Analysis of the consolidated cash flow statement
Liquidity
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 | 2015 | 2014 |
|---|---|---|
| Cash flow from operating activities | 3,104.9 | 1,930.9 |
| Cash flow from investing activities | (2,048.1) | (1,195.3) |
| Cash flow from financing activities | (1,054.8) | (647.6) |
| Exchange rate differences on cash | 17.7 | 46.0 |
| Change in cash and cash equivalents | 19.7 | 134.0 |
| Cash and cash equivalents at the beginning of the period | 772.9 | 642.9 |
| Change in cash and cash equivalents according to cash flow statement | 19.7 | 134.0 |
| Changes in the consolidated group | – | (4.0) |
| Cash and cash equivalents at the end of the period | 792.6 | 772.9 |
Cash flow from operating activities
The cash flow from operating activities, which also includes inflows from interest received and dividend receipts, amounted to EUR 3,104.9 million in the year under review as opposed to EUR 1,930.9 million in the previous year. The sharp increase of EUR 1,174.0 million in the net inflow year-on-year was essentially attributable to the generally higher premium volumes and, in particular, to certain financial solutions contracts in the area of life and health reinsurance under which the premiums had already been received by the balance sheet date but the corresponding retrocession premiums were not scheduled to be paid until the beginning of 2016.
Cash flow from investing activities
After allowance for dividend payments and financing measures, the substantially higher cash flow from operating activities was for the most part invested in an amount of EUR 2,048.1 million (EUR 1,195.3 million) while preserving the existing asset structure.
Regarding the development of the investment portfolio please see also our remarks at the beginning of this section.
Cash flow from financing activities
The cash flow from financing activities decreased from -EUR 647.6 million to -EUR 1,054.8 million in the year under review. This was mainly due to redemption of the EUR 500.0 million subordinated debt issued by Hannover Finanz (Luxemburg) S.A. at the first scheduled call date as well as the higher dividend payments of EUR 557.4 million (EUR 403.4 million).
Overall, allowing for the changes in the consolidated group, the cash and cash equivalents therefore increased year-on-year by EUR 19.7 million to EUR 792.6 million.
For further information on our liquidity management please see risk report.
