We generate liquidity primarily from our operational reinsurance business, investments and financing measures. Regular liquidity planning and a liquid investment structure ensure that Hannover Re is able to make the necessary payments at all times. Hannover Re’s cash flow is shown in the consolidated cash flow statement.
Hannover Re does not conduct any automated internal cash pooling within the Group. Liquidity surpluses are managed and created by the Group companies. Various loan relationships exist within the Hannover Re Group for the optimal structuring and flexible management of the short- or long-term allocation of liquidity and capital.
|Consolidated cash flow statement|
|in EUR million||2014||2013|
|Cash flow from operating activities||1,930.9||2,225.5|
|Cash flow from investing activities||(1,195.3)||(1,761.5)|
|Cash flow from financing activities||(647.6)||(347.7)|
|Exchange rate differences on cash||46.0||(41.7)|
|Change in cash and cash equivalents||134.0||74.6|
|Cash and cash equivalents at the beginning of the period||642.9||572.2|
|Change in cash and cash equivalents according to cash flow statement||134.0||74.6|
|Changes in the consolidated group1||(4.0)||(3.8)|
|Cash and cash equivalents at the end of the period||772.9||642.9|
|1 Cf. the explanatory remarks in the “Consolidation” section of the notes|
Cash flow from operating activities
The cash flow from operating activities, which also includes inflows from interest received and dividend receipts, amounted to EUR 1,930.9 million in the year under review as opposed to EUR 2,225.5 million in the previous year. The decrease of EUR 294.6 million in the net inflow year-on-year – despite the modest rise in net premium – was attributable mainly to increased losses paid for hailstorm Andreas as well as for US mortality and senior health insurance business.
Cash flow from investing activities
Making allowance for dividend payments and financing measures, the high cash flow from operating activities recorded in the year under review – as in the previous year – was for the most part invested in an amount of EUR 1,195.3 million (EUR 1,761.5 million) in additional investments while at the same time preserving the asset structure. The area of fixed-income securities saw particularly elevated activity compared to the previous year, attributable in part to the regrouping of the investment Portfolio from EUR into USD at our subsidiaries in Bermuda and partly also to our repurchase and issuance of new subordinated debt.
Regarding the development of the investment portfolio please see also our remarks at the beginning of this section.
Cash flow from financing activities
With dividend payments remaining roughly unchanged at EUR 403.4 million (EUR 410.3 million), the cash flow from financing activities decreased from -EUR 347.7 million to -EUR 647.6 million. The change was due to subordinated debt of EUR 493.5 million placed in the year under review as well repayment of the EUR 750 million subordinated debt issued by Hannover Finanz (Luxemburg) S.A. at the first scheduled redemption date. The taking up of long-term debt by HR GLL Central Europe GmbH & Co. KG, Munich, in an amount of EUR 77.3 million in the previous year resulted in a further change of -EUR 53.8 million in the cash inflow.
Overall, allowing for the changes in the consolidated group, the cash and cash equivalents therefore increased year-on-year by EUR 130.0 million to EUR 772.9 million.
For further information on our liquidity management please see the risk report.
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