Management of policyholders’ surplus

Management of policyholders’ surplus

The preservation of its capital is a key strategic objective for Hannover Re. In the 2013 financial year and in recent years hybrid capital was issued as an equity substitute in order to keep the cost of capital on a low level. The policyholders’ surplus is a key management ratio in the context of Hannover Re’s comprehensive capital management. The policyholders’ surplus is defined as follows:

  • shareholders’ equity excluding non-controlling interests, composed of the common shares, additional paid-in capital, other comprehensive income and retained earnings,
  • non-controlling interests and
  • hybrid capital used as an equity substitute, which encompasses our subordinated debt.

The policyholders’ surplus totalled EUR 8,767.9 million (EUR 8,947.2 million) as at the balance sheet date, a decrease of 2.0% in the year under review due to changes in cumulative other comprehensive income and in light of adjustments to the previous year pursuant to IAS 8 (cf. Section 3.1 of the notes).


Hannover Re uses “Intrinsic Value Creation” (IVC) as its central value-based management tool. With the aid of this tool we apply the principles of economic allocation of equity and efficient use of debt as an equity substitute in order to achieve the lowest possible weighted cost of capital. This concept as well as the objectives and principles in accordance with which we conduct our enterprise management and capital management are described in greater detail in our remarks on value-based management in this report.

Hannover Re is guided in its capital management by the requirements and expectations of the rating agencies that assess the Group with an eye to its targeted rating. Furthermore, while making appropriate allowance for business policy considerations and factors that influence market presence, the allocation of capital to the Group’s operational companies is based upon the economic risk content of the business group in question. The Group companies are also subject to national capital and solvency requirements. All Group companies met the applicable local minimum capital requirements in the year under review. Adherence to these capital requirements is continuously monitored by the responsible organisational units on the basis of the latest actual figures as well as the corresponding planned and forecast figures. If, despite the capital allocation mechanisms described above, a scenario occurs in which there is a danger of minimum capital requirements being undershot, suitable options are immediately discussed and measures set in motion to counteract such an eventuality. From the Group perspective we manage Hannover Re’s solvency using our internal capital model, which is described in greater detail in the opportunity and risk report.

Topic Navigation and sitemap

Close Window

Build your tailor-made report with the topic navigation feature. By selecting the topics of your interest & choice, all relevant pages will be listed below. From there you can directly jump to the corresponding page.

By clicking the "send" button you can save the topics of your choice and consequently navigate through the report within your selection. Not relevant contents will be marked as inactive in the first navigation level and hidden in the lower navigation levels. To change or remove your selection and return to the entire report, please click on "remove selection".

My Annual Report

Your page has been added successfully. Please click on "My Annual Report" in the service section to see your selection.

Link für Popup