Other information

Contingent liabilities and other financial commitments

Hannover Re has placed four subordinated debts on the European capital markets through its subsidiary Hannover Finance (Luxembourg) S. A. Hannover Re has secured by subordinated guarantee both the debt issued in 2001, the volume of which now stands at EUR 138 million, and the debts from financial years 2004 in an amount of EUR 750 million as well as 2005 and 2010 in amounts of EUR 500 million each (for further information on the subordinated debts please see the item of the Notes 17 “Subordinated liabilities”).

The guarantees given by Hannover Re for the subordinated debts take effect if the issuer in question fails to render payments due under the bonds. The guarantees cover the relevant bond volumes as well as interest due until the repayment dates. Given the fact that interest on the bonds is partly dependent on the capital market rates applicable at the interest payment dates (floating rates), the maximum undiscounted amounts that can be called cannot be estimated with sufficient accuracy. Hannover Re does not have any rights of recourse outside the Group with respect to the guarantee payments.

Talanx AG has provided a subordinated guarantee to the holders of the subordinated debt issued in February 2005 by its subsidiary Talanx Finanz (Luxemburg) S. A. The subordinated guarantee had a volume of EUR 243 million at the end of the year under review.

Pension commitments to former members of staff give rise to contingent liabilities of EUR 366 million against Group companies.

As security for technical liabilities to US clients, Hannover Re has established two trust accounts (master trust and supplemental trust) in the United States. They amounted to EUR 2,576 (2,341) million and EUR 10 (—) million respectively as at the balance sheet date. The securities held in the trust accounts are shown as available-for-sale investments. Hannover Re has furnished further collateral in an amount of EUR 299 (310) million in the form of so-called “single trust funds”.

As part of its business activities Hannover Re holds collateral available outside the United States in various blocked custody accounts and trust accounts, the total amount of which in relation to the major companies of the Hannover Re Group was EUR 1,851 (1,588) million as at the balance sheet date.

HDI-Gerling Industrie Versicherung AG has blocked holdings of EUR 51 (36) million. The securities held in the master trust are shown as available-for-sale investments.

Outstanding capital commitments with respect to certain special investments exist in the amount of EUR 295 (351) million. The commitments exist at various Group companies. They involve primarily private equity funds and venture capital firms in the form of private limited companies.

As security for technical liabilities, various financial institutions have furnished sureties for us in the form of letters of credit. The total amount as at the balance sheet date was EUR 2,842 (2,648) million. The standard market contractual clauses contained in some of the underlying letter of credit facilities regarding compliance with stipulated conditions are explained in the subsection “Management of liquidity risks” of the section “Nature of risks associated with insurance contracts and financial instruments”.

For liabilities in connection with participating interests in real estate companies and real estate transactions Hannover Re Real Estate Holdings has furnished the usual collateral under such transactions to various banks, the amount of which totaled EUR 258 (174) million as at the balance sheet date.

At some Group companies potential financial obligations relating to investments existed at the end of the financial year in the amount of altogether EUR 170 million in connection with structured securities through issuers’ rights to take delivery. The potential amounts that could be drawn upon totaled EUR 159 million for 2011 and EUR 11 million for 2012.

In addition, other financial commitments existed as at 31 December 2010 for investment volumes taken up but not yet paid out in an amount of EUR 38 million. Building loans to policyholders that had been awarded but not yet disbursed totaled EUR 1 million.

Commitments for contractually agreed future services in connection with IT outsourcing contracts amounted to altogether EUR 174 (102) million as at 31 December 2010.

Contractual obligations in an amount of EUR 12 million existed on the basis of various service agreements that had been concluded.

Further financial commitments exist on the basis of guarantee facilities (EUR 7 million) and other contractual relationships (EUR 28 million).

As guarantor institutions for Gerling Versorgungskasse VVaG, various Group companies are liable pro rata for any deficits that may be incurred by Gerling Versorgungskasse.

The Group’s life insurance companies are members of the Security Fund for Life Insurers pursuant to §§124 et seq. Insurance Supervision Act (VAG). On the basis of the Security Fund Financing Ordinance (Life), the Security Fund collects annual contributions of at most 0.2 per mille of the total net technical provisions until security funds of 1 per mille of the total net technical provisions have been accumulated. In addition, the Security Fund may collect special contributions in an amount of a further 1 per mille of the total net technical provisions. Furthermore, the companies have undertaken to make financial resources available to the Security Fund or alternatively to Protektor Lebensversicherung AG, Berlin, insofar as the resources of the Security Fund are not sufficient if a company has to be rehabilitated. The commitment amounts to 1% of the total net technical provisions (German Commercial Code) after allowance for the contributions already made to the Security Fund at this point in time. When the aforementioned payment commitments from the contributions payable to the Security Fund are taken into account, the total commitment of the companies stands at EUR 372 million.

Several Group companies are members of the association for the reinsurance of pharmaceutical risks, the association for the insurance of German nuclear reactors and the traffic accident pool Verkehrsopferhilfe e.V. In the event of one of the other pool members failing to meets its liabilities, an obligation exists to take over such other member’s share within the framework of the quota participation.