Annual Report 2017

On 15 September 2014 Hannover Rück SE placed a EUR 500.0 million subordinated bond on the European capital market. The issue has a perpetual maturity with a first scheduled call option on 26 June 2025 and may be redeemed at each coupon date thereafter. It carries a fixed coupon of 3.375% p. a. until 26 June 2025, after which the interest rate basis changes to 3-month EURIBOR +325 basis points.

On 20 November 2012 Hannover Rück SE placed a EUR 500.0 million subordinated bond in the European capital market via its subsidiary Hannover Finance (Luxembourg) S.A. The bond has a maturity of approximately 30 years with a first scheduled call option on 30 June 2023 and may be redeemed at each coupon date thereafter. It carries a fixed coupon of 5.00% p. a. until this date, after which the interest rate basis changes to a floating rate of 3-month EURIBOR +430 basis points.

On 14 September 2010 Hannover Rück SE placed a subordinated bond on the European capital market through its subsidiary Hannover Finance (Luxembourg) S.A. This subordinated debt of EUR 500.0 million has a maturity of 30 years with a first scheduled call option after ten years and may be redeemed at each coupon date thereafter. The bond carries a fixed coupon of 5.75% in the first ten years, after which the interest rate basis changes to a floating rate of 3-month EURIBOR +423.5 basis points.

Altogether three (three) subordinated bonds were recognised as at the balance sheet date with an amortised cost of EUR 1,492.0 million (EUR 1,490.8 million).

in EUR thousand				2017
Debt and subordinated capital
Subordinated loans	Coupon	Maturity	Currency	Amortised cost	Fair value measurement	Accrued interest	Fair value
Hannover Rück SE, 2014	3.375	n / a	EUR	495,033	59,342	8,692	563,067
Hannover Finance (Luxembourg) S.A., 2012	5.00	2043	EUR	497,822	104,038	12,603	614,463
Hannover Finance (Luxembourg) S.A., 2010	5.75	2040	EUR	499,096	71,004	8,507	578,607
				1,491,951	234,384	29,802	1,756,137

Debt				250,083	1,141	918	252,142
Other long-term liabilities				39	–	–	39
Total				1,742,073	235,525	30,720	2,008,318

in EUR thousand				2016
Debt and subordinated capital
Subordinated loans	Coupon	Maturity	Currency	Amortised cost	Fair value measurement	Accrued interest	Fair value
Hannover Rück SE, 2014	3.375	n / a	EUR	494,471	17,154	8,692	520,317
Hannover Finance (Luxembourg) S.A., 2012	5.00	2043	EUR	497,511	81,264	12,603	591,378
Hannover Finance (Luxembourg) S.A., 2010	5.75	2040	EUR	498,859	71,986	8,507	579,352
				1,490,841	170,404	29,802	1,691,047

Debt				313,377	3,179	1,218	317,774
Total				1,804,218	173,583	31,020	2,008,821

The aggregated fair value of the extended subordinated loans is based on quoted, active market prices. If such price information was not available, fair value was determined on the basis of the recognised effective interest rate method or estimated using other financial assets with similar rating, duration and return characteristics. Under the effective interest rate method the current market interest rate levels in the relevant fixed-interest- rate periods are always taken as a basis.

	2017
Maturities of financial liabilities
in EUR thousand	Less than three months	Three months to one year	One to five years	Five to ten years	Ten to twenty years	More than twenty years	No maturity
Other financial liabilities ¹	76,155	124,661	5,168	2,672	–	–	–
Debt	–	77,826	134,684	37,573	–	–	–
Subordinated loans	–	–	–	–	–	996,918	495,033
Other long-term liabilities	–	–	1	–	–	–	38
Total	76,155	202,487	139,853	40,245	–	996,918	495,071
¹ Excluding minority interests in partnerships, sundry non-technical provisions and derivative financial instruments; the maturities of the latter two items are broken down separately

Maturities of financial liabilities
	2016
in EUR thousand	Less than three months	Three months to one year	One to five years	Five to ten years	Ten to twenty years	More than twenty years	No maturity
Other financial liabilities ¹	65,972	219,933	985	–	–	643	–
Debt	40,165	63,754	185,234	24,224	–	–	–
Subordinated loans	–	–	–	–	–	996,370	494,471
Total	106,137	283,687	186,219	24,224	–	997,013	494,471
¹ Excluding minority interests in partnerships, sundry non-technical provisions and derivative financial instruments; the maturities of the latter two items are broken down separately

	2017	2016	2017	2016	2017	2016
Net gains and losses from debt and subordinated capital
in EUR thousand	Ordinary income / expenses		Amortisation		Net result
Debt	(9,834)	(11,967)	757	780	(9,077)	(11,187)
Subordinated loans	(70,626)	(70,706)	(1,110)	(987)	(71,736)	(71,693)
Total	(80,460)	(82,673)	(353)	(207)	(80,813)	(82,880)

The ordinary expenses principally include interest expenses of nominally EUR 70.6 million (EUR 70.7 million) resulting from the issued subordinated debt.

The following table shows the movements in debt, subordinated capital components and other long-term liabilities with respect to cash and non-cash changes.

	Balance at 31 December 2016	Cash flow	Non-cash-items		Bilanzwert 31.12.2017
Reconciliation of debt and subordinated capital
in EUR thousand			Currency translation	Other changes
Debt	313,377	-39,791	-22,746	-757	250,083
Subordinated loans	1,490,841	–	–	1,110	1,491,951
Other long-term liabilities	–	39	–	–	39
Total	1,804,218	-39,752	-22,746	353	1,742,073

Annual Report 2017

6.12 Debt and subordinated capital

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