Hannover Rück SE Shanghai Branch. Solvency Report Summary 2017 Q1

Transcription

1 Hannover Rück SE Shanghai Branch Solvency Report Summary 2017 Q1

2 Solvency Report Summary 2017 Q1 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 Name Age Education Title Term start date Qualification approval document number Lye Fook Kong ( 译名 : 黎福光 ) 47 Bachelor of Insurance Business GM July 31, 2015 CIRC approval [2015] No.776 Director of Investment June 06, Tenure and part-time status in the related party and other units NO 江瀚 JIANG Johnson 王岩 WANG Yan 盛毅 SHENG Sunny 刘晓岚 LIU Helen 42 Bachelor of Economics 43 Doctor of Economics and Social Sciences 39 Master of Business Administration DGM May 31, 2008 CIRC International [2008] No.421 Chief Actuarial July 28, 2008 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 DGM Mar 5, 2014 CIRC approval [2014] No.195 DGM Feb 20, 2017 CIRC approval [2017]No. 130 CFO Sep 21, 2009 CIRC Accounting [2009] No.952 CRO Apr 1, LLM CCO Aug 28, 2015 CIRC approval [2015]No. 879 NO NO NO NO 1.8. Contact person for solvency information disclosure Name: 盛毅 SHENG Sunny Tel: Mobile: Fax: sunny.sheng@hannover-re.com Page 2/9

4 2. Main indicators 2.1. Solvency ratio indicators (CNY; %) Name of indicator Current quarter Last quarter (audited) Core solvency surplus 1,037,381,433 1,101,625,123 Core solvency adequacy ratio 228% 254% Comprehensive solvency surplus 1,037,381,433 1,101,625,123 Comprehensive solvency adequacy ratio 228% 254% 2.2. The latest comprehensive risk rating According to the requirements from CIRC Notice of Data Preparation for the Solvency ǁ Risk Comprehensive Rating for 2016Q4 ([2017] No.338), we completed the reporting for 2016Q4 Risk Comprehensive Rating. Notification of the Risk Comprehensive Rating Result (Classified Regulation) for 2017Q4 ([2017] No.497) was received which announced that we were classified as A-level in the Risk Comprehensive Rating (Classified Regulation) for 2016Q Business Indicators (CNY) Name of indicator Current quarter Last quarter (audited) Insurance business income 1,201,230,268 1,149,746,264 Net profit 13,306,421 1,239,307 Net assets 1,512,022,112 1,554,929,873 Page 3/9

5 3. Actual capital (CNY) Name of indicator Current quarter Last quarter (audited) Admissible assets 23,530,677,119 26,911,316,969 Admissible liabilities 21,680,499,448 25,096,615,932 Actual capital 1,850,177,671 1,814,701,037 Including: 1,850,177,671 1,814,701,037 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 (audited) 1. Minimum capital 812,796, ,075, Minimum capital for quantitative risk 829,892, ,074, Minimum capital for Nonlife insurance risk 473,948, ,955, Minimum capital for Life insurance risk 314,819, ,270, Minimum capital for Market risk 195,245, ,218, Minimum capital for Credit risk 232,987, ,231, Correlation 387,109, ,600, Loss absorbency of specific insurance contracts Minimum capital for control risk -17,095,775-14,998, Supplementary capital The latest two comprehensive risk ratings (classified regulation) The Risk Comprehensive Rating (Classified Regulation) for 2016Q3: B-level. The Risk Comprehensive Rating (Classified Regulation) for 2016Q4: A-level. Page 4/9

6 6. Risk management requirement and assessment 6.1. The latest SARMRA assessment result Items Score SARMRA result Including: Risk management foundation and environment Risk management targets and tools 7.40 Insurance risk management 8.46 Market risk management 8.51 Credit risk management 8.16 Operational risk management 8.28 Strategy risk management 8.51 Reputation risk management 8.87 Liquidity risk management Risk management execution framework Hannover Re Shanghai Branch is 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. 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. Page 5/9

7 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 Branch. 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 To improve our comprehensive risk management capability in accordance to the relevant requirements set out in The insurance company solvency regulation no.11: solvency risk management requirements and assessment, we made the following progress in the risk management area: This quarter, the C-ROSS working team made further discussions regarding the issues raised by SARMRA on-site review. Improvement plans and schedules were made for those issues. We will keep following up and report to senior management on a regular basis. By now, most of the related policies and procedures have been revised and approved by senior management, thereby enhancing our risk management system. To ensure effectiveness in its implementation, all responsible departments have agreed to strictly follow through the implementation of these policies and procedures and keep proper records. This quarter in accordance with our risk management policy and requirement from SARMA on-site review, we conducted for the first time a test exercise on our major risk event contingency plan. The branch chose the example of a reputation risk event to test for our preparedness in handling a major risk event. The exercise was led by the risk management team with strong participation from senior management, our external lawyer and various departments like compliance and human resource. The test was successfully carried out in the timeframe set with full co-operation from all relevant departments. The test further reinforced our belief that the branch's existing contingency plan and risk event handling mechanism is effective and reliable. The summary report of the test exercise was reviewed by both the Branch's senior management and also home office's Group Risk Management Department. Moving forward we aim to increase the complexity of the test exercise and test other types of risk events. Page 6/9

8 This quarter, a risk management training with quiz was conducted for staff on the branch. The exercise aims to enhance the staff's understanding of the C-ROSS framework. During the training the Staff was reminded of the branch's solvency position over the last four quarters since C-ROSS implementation. This was intentionally done to demonstrate to them how their work can affect the solvency position of the branch and to reinforce their awareness in risk management matters. In addition we also shared with the staff a summary of the reputation test event exercise which was conducted so they are familiar with our Branch's risk event contingency processes. Our branch's risk management team will continue to monitor the progress of all risk management improvement measures; provide timely information and follow up actions; ensure the soundness of the risk management system; support the effective implementation of risk management works in both the business areas and company governance; strengthen the branch's awareness of risks it faced and its risk management capabilities especially in the area of solvency risk management. 7. Liquidity risk 7.1. Liquidity risk regulatory items(cny; %) Items This quarter Net cash flows -164,827,998 Consolidated liquidity ratio Within 3 months 462% Within 1 year 205% Above 1 year 69% Liquidity coverage ratio Stress Scenario 1 966% Stress Scenario % 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 In this reporting period, the net cash outflows is around 0.16 million, of which, net cash inflow from operating activities is about 0.21 billion and net cash outflow from investing activities is about 0.37 billion. For the consolidated liquidity ratio, the total asset is larger than total liability. The consolidated liquidity ratio within 3 month and within 1 year is relatively high, and as such our consolidated liquidity ratio is generally robust. The Branch s investment assets are of high quality. Under the stress scenarios 1 and 2, the coverage ratios are 966% and 1306%, respectively, indicating that the Branch s liquidity coverage is more than adequate. Page 7/9

9 Analysis on the difference between reporting periods, coping measures and target of improvement In this reporting period, net cash outflows from investing activities is around 0.37 billion, which is mainly due to the continually reduction in MMF holding and increase in bond holding. MMF is of strong liquidity and is hard to predict hence was not included in the cash flow forecast of the last reporting period. Affected by C-ROSS implementation, most of the Branch s Mod-Co treaties were recaptured last year. As a consequence, the asset and liability of the Branch decreased accordingly. Subsequently the Branch took a further look into the categorizing of its asset and liabilities liquidity tenor and recalculated the consolidated liquidity ratio. It shows that in the current period, the Branch s consolidated liquidity ratio within 3 months and within 1 year is a lot higher than in the previous period. Consolidated liquidity ratio above 1 year is, however, lower than previous period. Nonetheless for both periods, the total asset is still larger than total liability in the calculation of consolidated liquidity ratio, demonstrating the fact that the Branch s consolidated liquidity ratio continues to be robust and that the only change was in the categorizing of its assets and liabilities liquidity tenor. Page 8/9

10 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