Notes on the consolidated balance sheet – liabilities

(25) Notes payable and loans

In this item the Group reports loan liabilities of EUR 747 (675) million, chiefly in connection with the financing of acquired interests or other investment activities.

The rise of EUR 72 million in the liabilities to EUR 747 million in the year under review is attributable solely to the Non-Life Reinsurance segment and results from increased borrowing requirements as a consequence of the investment activities of Hannover Re Real Estate Holdings, Inc. The largest loan in a nominal amount of EUR 68 million runs until March 2015.

In addition, loans of EUR 559 million are apportionable to the Corporate Operations segment and are connected above all with the financing of interests acquired in 2007 (purchase of all shares of BHW Lebensversicherung AG and BHW Pensionskasse AG as well as increase in the interests held in the PB insurers to 100%). Talanx AG took out a floating-rate bank liability in an amount of EUR 550 million in order to finance these acquisitions. The Group uses derivative financial instruments to hedge the interest rate risk (for further information see item 12 of the Notes, subsection “Hedge accounting”). A further EUR 9 million is attributable to a bearer debenture issued in 2003 with a term until July 2013. The interest expenditures (EUR 8 million) resulting from these liabilities are recognized under the item “Financing costs”.

The net result from notes payable and loans is EUR 15 (14) million and consists solely of interest expenditures including amortization of EUR 1 (—) million.

The carrying amount of this item corresponds to the amortized cost. Cash outflows occur annually until final maturity in the amount of the interest payments. The total amount does not include any liabilities with a maturity of less than one year (see also the subsection “Management of liquidity risks” in the section “Nature of risks associated with insurance contracts and financial instruments”).