In addition to the financing effect of the changes in shareholders’ equity described above, debt financing on the capital market is a significant 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 1,798.3 million (EUR 2,270.3 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 cancelled and repaid at the first scheduled call date the subordinated debt of EUR 500.0 million issued in 2005 by Hannover Finance (Luxembourg) S.A. As at the balance sheet date altogether three subordinated bonds had been placed on the European capital market through Hannover Rück SE and Hannover Finance (Luxembourg) S.A.

The following table presents an overview of the amortised cost of the issued bonds.

Several Group companies have also taken up long-term debt – principally in the form of mortgage loans – amounting to EUR 308.5 million (EUR 283.9 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 and treasury shares”.

Various financial institutions have provided us with letters of credit for the collateralisation of 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. The guarantee facility was terminated in January 2016 and partially refinanced through bilateral credit facilities. 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”.