288,719 | 1,469,312 | 503,362 | 467,140 | (705,596) | (851,694) | 1,086,485 | 1,084,758 |
| Assets held for sale | 6,333 | 2,391 | – | – | – | – | 6,333 | 2,391 |
| Total assets | 30,463,918 | 27,784,931 | 24,382,900 | 22,298,295 | (35,105) | (216,274) | 54,811,713 | 49,866,952 |
| Segmentation of liabilities in EUR thousand |
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| Liabilities | ||||||||
| Loss and loss adjustment expense reserve | 18,595,088 | 18,030,010 | 3,017,220 | 2,738,458 | (1,610) | (1,151) | 21,610,698 | 20,767,317 |
| Benefit reserve | – | – | 10,974,804 | 10,309,149 | (234) | (83) | 10,974,570 | 10,309,066 |
| Unearned premium reserve | 2,253,544 | 2,110,289 | 86,265 | 105,575 | – | – | 2,339,809 | 2,215,864 |
| Provisions for contingent commissions | 141,114 | 145,915 | 73,105 | 61,347 | – | – | 214,219 | 207,262 |
| Funds withheld | 432,884 | 313,851 | 388,176 | 330,736 | – | – | 821,060 | 644,587 |
| Contract deposits | 84,523 | 96,611 | 5,713,361 | 4,911,582 | – | – | 5,797,884 | 5,008,193 |
| Reinsurance payable | 702,224 | 446,301 | 421,214 | 287,692 | (2,029) | (645) | 1,121,409 | 733,348 |
| Long-term liabilities | 167,774 | 202,823 | 4,552 | – | 2,228,465 | 1,731,587 | 2,400,791 | 1,934,410 |
| Other liabilities in the segment | 1,848,933 | 1,544,215 | 1,619,772 | 1,730,456 | (677,712) | (834,421) | 2,790,993 | 2,440,250 |
| Total liabilities | 24,226,084 | 22,890,015 | 22,298,469 | 20,474,995 | 1,546,880 | 895,287 | 48,071,433 | 44,260,297 |
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| Consolidated segment report as at 31 December 2012 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Segment statement of income | Non-life reinsurance | Life and health reinsurance | Consolidation | Total | ||||
| in EUR thousand | 1.1. – 31.12.2012 | 1.1. – 31.12.2011 | 1.1. – 31.12.2012 | 1.1. – 31.12.2011 | 1.1. – 31.12.2012 | 1.1. – 31.12.2011 | 1.1. – 31.12.2012 | 1.1. – 31.12.2011 |
| Gross written premium | 7,717,490 | 6,825,522 | 6,057,876 | 5,270,137 | (1,122) | 454 | 13,774,244 | 12,096,113 |
| Thereof | ||||||||
| From insurance business with other segments | 264 | – | 858 | (454) | (1,122) | 454 | – | – |
| From insurance business with external third parties | 7,717,226 | 6,825,522 | 6,057,018 | 5,270,591 | – | – | 13,774,244 | 12,096,113 |
| Net premium earned | 6,854,040 | 5,960,764 | 5,425,620 | 4,788,893 | (418) | 1,854 | 12,279,242 | 10,751,511 |
| Net investment income | 944,537 | 845,426 | 685,147 | 512,616 | 25,966 | 25,999 | 1,655,650 | 1,384,041 |
| Thereof | ||||||||
| Unrealised gains and losses on investments | 32,363 | 12,954 | 53,274 | (47,156) | 3,631 | (4,593) | 89,268 | (38,795) |
| Total depreciation, impairments and appreciation of investments | 16,257 | (6,115) | 2,810 | 314 | – | – | 19,067 | (5,801) |
| Income/expense on funds withheld and contract deposits | 13,754 | 14,239 | 341,732 | 324,299 | – | – | 355,486 | 338,538 |
| Claims and claims expenses | 4,842,487 | 4,701,962 | 4,010,877 | 3,328,609 | (18) | (676) | 8,853,346 | 8,029,895 |
| Change in benefit reserve | – | – | 529,434 | 619,713 | (151) | 1,747 | 529,283 | 621,460 |
| Commission and brokerage, change in deferred acquisition costs and other technical income/expenses | 1,573,976 | 1,367,299 | 1,098,037 | 985,803 | (1,847) | (6,186) | 2,670,166 | 2,346,916 |
| Administrative expenses | 165,330 | 160,223 | 144,127 | 130,568 | 1,333 | (1,728) | 310,790 | 289,063 |
| Other income and expenses | (124,927) | 22,553 | (37,212) | (19,170) | (2,705) | (10,184) | (164,844) | (6,801) |
| Operating profit/loss (EBIT) | 1,091,857 | 599,259 | 291,080 | 217,646 | 23,526 | 24,512 | 1,406,463 | 841,417 |
| Interest on hybrid capital | – | – | – | – | 104,511 | 99,169 | 104,511 | 99,169 |
| Net income before taxes | 1,091,857 | 599,259 | 291,080 | 217,646 | (80,985) | (74,657) | 1,301,952 | 742,248 |
| Taxes | 335,055 | 77,618 | 55,692 | 30,626 | (22,518) | (42,784) | 368,229 | 65,460 |
| Net income | 756,802 | 521,641 | 235,388 | 187,020 | (58,467) | (31,873) | 933,723 | 676,788 |
| Thereof | ||||||||
| Non-controlling interest in profit or loss | 70,900 | 66,051 | 4,511 | 4,764 | – | – | 75,411 | 70,815 |
| Group net income | 685,902 | 455,590 | 230,877 | 182,256 | (58,467) | (31,873) | 858,312 | 605,973 |