2. Accounting principles
Hannover Re is obliged to prepare a consolidated financial statement and group management report in accordance with § 290 German Commercial Code (HGB).
Pursuant to EU Regulation (EC) No. 1606/2002, the present consolidated financial statement and group management report of Hannover Re have been drawn up in accordance with the International Financial Reporting Standards (IFRS) that are to be used within the European Union. We have also made allowance for the supplementary regulations applicable pursuant to § 315a Para. 1 German Commercial Code (HGB) and the supplementary provisions of the parent company's Articles of Association as amended on 3 August 2007.
The consolidated financial statement reflects all IFRS in force as at 31 December 2008 as well as all interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), application of which was mandatory for the 2008 financial year.
Since 2002 the standards adopted by the International Accounting Standards Board (IASB) have been referred to as "International Financial Reporting Standards (IFRS)"; the standards dating from earlier years still bear the name "International Accounting Standards (IAS)". Standards are cited in our Notes accordingly; in cases where the Notes do not make explicit reference to a particular standard, the term IFRS is used.
In addition, the German Accounting Standards (GAS) adopted by the German Accounting Standards Committee (GASC) have been observed insofar as they do not conflict with currently applicable IFRS.
The declaration of conformity required pursuant to § 161 German Stock Corporation Act (AktG) regarding compliance with the German Corporate Governance Code has been submitted and made available to the shareholders.
The annual financial statements included in the consolidated financial statement were for the most part drawn up as at 31 December. Pursuant to IAS 27.27 there is no requirement to compile interim accounts for Group companies with diverging reporting dates because their closing dates are no earlier than three months prior to the closing date for the consolidated financial statement.
The annual financial statements of all companies were initially drawn up in compliance with the provisions of the respective national laws and then transformed to IFRS in accordance with standard Group accounting and measurement rules.
The consolidated financial statement was drawn up in euros (EUR), the amounts shown have been rounded to EUR thousands and – provided this does not detract from transparency – to EUR millions. Figures indicated in brackets refer to the previous year.
The present consolidated financial statement was examined by the Supervisory Board, adopted at the meeting of the Supervisory Board held on 10 March 2009 and hence released for publication.
New accounting principles
In November 2006 the IFRIC published IFRIC 11 "IFRS 2 – Group and Treasury Share Transactions". The interpretation provides guidance on the application of IFRS 2 "Share-based Payment" to share-based payments involving an entity's own equity instruments or rights to such equity instruments granted within the group. IFRIC 11 is mandatory for financial years beginning on or after 1 March 2007. Application of the interpretation had no implications for Hannover Re's consolidated financial statement.
In July 2007 the IFRIC published IFRIC 14 "IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction". The interpretation provides guidance inter alia for determining the limit on the amount of a surplus in a pension plan that may be recognised as an asset pursuant to IAS 19. Application of the interpretation had no implications for Hannover Re's consolidated financial statement.
On 13 October 2008, in response to the turmoil on international capital markets, the IASB adopted and published the amendments to "IAS 39 & IFRS 7 Reclassification of Financial Assets". By way of the Regulation (EC) No. 1004/2008 the European Commission adopted the amendments in European law on 15 October 2008. The amendments permit, in particular circumstances, reclassifications of (1.) non-derivative financial assets out of the fair value through profit or loss category and (2.) financial assets classified in the available-for-sale category to the loans and receivables category, and provide for additional disclosures in this regard. Hannover Re investigated the implications of the amendments and in view of the scarcely available scope for application did not avail itself of the facilities associated with the amendments as at the balance sheet date.
Standards or changes in standards that have not yet entered into force or are not yet applicable
The IASB has issued the following standards, interpretations and amendments to existing standards with possible implications for the consolidated financial statement of Hannover Re, application of which is not yet mandatory for the year under review and which are not being applied early by Hannover Re:
In November 2006 the IASB issued IFRS 8 "Operating Segments", which replaces the previous IAS 14 "Segment Reporting". IFRS 8 requires adoption of the "management approach" for reporting on the economic position of segments. Under this approach, the segmentation and the disclosures for the segments are based on the information used internally by management for evaluating segment performance and deciding on the allocation of resources. IFRS 8 applies to financial years beginning on or after 1 January 2009. Hannover Re does not currently expect the standard to have any influence on the presentation of segments in the consolidated financial statement.
In September 2007 the IASB issued a revised IAS 1 "Presentation of Financial Statements". The revision is aimed at improving users' ability to analyse and compare the information given in financial statements. IAS 1 defines the basic principles for the presentation and structure of the annual financial statement. It also contains minimum requirements for the content of an annual financial statement. The revised standard is applicable to financial years beginning on or after 1 January 2009; early adoption is permitted.
In January 2008 the IASB published the revised versions of IFRS 3 "Business Combinations" and IAS 27 "Consolidated and Separate Financial Statements". The new provisions primarily cover the recognition of minority interests, measurement issues in connection with successive acquisition, changes in a participating interest with or without a loss of control and adjustments to acquisition costs depending upon future events and their effects on goodwill. The revised IFRS 3 still does not apply to combinations of entities under common control. The amendments are mandatory for financial years beginning on or after 1 July 2009. As at the balance sheet date neither of these revised versions had been ratified by the European Union.
In February 2008 the amendments to IAS 32 and IAS 1 "Puttable Financial Instruments and Obligations arising on Liquidation" were published. The revised version of IAS 32 permits the balance sheet classification of puttable financial instruments as equity in the future under certain conditions. The amendment cannot be applied to the consolidated financial statement, and in particular minority interests in partnerships shall continue to be recognised as a financial liability. The amendment of IAS 1 refers to revised disclosure requirements applicable to puttable financial instruments and obligations arising on liquidation. The application of both standards is mandatory from 1 January 2009 onwards. Hannover Re does not expect the amendments to have any effect on the consolidated financial statement.
In July 2008 the IFRIC published IFRIC 16 "Hedges of a Net Investment in a Foreign Operation". This interpretation provides guidance on possible hedges of a net investment in a foreign operation and on the accounting thereof in an entity's consolidated financial statements. Application of the clarifications is mandatory for financial years beginning on or after 1 October 2008. Hannover Re does not expect application of the interpretation to have any effect on the consolidated financial statement.