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Financing and Group debt

In addition to the financing effect of the changes in shareholders’ equity described above, debt financing on the capital market is a key component of Hannover Re’s financing. It was essentially composed of subordinated bonds issued to ensure lasting protection of our capital base – in part also in observance of rating requirements. The total volume of debt and subordinated capital stood at EUR 2,400.8 million (EUR 1,934.4 million) as at the balance sheet date.

Our subordinated bonds supplement our equity with the aim of reducing the cost of capital and also help to ensure liquidity at all times. In the year under review we issued further subordinated debt with a nominal volume of EUR 500.0 million and a maturity of approximately 30 years. As at the balance sheet date four subordinated bonds had been placed on the European capital market through Hannover Finance (Luxembourg) S.A.

The table below summarises the carrying amounts of our subordinated bonds.

Subordinated bonds
in EUR million Issue date Coupon
in %
2012 2011
Hannover Finance (Luxembourg) S.A., subordinated debt,
EUR 500 million; 2012/2043
20.11.2012 5.00 496.6
Hannover Finance (Luxembourg) S.A., subordinated debt,
EUR 500 million; 2010/2040
14.9.2010 5.75 498.0 497.9
Hannover Finance (Luxembourg) S.A., subordinated debt,
EUR 500 million; 2005/undated
1.6.2005 5.00 489.6 485.7
Hannover Finance (Luxembourg) S.A., subordinated debt,
EUR 750 million; 2004/2024
26.2.2004 5.75 748.8 748.0
Total     2,233.0 1,731.6

Several Group companies have also taken up long-term debt – principally in the form of mortgage loans – amounting to EUR 167.8 million (EUR 202.8 million).

For further explanatory information please see our remarks in the notes to this report, Section 6.12 “Debt and subordinated capital” and Section 6.13 “Shareholders’ equity, non-controlling interests and treasury shares”.

Sureties in the form of letters of credit have been furnished by various financial institutions as collateral for our technical liabilities. Both bilateral agreements and an unsecured syndicated guarantee facility existed as at the balance sheet date with a number of financial institutions for this purpose. We report in detail on existing contingent liabilities in the notes, Section 6.12 “Debt and subordinated capital” in our remarks on other financial facilities, and Section 8.7 “Contingent liabilities and commitments”.

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