Hannover Rück SE Shanghai Branch. Solvency Report Summary 2016 Q2

Transcription

1 Hannover Rück SE Shanghai Branch Solvency Report Summary 2016 Q2

2 Solvency Report Summary 2016 Q2 1. Basic information 1.1. Name of Company Hannover Rück SE Shanghai Branch 1.2. Registered Address: Suite , Building 1, Lujiazui Century Financial Plaza, 729 South Yanggao Road, Shanghai, P.R.China General Manager: Lye Fook Kong ( 译名 : 黎福光 ) 1.4. Scope of business and area of operations: Life Reinsurance, includes Reinsurance business within the territory of China; Retrocession business within the territory of China; International reinsurance business. Nonlife Reinsurance, includes Reinsurance business within the territory of China; Retrocession business within the territory of China; International reinsurance business Ownership structure and shareholders List of Top 10 major shareholders at the end of current quarter Order Name of shareholders Actual Investment (in CNY 10,000) Stake (%) Share Class Share Status 1 Hannover Rück SE 130, % Foreign shares Normal Page 1/9

3 1.6. Subsidiaries, joint ventures and affiliates We have no subsidiaries, joint ventures and affiliates in this quarter Basic Information about senior management General Manager and Director of Investment: Lye Fook Kong ( 译名 : 黎福光 ) Age 46 Education / Degree Bachelor of Insurance Business Term start date July 31, 2015 June 06, 2015 Responsibility General Manager Director of Investment Qualification approval document number Tenure and part-time status in the related party and other units CIRC approval [2015] No.776 No Deputy General Manager and Chief Actuarial: 江瀚 JIANG Johnson Age 41 Education / Degree Bachelor of Economics Term start date May 31, 2008 July 28, 2008 Responsibility Deputy General Manager Chief Actuarial Qualification approval document number CIRC International [2008] No.421 CIRC P&C [2008] No. 960 CIRC P&C [2009] No. 684 CIRC P&C [2010] No. 868 CIRC P&C [2011] No CIRC P&C [2012] No. 898 Page 2/9

4 Tenure and part-time status in the related party and other units No Deputy General Manager: 王岩 WANG Yan Age 42 Education / Degree Doctor of Economics and Social Sciences Term start date Mar 5, 2014 Responsibility Qualification approval document number Tenure and part-time status in the related party and other units Deputy General Manager CIRC approval [2014] No.195 No Chief Finance Officer and Chief Risk Officer: 盛毅 SHENG Sunny Age 38 Education / Degree Master of Business Administration Term start date Sep 21, 2009 Apr 1, 2015 Responsibility Chief Finance Officer Chief Risk Officer Qualification approval document number Tenure and part-time status in the related party and other units CIRC Accounting [2009] No.952 No Chief Compliance Officer 刘晓岚 LIU Helen Page 3/9

5 Age 35 Education / Degree LLM Term start date Aug. 28, 2015 Responsibility Qualification approval document number Tenure and part-time status in the related party and other units Chief Compliance Officer CIRC approval [2015]No. 879 No 1.8. Contact person for solvency information disclosure Name: 盛毅 SHENG Sunny Tel: Mobile: Fax: sunny.sheng@hannover-re.com 2. Main indicators 2.1. Solvency ratio indicators (CNY; %) Name of indicator Current quarter Last quarter Core solvency surplus 1,091,186,044 1,026,146,912 Core solvency adequacy ratio 248% 247% Comprehensive solvency surplus 1,091,186,044 1,026,146,912 Comprehensive solvency adequacy ratio 248% 247% 2.2. The latest comprehensive risk rating The Comprehensive risk rating (Classified Regulation) has not come out officially. Since our company is a foreign reinsurance company, the existing classified regulation standards for insurance companies are not applicable to us. Therefore, we do not have the latest Classified Regulation evaluation standards. However, in accordance with the Insurance company solvency regulatory rule No. 10: comprehensive risk rating (Classified Regulation)" requirement and in order to better cooperate with the CIRC on the Page 4/9

6 insurance company solvency comprehensive rating as well as the comprehensive evaluation of our company solvency risk situation, our company conducted the self-assessment of comprehensive risk rating (Classified Regulation) for this quarter based on the No.10 evaluation standards and our company's risk management situation Business Indicators (CNY) Name of indicator Current quarter Last quarter Insurance business income 1,659,887,486 1,878,724,545 Net profit 114,669,224 52,931,005 Net assets 1,557,571,820 1,452,222, Actual capital (CNY) Name of indicator Current quarter Last quarter Admissible assets 42,041,251, ,349,874,186 Admissible liabilities 40,214,539, ,623,472,031 Actual capital 1,826,712,605 1,726,402,155 Including: 1,826,712,605 1,726,402,155 Core tier 1 capital Core tier 2 capital - - Supplementary tier 1 capital - - Supplementary tier 2 capital Minimum capital (CNY) No. Name of indicator Current quarter Last quarter 1. Minimum capital 735,526, ,255, Minimum capital for quantitative risk 735,526, ,255, Minimum capital for Nonlife insurance risk 336,791, ,984, Minimum capital for Life insurance risk 174,980, ,481, Minimum capital for Market risk 178,273, ,935, Minimum capital for Credit risk 397,944, ,263,305 Page 5/9

7 Correlation 352,463, ,408, Loss absorbency of specific insurance contracts Minimum capital for control risk Supplementary capital The latest two comprehensive risk ratings (classified regulation) The Comprehensive risk rating (Classified Regulation) has not come out officially. Since our company is a foreign reinsurance company, the existing classified regulation standards for insurance companies are not applicable to us. Therefore, we do not have the latest Classified Regulation evaluation standards. However, in accordance with the Insurance company solvency regulatory rule No. 10: comprehensive risk rating (Classified Regulation)" requirement and in order to better cooperate with the CIRC on the insurance company solvency comprehensive rating as well as the comprehensive evaluation of our company solvency risk situation, our company conducted the self-assessment of comprehensive risk rating (Classified Regulation) for this quarter based on the No.10 evaluation standards and our company's risk management situation. 6. Risk management requirement and assessment 6.1. Risk management execution framework Our branch is the only operation of Hannover Rück SE in China and is classified as a Class II company under C-ROSS requirements. Due to its identity as a non-independent legal entity, and having no board of directors or risk management committee, our C-ROSS leading team consists of the company's senior management. The Chief Risk Officer position is currently served by the Chief Financial Officer. There is currently one professional member of staff for risk management in the risk management department. Hannover Re Shanghai Branch is supported by the risk management and other functions of the Hannover Re Group. Hannover Re Shanghai Branch is also subject to the Hannover Re Group s risk strategy and risk management framework. Our current corporate strategy encompasses ten guiding principles that safeguard the realization of our vision Long-term success in a competitive business across the various divisions. The following principles of the corporate strategy constitute the key strategic points of departure for our Hannover Re Group-wide risk management: We manage risks actively. We maintain an adequate level of capitalization. We are committed to sustainability, integrity and compliance. The risk strategy is derived from our corporate strategy. It forms the core element in our handling of opportunities and risks. The risk strategy specifies more closely the goals of risk management and documents our understanding of risk. We have also defined ten overriding principles within our risk strategy: We adhere to the risk appetite set by the Executive Board. We integrate risk management into value-based management. Page 6/9

8 We promote an open risk culture and the transparency of our risk management system. We strive for the highest ERM rating and a comfortable level of capital adequacy under Solvency II. We determine a materiality threshold for our risks. We make use of appropriate quantitative methods. We apply well-suited qualitative methods. We allocate our capital risk-based. We ensure the necessary separation of functions through our organizational structure. We assess the risk contribution from new business areas and new products. The risk strategy is similarly specified with an increasing degree of detail on the various levels of the company. The risk strategy and the major guidelines derived from it, such as the Framework Guideline on Risk Management and the central system of limits and thresholds, are reviewed at least once a year. In this way we ensure that our risk management system is kept up-to-date. We manage our total enterprise risk such that we can expect to generate positive Group net income with a probability of 90% p. a. and the likelihood of the complete loss of our economic capital and shareholders equity does not exceed 0.03% p. a. These indicators are monitored using our internal capital model and the Executive Board is informed quarterly about adherence to these key parameters as part of regular reporting. The necessary equity resources are determined according to the requirements of our economic capital model, solvency regulations, the expectations of rating agencies with respect to our target rating and the expectations of our clients. Above and beyond that, we maintain a capital cushion in order to be able to act on new business opportunities at any time. The internal target capitalization of the Hannover Re Group is therefore significantly higher than the minimum confidence level of 99.5% required under the European Solvency II regime. The Hannover Re Group is regulated in Europe under Solvency II. In addition, Hannover Re Shanghai Branch is regulated according to the China Risk-oriented Solvency System Measures to improve risk management and progress This quarter is the second quarter that C-ROSS has been officially implemented, and according to the relevant requirements set out in The insurance company solvency regulation no.11: solvency risk management requirements and assessment, our company's risk management activities are as follows: This quarter, the risk management department arranged the 2 nd round interviewing with the responsible departments and reviewed each item in the SARMRA list. From the view of System Soundness and Implementation Effectiveness, the risk management department assessed the risk management status for all departments. The responsible departments supplemented corresponding policies and supporting documents to assure that every item in SARMRA can be traced. During the process of SARMRA selfassessment, we revised existing risk management policies and department duty of risk management process. As planned, we will complete the revision and amendment of existing risk management policies in early August, and form the second edition of risk management policies and guidelines. The company finished 2015 Solvency Stress Test in accordance with the requirement of CIRC during this quarter. Based on the stress test results, the company performed well under both the basic scenario and stressed scenarios, and the solvency ratios are all above 200%. The 2015 annual solvency stress test report has been submitted to CIRC and the original kept in the office. According to the requirement of CIRC and Shanghai Branch Risk Management policies, risk management department implemented the 2016 Annual Internal Training on Risk Management and C-ROSS Solvency Page 7/9

9 Contingency Plan during this quarter. This training enhanced the company risk management system and strengthened staff`s awareness of risk management. 7. Liquidity risk 7.1. Liquidity risk regulatory items(cny; %) Items This quarter Net cash flows 1,033,099,728 Consolidated liquidity ratio Within 3 months 130% Within 1 year 122% Above 1 year 69% Liquidity coverage ratio Stress Scenario 1 278% Stress Scenario 2 319% Liquidity coverage ratio on separate accounts of investment-linked insurance business Not applicable 7.2. Liquidity risk analysis and coping measures Changes on liquidity risk regulatory items Net cash flows changed from about 0.26 billion net inflow in the last reporting period to about 1.03 billion net inflow in this reporting period. Main reasons for the large inflow in this quarter are that: 1) the recapture amount and deficit account refunded back to the company due to the early termination of several modified co-insurance contracts; 2) cross-border HKD premiums equivalent to 0.58 billion RMB was placed as cash deposit at the end of this quarter. Generally speaking, the consolidated liquidity ratio for the company is safe, as the total asset is larger than total liability in the calculation of consolidated liquidity ratio. The company investment assets are all excellent assets, and under the stress scenarios 1 and 2, the coverage ratios are 278% and 319%, which indicates that the company liquidity coverage is abundant Analysis on the difference between reporting period, coping measures and target of improvement During this reporting period our company had 1.03 billion net cash inflow, which is lower than the last quarter forecast figure of 1.88 billion. The reason is that in last quarter forecast, cross-border HKD premiums would be all placed as cash deposit, but in 2016Q2 actual, about 1.03 billion RMB of the premium was placed into non-cash instruments. Because most of the assets in the calculation of consolidated liquidity ratio terminate within 1 year, especially within 3 months, the consolidated liquidity ratio are 130% for 3 months and 122% for 1 year respectively, and 69% for over 1 year, which indicate that compared to liability, the duration of assets are shorter. i.e., the company has the capacity to switch to longer term assets. Compared to last quarter (2770% and 3983%), the liquidity coverage ratio dropped Page 8/9

10 sharply. The reason is that, as planned, the L&H department will terminate the co-insurance contract with Hong Kong Hang Seng Insurance Limited, and then the company will have to refund back the corresponding premiums (equivalent to 1.61 billion RMB). This will cause a huge cash outflow in next quarter and the denominator of the liquidity coverage ratio will increase, therefore the liquidity coverage ratio will decrease. However as the ratio is still above 200%, we would say the liquidity coverage ratio of the company is sufficiently robust. 8. Regulatory measures taken by regulatory authorities against the company 8.1. Regulatory measures taken by the CIRC against the company No regulatory measures were taken by the CIRC against the company in the reporting period Rectification measures adopted by the company and information about implementation Not applicable. Hannover Rück SE P.O. Box , Hannover, Germany Supervisory Board Herbert K. Haas/Chairman Executive Board Ulrich Wallin/Chairman, Sven Althoff, Claude Chèvre, Jürgen Gräber, Dr. Klaus Miller, Dr. Michael Pickel, Roland Vogel Registered Office Hannover, Commercial Register Hannover, HRB 6778 Page 9/9