ANNUAL REPORT - hdi.global · HDI-Gerling Verzekeringen N.V. | Annual Report 2017 ... target solvency II ratios of 150% for 2017 and 120% for 2018 and ongoing. In addition, it is

ANNUAL REPORT

2017

HDI-Gerling Verzekeringen N.V.

HDI-Gerling Verzekeringen N.V. | Annual Report 2017

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WESTBLAAK 14 3012 KL ROTTERDAM

The annual report was adopted and approved in the shareholders’ meeting on 5 April 2018, at which discharge was granted to the members of the Board of Directors and the Supervisory Board for 2017, as mentioned in the report of the Supervisory Board. Authorised capital EUR 67,500,000 Issued and paid up capital EUR 40,000,050

SUPERVISORY BOARD U.H. Wollschläger, Chairman H.A. Daugird Dr. J. ten Eicken F.W. Warmelink

Board of Directors W.J. Garhammer, Spokesman R.M. Fischer

AUDITOR Mazars Paardekooper Hoffman Accountants N.V. C.A. Harteveld RA


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CONTENTS

REPORT OF THE SUPERVISORY BOARD 7

KEY FIGURES 2017 – 2013 11

REPORT OF THE BOARD OF DIRECTORS 15

2017 FINANCIAL STATEMENTS 33

NOTES TO THE 2017 FINANCIAL STATEMENTS 41

OTHER INFORMATION 89


REPORT OF THE SUPERVISORY BOARD

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REPORT OF THE SUPERVISORY BOARD The Supervisory Board is pleased to present the annual report of HDI-Gerling Verzekeringen N.V. for the 2017 financial year. The Supervisory Board has monitored the administration of business by the Board of Directors through regular meetings. The financial statements included in this report have been audited by Mazars Paardekooper Hoffman Accountants N.V. The auditor has issued an unqualified audit opinion on the financial statements included in this report. We propose the adoption of the financial statements included in this annual report. Furthermore we propose to the shareholers’meeting to approve a dividend payout of EUR 60.0 million, based on the capital policy target capitalization as described in chapter “Solvency”. After the adoption of the financial statements, it was agreed to grant discharge to the following members of the Board of Directors: W.J. Garhammer and R.M. Fischer and to the following members of the Supervisory Board: H.A. Daugird, Dr. J. ten Eicken, F.W. Warmelink and U.H. Wollschläger. The functioning of the individual members of the Supervisory Board as a whole, as well as the relations between the Supervisory Board and the Board of Directors, are evaluated periodically by the chairman of the Supervisory Board. In due time, this evaluation will also take place under independent counselling in accordance with the stipulations included in the Governance Principles. The Chairman of the Supervisory Board determines, during the annual evaluation of the Supervisory Board, whether training is required to enhance or extend the expertise of members of the Supervisory Board. The effectiveness of training that has been followed may also be assessed at the same time. Members of the Supervisory Board have access to a programme developed by the Dutch Association of Insurers (Verbond van Verzekeraars) and the University of Nyenrode (Netherlands). The latter is a permanent-education programme. We subscribe to the principle stated in the Code of Conduct for insurers of evaluating our own performance under independent supervision once every three years. There was no evaluation of this kind in 2017. The Supervisory Board has established an Audit Committee and a Nomination and Remuneration Committee. A Risk Committee has not been established, notwithstanding the Governance Principles of the Dutch Association of Insurers. Nevertheless, the Supervisory Board has a strong focus on supervising the effectiveness of the risk management function, the company’s risk management strategy and risk appetite, and the company’s risk management in general. The risk officer at HDI-Gerling Verzekeringen N.V. gives an update on the company’s risk position and main risk management activities in every meeting of the Supervisory Board. In addition, the company’s Own Risk and Solvency Assessment, including various risk scenarios and mitigating actions, are discussed in Supervisory Board meetings as well as the capital policy for the company and actuarial calculations of claims reserving. Rotterdam, 5 April 2018 U.H. Wollschläger, Chairman H.A. Daugird Dr. J. ten Eicken F.W. Warmelink



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KEY FIGURES 2017 - 2013



KEY FIGURES 2017 - 2013

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Key Figures 2017 – 2013

Sta tement of financ ia l position

Figures in EUR 1,000 2017 2016 2015 2014 2013

Investments 248,754 296,856 306,202 297,428 233,042

Technical provisions (net) 125,867 230,144 233,634 257,559 243,584

Shareholders’ equity 149,355 132,464 132,615 140,027 154,671

Balance sheet total 547,791 705,568 769,969 838,077 912,092

Inc ome sta te me nt

Figures in EUR 1,000 2 0 17 2 0 16 2 0 15 2 0 14 2 0 13

Gross written premium 21,702 1) 154,433 1) 219,944 1) 281,165 1) 390,709

Net earned premium 16,816 104,978 108,489 138,834 150,826

Net claims and claims expenses - 16,663 - 79,624 - 92,116 - 126,576 - 93,791

Net acquistion costs and administrative

expenses- 4,971 - 33,862 - 26,709 - 34,383 - 53,428

Net technical result - 2,833 - 10,058 - 12,987 - 21,776 4,032

Net investment income 2,714 4,933 6,207 5,482 22,362

Net Income 18,522 - 1,335 - 4,812 1,128 12,324

Ra tios a nd othe r ke y figure s

2 0 17 2 0 16 2 0 15 2 0 14 2 0 13

Solvency Capital Requirement 163.5% 145.5% 158.6% 2) - -

Net loss ratio 99.1% 75.8% 84.9% 91.2% 62.2%

Net expense/commission ratio 17.8% 33.7% 27.1% 24.5% 35.1%

Combined ratio (net) 116.8% 109.6% 112.0% 115.7% 97.3%

Employees (FTE) 0 1) 144 1) 151 1) 208 1) 277

Number of outstanding claims 9,120 16,609 20,988 24,147 22,869

1) Since 2014 until beginning of 2017 all business (GWP) has been transferred from HDI-Gerling Verzekeringen N.V. to HDI Global SE, the Netherlands.The staff has followied the business. 2) Solvency II figures are available from 2015 onwards. The 2015 figures have not been subject to external audit..


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REPORT OF THE BOARD OF DIRECTORS

GENERAL 17

GOVERNANCE 18

REMUNERATION POLICY 22

THREE LINES OF DEFENCE MODEL 22

RISK MANAGEMENT 22

LINES OF BUSINESS 27

COMPLIANCE AND SECURITY 29

STAFF 30

PERSPECTIVES 30



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GENERAL GENERAL INFORMATION HDI-Gerling Verzekeringen N.V. was incorporated in 1978 as a 100% subsidiary of HDI (Haftpflichtverband der Deutschen Industrie) V.a.G. in Hanover (Germany), continuing the activities initiated by the HDI Group in cooperation with third parties in the Netherlands in the mid-seventies. Since then, all interests and participations have been transferred to the Talanx Group, which is headed by Talanx AG in Hanover (Germany). The industrial lines division of Talanx AG is led by HDI Global SE, the 100% shareholder of HDI-Gerling Verzekeringen N.V. HDI Global SE, wants all European foreign units (with the exception of HDI Versicherung AG in Austria) to operate as branches. The Dutch branch office of HDI Global SE therefore started in late 2013 to renew insurance policies underwritten in the past by HDI-Gerling Verzekeringen N.V. This process continued until December 2017, when all insurance policies (notwithstanding some minor exceptions which will be transferred in 2018) of HDI-Gerling Verzekeringen N.V. were transferred to HDI Global SE, the Netherlands. In the context of the completion of transferring new and renewal insurance policies to the Dutch branch of HDI, HDI-Gerling Verzekeringen N.V. started to operate as a so-called run-off company. Besides regulatory, fiscal internal and external reporting requirements, HDI-Gerling Verzekeringen N.V. is now mainly focussed on handling its remaining claims portfolio. Since all former employees of HDI-Gerling Verzekeringen N.V. have also been transferred to the Dutch branch of HDI, all necessary services and functions (actuarial, claims handling, compliance financials, reinsurance, risk management, etc.) are outsourced to HDI Global SE, the Netherlands. This is based on a Service Level Agreement and monitored according to the company’s outsourcing policy. FINANCE Gross premium income declined from EUR 154.4 million in 2016 to EUR 21.7 million, mainly due to the transfer of the book of business to the branch of HDI Global SE. The net loss ratio increased from 75.8% in the previous year to 99.1% in 2017, due to the run-off situation and related reinsurance solution

implemented. The net technical loss of EUR 10.1 million in 2016 improved by EUR 7.3 million to a loss of EUR 2.8 million. Net investment income decreased from EUR 4.9 million to EUR 2.7 million. The investment expenses have increased significantly due to a reclassification of real estate from property for own use to investment property. As the entire staff has been transferred to the branch of HDI Global SE on 1st January 2017, the real estate can not been considered for own use any longer. The company booked a net income of EUR 18.5 million in 2017. The 2016 net loss was EUR 1.3 million. This improvement is mainly due to the sale renewal rights to HDI Global SE in 2013 of which the last part was accounted for in 2017 (EUR 16.5 million). SOLVENCY In recent years, HDI-Gerling Verzekeringen N.V. has maintained a strong position in its solvency margin. Based on the calculation for the 2017 Solvency II reporting, the solvency ratio as at 31 December 2017 is 163.5% (145.5% as at 31 December 2016). In the solvency ratio the foreseeable dividend distribution is included, without the foreseeable dividend distribution the solvency ratio would have been 278.7%. The expected development and decrease of the claims portfolio in the year 2017 as well as upcoming years is supposed to cause a significant increase of the company’s solvency position by far exceeding legal solvency requirements. Since volatility in the run-off claims portfolio is foreseen to decrease, the Supervisory Board and Board of Directors have implemented target solvency II ratios of 150% for 2017 and 120% for 2018 and ongoing. In addition, it is important to point out that Standard & Poor’s confirmed the “A stable” rating for HDI-Gerling Verzekeringen N.V. in January 2018. LIQUIDITY The cash position of HDI-Gerling Verzekeringen N.V. decreased during 2017 by EUR 6.8 million. The cash position continues to be adequate at a total of EUR 21.2 million at year-end 2017. The company has a large portfolio of fixed income securities which can provide adequate liquidity. There were no liquidity shortages in 2017.



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GOVERNANCE GENERAL INFORMATION HDI-Gerling Verzekeringen N.V. has taken the Code of Conduct for Insurers (Verbond van Verzekeraars) and the Dutch Corporate Governance Code into consideration during the elaboration of the following main principles for its governance organization:

The corporate bodies have been structured in a way that allows them to function effectively. In carrying out their tasks these corporate bodies focus on the interests of the company’s stakeholders.

The Board of Directors is responsible for compliance with laws and regulations. This applies even when various tasks and duties are delegated.

We operate on the principle of a collegial board. All board members are jointly responsible for the policies and strategies pursued by the company. However, the responsibilities for compliance and risk management have been segregated and assigned to different board members.

The key functions (compliance, risk management, internal audit and actuarial functions) carry out their duties independently. They possess sufficient expertise, knowledge and skills to carry out their duties competently.

Information exchange between these key positions and corporate bodies is conducted on lines conducive to the sound and effective performance of the corporate bodies and key officers.

The governance organization is structured using a ‘three lines of defense’ model. The first line (business operations) manages risks; compliance, risk management and the actuarial function form the second line. The internal audit is the third line. The internal audit may not be combined or mingled with the first- or second-line functions.

It is our corporate target to have internal regulation measures which are effective in their structure, implementation and operation, with sufficient checks and balances. Material risks are identified and managed in time and there is continuous monitoring of risks related to business activities. Our reporting system is transparent.

We have a carefully managed sustainable remuneration policy that is in line with our strategy and risk appetite, objectives and values. It takes into consideration long-term interests, the relevant international context and the level of support in society.

Our governance organization and our approach to observing the governance principles are explained below. HDI-Gerling Verzekeringen N.V. has three corporate bodies: the Board of Directors, the Supervisory Board and the shareholders’ meeting. The tasks and powers of these bodies are defined by law and the company’s Articles of Association. In addition to these bodies, the Board of Directors has installed and appointed the key functions: risk management, actuarial, internal audit and compliance. All of these functions are involved in the process of observing, implementing and monitoring the requirements pursuant to the applicable laws and regulations. BOARD OF DIRECTORS COMPOSITION OF THE BOARD OF DIRECTORS AND KNOWLEDGE The Board of Directors takes responsibility for leading the company and defines goals and corporate strategy within the corporate governance framework. The Board of Directors ensures a sound balance between the commercial interests and the risks these entail, and due observance of the risk appetite approved by the Supervisory Board. The Board of Directors is also responsible for a corporate culture that is characterised by honest business management in compliance with all relevant rules and regulations. The responsibility of the Board of Directors also includes managing the risks associated with the management activities and financing of the company. In accordance with the Articles of Association, the Board of Directors comprises at least two persons. In addition, the shareholders’ meeting determines the number of board members of the Board of Directors. The composition on the Board of Directors is such that it can carry out its duties properly. Members of the Board of Directors have gained sound knowledge and experience in the industrial insurance sector. They are capable of evaluating and determining the main lines of policy and of forming a well-balanced and independent view of the risks those lines entail. When appointing or re-appointing members to the Board of Directors an individual profile is drafted that is in line with the job profile for the Board of Directors. The aim is to have, if possible, a mix of male and female members from different age brackets and, if possible, a mix of different nationalities. The quality of the candidate is an essential factor for the final decision about an appointment. The Board of Directors did not meet the above-mentioned gender balance. The company will continue to strive for an adequate and balanced composition of the Board of Directors in future appointments, by taking into account all relevant selection criteria including but not limited to gender balance and executive experience.



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Steps are taken to ascertain whether a candidate member of the Board of Directors has sufficient knowledge, expertise and experience to fulfil his/her duties as a member of the Board of Directors. A candidate shall not be appointed to the Board of Directors if there are any doubts regarding his/her integrity. The current Board of Directors consists of:

W.J. Garhammer (Spokesman) Year of birth: 1961 Nationality: German Responsibilities: Technical Departments (without Claims

Handling), Finance, Risk Management (incl. actuarial function), Human Resources, Legal, ICT and Facility Services

R.M. Fischer Year of birth: 1959 Nationality: German Responsibilities: Claims Handling, Corporate Reinsu-

rance, Compliance, Internal Audit In view of the tasks and responsibilities of the Board of Directors, the areas of responsibility of the individual members of the Board of Directors have been defined. Notwithstanding their overall responsibility, each member of the Board of Directors leads the area(s) assigned to him within the scope of the resolutions of the Board of Directors. The responsibility for compliance has been separated from responsibility for finance, accounting and risk management. The Board of Directors meets on a regular basis and it reports regularly and comprehensively to the Supervisory Board about the strategic orientation, the development of business, the company’s financial position, the implementation of the remuneration policy and results of operations, planning and goal accomplishment, current opportunities and identified risks. Certain decisions of the Board of Directors that are of particular importance or strategic significance require the approval of the Supervisory Board. Some of these reservations of approval are prescribed by law; others are governed by the Articles of Association. In all its actions, the Board of Directors balances all interests of the stakeholders, taking into account the continuity of the company, its social environment, its duty to care for its clients and the compliance with applicable rules and regulations, and codes that apply to the company.

The Board of Directors also weighs the company’s commercial interests against the risks to be taken and, in that way, ensures balanced decisions. To safeguard this balanced decision-making to the greatest extent possible, responsibility for commercial interests and responsibility for risk management have also been separated at the level of portfolio allocation. Needless to say, there is still shared responsibility for the policy conducted. The Board of Directors also ensures that it is informed in good time about material risks in the area of risk management. It makes all decisions of material importance relating to the company’s risk profile, capital allocation and liquidity position. We comply with the Governance Code of Conduct for Insurers and we subscribe to the principles of a responsible remuneration policy as stipulated in the Regulations for Controlled Remuneration Policy Wft 2011 (Regeling Beheerst Beloningsbeleid Wft 2011) and implement them in our Board of Directors’ variable remuneration policies and procedures. Expertise is an asset of our company. It is part of our core value “Quality” and an important selling point in our markets, where knowledge is becoming scarce. Market surveys indicate that we have a reputation for a high level of expertise. We are determined to maintain our high-expertise level of service for our customers. To maintain this asset, both HDI’s employees and management not only follow a permanent-education programme but also numerous additional courses and training. Training for the Board of Directors focuses on general management skills, insurance developments, legal developments, integrity, risk management, corporate governance and finance. This skill set has been maintained through participation in the Talanx Academy. Secondly, the members of the Board of Directors have access to a programme developed by the Dutch Association of Insurers (Verbond van Verzekeraars) and they participate in the permanent-education programme of the University of Nyenrode (Netherlands). SUPERVISORY BOARD COMPOSITION OF THE SUPERVISORY BOARD AND KNOWLEDGE The Supervisory Board advises and monitors the Board of Directors. The Supervisory Board is also responsible for examining and approving the company’s financial statements. The Supervisory Board monitors the risk policy pursued by the Board of Directors. The risk profile is discussed periodically and assessed for that purpose. The Supervisory Board evaluates in particular whether capital allocation and liquidity attachment are in accordance with the approved risk policy.



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The Supervisory Board consists of four members. A job profile has been drawn up with regard to the composition of the Supervisory Board, in part to safeguard the experience, expertise, independency and diversity of the Supervisory Board. When appointing or re-appointing members to the Supervisory Board an individual profile is drafted that is in line with the job profile for the Supervisory Board. The aim is to have a mix of male and female members from different age brackets who are still actively employed or already retired and, if possible, a mix of different nationalities. The Supervisory Board did not meet the above-mentioned gender balance. The company will continue to strive for an adequate and balanced composition of the Supervisory Board in future appointments, by taking into account all relevant selection criteria including but not limited to gender balance and executive experience. During the course of appointments or re-appointments to the Supervisory Board, steps are taken to ensure that the Supervisory Board has expertise in the following areas:

Insurance industry Accountancy, finance and investments Risk control/risk management Legal affairs and corporate governance Integrity Human resources and management development

The members of the Supervisory Board are:

U.H. Wollschläger (Chairman) Year of birth: 1955 Nationality: German H.A. Daugird Year of birth: 1947 Nationality: German Dr. J. ten Eicken Year of birth: 1964 Nationality: German

F.W. Warmelink Year of birth: 1952 Nationality: Dutch

We believe that, in view of the knowledge and experience of the members of the Supervisory Board, there is more than sufficient expertise in the areas listed here. The fact that they have wide-ranging experience in the insurance sector means that they have a sound understanding of the social position of insurers and it also enables them to balance in a well-considered way the interests of all stakeholders. No more than two out of four of the current members of the Supervisory Board have managerial duties with entities of the Talanx Group. We believe that this furthers the independency of the Supervisory Board in favour of the interests of the company and all of its stakeholders. Candidate members qualify for membership of the Supervisory Board when they have gained relevant managerial experience with insurers, financial services providers or industrial enterprises (end customers). Experience will preferably be in the industrial sector of the markets served by HDI-Gerling Verzekeringen N.V. Furthermore, we ensure that the Supervisory Board has an adequate understanding of the Dutch market, Dutch legislation and regulations, and the interests of the Dutch stakeholders. This approach places customers’ interests first and foremost during the execution of the supervisory duties of the board. In the course of their work, the members of the Supervisory Board are expected to serve the interests of the company, while also taking into account relevant social, economic, political and other developments, either domestic or international. The members of the Supervisory Board have the capacity to make independent assessments of the main lines of the overall company policy and they can form a well-balanced and independent view of the basic risks the company is facing. Supervisory Board members are also required to be available and accessible to the extent that this allows them to fulfil their duties properly. Persons whose personal integrity may be in dispute will not be appointed to the Supervisory Board of the company. The functioning of the individual members of the Supervisory Board as a whole, as well as the relations between the Supervisory Board and the Board of Directors, are evaluated periodically by the chairman of the Supervisory Board. In due time, this evaluation will also take place under



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independent counselling in accordance with the stipulations included in the Governance Principles. The Chairman of the Supervisory Board determines, during the annual evaluation of the Supervisory Board, whether training is required to enhance or extend the expertise of members of the Supervisory Board. The effectiveness of training that has been followed may also be assessed at the same time. Members of the Supervisory Board have access to a programme developed by the Dutch Association of Insurers (Verbond van Verzekeraars) and the University of Nyenrode (Netherlands). The latter is a permanent-education programme. We subscribe to the principle stated in the Governance Code of the Dutch Association of Insurers of evaluating our own performance under independent supervision once every three years. There was no evaluation of this kind in 2017. The Supervisory Board met three times in 2017. There were also various informal contacts between the individual members of the Supervisory Board. No member of the Supervisory Board was frequently absent. In accordance with our remuneration policy an external member of the Supervisory Board receives fixed and proper remuneration which is not dependent on the company’s profits. Within the company, the Supervisory Board is responsible for implementing and evaluating the remuneration policy established with regard to the members of the Board of Directors. The Supervisory Board has therefore appointed a dedicated Nomination and Remuneration Committee. The members of the Nomination and Remuneration Committee are:

U.H. Wollschläger Dr. J. ten Eicken

The Supervisory Board established an Audit Committee to help it perform its tasks effectively. Nevertheless, the Supervisory Board remains collectively responsible for the fulfilment of the duties delegated to the Audit Committee. The Audit Committee monitors the financial reporting processes and the effectiveness of the system of internal controls, of risk management and of the internal audit system. It also deals with compliance and information system issues on behalf of the Supervisory Board. It prepares for the

Supervisory Board’s review of the annual financial statements, the Management Report, the Board of Directors’ proposal for the profit allocation and the financial statements. In this context the Audit Committee obtains information about the independent Auditor’s opinion as to the financial position and results of the operations and outlines the effects of any changes in accounting and recognition methods on the net assets, results of operations and financial position. It deals with issues concerning the required independence of the Auditor, the awarding of the audit mandate and areas to be addressed in the audit. The composition of this audit committee is such that knowledge of, and experience with, financial reporting, internal control and audit are guaranteed.

F. W. Warmelink (Chairman)

U.H. Wollschläger

H.A. Daugird

In its meeting on 5 April 2018 the Audit Committee/Supervisory Board re-appointed Mazars Paardekooper Hoffman Accountants N.V. as the company’s external auditor for the year 2018. SUPERVISORY BOARD TASKS AND PROCEDURES As stated above, the Supervisory Board has established an Audit Committee and a Nomination and Remuneration Committee. A Risk Committee has not been established, notwithstanding the Governance Principles of the Dutch Association of Insurers. Nevertheless, the Supervisory Board has a strong focus on supervising the effectiveness of the risk management function, the company’s risk management strategy and risk appetite, and the company’s risk management in general. The risk officer at HDI-Gerling Verzekeringen N.V. gives an update on the company’s risk position and main risk management activities at every meeting of the Supervisory Board. SHAREHOLDERS’ MEETING Shareholders exercise their rights in the shareholders’ meeting. The sole shareholder of HDI-Gerling Verzekeringen N.V. is HDI Global SE. Each share carries one vote in the voting on resolutions. The shareholders’ meeting nominates the members of the Supervisory Board and votes to ratify the conduct of business by the Board of Directors and the Supervisory Board. It makes decisions about the allocation of the disposable profit, capital measures and the approval of affiliation agreements, the remuneration of the Supervisory Board and the Board of Directors, and



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amendments to the company’s Articles of Association. An ordinary shareholders’ meeting is held each year at which the Board of Directors and the Supervisory Board provide an account of the financial year just ended. In addition, there is at least one extraordinary shareholders’ meeting every year. Extraordinary shareholders’ meetings are also held as often as the Board of Directors or the Supervisory Board deems necessary.

REMUNERATION POLICY GENERAL INFORMATION Variable remuneration is granted to the members of the Board of Directors subject to strict conditions, as stated in the regulations for Controlled Remuneration Policy Wft 2011 (Regeling Beheerst Beloningsbeleid Wft 2011) and the principles concerning remuneration as laid down in the Governance Principles of the Dutch Association of Insurers. The current remuneration policy has been approved by De Nederlandsche Bank. This remuneration policy means we are sure that our variable remuneration does not contain any inappropriate incentives. The shareholders’ meeting determines the remuneration of the members of the Board of Directors in accordance with the remuneration policy and the principles for remuneration in the Talanx Group. The granting of the variable remuneration of the Board of Directors depends on compliance with the criteria set in advance by the Supervisory Board. Performance benchmarks may be adjusted in line with risks and costs of capital. A claw-back procedure for variable remuneration has been included in the employment contracts for the Board of Directors. It has also been decided that the Supervisory Board may reclaim variable remuneration granted to members of the Board of Directors if this remuneration has been granted on the basis of inaccurate information.

THREE LINES OF DEFENCE MODEL GENERAL INFORMATION The governance organisation of HDI-Gerling Verzekeringen N.V. is structured on the basis of a ‘three lines of defence’ model:

FIRST LINE A prominent feature of the HDI organisation is its strong focus on business. The primary responsibility for risk management and compliance is found in the first line of business operations. To this end, risk management and compliance is embedded in the daily, primary process. The first line has a high degree of detailed knowledge of the business and it therefore has the primary responsibility for identifying the most significant risks as well as embedding and safeguarding compliance with new legislation and regulations in the business processes. The underwriting and claim handling guidelines are organised along these lines. SECOND LINE In line with Solvency II regulations and our structure, the compliance function, risk management function and actuarial function form the second line of defence. Their primary task is to help the Board of Directors to implement and monitor policy, to monitor the business and to create more awareness in order to ensure that the Board fulfils its responsibilities. THIRD LINE The internal audit at HDI-Gerling Verzekeringen N.V. is the third line of defence. The internal audit is independent of both the first line and second line. The third line evaluates the governance system and, more particularly, the effectiveness of the risk and compliance management function, as well as the existence and implementation of the corporate strategy, policies and guidelines in procedures and measures within the first line. The internal audit may not therefore be combined or mingled with the first- or second- line functions. Internal audits at HDI-Gerling Verzekeringen N.V. are conducted by Ernst & Young in coordination with Talanx Internal Audit.

RISK MANAGEMENT GENERAL INFORMATION Handling a variety of risks is inherent to the business model of an insurance company. On the one hand this involves risks that are inextricably linked to the insurance industry, including financial and insurance-related risks, and on the other hand it involves risks that emerge in the operating environment of HDI-Gerling Verzekeringen N.V. and the manner in which HDI-Gerling Verzekeringen N.V. is organised and manages processes.



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The Board of Directors of HDI-Gerling Verzekeringen N.V. is responsible for the implementation and operation of the internal risk management and related control systems. The purpose of these systems is to manage the risks to which the company is exposed as effectively as possible given the defined risk appetite of HDI-Gerling Verzekeringen N.V. The Board of Directors has introduced the Risk Management function not only to provide the Board with advice and support but also for the Solvency II legislation. The Risk Manager is responsible for directing the risk management function and reports directly to the Board of Directors. The tasks and responsibilities are documented in the Risk Management Charter. The risk management and control systems are structured so that the company:

1. has an understanding of the main risks to which it is exposed; 2. has an adequate system of measures to manage those risks; 3. has a picture of the risk/return relationship for each risk group; 4. measures and manages the total risk and solvency position

periodically. The Risk management function is challenged in the ORSA. Where the risk appetite is compared with the actual risks, including controls like three lines of defence and governance. RISK APPETITE HDI-Gerling Verzekeringen N.V. defines risk appetite as the level of risks it is willing and able to accept in the pursuit of its objectives. An important area here is the management of opportunities, risks and returns while keeping activities as efficient and effective as possible. The risk strategy provides direction for a risk appetite that supports our business strategy. The willingness of HDI to accept a risk is determined by expected returns, counterparty and customer interests, existing risk exposures and other risk characteristics, the severity of the risk given an extreme market event and the speed at which risk can materialise in our capital position, liquidity position and IFRS net income. This all comes together in the Solvency II standard model, which requires having a Solvency II ratio that is at a prudent level well above the minimum requirement of 100%. From 2016 onwards, the risk appetite has been based on Solvency II fundamentals. The risk appetite of HDI-Gerling Verzekeringen N.V. is mainly based on the risk appetite of HDI Global SE. The change to a run-off company affects our risk appetite. We will therefore introduce a maximum Solvency II ratio for the years to come.

SOLVENCY II Under Solvency II, capital requirements are forward-looking and economic they are tailored to the specific risks born by each insurer, allowing an optimal allocation of capital across the business. The capital requirements are defined by a two-step ladder, including the solvency capital requirements (SCR) and the minimum capital requirements (MCR), in order to trigger proportionate and timely supervisory intervention. We believe that Solvency II is a far better system than Solvency I as this was a system that was not risk sensitive at all. RISK MANAGEMENT SYSTEM HDI-Gerling Verzekeringen N.V.’s risk management system is defined as a system consisting of the strategies, policies, processes and procedures deemed necessary to continuously identify, measure, monitor, manage and report the risks to which the company is exposed. The Risk Manager is responsible for the development and coordination of the risk management policy. His duties include checking and monitoring the risks entered by the first line in a specific risk management tool. Back in 2013, HDI-Gerling Verzekeringen N.V. implemented an application (SIIP2) that helps to identify and control operational and strategic risks throughout the organisation. Risk mitigation measures are also registered. Risk owners have been appointed. They are responsible for identifying operational and strategic risks within their area of responsibility and describing the existing risk mitigation measures in place. The remaining net risk must be quantified and evaluated. If a risk exceeds a specified limit, it will be included in the Risk Report of our mother company. To guarantee the quality of the input and assessment, various workshops and training sessions are organised for the risk owners. A report containing an evaluation of the risks is compiled twice a year by the risk manager. In 2016 the application was updated and now registration of operational and strategic risks is done in Tagetik twice a year. ORSA A central tool in this risk-based approach is the annual Own Risk and Solvency Assessment (ORSA). It analyses scenarios (and mitigation measures) relating to events that may have a material impact on the solvency position, continuity, activities and/or the organisation of HDI-Gerling Verzekeringen N.V. The capitalisation policy of HDI-Gerling Verzekeringen N.V. was also integrated in the ORSA in 2017 According to the standard formula of Solvency II we are sufficiently capitalised. Our solvency is also adequate to cope with unplanned shocks.



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Several stress scenarios were tested using the ORSA and none of them jeopardised our Solvency II ratio.Every year we choose different scenarios that fit to the present risk profile. We also make scenarios of event that are less likely to happen. For some scenarios we made a reverse stress scenario. This means that we enlarge the stress event that much until the SII ratio reaches 100%. This gives us an insight of the risk bearing capacity of the company. In the ORSA we also test the appropriateness of the Standard formula. We came to the conclusion that the Standard formula fits to HDI-Gerling Verzekeringen N.V. ACTUARIAL FUNCTION The actuarial function is an important part of HDI-Gerling Verzekeringen N.V.’s quantitative risk management. The management of HDI-Gerling Verzekeringen N.V. requires a prior understanding of, and insight into, policy decisions relating to the provisions for technical claims. The actuarial function was redesigned in 2015 in order to meet Solvency II requirements. The actuarial function had its first session in 2016. The actuarial function consists of an actuarial committee with a number of key players: the chief Actuary/Risk Management of our mother company, two members of the Board of Directors, the director of the Claims department, the Risk Manager and the directors of all lines of business. Risk management performs the actuarial calculations (first line of defence) and they are monitored in the actuarial committee (second line of defence). The existence of the committee safeguards the segregation of duties between the risk management function and the actuarial function. When the actuarial calculations have finished, the results are intensively discussed with the chairman of the actuarial function. At year-end an actuarial function report is made. The purpose of this report is to comply with the requirement under Article 48 (1) of the Solvency II Directive for the Actuarial Function (AF) to produce a written report to the Board of Directors (BoDs) of HDI-Gerling Verzekeringen N.V. The actuarial function report informs HDI’s board of directors about the reliability and adequacy of the calculation of the technical provisions provided by the Risk management Department. It also expresses an opinion of the actuarial function on the overall underwriting policy to the extent applicable for a run-off company and on the adequacy of reinsurance arrangements in place.

SOLVENCY II RISK CATEGORIES The main Solvency II risks to which HDI-Gerling Verzekeringen N.V. is exposed are:

1. Risks related to insurance sector activities 2. Market risks 3. Counterparty credit risks 4. Operational risks/strategic risks

1. RISKS RELATED TO INSURANCE SECTOR ACTIVITIES For HDI-Gerling Verzekeringen N.V. the risks related to insurance sector activities are the most substantial in the sense that they require most capital. The risk appetite of HDI-Gerling Verzekeringen N.V. in relation to insurance-sector activities is, first and foremost, structured by assuming that, if the risk is not understood to the extent that an adequate estimate can be made, the risk will not be underwritten. The underlying underwriting guidelines are documented for each line of business. The guidelines are assessed annually and adjusted when needed. Furthermore, risks that cannot be reinsured under the treaties are not underwritten. The constraints and limits of the reinsurance treaties therefore have a major effect on HDI-Gerling Verzekeringen N.V.’s risk appetite. From year 2017 by far all policies did not have a renewal in HDI-Gerling Verzekeringen N.V. and this results that our premium risk is almost zero. However, we still do have a reserving risk from policies that were underwritten in the past. The reserving risk is partly mitigated by reinsurance coverage. 2. MARKET RISKS Solvency II defines market risks as “uncertainty in value as a result of changes in market variables”. Market risk includes the price risk of bonds, shares and property, the currency risk and the interest rate risk. Management of the investment portfolio at HDI-Gerling Verzekeringen N.V is subject to group guidelines set out by Talanx Asset Management. The objective of asset liability management is the optimal combination of risk, returns and liquidity while taking into consideration the operational insurance business and the organisational structure. The general principles of diversification and risk spread must be implemented. Talanx Asset Management monitors compliance with the investment guideline. Talanx Asset Management also conducts the acquisition and disposal of investments through regulated markets on behalf of HDI-Gerling



25

Verzekeringen N.V. Where the guideline and/or its implementation conflicts with national legislation, the latter prevails. In 2017 we lowered our risk appetite. We lowered our exposure in collateralised securities, shares and infrastructure projects, resulting in a lower market risk. 3. COUNTERPARTY DEFAULT RISK Solvency II defines “Counterparty Default Risk” as the risk related to the collectability of claims on third parties. Possible claims on third parties by HDI-Gerling Verzekeringen N.V primarily involve reinsurers, power of attorney and intermediaries. The level of the reserved capital for counterparty credit risk depends on whether the third party should (type 1 risk) or should not (type 2 risk) have a rating. TYPE 1 CREDIT RISKS These are counterparty credit risks relating to counterparties that are expected to have a credit rating. This risk is declining due to the transfer of business to the branch, and this is also resulting in lower reinsurance recoverables. HDI-Gerling Verzekeringen N.V. requires third parties to have a Standard & Poor’s rating of “A” or higher. TYPE 2 CREDIT RISKS These are counterparty credit risks relating to counterparties that are not expected to have a credit rating. The type 2 risk is becoming more prevalent and we have extended the procedures for monitoring the amount and duration of the claim. The financial department has been restructured to further the control of our financial processes and it now consists of three sub-departments.

1. Financial reporting; 2. Current Accounts & General Ledger; 3. Credit Control & Treasury.

The tasks and responsibilities of the sub-departments are registered and described and we have implemented a strict four-eye principle. Processes have been redesigned and documented. The management instructed to re-align and reconcile payables/receivables positions, particularly with intermediaries. All the measures taken led to a significant improvement in our balance sheet position and therefore to the improvement of our position with respect to credit risks.

All type II receivables older than 90 days have a higher capital requirement. Our aim is to keep these receivables as low as possible. Our exposure of 90 days or older receivables is mitigated by a bad debt provision for almost the same amount. The result is that our exposure of “old” type II receivables is close to zero. 4. OPERATIONAL RISKS/STRATEGIC RISKS Operational risk is the risk associated with inefficiently designed processes and/or the inefficient execution of processes. The personnel risk as a component of operational risk is important for HDI-Gerling Verzekeringen N.V. Staff professionalism and competence are required for the services provided. The company response to this risk includes study programmes, appreciation and remuneration. HDI-Gerling Verzekeringen N.V. chooses the primary and fringe benefits in its conditions of employment very carefully in order to retain its personnel. The operational and strategic risks in the company are monitored in Tagetik SIIP2. The risk assistants describe the mitigating measures for each risk. Many initial risks have been mitigated to an increasing extent. The product development risk, for example, is offset through the ‘Product Approval and Review Process’ and the whistle-blower scheme furthers the mitigation of the fraud risk, compliance risk and other risks. The objective of compliance is to help the organisation to prevent infringements of legislation and regulations and to minimise the risks for the organisation’s integrity and reputation. Effective compliance risk management creates confidence in the market and protects our market position. The management initiated a major project in 2015 to mitigate the risks resulting from deficiencies in the company’s system of internal controls. These systems consist of technical and organisational measures and controls to ensure adherence to guidelines and to support the prevention of losses from malicious actions by internal or external parties. As a legacy from the past, as shown by findings from the supervisory authority and from internal and external audit procedures, deficiencies in the segregation of duties, for example, need to be mitigated in a comprehensive, uniform and documented way. Risk management is intensively involved in this ongoing project in order to further strengthen the anchoring of effective risk management and compliance procedures in the organisation. The system of internal controls is monitored by risk management on a quarterly basis.



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SOLVENCY II Solvency II was launched in 2016. In previous years, we had the opportunity to familiarise ourselves with the new legislation and to make the appropriate preparations. We made preparations for the Solvency II framework, HDI-Gerling Verzekeringen N.V. anually issued ORSA’s from the year 2014, participated in the preparatory reporting in June 2015 and produced quarterly reports starting Q1 2015. In 2016 the company has submitted a day-one reporting. The required Solvency II details are not included in this Annual Report, but will be separately submitted in the Solvency & financial Condition Report (SFCR) and Report to Supervisor (RSR). In broad terms, the Solvency II framework is based on three pillars. PILLAR I Pillar I focusses on modelling the capital requirements: determining the required solvency level (Solvency Capital Requirement or SCR) on the basis of risks and the minimum required solvency level (Minimum Capital Requirement or MCR). Our insurance portfolios must be modelled in line with market values in order to complete the capital calculations. The market value balance sheet and the SCR and MCR calculations are reported regularly to the Board of Directors and to the Supervisory Board and assessed using the capitalisation policy as documented in the ORSA. With effect from 2016 the Solvency II position will be calculated on a quarterly basis. PILLAR II This pillar focuses on governance and the structuring of risk management. This section also sets out the basic principles for the regulatory body’s supervision. Business operations must be structured to allow for the optimal management of risks with an effective and integrated risk management system, as demonstrated by self-assessment using the Own Risk and Solvency Assessment (ORSA). HDI-Gerling Verzekeringen N.V compiled an ORSA in late 2017 and submitted it to the regulatory body. The ORSA was produced by a dedicated working group comprised of representatives of various lines of business and business units. HDI-Gerling Verzekeringen N.V. used this ORSA to further develop important Solvency II concepts (such as risk appetite, the ORSA process, capital management and governance). The input for the scenarios used in the ORSA originated from these workshops and further input was provided by Tagetik SIIP2 and the members of the Supervisory Board. HDI-Gerling Verzekeringen N.V complied with solvency limits in all scenarios.

PILLAR III Pillar III focuses on the mandatory periodical reports on solvency, the financial situation and the risk management system. To establish a clear picture of the impact of our organisation’s reporting requirements, we conducted dry runs, including the documentation of the reporting processes, related issues and failures. Furthermore, in cooperation with our parent company, we are in the process of setting up a framework for the automation of a number of components of the QRT (Quantitative Reporting Templates).



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LINES OF BUSINESS

Gross writte n pre mium

Figures in EUR 1,000

Gross Ce de d Ne t Gross Ce de d Ne t

Writte n pre mium

Marine 7,449 21,444 - 13,995 57,695 14,640 43,055

Property 328 742 - 414 34,779 7,898 26,881

Liability 10,096 11,590 - 1,494 28,230 10,100 18,130

Motor 540 456 84 19,692 690 19,002

Engineering 3,289 23,603 - 20,314 14,037 8,048 5,989

Tota l 2 1,7 0 2 5 7 ,8 3 5 - 3 6 ,13 3 15 4 ,4 3 3 4 1,3 7 6 113 ,0 5 7

2 0 17 2 0 16

Te c hnic a l re sult



Te c hnic a l re sult

Marine 1,920 1,946 - 26 - 8,643 - 3,653 - 4,990

Property 7,630 4,340 3,290 - 1,975 1,208 - 3,183

Liability - 21,826 - 10,489 - 11,337 - 10,028 - 11,603 1,575

Motor 4,799 3,356 1,443 1,194 2,071 - 877

Engineering 9,526 5,729 3,797 4,249 6,832 - 2,583

Tota l 2 ,0 4 9 4 ,8 8 2 - 2 ,8 3 3 - 15 ,2 0 3 - 5 ,14 5 - 10 ,0 5 8

2 0 17 2 0 16

Overall, the decrease in all lines of businesses of the gross written premium was caused by the Alba III project, in which all remaining insurance policies were transferred to the branch of HDI Global SE. The technical result was affected by the change in the reinsurance structure. Because of the portfolio transfer to the branch the management has decided to change the reinsurance structure at HDI-Gerling Verzekeringen N.V. In 2017 the reinsurance structure for the lines Engineering, Liability and Marine changed to a 100% quote of share for 2017 claims and the years after, rather than an excess of loss structure in 2016. In the marine book of business the net claim expenses is still relatively high, despite the reinsurance, due to an increase in the reserves for previous years and a release of a reinsurance claim. Also in the liability book of business the net claim expenses are still relatively high due to an increase in the reserves for previous years (mainly 2013). The claim ratio of the property book of business has improved, due to a low number of claims in the current year and the claim ratio of the motor book has improved, due to positive run-off results. Other technical result contributes positively to the technical result of the engineering business, due to release of provisions. .



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MARINE

Figures in EUR 1,000,000

Gross Ne t Gross Ne t

Gross written premiums 7.4 - 14.0 57.7 43.1

Earned premiums 23.7 1.6 63.9 36.1

Claims expenses 17.5 2.8 55.3 27.6

Operating expenses 4.4 - 1.1 17.3 13.3

Other technical result 0.1 - 0.2

Te c hnic a l re sult 0 .0 - 5 .0

Ra tio's

Net Expense/Commission - 75.0% 37.4%

Net Claims 175.0% 76.5%

Ne t Combine d Ra tio

2 0 17 2 0 16

10 0 .0 % 113 .9 %

PROPERTY





Claims expenses - 0.2 3.7 25.5 17.3

Operating expenses 2.4 1.5 11.0 9.1

Other technical result - -


Ra tio's

Net Expense/Commission 17.6% 39.2%

Net Claims 43.5% 74.6%


2 0 17 2 0 16

113 .8 %6 1.2 %

LIABILITY




- -


Claims expenses 30.4 9.3 35.8 13.4


Other technical result - -

Te c hnic a l re sult - 11.4 1.6

Ra tio's


Net Claims 664.3% 77.0%


2 0 17 2 0 16

9 0 .7 %9 14 .3 %

MOTOR



Gross written premiums 0.9 0.4 19.7 19.0


Claims expenses - 0.8 2.5 13.0 14.1


Other technical result - 0.1

Te c hnic a l re sult 1.5 - 0 .9

Ra tio's


Net Claims 50.0% 74.6%


2 0 17 2 0 16

10 4 .8 %7 0 .0 %



29

ENGINEERING





Claims expenses 3.4 - 1.7 12.8 7.2

Operating expenses 2.9 - 5.3 3.3

Other technical result 1.6 - 1.5


Ra tio's

Net Expense/Commission 51.1%

Net Claims 76.6%


2 0 17 2 0 16

- 6 6 0 .0 %

- 320.0%

- 340.0%

12 7 .7 %

Due to the run-off situation and the change in the reinsurance programm the above mentioned figures may show unexpected figures.

COMPLIANCE AND SECURITY The rules of conduct of HDI-Gerling Verzekeringen N.V. (HDI) formulate standards for responsible and ethical behaviour for its employees. It is incumbent upon every employee to ensure that their actions comply with these rules of conduct, as well as the laws, guidelines and instructions covering their area of work. The commercial success of the company is determined not only by the quality of its products and services, but also by the legally impeccable, professional and responsible conduct of its management and employees towards each other, its business partners and the general public. THE COMPLIANCE & SECURITY DEPARTMENT Given the crucial role in the ‘Three lines of defence’ model and as a key function in Solvency II, the Compliance & Security Manager (the Compliance Officer of the company) reports directly to the Board of Directors of the company and functionally to the Chief Compliance Officer of Talanx AG. In addition, the Supervisory Board is informed on a regular basis about compliance & security issues. When necessary, the Compliance Officer may escalate to the Supervisory Board directly. This contributes to the independence of the Compliance Officer at the company. Furthermore, the Compliance Officer can propose topics for the agenda of the internal auditor. The Board of Directors and the Supervisory Board receive on a regular basis written reports from the Compliance & Security Manager about topics relating to compliance, security and ethics. The mission of the Compliance & Security department is:

Supervising compliance with the applicable rules and regulations; Supervising the control of business operations and business risks

regarding the applicable rules and regulations.; Stimulating an incorruptible corporate culture.

In this context, ‘compliance & security risk’ is taken to mean: ‘the possibility of 1) measures from authorities or 2) the company’s business model, its reputation, solvency and/or profitability being impaired or threatened as a consequence of fraud, non-compliance or unsatisfactory compliance with supervisory rules or nonfulfillment or unsatisfactory fulfillment of justified expectations from its stakeholders such as clients, employees, supervisory authorities and society as a whole.’ The department has the following objectives:

Risk management: to identify and analyse, together with the (internal) stakeholders, compliance, privacy and security risks (and thus trying to limit adverse effects of non-compliance with applicable rules and regulations).

Drawing up/advising: to prepare/to assist, together with the (internal) stakeholders, in the drawing up of policies, procedures and control measures regarding the risks mentioned before and advising on its implementation.

Awareness: to stimulate compliance with policies, procedures and control measures as mentioned before by advising and training.



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Monitoring: to supervise compliance with policies, procedures and control measures as mentioned before, to report about the outcome and if necessary to make recommendations for improvement.

Enforcement: if applicable, to enforce in cases of non-compliance with policies, procedures and control measures as mentioned before.

Relationship management: to maintain a good relationship with supervisory authorities.

In order to comply with these objectives Compliance & Security uses a Risk & Control Framework which is updated on a regular basis. SANCTIONS REGULATIONS Considerable effort and recourses were devoted in 2017 to remain compliant with Sanction regulations on the same level as in 2016. This in part in response to an investigation by De Nederlandsche Bank N.V. (DNB) (in 2015) that led to serious findings regarding the proper implementation of Sanction regulations at the company, which resulted in an administrative fine of EUR 10,000. In 2016 the actions taken by HDI resulted in a positive outcome of the validation check on operational effectiveness by DNB. During 2017 preparations have been made to migrate to the Sanctions Platform of the United Dutch Insurance Exchange (VNAB) leaving the current platform offered by FRISS (consultancy firm in fraud, risk & compliance). The planning is to use the new Platform in 2018. PRIVACY AND INFORMATION SECURITY Because of new (mandatory) legislation with regard to the area of privacy (i.e. the Dutch Act on reporting data breaches and the General Data Protection Regulation (the GDPR)), a data privacy maturity assessment was performed by an external consultancy in 2016. The assessment was the basis for a project with respect to Privacy and Information Security including further structuring the privacy compliance organisation at the company. Considerable effort and recourses were devoted in 2017 to this which objective is to comply with the GDPR and to have an appropriate level of information security as per 25 May 2018. In this respect a Data Protection Officer was assigned in the Compliance & Security department. RULES OF CONDUCT The company has a whistle-blower policy in place and it has implemented a web-based whistleblowing system that supports the anonymous reporting of incidents. The link to this digital system can be found on the company’s website and it gives employees the opportunity to set up an anonymous post box to communicate with the Confidential Advisor and the Compliance Officer. Furthermore, the company has a procedure in place for complaints from customers and third parties, with clearly defined deadlines for responding to, and following up, complaints. The company has several rules of conduct. They include a Gift and Invitation Policy and a Sponsoring and Donation Policy. Compliance with these rules

of conduct is monitored by the Compliance & Security department to prevent possible conflicts of interest. The Compliance & Security department organises regular training sessions and workshops for employees and the management in order to promote ethical behaviour. PLANNING FOR 2018 According to the Vision, Mission & Strategy 2018-2020 including the Annual Plan 2018 the following key activities have been scheduled for 2018:

Implementation of a new policy regarding Privacy and Information Security in order to comply with the GDPR;

Implementation of the in 2017 adopted insurance fraud policy; Migration from the FRISS platform to the VNAB Sanctions

Platform; Further streamlining of the in 2017 adopted Incident management

policy and procedure; Review and update of the company rules of conduct; Improving awareness with respect to compliance, security, privacy

and information security themes. Performing assessments on compliance with several compliance,

security, privacy and information security themes; Drafting the internal compliance report 2018.

STAFF As of 1 January 2017 all employees of HDI-Gerling Verzekeringen N.V. have been transferred to the Dutch branch of HDI Global SE. Therefore HDI-Gerling Verzekeringen N.V. has outsourced all required services and key functions to HDI Global SE, the Netherlands as agreed in a Service Level Agreement between the companies. These services are: claim handling, finance and accounting, IT related services, risk management, compliance and the actuarial function. The quality of these services is closely monitored.

PERSPECTIVES With the completion of the transfer of insurance policies to HDI Global SE, the Netherlands, in 2017, the business scope of HDI-Gerling Verzekeringen N.V. has changed: In a market perspective the company is now mainly focussed on handling its claims portfolio according to HDI service and know-how standards clients can expect and are used to. Rotterdam, 5 April 2018 W.J. Garhammer R.M. Fischer



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33

2017 FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION 34

INCOME STATEMENT 36

STATEMENT OF COMPREHENSIVE INCOME 37

STATEMENT OF CHANGES IN EQUITY 38

CASH-FLOW STATEMENT 39

NOTES TO THE 2017 FINANCIAL STATEMENTS 41


STATEMENT OF FINANCIAL POSITION

34

STATEMENT OF FINANCIAL POSIT ION

Asse ts Note


A. Inta ngible a sse ts

Goodwill 1 - -

Other intangible assets 2 14 60

14 6 0

B. Inve stme nts

Investment property 3 5,360 900

Investments in affiliated companies and

partic ipating interests 4 170 2,760

Loans and receivables 5 25,366 25,608

Other financial instruments

i. Held to maturity 6 7,804 7,841

ii. Available for sale 7/8 210,054 259,747

Tota l inve stme nts 2 4 8 ,7 5 4 2 9 6 ,8 5 6

C. De fe rre d a c quisition c osts 9 - 7 ,9 9 4

D. Re insura nc e re c ove ra ble s on

te c hnic a l provisions 13/14 2 2 2 ,10 8 2 6 8 ,7 6 5

E. De fe rre d ta x a sse ts 10 6 ,9 3 2 9 ,7 2 8

F. Othe r a sse ts 11 7 ,9 5 4 12 ,5 6 9

G . Ac c ounts re c e iva ble on insura nc e busine ss 12 4 0 ,7 9 8 8 1,6 0 2

H. Ca sh 2 1,2 3 1 2 7 ,9 9 4

Tota l a sse ts 5 4 7 ,7 9 1 7 0 5 ,5 6 8

3 1 De c e mbe r 2 0 17 3 1 De c e mbe r 2 0 16


STATEMENT OF FINANCIAL POSITION

35

Lia bilitie s Note 3 1 De c e mbe r 2 0 17


I. Sha re holde rs' e quity

Common shares 40,000 40,000

Additional paid- in capital 24,932 24,932

Legal reserves 106 106

Retained earnings 77,377 58,855

Other reserves 6,940 8,571

Tota l sha re holde rs' e quity 14 9 ,3 5 5 13 2 ,4 6 4

J. Te c hnic a l provisions

Unearned premium reserve 13 22,370 67,282

Loss and loss adjustment expense reserve 14 325,605 431,627

3 4 7 ,9 7 5 4 9 8 ,9 0 9

K. Othe r provisions

Provision for pensions 15 11 1,156

Sundry provisions 16 - 595

11 1,7 5 1

L. Lia bilitie s

Other liabilities 17 40,314 59,190

4 0 ,3 14 5 9 ,19 0

C. De fe rre d a c quisition c osts 9 9 6 3 -

E. De fe rre d ta x lia bilitie s 12 9 ,17 3 13 ,2 5 4

Tota l lia bilitie s 5 4 7 ,7 9 1 7 0 5 ,5 6 8

3 1 De c e mbe r 2 0 16


INCOME STATEMENT

36

STATEMENT OF FINANCIAL POSIT ION (BEFORE DISTRIBUTION OF PROFIT)INCOME STATEMENT

Note


Gross written premium 18 21,702 154,433

Ceded written premium 18 - 57,835 - 41,376

Change in gross unearned premium 18 44,912 20,793

Change in ceded unearned premium 18 8,037 - 28,872

Ne t e a rne d pre mium 16 ,8 16 10 4 ,9 7 8

Claims and claims expenses (gross) 19/20 - 50,386 - 142,404

Reinsurers' share 19/20 33,723 62,780

Cla ims a nd c la ims e xpe nse s (ne t) - 16 ,6 6 3 - 7 9 ,6 2 4

Acquisition costs and administrative expenses

(gross) 20 - 16,164 - 48,185

Reinsurers' share 11,193 14,323

Ac quisition c osts a nd a dministra tive e xpe nse s (ne t) - 4 ,9 7 1 - 3 3 ,8 6 2

Other technical income 2,022 712

Other technical expenses - 37 - 2,262

Othe r te c hnic a l re sult 1,9 8 5 - 1,5 5 0

Ne t te c hnic a l re sult - 2 ,8 3 3 - 10 ,0 5 8

Income from investments 21 5,946 5,411

Expenses for investments 21 - 3,232 - 478

Ne t inve stme nt inc ome 2 ,7 14 4 ,9 3 3

Other non- technical income 18,705 10,624

Other non- technical expenses - 875 - 6,318

Othe r inc ome /e xpe nse s 22 17 ,8 3 0 4 ,3 0 6

Ope ra ting profit/ loss 17 ,7 11 - 8 19

Taxes on income 23 811 - 516

Ne t inc ome 18 ,5 2 2 - 1,3 3 5

2 0 17 2 0 16


STATEMENT OF COMPREHENSIVE INCOME

37

STATEMENT OF FINANCIAL POSIT ION (BEFORE DISTRIBUTION OF PROFIT)STATEMENT OF COMPREHENSIVE INCOME

Figures in EUR 1,000 2 0 17 2 0 16

Ne t inc ome *) 18 ,5 2 2 - 1,3 3 5

Othe r c ompre he nsive inc ome :

Ite ms tha t ma y be re c la ssifie d subse que ntly to inc ome sta te me nt:

Gains (losses) recognised in other comprehensive income for the period - 2,175 2,993

Realised gains/losses transferred to the income statement - - 315

- 2 ,17 5 2 ,6 7 8

Ta xe s on inc ome a nd e xpe nse re c ognise d in e quity via

othe r inc ome /e xpe nse s 544 - 669

Tota l ite ms tha t ma y be re c la ssifie d subse que ntly to inc ome sta te me nt, ne t of ta x - 1,6 3 1 2 ,0 0 9

Tota l c ompre he nsive inc ome for the pe riod *) 16 ,8 9 1 6 7 4

*) recognised income is attributable to the company. 16,891 674


STATEMENT OF CHANGES IN EQUITY

38

STATEMENT OF CHANGES IN EQUITY


Common Addi- Le ga l Re ta ine d Unre a - Ga ins or Sha re -

sha re s tiona l re se rve s e a rnings lise d losse s on holde rs'

pa id- in Ga ins / pe nsion e quity

Ca pita l Losse s provisions

Ba la nc e a t 0 1.0 1.2 0 16 4 0 ,0 0 0 2 4 ,9 3 2 10 6 6 3 ,4 8 8 6 ,5 6 2 - 2 ,4 7 3 13 2 ,6 15

Net income - - - - 1,335 - - - 1,335

the re of re c la ssifia ble - - - - 3 ,2 9 8 - 2 ,4 7 3 - 8 2 5

Gains or losses on pension

provisions- - - - 3,298 - 2,473 - 825

Unrealised gains and

losses from investments- - - - 2,009 - 2,009

Ba la nc e a t 3 1.12 .2 0 16 4 0 ,0 0 0 2 4 ,9 3 2 10 6 5 8 ,8 5 5 8 ,5 7 1 - 13 2 ,4 6 4

Net income - - - 18,522 - - 18,522

the re of re c la ssifia ble - - - - - 1,6 3 1 - - 1,6 3 1

Unrealised gains and

losses from investments- - - - - 1,631 - - 1,631

Ba la nc e a t 3 1.12 .2 0 17 4 0 ,0 0 0 2 4 ,9 3 2 10 6 7 7 ,3 7 7 6 ,9 4 0 - 14 9 ,3 5 5

Othe r re se rve s


CASH-FLOW STATEMENT

39

CASH-FLOW STATEMENT

Figures in EUR 1,000 Note 2 0 17 2 0 16

I. 1. Net income 18 ,5 2 2 - 1,3 3 5

I. 2. Changes in technical provisions 10/11 - 104,277 - 3,490

I. 3. Changes in deferred acquisition costs 13 8,957 - 3,496

I. 4. Changes in accounts receivable and payable 9/15 39,342 - 15,027

I. 5. Changes in other receivables and liabilities 12/17 - 15,342 - 2,045

I. 6. Net gains and losses on investments 3- 8 - 330 - 470

I. 7. Other non- cash expenses and income 405 7,435

I. 8. Income tax expense/income - 740 586

I. Ca sh flows from ope ra ting a c tivitie s - 5 3 ,4 6 3 - 17 ,8 4 2

II. 1. Cash inflow from the sale of real estate 3- 8 619 -

II. 2. Cash outflow from the purchase of real estate 3- 8 - 52 -

II. 3. Cash inflow from the sale and maturity of financial instruments 3- 8 45,413 36,472

II. 4. Cash outflow from the purchase of financial instruments 3- 8 - 635 - 26,674

II. 5. Changes in other invested assets / affiliated companies 3+4 1,706 62

II. 6. Cash in/outflows from the acquisition of tangible and intangible assets 1/2 - 954

II. 7. Cash in/outflows from the sale of tangible and intangible assets 1/2 20 852

II. Ca sh flows from inve sting a c tivitie s 4 7 ,0 7 1 11,6 6 6

Ca sh a nd c a sh e quiva le nts a t the be ginning of the fina nc ia l ye a r 2 7 ,9 9 4 3 4 ,4 7 9

Cha nge in c a sh a nd c a sh e quiva le nts (I.+ II. ) - 6 ,3 9 2 - 6 ,17 6

Effe c t of e xc ha nge ra te c ha nge s on c a sh a nd c a sh e quiva le nts - 3 7 1 - 3 0 9

Ca sh a nd c a sh e quiva le nts a t the e nd of the fina nc ia l ye a r 2 1,2 3 1 2 7 ,9 9 4

Additiona l informa tion

Income taxes refunded from tax authorities - - 2,776

Interest received from operating activities - 6,974 - 7,589

Interest paid from operating activities - 97 The cash flow statement shows how cash and cash equivalents of the company changed in the course of the year under review due to inflows and outflows. In this context a distinction is made between cash flow movements from operating activities and those from investing and financing activities. The cash flows are presented in accordance with IAS 7 “Statement of Cash Flows”. The cash flow statement was drawn up using the indirect method. The liquid funds are limited to cash and cash equivalents and correspond to the item “Cash” in the statement of financial position. The cash flow movements of the company are determined primarily by the business model of an insurance enterprise. In general, we first receive premiums for risk assumption and subsequently make payments for claims.


41

NOTES TO THE 2017 FINANCIAL STATEMENTS

GENERAL INFORMATION 42

NOTES TO THE 2017 FINANCIAL STATEMENT – STATEMENT OF FINANCIAL POSITION 53

A. INTANGIBLE ASSETS 53

B. INVESTMENTS 54

C. DEFERRED ACQUISITION COSTS 59

E. DEFERRED TAX ASSETS / LIABILITIES 60

F. OTHER ASSETS 62

G. ACCOUNTS RECEIVABLE ON INSURANCE BUSINESS 63

H. CASH 64

I. SHAREHOLDERS’ EQUITY 64

J. TECHNICAL PROVISIONS 64

K. OTHER PROVISIONS 69

L. LIABILITIES 69

NOTES TO THE 2017 FINANCIAL STATEMENT – INCOME STATEMENT 71

NATURE OF RISKS 77

RELATED PARTIES’ DISCLOSURE 84

OFF BALANCE SHEET COMMITMENTS 86

AUDITOR SERVICES AND FEES 87

FISCAL UNITY 87

DISTRIBUTION OF PROFITS 87

BRANCH OFFICES 87

POST BALANCE SHEET EVENTS 88

(KPN building - Belvédère)


NOTES TO THE 2017 FINANCIAL STATEMENTS | GENERAL INFORMATION

42

NOTES TO THE 2017 FINANCIAL STATEMENTS

GENERAL INFORMATION The financial statements of HDI-Gerling Verzekeringen N.V. for the year ended 31 December 2017 were authorised for issue in accordance with the resolution of the Board of directors on 5 April 2018. The company offers insurance services in non-life insurance. RELATIONSHIP TO PARENT COMPANY HDI-Gerling Verzekeringen N.V. is a limited company established in and under the laws of the Netherlands and it has its registered office at Westblaak 14, 3012 KL in Rotterdam, the Netherlands. All of the company’s capital is controlled by HDI Global SE, which is a wholly owned subsidiary of Talanx AG, Hanover, Germany. HDI-Gerling Verzekeringen N.V. was incorporated in 1978 as a 100% subsidiary of HDI Haftpflichtverband der Deutschen Industrie V.a.G. in Hanover (Germany), continuing the activities initiated by HDI, in cooperation with third parties, in the Netherlands in the mid-seventies. Since then all interests and participations have been transferred to the Talanx Group, which is headed by the holding company Talanx AG. The industrial lines division is lead by HDI Global SE. BASIS OF PREPARATION The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (‘EU’) and Part 9 of Book 2 of the Netherlands Civil Code. The financial statement reflects all standards in force as at 31 December 2017 that were required to be applied for the 2017 financial year and that have been adopted by the EU. This includes all interpretations issued by the IFRS Interpretations Committee (IFRSIC, formerly known as the International Financial Reporting Interpretations Committee (IFRIC)) and the former Standing Interpretations Committee (SIC). The financial statements have been drawn up in euros (EUR). The amounts shown have been rounded off to thousands of euros (EUR 1,000) unless figures are required in full euro amounts for reasons of transparency. This may lead to rounding-off differences in the tables presented in this report. Figures in brackets refer to the previous year. CONTINUITY These financial statements were prepared on the basis of the assumption that the company will continue as a going concern. GENERAL INFORMATION Unless otherwise indicated, all assets and liabilities are carried at nominal value. Income and expenses are attributed to the period to which they relate.

CURRENCY TRANSLATION PRINCIPLES The reporting currency used in the financial statements of HDI-Gerling Verzekeringen N.V. is the euro (EUR). Items denominated in foreign currencies are valued at the exchange rate applicable as at the balance sheet date. Conversion differences are recognised in the income statement. Transactions in foreign currencies are principally converted into the functional currency using the exchange rates on the transaction date. In accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates” the recognition of exchange rate gains and losses by conversion is guided by the nature of the underlying balance sheet item. Gains and losses resulting from the conversion of monetary assets and liabilities in foreign currencies are recognised in the statement of income under other income/expenses. ACCOUNTING PRINCIPLES Applicable standards/interpretations and changes in standards The financial statements reflect all IFRS standards effective as at 31 December 2017 as well as the interpretations issued by the IFRS Interpretations Committee (previously known as the IFRIC) and the previous Standing Interpretations Committee (SIC) that were required to be applied for the 2015 financial year and that had been adopted by the EU. In accordance with IFRS 4 “Insurance Contracts”, insurance-specific transactions for which IFRS do not contain any separate guidance are accounted for in accordance with the relevant requirements of local pre-IFRS accounting policies as at the date of initial application of IFRS 4 on 1 January 2005. IFRS 4 requires disclosures to be made about the nature and extent of risks associated with insurance contracts and IFRS 7 “Financial Instruments: Disclosures” requires similar disclosures about risks associated with financial instruments. The disclosures resulting from these requirements are contained in the risk management section in note 24. Both the risk report and the relevant disclosures in the notes must therefore be read in order to obtain a comprehensive overview of the risks to which the HDI-Gerling Verzekeringen N.V. is exposed. Please refer to the corresponding explanations in the risk report and the notes. STANDARDS, INTERPRETATIONS AND REVISIONS TO ISSUED STANDARDS THAT WERE NOT YET EFFECTIVE IN 2017 AND THAT WERE NOT APPLIED BY THE COMPANY PRIOR TO THEIR EFFECTIVE DATE. A) ALREADY ENDORSED BY THE EU IFRS 9 “Financial Instruments”, which was published on 24 July 2014, supersedes the existing guidance in IAS 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 contains revised guidance for the classification and measurement of financial instruments, including a new model for impairing financial assets that provides for expected credit losses, and the new general hedge accounting requirements. It also takes over the existing guidance on recognising and derecognising financial instruments



43

from IAS 39. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. However, the IASB issued amendments to IFRS 4 “Application of IFRS 9 and IFRS 4” in September 2016. They affect the initial application of IFRS 9 for insurance companies. Without these amendments, the various dates of coming into force for IFRS 9 and the new standard for insurance contracts (IFRS 17) will lead to increased volatility in the results and duplicated conversion expenses for a transitional period. Applying IFRS 4.20A, the company, whose predominant activity is in the insurance business, chooses to apply IAS 39 instead of IFRS 9 for financial years that begin prior to 1 January 2021. Insurance business is deemed to be the “predominant activity” at least if, on the final annual reporting date prior to 1 April 2016, more than 90% of the total liabilities were attributable to the insurance business. The assessment of these prerequisites with regard to the application of this solution was carried out on the basis of the financial statements as at 31 December 2015. At this assessment date, the liabilities in the area of application of IFRS 4 accounted for more than 90% of the total liabilities of the company. Furthermore, there has been no change in the business activity that would make a re-assessment necessary. As from the 2018 financial year, selected disclosures must be made in the Notes that are designed to permit a certain comparability with companies that already apply IFRS 9. Due to the major significance of IFRS 9, the Talanx Group set up a project to examine the impact of the standard on the financial statements and to take the necessary steps towards implementation; this also takes into account the elaboration of the disclosure obligations that arise when postponing the initial application of IFRS 9. However, it is already evident that the new classification requirements will affect the accounting for financial assets in the company. The IASB issued its new requirements governing revenue recognition in IFRS 15 “Revenue from Contracts with Customers” on 28 May 2014. It replaces the existing guidance on revenue recognition, including IAS 18 “Revenue”, IAS 11 “Construction Contracts” and IFRIC 13 “Customer Loyalty Programmes”. IFRS 15 establishes a comprehensive framework to determine how, how much and when revenue is recognised. IFRS 15 must be applied for the first time to reporting periods beginning on or after 1 January 2018. Financial instruments and other contractual rights and obligations that need to be accounted for using separate standards and (re)insurance contracts in the area of application of IFRS 4 (core business activity of the company) are explicitly excluded from the area of applicability of this standard. The company will apply IFRS 15 as of 1 January 2018 and in the process will select the modified retrospective approach, that is, the cumulative effect from the initial application will have to be recognised in the profit reserves as at 1 January 2018. Moreover, the company intends to apply the practical simplifications with regard to concluded contracts and contract amendments. On the basis of the completed impact analysis, the company does not expect any material conversion effects at the time of initial application. Due to the minor significance of the anticipated, cumulatively immaterial conversion effect with regard to the presentation of the net assets, financial position and results of operations of the company and in compliance with the materiality concept, the company will dispense with the recognition of the immaterial conversion effect as at 1 January 2018. On 13 January 2016, the IASB published the new requirements governing lease accounting in IFRS 16 “Leases”. IFRS 16 introduces a standardised

accounting model, whereby leases must be recognised in the balance sheet of the lessee. A lessee recognises a right-of-use asset that represents their right to use the underlying asset and a liability arising from the lease, representing their obligation to make lease payments. There are exceptional regulations for short-term leases and leases concerning low-value assets. The accounting at the lessor is comparable to the current standard – that means, that lessors must continue to classify leases as financing or operating leases. IFRS 16 supersedes the existing guidelines on leases, including IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Lease”, SIC-15 “Operating Leases – Incentives” and SIC-27 “Evaluating the Substance of Transactions in the Legal Form of a Lease”. The standard must be applied for the first time in the reporting period of a financial year beginning on or after 1 January 2019. An early application is permissible for companies that are applying IFRS 15 before or at the time of the first application of IFRS 16. The company has begun assessing the possible impact of the application of IFRS 16 on its financial statements, without being able to quantify it reliably at present. The company intends to apply the standard using the modified retrospective method. The cumulative effect of the initial application of IFRS 16 – insofar as it is material – will therefore be recognised as an adjustment of the opening balance of retained earnings as at 1 January 2019, without any adjustment of the comparative period. Up to now, one impact that has been identified is that the company will recognise new assets and debts for its operating leases. As at 31 December 2017, the future minimum lease payments for non-callable operating leases (on a non-discounted basis) stood at EUR 3.0 million (see information in the Note“26. Off Balance Sheet Commitments” in the “Others” section). Apart from the above-mentioned new standards/amendments that could have a material impact on the financial statements, other standard amendments have been passed, but they are not expected to have any material impact on the net assets, financial position and results of operations of the company:

St andard

IFRS 15 “ Revenue from

Contracts with Customers”

Amendments in the context of

the “ annual improvements (2014-

2016 cycle)”

(1) Effect ive for annual periods beginning on or after the date stated.

STA N D A R D A M EN D M EN TS

T it le o f t he st andard

/ int erp ret at ion /

amendment

F irst app licat ion

( 1)

Clarif icat ions of IFRS 15 1 January 2018

Amendments to IAS 28 and

IFRS 11 January 2018



44

B) NOT YET ENDORSED BY THE EU The IASB issued its new requirements governing insurance accounting in IFRS 17 “Insurance Contracts” on 18 May 2017 which, subject to implementation in EU law, must be applied bindingly to financial years that begin on or after 1 January 2021. IFRS 17 supersedes IFRS 4 and so establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with a discretionary surplus participation within the scope of the standard for the first time. According to the assessment model of the new standard, groups of insurance contracts are assessed on the basis of the expected value of discounted cash flows with an explicit risk adjustment for non-financial risks and a contractual service margin, which leads to a profit recognition corresponding to the provision of services. Instead of premium income in every period, the changes arising from the liability to grant insurance cover are recognised as “insurance turnover”, for which the insurance company receives a fee minus incoming and outgoing payments of savings components. Insurance financing earnings and costs result from discounting effects and financial risks. They may be recognised for each portfolio either in the statement of income through profit or loss or in the other comprehensive income. Changes in the assumptions that do not relate to interest or financial risks are booked against the contractual service margin and are distributed over the term of the services that are still due to be provided. If the service margin becomes negative, a corresponding amount must be recognised through profit or loss. IFRS 17 provides a simplified procedure for short-term contracts, which presents the liability to grant insurance cover as was done previously via unearned premiums. Liabilities arising from incurred but not yet processed insurance claims must be discounted under IFRS 17 at the relevant current interest rates. As these new regulations affect the core business activities of the company, it is inevitable to expect material impacts on the financial statements. Due to the particular significance of the new accounting regulations, the Group has set up a multi-year project to examine the impact of the standard on the financial statements and to take the necessary steps towards implementation. The basic accounting principles are currently being developed, so that it will then be possible to begin with implementing the comprehensive requirements in the processes and systems at the company. Moreover, a series of further standard amendments and interpretations have been passed, but it is anticipated that they will not have any material impact on the net assets, financial position and results of operations of the company:

St andard

IFRIC 22

IAS 40 " Investment Property"

IFRIC 23

IFRS 9 " Financial Instruments"

Amendments in the context of

the “ annual improvements (2015-

2017 cycle)”

(1) Effect ive for annual periods beginning on or after the date stated.

Amendments to IFRS 3,

IFRS 11, IAS 12 and IAS 231 January 2019

Transfers of Investment

Property1 January 2018

Uncertainty over Income

Tax Treatments1 January 2019

Prepayment Features with

Negative Compensation1 January 2019

A PPLIC A T ION OF N EW ST A N D A R D S A N D / OR A M EN D M EN TS -

N OT Y ET EN D OR SED

Tit le o f t he st andard

/ int erp ret at ion /

amendment

Foreign Currency

Transactions and Advance

Considerat ion

1 January 2018

F irst app licat ion

( 1)

ACCOUNTING POLICIES The financial statements are on a historical cost basis, except for the investments in affiliated companies and participating interests which are valued on the equity-mthod. Financial assets available for sale and investment property that have been measured at fair value. Loans and receivables and investments held to maturity are valued on amortised costs. The annual financial statements of the company and its subsidiaries are governed by uniform accounting policies, the application of which is based on the principle of consistency. In this section we will describe the accounting policies applied, any amendments made to accounting policies in 2017 and major discretionary decisions and estimates. Newly applicable accounting standards in the 2017 financial year are described in the section “General accounting principles and application of International Financial Reporting Standards (IFRS)“. SIGNIFICANT MANAGEMENT JUDGEMENT AND ESTIMATES Preparation of the financial statements requires management to exercise a certain degree of judgement and to make estimates and assumptions that affect the accounting policies applied and the carrying amounts of the recognised assets and liabilities, income and expenses, and contingent assets and liabilities disclosed. Actual results may differ from those estimates. Preparation of the financial statements entails, to a certain extent, taking discretionary decisions and making estimates and assumptions that have implications for the assets and liabilities recognised in the income statement as well as contingent claims and liabilities.



45

As a rule, these decisions and assumptions are subject to ongoing review and are based in part on historical experience as well as on other factors, including expectations about future events that currently appear reasonable. The processes in place both at the company level and at the level of the subsidiaries are geared toward calculating the values in question as reliably as possible taking all relevant information into account. Furthermore, steps are taken to ensure that the standards laid down by the company are applied in a consistent and appropriate manner. Estimates and assumptions entailing a significant risk in the form of a material adjustment, during the next financial year, to the carrying amounts of individual balance sheet items are discussed below. In addition, further details can be found in the accounting policies or directly in the notes on individual items. The company has determined not to consolidate Hannover Risk Consultants B.V. and H.J. Roelofs Assuradeuren B.V. due to low materiality. The other participation Westblaak Vastgoedfonds I B.V. is not consolidated because the company does not have control over this entity. Loss and loss adjustment expense reserves As at 31 December 2017 the company recognised loss and loss adjustment expense reserves to the amount of EUR 326 million (2016: EUR 432 million). The loss and loss adjustment expense reserves, the amount and maturity of which are uncertain, are recognised in line with the “best estimate” principles to the amount that will probably be utilised. The actual amounts payable may prove to be higher or lower; any resulting run-off profits or losses are recognised in the income statement. Fair value or impairments of financial instruments Financial instruments classified as available for sale with a fair value of EUR 210 million (2016: EUR 260 million) were recognised at the balance sheet date. Fair values and impairments for financial instruments, especially for those not traded on an active market, are determined using appropriate measurement methods. In this regard, please see our remarks on the determination of fair values as well as the applicability criteria for determining of the need to take impairments on certain financial instruments in the subsection entitled “Investments including income and expenses”. The allocation of financial instruments to the various levels of the fair value hierarchy is described under the note “Fair value hierarchy”. To the extent that significant measurement parameters are not based on observable market data (level 3), estimates and assumptions play a major role in determining the fair value of these instruments. Deferred tax assets and liabilities Estimates are made in particular with respect to the utilisation of tax loss carried forward, first and foremost in connection with deferred tax liabilities recognised in the balance sheet and expected future earnings. The company’s deferred tax assets and liabilities were balanced at the balance sheet date and amounted to a liability of EUR 9.2 million (2016: EUR 13.2 million) as at the balance sheet date. The deferred taxes on the asset side (EUR: 7.1 million) of the balance sheet are related to losses carried forward.

RECOGNITION OF INSURANCE CONTRACTS IFRS 4 “Insurance Contracts” contains basic principles – but no more far-reaching measurement requirements for the accounting for insurance and reinsurance contracts that an entity enters into as an insurer. For this reason, all insurance contracts are accounted for in accordance with the relevant requirements of local pre-IFRS accounting policies as at the date of initial application of IFRS on 1 January 2005, provided IFRS 4 contains no specific provisions to the contrary. The insurance business is classified as insurance contracts and investment contracts. An insurance contract is a contract under which the company has accepted significant insurance risk from another party (the policyholders) by agreeing to compensate the policyholders if a specific uncertain event adversely affects the policyholders. Investment contracts are those contracts that transfer significant financial risk and no significant insurance risk. Investment contracts, in other words contracts that have no significant insurance risk and do not contain discretionary participation features, are accounted for as financial instruments in accordance with IAS 39. ASSETS INTANGIBLE ASSETS Intangible assets with the exception of goodwill are recognised at amortised acquisition/production cost less accumulated amortisation and, where appropriate, accumulated impairment losses. They are amortised over their estimated useful life. In the case of software (straight-line amortisation), this is generally five years. The other intangible assets consists of acquired software. GOODWILL Goodwill is the positive difference between the cost of acquiring a company and the fair value of the company’s net assets. In accordance with IFRS 3 “Business Combinations,” negative differences from initial consolidation should be recognised immediately in income after renewed testing. Goodwill is tested for impairment at least once a year and recognised in the balance sheet at its initial acquisition cost less cumulative impairment losses. Neither scheduled amortisation nor reversals are permitted. For the purposes of the impairment test required by IAS 36 “Impairment of Assets”, goodwill must be allocated to the cash-generating units (CGUs). The goodwill is allocated to the CGU that is expected to derive benefit from the acquisition that gave rise to the goodwill. A CGU cannot be larger than a business segment. In order to determine possible impairment, the recoverable amount – defined as the higher of the value in use or the fair value less costs of disposal – of a CGU is established and compared with the carrying amounts of this CGU in the company including goodwill. If the carrying amounts exceed the recoverable amount, goodwill impairment is recognised in the statement of income (item: “Goodwill impairments”).



46

OTHER INTANGIBLE ASSETS The other intangible assets also comprise acquired and self-developed software. Intangible assets acquired for a consideration are recognised at amortised cost; self-developed software is carried at production cost less straight-line amortisation. Amortisation is carried out over the asset’s estimated useful life, generally five years. All other intangible assets are tested for impairment as at the balance sheet date and written down if necessary. These amortisation and impairment expenses are allocated to the functional units; insofar as allocation to functional units is not possible, they are recognised under other expenses. Write-ups on these assets are recognised in other income. INVESTMENTS INVESTMENT PROPERTIES With respect to real estate, a distinction is made between investment property and own-use real estate based on the following criteria: investment and own-use real estate for mixed-use properties are classified separately if the portions used by third parties and for own use cannot be sold separately. If this is not the case, properties are classified as investment property only if less than 10% is used by the company. On 1 January 2017 all employees have been transferred to the branch office of HDI Global SE. Therefore, the real estate is no longer for own use for HDI-Gerling Verzekeringen N.V., but classified as investment property. Investment Property is initially measured at cost and subsequently at fair value any change therein recognised in profit or loss. Any gain or loss from disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. The fair value are evaluated annually by an accredited, independent valuer. Transfers are made to (or from) investment property only when there is a change in use. Because on 1 January 2017 all employees have been transferred to the branch office of HDI Global SE. The real estate is no longer for own use for HDI-Gerling Verzekeringen N.V. and is transferred to investment property. Due to this transfer the investment property is valued at fair value. An independent surveyor appraised the property using the gross initial yield method. FINANCIAL INSTRUMENTS In accordance with IAS 39 “Financial Instruments: Recognition and Measurement,” financial assets/liabilities, including derivative financial instruments, are recognised/derecognised at the time of their acquisition or disposal at the settlement date. Financial assets are classified upon initial recognition in one of four categories, depending on their purpose: “loans and receivables”, “financial instruments held to maturity”, “financial instruments available for sale” and “financial instruments at fair value through profit or loss”. Financial liabilities are classified either as “financial instruments at fair value through profit or loss” or “at amortised cost.” Depending on the categorisation, the transaction costs directly connected with the acquisition of the financial instrument may be recognised. Financial

instruments are subsequently measured at either amortised cost or at fair value, depending on the classification as described above. Amortised cost is calculated on the basis of the original cost of the instrument, after allowing for redemption amounts, premiums or discounts amortised using the effective interest rate method and recognised in income, and any impairment losses or reversals of impairment losses. The company derecognised a financial asset when the contractual right to cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in which substantially all of the risks and rewards of ownership of the financial assets are transferred, or it neither transfers, nor retains substantially all of the risks and rewards of ownership a does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the company is recognised as a separate asset or liability. The company derecognised a financial liability when its contractual obligations are discharged or cancelled, or expires. Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the company has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and the liability simultaneously. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING The company does not have derivative financial instruments and do not apply hedge accounting. INVESTMENTS IN AFFILIATED COMPANIES AND PARTICIPATING INTERESTS These investments include not only investments in subsidiaries that are not consolidated because of their subordinate importance for the presentation of the assets, the financial position and net income of the company, but also other participating interests. Investments in listed companies are recognised at fair value on the balance sheet date; other investments are recognised at cost, less impairments where applicable. Investments in associated companies encompass solely those associated companies measured using the equity method on the basis of the share of their equity attributable to the company. The share of these companies’ net income going to the company is reported separately under net investment income. The shareholders’ equity and year-end result are taken from the associated company’s latest available annual financial statement. The company tests for impairment at each reporting date. If impairment is identified, the difference between the carrying amount and the recoverable amount is recognised as an impairment loss in the income statement. LOANS AND RECEIVABLES These consist of non-derivative financial instruments with fixed or determinable payments that are not listed in an active market and are not intended to be sold in the near term. They consist primarily of fixed-income securities in the form of borrower’s note loans, registered bonds and



47

mortgage loans. They are measured at amortised cost using the effective interest rate method. Individual receivables are tested for impairment at the reporting date. An impairment loss is recognised if the loan or receivable is no longer expected to be repaid in full or at all (see also our disclosures in the “Impairment” section in this chapter). Impairment losses and their reversal are recognised in the income statement. The upper limit of the reversal is the amortised cost that would have resulted at the measurement date if no impairment losses had been recognised. FINANCIAL ASSETS HELD TO MATURITY These comprise financial instruments with fixed or determinable payments and fixed maturities that are not classified as loans or receivables. The company has the positive intention and the ability to hold these securities to maturity. The procedure for measuring and testing impairment is the same as for “loans and receivables”. FINANCIAL ASSETS CLASSIFIED AS AVAILABLE FOR SALE These financial assets consist of fixed-income and variable-yield financial instruments that the company does not immediately intend to sell and that cannot be allocated to any other category. These securities are recognised at fair value. Premiums and discounts are amortised over the term of the assets using the effective interest rate method. Unrealised gains and losses from changes in fair value are recognised in “Other comprehensive income” and reported in equity (“Other reserves”) after allowing for accrued interest and deferred taxes. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Financial instruments due on demand are recognised at their nominal value. Such instruments include cash in hand and funds held by ceding companies. FAIR VALUE MEASUREMENT Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction, or for which a liability could be settled. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. That is to say it is an exit price. Accordingly, the fair value of a liability reflects the non-performance risk (that is to say the entity’s own credit risk). The fair value of financial instruments is generally determined on the basis of current, publicly available, unadjusted market prices. Where prices are quoted on markets for financial instruments, the bid price is used. Financial liabilities are measured at the asking price on the reporting date. Securities for which no current market price is available are measured on the basis of current and observable market data using established financial models. Such models are used principally to measure unlisted securities. We have allocated all financial instruments measured at fair value to a level of the fair value hierarchy in accordance with IFRS 7. The value determined on the basis of valuation models at the time of acquisition can, however,

differ from the actual cost of acquisition. The resulting measurement difference constitutes a theoretical “day-one profit/loss”. Fair values are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted prices (unadjusted in active markets for identical assets or liabilities)

Level 2: inputs other than quoted prices included in Level 1 that

are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: inputs for the asset or liability that are not based on

observable market data (unobservable inputs) IMPAIRMENT OF FINANCIAL INSTRUMENTS At each reporting date, the company tests its financial instruments – with the exception of financial assets at fair value through profit or loss – to determine whether there is objective, substantial evidence of impairment. Furthermore, IAS 39.59 lists examples of objective evidence that a financial asset is impaired. In the case of held equity instruments, a significant or relatively long-lasting decline in the fair value below the acquisition costs is considered to be objective evidence of an impairment. The company considers a decline of 20% to be significant and a period of nine months to be relatively long-lasting. In the case of securities denominated in foreign currencies, the assessment is made in the functional currency of the company that holds the equity instrument. Indicators for determining whether fixed-income securities and loans are impaired include financial difficulties being experienced by the issuer/debtor, failure to receive or pay interest income or capital gains, and the likelihood that the issuer /debtor will initiate bankruptcy proceedings. A case-by-case qualitative analysis is carried out in making this determination. First and foremost, we factor in the rating of the security, the rating of the issuer/borrower, and a specific market assessment. Moreover, in the case of securities measured at amortised cost, we test whether material items are impaired when analysed in isolation. Impairment losses are recognised in profit or loss and the securities are written down to their fair value, which is generally the published exchange price. In this context, we generally deduct impairment losses on investments directly from the relevant asset items rather than using an allowance account. Reversals of impairment losses on debt instruments are recognised in profit or loss up to the amount of amortised cost. In the case of financial assets available for sale, any excess amount is recognised in “Other comprehensive income” and reported in “Other reserves”. Reversals of impairment losses on equity instruments, on the other hand, are recognised outside profit or loss in “Other comprehensive income”. DEFERRED ACQUISITION COSTS Commissions and other variable costs that are closely connected with the renewal or conclusion of insurance contracts are recognised in deferred acquisition costs.



48

Acquisition costs are normally amortised at a constant rate over the average contract period. The amortisation amount generally depends on the gross margins for the respective contracts that have been calculated for the corresponding year of the contract. Depending on the type of contract, amortisation is taken either in proportion to the premium income or in proportion to the anticipated profit margins. REINSURANCE RECOVERABLES ON TECHNICAL PROVISIONS Reinsurance recoverables on technical provisions are generally calculated in this item from the gross technical provisions in accordance with the contractual conditions. Appropriate allowance is made for credit risks. DEFERRED TAX ASSETS / LIABILITIES IAS 12 “Income Taxes” requires deferred tax assets to be recognised if the carrying amounts of assets are lower or those of liabilities are higher in the balance sheet than in the tax base and where these temporary differences will reduce future tax liabilities. In principle, such measurement differences may arise between the tax accounts prepared in accordance with the national tax law and the IFRS balance sheet of the company. Deferred tax assets are also recognised in respect of tax credits and on tax losses carried forward. Valuation allowance are recognised for impaired deferred tax assets. Deferred tax assets are offset against deferred tax liabilities if there is a legally enforceable right to offset current tax assets against current tax liabilities, and if the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. Deferred tax assets are recognised for the carrying forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be offset. A deferred tax asset for losses carried forward will not be offset against the deferred tax liabilities. The assessment as to whether deferred tax claims from tax losses that have been carried forward can be used, in other words when they are not impaired, is guided by the company’s planned results and the tax strategies that can realistically be achieved. Value adjustments are taken on impaired deferred tax assets. If deferred taxes relate to items recognised in equity through “other comprehensive income”, the resulting deferred taxes are also recognised in “other comprehensive income”. Deferred taxes are booked using the company tax rate of 25.0% unless they can be allocated to specific companies (with another country-specific tax rate). OTHER ASSETS Receivables included in “other assets” are generally recognised at their nominal value, less any necessary impairment losses. Property, plant and equipment are recognised at cost less straight-line depreciation and impairment losses. The maximum useful life for real estate held and used is fifty years; the useful life of operating and office equipment is normally between two and five years. The principles that apply to the presentation of

investment property generally also apply to the measurement and impairment testing of own-use real estate. Impairments/valuation allowances are allocated to the technical functions or recognised in “other income/expenses”. RECEIVABLES Receivables are generally recognised at nominal value. Where necessary, impairment losses are recognised on an individual basis. Impairment losses are recognised for groups of similar receivables if the receivables have not been individually impaired or no impairment can be determined for individual receivables. We use allowance accounts for impairment losses on accounts receivable on insurance business. In all other cases, the underlying assets are written down directly. If the reasons for a recognised impairment loss no longer apply, it is reversed to profit or loss directly, or by adjusting the allowance account, up to a maximum of the original amortised cost. CASH Cash is recognised at its nominal value. Cash and cash equivalents consist of cash at bank and cash in hand and deposits held at call with banks. This includes bank overdrafts, which are included in the payables and other financial liabilities on the balance sheet. LIABILITIES SHAREHOLDERS’ EQUITY The common shares, reserves (additional paid-in capital, retained earnings) and cumulative other comprehensive income are recognised in shareholders’ equity. The common shares and additional paid-in capital comprise the amounts paid in by the shareholder on its shares. The retained earnings consist of profits generated and reinvested by the company. In addition, in the event of a retrospective change in accounting policies, an adjustment for previous periods is made to the opening balance of retained earnings and comparable items for the earliest period presented. Unrealised gains and losses from changes in the fair value of financial assets available for sale are recognised in “Unrealised gains/losses on investments”. Unrealised gains and losses from equity method measurement are recognised in “Other reserves”. In addition, reversals of impairment losses on variable yield securities classified as available for sale are recognised in this account. TECHNICAL PROVISIONS Technical provisions are reported gross in the balance sheet, that is to say before deduction of the reinsurers’ share. Reinsurance recoverables on technical provisions are calculated and recognised on the basis of the individual reinsurance contracts. Measurement of technical provisions is based on local pre-IFRS accounting policies. In the case of short-term insurance contracts, those portions of premiums already collected that are attributable to future risk periods are deferred on a time-proportion basis and recognised in “Unearned premium reserves”. These premiums are recognised as earned - and therefore recognised as income - over the duration of the insurance contracts in proportion to the



49

amount of insurance cover provided or as they fall due. In the case of insurance contracts, this premium income is generally deferred to a specific date (predominantly in primary insurance). In the reinsurance business, assumptions are made if the data required for a time proportion calculation is unavailable. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES The loss and loss adjustment expense reserves are established for payment obligations relating to primary insurance and reinsurance claims that have occurred but have not yet been settled. They are subdivided into reserves for claims that have been reported as at the reporting date and reserves for claims that have been incurred but not yet reported as at the reporting date (IBNR reserve). The loss and loss adjustment expense reserves are generally calculated on the basis of actuarial methods. These are used to estimate future claims expenditures, including expenses associated with loss adjustment, provided no estimates for individual cases need to be taken into account. The reserve is recognised on a best estimate basis to the amount likely to be required to settle the claims. Receivables arising from subrogation, salvage and claim sharing agreements are taken into account when making the best estimate. In order to assess the ultimate liability, anticipated ultimate loss ratios are calculated for all lines of business using actuarial methods such as the chain ladder method. In such cases, the development of a claim until completion of the run-off is projected on the basis of statistical triangles. The reinsurance part of the loss and loss adjustment expense reserves is calculated by using the same factor which can be calculated by line of business between the gross claim reserves and the gross best estimates. It is generally assumed that the future rate of inflation of the loss run-off will be similar to the average rate of past inflation contained in the data. More recent underwriting years and occurrence years are subject to greater uncertainty in actuarial projections, although this level of uncertainty is mitigated by drawing on a variety of additional information. Particularly in liability lines, a considerable period of time may elapse between the occurrence of an insured loss. The realistically estimated future settlement account (best estimate) is therefore recognised, and this is generally calculated on the basis of statistical information. This estimate draws on past experience and assumptions as to future developments while taking market information into account. The amount of provisions and their allocation to occurrence years are determined using recognised forecasting methods based on non-life actuarial principles. Because settlements of major losses differ from case to case, there is often insufficient statistical data available here. In these instances, appropriate reserves are created after analysing the portfolio exposed to such risks and, where appropriate, after individual scrutiny. These reserves represent the best estimates of the company. In addition, an individually determined reserve is created for a portion of known insurance claims. These estimates, which are based on facts that were known at the time the reserve was established, are made on a case- by- case basis by the employees responsible for loss adjustment and take into account the general principles

of insurance practice, the loss situation and the agreed scope of coverage. Reserves are regularly remeasured when this is warranted by new findings. The loss and loss adjustment expense reserves are not discounted. At least once a year, we subject all technical provisions to an adequacy test in accordance with IFRS 4. If the test indicates that future income will probably not cover the anticipated expenses at the level of the calculation cluster, a provision is recognised for anticipated losses after writing off the related deferred acquisition costs. The calculation of the unearned premium reserve and the loss adjustment expense reserve on the basis of the current realistically estimated future settlement amount is generally based on each line’s business model and takes into account future modifications of terms and conditions, reinsurance cover and, where appropriate, the ability to control the profitability of individual contractual relationships. Investment income is not included in this calculation. Premium deficiency reserves are required when there is a probable loss on unearned premiums. A premium deficiency shall be recognised if the sum of expected claim costs and claim adjustment expenses and unamortized acquisition costs exceeds the related unearned premiums. For the calculation of the ULAE reserve, we made an approximation of the development of claim files per insurance category. The number of claims that is expected to have to be closed in the future is multiplied by the average costs we think we will have per claim file. These average costs are calculated by dividing the booked costs per insurance category by the number of claims that were settled during the same period in the same category. OTHER PROVISIONS This item includes the provision for pensions. The provision for pensions relates to the guarantee and commutation liability regarding former pension schemes for staff. The carrying amount of the provisions is reviewed at each reporting date. LIABILITIES Financial liabilities are reported at amortised costs. Deferred tax liabilities Deferred tax liabilities are recognised if the carrying amounts of assets are higher or those liabilities are lower in the balance sheet than the tax base, and where these temporary differences will increase future tax liabilities. See our disclosure on deferred tax assets. Deferred tax liabilities may not be recognised for the initial recognition of goodwill. KEY PERFORMANCE INDICATORS Written premium The amount that the insurer declares due either once or on a continual basis during the financial year in exchange for providing insurance coverage



50

is recognised under written premium. Premium also includes instalment payment surcharges and ancillary payments. The deduction of ceded written premium results in net written premium. Earned premium Premiums for insurance contracts are recognised as earned – and therefore as income - over the duration of the contracts in proportion to the amount of insurance cover provided or as they fall due. Premium earned consists of the portion of written premium that is to be deferred in accordance with the terms of the insurance contracts. Claim and claim expenses Claim and claim expenses includes claims paid during the financial year as well as claims paid with respect to previous years. It also includes changes in the loss and loss adjustment expense reserve. Acquisition costs Acquisition costs consist of commissions to individuals and organisations engaged to sell insurance products, reinsurance commission paid and changes in deferred acquisition costs and in provisions for commissions. Other cost elements also recognised here when they are closely related to the acquisition of new insurance contracts and the extension of existing insurance contracts. Administrative expenses Administrative expenses consist of expenses for contract management such as the collection of premiums when due. All costs directly attributable to this area, including personnel costs, depreciation, amortisation and impairment losses and rents are recognised here. NET INVESTMENT INCOME Net investment income is composed of ordinary income (dividends, current interest income and other income), income from reversal of impairment losses, gains and losses on the disposal of investments, unrealised gains and losses on financial instruments at fair value through profit or loss, impairment losses on investments, net interest income from funds withheld and contract deposits and other expenses relating to investments. RELATED PARTIES DISCLOSURES IAS 24 “Related parties’ disclosures” defines related parties as, for example, parent companies and subsidiaries, subsidiaries of a common parent company, associated companies, legal entities under the influence of management and the management of the company itself. The related entities in HDI-Gerling Verzekeringen N.V. comprise Talanx AG, HDI Global SE, Hannover Rückversicherung AG, HDI Global Network SE, Talanx Reinsurance (Ireland) Ltd., Talanx Service AG, Westblaak Vastgoedfonds I B.V., Stichting Administratiekantoor Westblaak, Talanx Asset Management GmbH and all unconsolidated subsidiaries mentioned in

the note, “Investments in affiliated companies and participating interests”. In the case of Stichting Administratiekantoor, the related person is a key staff member of HDI-Gerling Verzekeringen N.V. Business relations with HDI Global Network SE, HDI Global SE, Talanx Reinsurance (Ireland) Ltd. and Hannover Rückversicherung AG consist of various forms of reinsurance. The company rents office space from Westblaak Vastgoedfonds I B.V. / Stichting Administratiekantoor Westblaak and has given surety. The business relationships with the outstanding balances are disclosed in the note “Accounts Receivable” and the note “Other Liabilities”. For details about the remuneration received by the members of the Board of Directors and the Supervisory Board of HDI-Gerling Verzekeringen N.V. and any outstanding balances, please see the remarks in the note “Attribution of other income / expenses”.


NOTES TO THE 2017 FINANCIAL STATEMENTS | STATEMENT OF FINANCIAL POSITION

53

NOTES TO THE 2017 FINANCIAL STATEMENTS – STATEMENT OF FINANCIAL POSITION A. INTANGIBLE ASSETS

1. Goodwill

Figures in EUR 1,000 2 0 17 2 0 16

- 4 ,5 7 1

- -

- - 4,571

Ac quisition va lue a s a t 3 1.12 of the ye a r unde r re vie w - -

- 3 ,2 6 1

- -

- - 3,261

- -

- 1,310

- -

Ac quisition va lue a s a t 3 1.12 of the pre vious ye a r

Additions

Disposals

Ba la nc e a s a t 3 1.12 of the ye a r unde r re vie w

Disposals

Additions

Ac c umula te d impa irme nt losse s a s a t 3 1.12 of the ye a r unde r re vie w

Balance as at 31.12 of the previous year

Ac c umula te d impa irme nt losse s a s a t 3 1.12 of the pre vious ye a r

The balance of the recognised goodwill derives from past acquisitions of the former Nassau Verzekering Maatschappij N.V. Under IFRS 3, depreciation was frozen after 27 April 2011. In 2016 the corresponding renewal rights have been transferred therefore the goodwill has been released.

2 . Othe r Inta ngible Asse ts

Figures in EUR 1,000 2 0 17 2 0 16

2 ,4 14 2 ,4 13

Additions - 1

Disposals - -

Other changes - -

2 ,4 14 2 ,4 14

2 ,3 5 4 2 ,2 6 4

Additions - -

Disposals - -

Depreciation/amortisation

Scheduled 46 90

Unscheduled - -

Other changes - -

2 ,4 0 0 2 ,3 5 4

Balance as at 31.12 of the previous year 60 149

Ba la nc e a s a t 3 1.12 of the ye a r unde r re vie w 14 6 0

Ac c umula te d de pre c ia tion a nd a c c umula te d impa irme nt losse s a s a t 3 1.12 of the

ye a r unde r re vie w

Ac c umula te d de pre c ia tion a nd a c c umula te d impa irme nt losse s a s a t 3 1.12 of the

pre vious ye a r

Ac quisition va lue a s a t 3 1.12 of the ye a r unde r re vie w

Ac quisition va lue a s a t 3 1.12 of the pre vious ye a r

The other intangible assets refer to purchased software. The software is carried at acquistion price less amortisation, based on estimated economic life and a fixed percentage (20.0%).



54

B. INVESTMENTS

3 . Inve stme nt Prope rty

Figures in EUR 1,000 2 0 17 2 0 16

9 0 0 1,15 0

6,425 -

- 1,275 -

6 ,0 5 0 1,15 0

- 690 - 250

5 ,3 6 0 9 0 0

Fa ir va lue a s a t 3 1.12 of the pre vious ye a r

Fair value gains / losses

Remeasurement recognised in profit or loss

Fa ir va lue a s a t 1.1 of the ye a r unde r re vie w

Transfer


On 1 January 2017 all employees have been transferred to the branch office of HDI Global SE. Therefore, the real estate is no longer for own use for HDI-Gerling Verzekeringen N.V., but classified as investment property and is rented to HDI Global SE, the Netherlands. The rental income from investment property amounts to EUR 1.3 million in 2017. Direct operating expenses (including repairs and maintenance) arising from this investment property that generated rental income amounts to EUR 0.6 million in 2017. An independent surveyor appraised the property using the gross initial yield method.

4 . Investments In Affilia ted Companies And Partic ipa ting Inte rests

Figures in EUR 1,000 2017 2016

100.00% 159 913

100.00% 11 656

35.25% - 686

35.25% - 505

170 2 ,760

HANNOVER Risk Consultants B.V.

VOV GbR

VOV GmbH Cologne

Ba lance as a t 31.12 of the year under review

Partic ipa tion Affilia ted companies Loca tion

Rotterdam

Rotterdam

Cologne

H.J. Roelofs- Assuradeuren B.V.

The participations are valued at net asset value. VOV is sold to HDI Global SE, the Netherlands, therefore the value of the portfolio (VOV GmbH) is transferred to HDI Global SE, the Netherlands. The renewal rights (VOV GbR) are impaired due to this transfer. Due to dividend payments from H.J. Roelofs-Assuradeuren B.V. and Hannover Risk Consultants B.V. to HDI-Gerling Verzekeringen N.V. the value of H.J. Roelofs-Assuradeuren B.V. and Hannover Risk Consultants B.V. have been decreased.

5 . Loa ns And Re c e iva ble s

Figures in EUR 1,000 2 0 17 2 0 16

12,003 11,744

5,574 5,760

5,462 5,556

2,327 2,390

- 158

2 5 ,3 6 6 2 5 ,6 0 8

Mortgages


Loa ns a nd re c e iva ble s

Covered bonds

Corporations

Semi Governments

EU Governments

The mortgages have decreased with EUR 158 to EUR 0, as a result of scheduled repayments.



55

Development of contractual maturity

2017 2016

682 927

482 556

5,984 321

244 5,980

8,581 64

6,213 14,545

3,180 3,215

25 ,366 25 ,608


Due in one year

Due after one through two years

Due after two through three years

Due after three through four years

Due after four through five years

Due after five through ten years

Due after ten years

Tota l

6 . Financ ia l Asse ts He ld To Maturity


7,804 7,841

7 ,804 7 ,841

Corporations

Ba lance as a t 31.12 of the year under review

The fair value of these financial assets held to maturity amounts to EUR 8,607 (2016: EUR 8,790). The nominal interest rate for the Talanx bonds is 3.125%. Development of contractual maturity

2017 2016

. .

- -

- -

- -

- -

7,804 7,841

- -

7 ,804 7 ,841


Due in one year






Due after ten years

Tota l

7 . Fina nc ia l Asse ts Ava ila ble For Sa le

Figures in EUR 1,000 2 0 17 2 0 16

71,892 79,255

63,133 79,619

44,665 53,887

18,644 19,119

8,464 24,626

3,169 3,038

87 203

2 10 ,0 5 4 2 5 9 ,7 4 7

Covered bonds

Government debt securities of EU member states

Shares

Fixed- income securities


Partic ipation rights

Debt securities issued by semi- governmental entities

Corporations

Asset backed securities

The purchase price of the shares and participation rights amounts to EUR 3,086 (2016: EUR 3,202). The decrease of the assets available for sale relates to the run off situation of HDI-Gerling Verzekeringen N.V.



56

Development of contractual maturity

2017 2016

21,997 33,712

33,475 21,140

33,035 34,291

29,885 33,640

44,151 30,362

35,541 79,860

8,714 23,501

3,256 3,241

210 ,054 259 ,747

Due after ten years

Figures in EUR 1.000

Due in one year






Tota l

Without duration

The financial assets available for sale without duration are related to an investment in an equity fund and participation rights. Of the EUR 210,054 in financial assets available for sale, EUR 209,967 is managed by Talanx Asset Management on the basis of a Service Level Agreement.

8 . Fa ir Va lue Hie ra rchy

For the purposes of the disclosure requirements pursuant to IFRS, financial instruments that are to be recognised at fair value must be assigned to a three-level fair value hierarchy, as must those assets and liabilities recognised at amortised cost for which a disclosure of fair value is required in connection with annual reporting (financial instruments not measured at fair value). The fair value hierarchy reflects the characteristics of the pricing information and inputs used for measurement, and it is structured as follows:

Level 1: Assets and liabilities that are measured using (unadjusted) prices quoted directly on active, liquid markets. This includes, first and foremost, listed equities, futures and options and invested funds.

Level 2: Assets and liabilities that are measured using observable market data and are not allocated to Level 1. Measurement is based in particular on prices for comparable assets and liabilities that are traded on active markets, prices on markets that are deemed active and inputs derived from such prices and market data. This level includes, for example, assets measured on the basis of yield curves such as debenture bonds and registered debt securities. Level 2 includes highly liquid bonds traded on regulated markets. Bonds with limited liquidity such as corporate securities are also allocated to Level 2.

Level 3: Assets and liabilities that cannot be measured or can be measured only in part using inputs observable on the market. These instruments are mainly measured using measurement models and methods. This level primarily includes unlisted equity instruments.

Allocation to the fair value hierarchy levels is always reviewed at the end of a period if not more often. Transfers are shown as if they have taken place at the beginning of the financial year. BREAKDOWN OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE As at the balance sheet date, HDI has no share in Level 1 financial instruments. The total financial instruments which are measured at fair value, 99.96% were allocated to Level 2 as at the balance sheet date. As at the balance sheet date, we allocated 0.04% of financial instruments measured at fair value to Level 3. The following table shows the carrying amounts of the financial assets recognised at fair value, broken down according to the three levels of the fair value hierarchy:

Book Va lue Of Financ ia l Instruments by c lass

Ba lance a t

Figures in EUR 1,000 Leve l 1 Leve l 2 Leve l 3 * 31- 12 - 2017

Loans and receivables - 19,900 5,466 25,366

Financial assets held to maturity - 7,804 - 7,804

Financial instruments classified as available for sale - 209,967 87 210,054



57

Balance a t

Figures in EUR 1,000 Leve l 1 Leve l 2 Leve l 3 * 31- 12 - 2016



Financial instruments classified as available for sale - 259,544 203 259,747

* Categorisation in level 3 has no credit quality implications; no conclusions may be drawn as to the credit rating of the issuers.

Fa ir va lue s of fina nc ia l instrume nts not re c ognise d a t fa ir va lue , by ba la nc e she e t ite m

Fa ir va lue

a t

Figures in EUR 1,000 Le ve l 1 Le ve l 2 Le ve l 3 3 1- 12 - 2 0 17



Le ve l 1 Le ve l 2 Le ve l 3Fa ir va lue

a t

Figures in EUR 1,000 3 1- 12 - 2 0 16



MEASUREMENT PROCESS

The measurement process consists of using either publicly available prices in active markets measurements with economically established models that are based on observable inputs in order to ascertain the fair value of financial investments (Level 1 and Level 2 assets). For assets for which publicly available prices or observable market data are not available (Level 3 assets), measurements are primarily made on the basis of documented measurements prepared by independent professional experts (e.g. audited net asset value) that have previously been subjected to systematic plausibility checks. The organisational unit entrusted with measuring investments is independent from the organisational units that enter into investment risks, thus ensuring the separation of functions and responsibilities. The measurement processes and methods are documented in full. Decisions on measurement questions are primarily taken by Talanx Asset Management.



58

Financ ia l Instruments For Which Significant Inputs Are Not Based On Observable Marke t Da ta (Leve l 3 )

The following table shows a reconciliation of the financial instruments included in Level 3 of the year under review

Figures in EUR 1,000 2 0 17

Lo ans and

receivables

Fina nc ia l

instrume nts

a va ila ble

for sa le

Tota l

a mount of

fina nc ia l

instrume nts

5 ,3 4 3 2 0 3 5 ,5 4 6

- 16 - - 16

861 - 861

- 722 - 116 - 838

5 ,4 6 6 8 7 5 ,5 5 3

Ope ning ba la nc e of the ye a r unde r re vie w

Income and expenses

Closing ba la nc e of the ye a r unde r re vie w

Repayments / redemptions

Recognised in the income statement

Additions

Purchases

Disposals


Lo ans and

receivables

Fina nc ia l

instrume nts

a va ila ble

for sa le

Tota l

a mount of

fina nc ia l

instrume nts

3 ,2 0 8 2 0 3 3 ,4 11

15 - 15

3,161 - 3,161

- 1,041 - - 1,041

5 ,3 4 3 2 0 3 5 ,5 4 6

Income and expenses

Ope ning ba la nc e of the ye a r unde r re vie w

Recognised in the income statement

Purchases

Disposals

Repayments / redemptions

Additions

Closing ba la nc e of the ye a r unde r re vie w

Methods used in determining the fair values for the different assets and liabilities. If available, assets are priced with unadjusted quoted prices not older then 5 business days. Assets without available quoted prices are priced by valuation techniques using observable market inputs. If no observable market data is available, a valuation technique with unobservable market is used. Most frequently the Discounted Cash Flow Method is used as a valuation technique. It is applied for the valuation of a broad range of fixed income instruments. If appropriate, extensions of the model (e.g. Hull-White-Method) are used. Assumptions applied when a valuation technique is used in determining the fair values and liabilities for the different assets and liabilities. Input of the most frequently used model – the DCF-Model – is a yield curve and an estimated credit spread. The model is free of any assumptions. Other models that are used for complex bonds may have some statistical assumptions such as linear distribution or stochastic independence. A detailed explanation of the assumptions used is available on request. If possible, assumptions are supported or at least back-tested by observable market data.



59

C. DEFERRED ACQUISITION COSTS

9 . De fe rre d Ac quisition Costs


Gross

busine ss

Re insura nc e

re c ove ra ble s

Ne t

busine ss

Gross

busine ss

Re insura nc e

re c ove ra ble s

Ne t

busine ss

Balance as at 31.12

of the previous year 11,022 3,028 7,994 13,557 9,059 4,498

Newly capitalised

acquisition costs 682 3,093 - 2,411 6,247 759 5,488

Amortised

acquisition costs - 7,858 - 1,312 - 6,546 - 8,782 - 6,790 - 1,992

Ba la nc e a s a t 3 1.12 of

the ye a r unde r re vie w3 ,8 4 6 4 ,8 0 9 - 9 6 3 11,0 2 2 3 ,0 2 8 7 ,9 9 4

2 0 17 2 0 16

The negative amount of the deferred acquisition costs is attributable to the change in the reinsurance programs for Marine, Liability and Engineering, which are now fully covered as of accident year 2017.



60

E. DEFERRED TAX ASSETS / LIABILITIES

10 . De fe rre d Ta xe s


D ef erred

t ax asset s

at

3 1.12 .2 0 16

D ef erred

t ax

l iab il it ies at

3 1.12 .2 0 16

N et balance

at

3 1.12 .2 0 16

R ecognised

in income

st at ement

R ecognise

d in OC I

N et balance

at

3 1.12 .2 0 17

D ef erred

t ax asset s

at

3 1.12 .2 0 17

D ef erred

t ax

l iab il it ies at

3 1.12 .2 0 17

.De fe rre d ta x a sse ts a nd lia bilitie s

Loss carryforwards 9,728 - 9 ,7 2 8 - 2,658 - 7 ,0 7 0 7,070 -

Intangible assets - - - - - - - -

.Real estate - - - - 543 - - 5 4 3 - - 543

.Others - - - - - - - -

Claim reserves - - 10,975 - 10 ,9 7 5 3,428 - - 7 ,5 4 7 - - 7,547

.Investments 750 - 2,517 - 1,7 6 7 140 544 - 1,0 8 3 - - 1,083

Tangible assets - - 512 - 5 12 512 - - - -

Ta x a sse ts (lia bilitie s)

be fore offse tting10 ,4 7 8 - 14 ,0 0 4 - 3 ,5 2 6 8 7 9 5 4 4 - 2 ,10 3 7 ,0 7 0 - 9 ,17 3

Recognised amounts set

off- 750 750 - - - -


a fte r offse tting9 ,7 2 8 - 13 ,2 5 4 - 3 ,5 2 6 - 2 ,10 3 7 ,0 7 0 - 9 ,17 3

The deferred taxes on losses carried forward relates to the fiscal loss of 2014, 2015 and 2016. The other deferred tax assets of EUR 0 (2016: EUR 750) and deferred tax liabilities have been netted in the statement of financial position in line with IAS 12 Income Taxes. The net change in deferred tax assets and liabilities is EUR -/- 1.423.



61


D ef erred

t ax asset s

at

3 1.12 .2 0 15

D ef erred

t ax

l iab il it ies at

3 1.12 .2 0 15

N et balance

at

3 1.12 .2 0 15

R ecognised

in income

st at ement

Ot her

N et balance

at

3 1.12 .2 0 16

D ef erred

t ax asset s

at

3 1.12 .2 0 16

D ef erred

t ax

l iab il it ies at

3 1.12 .2 0 16

.De fe rre d ta x a sse ts a nd lia bilitie s

Loss carryforwards 8,719 - 8 ,7 19 1,009 - 9 ,7 2 8 9,728 -

Intangible assets 419 - 4 19 - 419 - - - -

.Others - - - 825 - 825 ² - - -

Claim reserves - - 8,528 - 8 ,5 2 8 - 2,447 - - 10 ,9 7 5 - - 10,975

.Investments 6 - 1,558 - 1,5 5 2 454 - 669 ¹ - 1,7 6 7 750 - 2,517

Other liabilities -

Tangible assets - - 503 - 5 0 3 - 9 - - 5 12 - - 512


be fore offse tting9 ,14 4 - 10 ,5 8 9 - 1,4 4 5 - 5 8 7 - 1,4 9 4 - 3 ,5 2 6 10 ,4 7 8 - 14 ,0 0 4

Recognised amounts set

off- 425 425 - - - 750 7 5 0


a fte r offse tting8 ,7 19 - 10 ,16 4 - 1,4 4 5 - 3 ,5 2 6 9 ,7 2 8 - 13 ,2 5 4

1) Recognised in other comprehensive income. 2) Reclass deferred tax on pension provision



62

F. OTHER ASSETS

11. Othe r Asse ts

Figures in EUR 1,000 2 0 17 2 0 16

5,481 2,457

1,623 2,796

582 399

181 369

87 92

- 4,027

- 2,429

7 ,9 5 4 12 ,5 6 9

Receivables from other non insurance- related services


Prepaid expenses

Accrued investment income

Office equipment *)

Tax receivables

Own- use real estate **)

Receivables from other insurance related services

Other assets have a maturity of up to one year. In 2017 the office equipment has been sold to HDI Global SE, the Netherlands. The own-use real estate was reclassified to investment property.

*) Offic e Equipme nt

Figures in EUR 1,000 2 0 17 2 0 16

2 3 ,4 0 5 2 4 ,5 8 1

- -

2 3 ,4 0 5 2 4 ,5 8 1

- 238

- 4,347 - 1,414

- 19,058 -

- 2 3 ,4 0 5

19 ,3 7 8 18 ,5 3 0

- -

19 ,3 7 8 18 ,5 3 0

9 1,910

- 3,706 - 1,062

- 15,681 -

- 19 ,3 7 8

- 4 ,0 2 7

Transfer

Transfer


Disposals


Ac c umula te d de pre c ia tion a nd a c c umula te d impa irme nt losse s a s a t

3 1 De c e mbe r of the ye a r unde r re vie w

Adjustment of value carried forward from prior years

Adjustment of value carried forward from prior years

Ac quisition va lue a s a t 3 1 De c e mbe r of the pre vious ye a r

Gross book va lue a s a t 3 1 De c e mbe r of the ye a r unde r

re vie w

Ac c umula te d de pre c ia tion a nd a c c umula te d impa irme nt

losse s a s a t 3 1 De c e mbe r of the pre vious ye a r

Additions

Disposals

Ac quisition va lue a s a t 1 Ja nua ry of the ye a r unde r re vie w

Gross book va lue a s a t 1 Ja nua ry of the ye a r unde r re vie w

In 2017 the office equipment was sold to HDI-Global SE, the Netherlands.



63

**) Own - use re a l e sta te

Figures in EUR 1,000 2 0 17 2 0 16

3 ,4 0 5 3 ,4 0 5

- -

- -

- 3,405 -

- 3 ,4 0 5

9 7 6 9 0 1

- 75

- -

- 976 -

- 9 7 6

- 2 ,4 2 9

Ac c umula te d de pre c ia tion a nd a c c umula te d impa irme nt losse s a s a t

3 1 De c e mbe r of the ye a r unde r re vie w


Ac c umula te d de pre c ia tion a nd a c c umula te d impa irme nt

losse s a s a t 3 1 De c e mbe r of the pre vious ye a r

Disposals

Transfer


Ac quisition va lue a s a t 3 1 De c e mbe r of the pre vious ye a r

Additions

Disposals

Gross book va lue a s a t 3 1 De c e mbe r of the ye a r unde r

re vie w

Transfer

Since 1 January 2017 own-use real estate has been transferred to investment property, note 3. G. ACCOUNTS RECEIVABLE ON INSURANCE BUSINESS

12 . Ac c ounts Re c e iva ble On Insura nc e Busine ss

Figures in EUR 1,000 2 0 17 2 0 16

2 2 ,0 7 3 4 4 ,6 9 0

119 428

21,954 44,262

18 ,7 2 5 3 6 ,9 12

4 0 ,7 9 8 8 1,6 0 2

Accounts receivable on direct written insurance business

Accounts receivable on reinsurance business


From insurance intermediaries

thereof:

From policyholders

Accounts receivables on insurance business include EUR 4,432 (2016: EUR 16,645) for receivables from Talanx Group companies. The transition of the renewal rights to HDI Global SE, the Netherlands is also shown in the accounts receivable for insurance business. Due to the fact that no new business is written the accounts receivable are decreasing. The accounts receivable from reinsurance business decreased to EUR 18,725 (2016: EUR 36,912) this is also caused by the transfer of the renewal rights. In the total amount of EUR 40.8 million a provision is included regarding credit risk of EUR 13.8 million (2016: EUR 17.6 million). The change in 2017 consists of a release fom EUR 1.3 million and the amount used EUR 2.5 million. Management is the opinion that this calculated provision is adequate to cover the potential credit risk (non recovery risk). The assessment contains a considerable level of uncertainty given the limited information on the exposure to current accounts. The receivables have a maturity of up to one year.



64

H. CASH The cash is free at the company’s disposal. The total amount is EUR 21,676 (2016: EUR 27,994). I. SHAREHOLDERS’ EQUITY The equity capital consists of 150,000 shares, each valued at EUR 450. Of those shares 88,889 (2016: 88,889) have been issued and are fully paid up. The shareholders’ meeting decides over interim dividends. A decision to distribute interim dividend out of the profit of the reporting year may also be made by the Board of Directors with permission of the Supervisory Board. Unless decided different, after approval in the shareholders’ meeting dividends will be paid within thirty days. For information on the composition of equity, see the “Statement of changes in equity”. The legal reserve contain an amount of EUR 106 (2015: EUR 106) that may not be distributed. This reserve was raised for currency differences with the introduction of the Euro-currency. The company´s objectives when managing capital are to safeguard the company´s ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The figure for managing capital for insurers is the solvency ratio (Solvency II). The company calculates the solvency ratio by using the standard model.

Solve nc y


R at io o f

Elig ib le own

f unds

R at io o f

Elig ib le own

f unds

Total eligible own funds 85,189 136,220

Solvency Capital Requirement 52,095 163.5% 93,609 145.5%

Minimum Capital Requirement 13,024 654.1% 33,721 404.0%

2 0 17 2 0 16

The available solvency capital requirement percentage is 163.5% (2016: 145.5%). In the solvency capital requirement percentage the foreseeable dividend distribution is included, without the foreseeable dividend distribution the solvency capital requirement percentage would have been 278.7%. Under our capital policy as discussed by the Supervisory Board, the minimum target ratio for Solvency II is 120%. The components of the own funds are of high quality (Tier 1) as losses can be offset completely by the own funds of the company. The equity policy document has been approved by the Supervisory Board. J. TECHNICAL PROVISIONS

13 . Une a rne d Pre mium Re se rve



Ba la nc e a s a t 0 1.0 1 of

the ye a r unde r re vie w6 7 ,2 8 2 14 ,6 4 1 5 2 ,6 4 1 8 8 ,9 7 5 4 3 ,5 13 4 5 ,4 6 2

Portfolio entries / withdrawals 2,502 14,303 - 11,801 38,580 3,821 34,759

Releases - 47,414 - 6,266 - 41,148 - 60,273 - 32,693 - 27,580


the ye a r unde r re vie w2 2 ,3 7 0 2 2 ,6 7 8 - 3 0 8 6 7 ,2 8 2 14 ,6 4 1 5 2 ,6 4 1

2 0 17 2 0 16



65


Gross Ceded Net Gross Ceded Net

Engineering 18,909 19,639 - 730 29,762 9,741 20,021

Liability 3,334 3,035 299 21,448 786 20,662

Motor 66 - 66 9,545 621 8,924

Property 61 4 57 5,834 3,493 2,341

Marine - - - 693 - 693

Tota l 22 ,370 22 ,678 - 308 67 ,282 14 ,641 52 ,641

2017 2016

Unearned premium reserve

The reason for the decrease in the gross unearned premium reserve is to be found in the fact that the renewal rights have been transferred to HDI Global SE, the Netherlands. The change in unearned premium reserve ceded was caused by the change in the reinsurance programs for Marine, Liability and Engineering, which are now fully covered as of accident year 2017.

14 . Loss And Loss Adjustme nt Expe nse Re se rve



Ba la nc e a s a t 0 1.0 1 of

the ye a r unde r re vie w4 3 1,6 2 7 2 5 4 ,12 4 17 7 ,5 0 3 4 5 6 ,9 9 4 2 6 8 ,8 2 2 18 8 ,17 2

Plus incurred claims and

claims expenses

- Year under review 40,936 26,409 14,527 138,814 53,722 85,092

- Previous years 11,261 8,125 3,136 3,590 9,058 - 5,468

Tota l 5 2 ,19 7 3 4 ,5 3 4 17 ,6 6 3 14 2 ,4 0 4 6 2 ,7 8 0 7 9 ,6 2 4

Less claims and claims

expenses paid

- Year under review 17,397 6,818 10,579 41,270 6,151 35,119

- Previous years 140,822 82,410 58,412 126,501 71,327 55,174

Tota l 15 8 ,2 19 8 9 ,2 2 8 6 8 ,9 9 1 16 7 ,7 7 1 7 7 ,4 7 8 9 0 ,2 9 3


the ye a r unde r re vie w3 2 5 ,6 0 5 19 9 ,4 3 0 12 6 ,17 5 4 3 1,6 2 7 2 5 4 ,12 4 17 7 ,5 0 3

2 0 17 2 0 16



Loss a nd loss

a djustme nt e xpe nse s

re se rve

Liability 177,203 112,662 64,541 195,615 115,529 80,086

Marine 67,525 36,656 30,869 109,633 64,688 44,945

Motor 36,794 21,102 15,692 49,534 27,634 21,900

Engineering 35,650 25,232 10,418 48,207 27,977 20,230

Property 8,433 3,778 4,655 28,638 18,296 10,342

Tota l 3 2 5 ,6 0 5 19 9 ,4 3 0 12 6 ,17 5 4 3 1,6 2 7 2 5 4 ,12 4 17 7 ,5 0 3

2 0 17 2 0 16



66


N et to talMarine

(Cargo)

Liability

(Nassau

GTPL)

7,991 4,933 3,824

4,826 - 22

3,896 - 5,097 4,969

16 ,713 - 164 8 ,815

Claim losses incurred in the current year

Closing ba lance of the year under review

Effect of assumption changes

Additions

LIABILITY Claims under Liability policies are subdivided into loss-occurrence and claims-made policies. These claims are also subdivided into large losses and attritional claims. In addition, the Liability claims of the former Nassau Verzekeringen N.V. are modelled separately. As of 2014 most of the policies with an annual premium exceeding EUR 25,000 were transferred to HDI Global SE, the Netherlands and in 2017 the remainder. The effect of assumption changes of net 3.8 million euros is primarily caused by repeatedly higher than anticipated local incurred losses. This line of business seems especially prone to relatively large increases in incurred losses at relatively late development years. This has led us to review our actuarial approach and has resulted in adjustments that cause an increase of net best estimates of 3.8 million euros for this line of business. MARINE The Marine portfolio is modelled by subdividing it into Cargo and Hull. Furthermore, another part of the portfolio which relates to an underwriting agency has been modelled separately because the claims related to this underwriting agency cannot be modelled in a traditional marine portfolio. Due to pruning of the Marine business by the re-underwriting of non-profitable business, performance in the Marine portfolio increased. This resulted in lower best estimate reserves as in 2016. As of 2017 all policies were transferred to HDI Global SE, the Netherlands. The effect of assumption changes of net 4.9 million euros is primarily caused by accident year 2016. This year saw a large loss caused by the bankruptcy of Hanjin Shipping. For year-end 2016 it was very hard to model the IFRS ultimate for accident year 2016. Different methods gave a very large range of possible outcomes. The method we eventually settled with, would have resulted in a negative best estimate if we would have applied it to year-end 2017 as well. Therefore the method was changed and the impact of this change is 3.7 million euros on a net basis. For other event years we can conclude that anticipated releases of claims reserves have materialized earlier than expected. This observation has led us to review our previously chosen methods. MOTOR The Motor portfolio is subdivided into Motor Liability and Motor Property Damage. The pruning in the Motor business led to the ongoing decrease in the best estimate reserves. ENGINEERING Claims under Engineering policies are subdivided into large losses and attritional claims. As of 2014 most of the policies with an annual premium exceeding EUR 25,000 were transferred to the branch and in 2017 the remainder. PROPERTY The claims of Property policies are subdivided into large losses and attritional claims. As of 2014 most of the policies with an annual premium exceeding EUR 25,000 were transferred to the branch, and in 2017 the remainder. In 2017 there were releases of reserves in the property book of business, resulting in lower best estimate reserves.



67

14 Loss And Loss Adjustme nt Expe nse Re se rve


Total Claims Reserve Gross

2 0 0 8 2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17

<=2007 160,671 128,901 102,015 126,391 140,560 112,366 66,112 52,347 47,473 39,647

2008 150,330 78,844 47,743 49,886 32,086 26,429 20,087 16,707 13,204 7,669

2009 116,165 62,825 57,357 38,359 34,913 31,522 27,837 24,097 16,089

2010 126,112 73,623 52,987 30,120 20,030 14,745 11,577 8,773

2011 153,965 87,890 50,203 39,733 30,615 44,410 37,875

2012 182,111 80,634 61,280 46,284 33,650 20,442

2013 174,301 106,102 71,236 42,165 43,424

2014 165,936 97,272 60,825 49,062

2015 99,951 56,681 36,121

2016 97,545 42,964

2017 23,539

Tota l 3 11,0 0 1 3 2 3 ,9 10 3 3 8 ,6 9 5 4 6 1,2 2 2 5 3 3 ,9 9 3 5 0 8 ,9 6 6 5 10 ,8 0 2 4 5 6 ,9 9 4 4 3 1,6 2 7 3 2 5 ,6 0 5

The loss and loss adjustments expense reserve relates for EUR 23,539 to the current year and EUR 302.066 to previous years. For the under writing year 2013 the loss and loss adjustments expense reserve has increased due to a large gross loss in the Liability. Other developments are in line with the company’s plan and forecast.



68

Ne t Loss Re se rve And Its Run- off For The Compa ny


(T=) (T=) (T=) (T=) (T=) (T=) (T=) (T=) (T=) (T=)

2 0 0 8 2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17

Loss a nd loss a djustme nt e xpe nse re se rve

9 8 ,4 5 7 9 2 ,9 15 9 7 ,8 3 3 18 0 ,0 5 4 18 1,8 9 1 17 6 ,2 2 5 2 0 0 ,4 2 0 18 8 ,17 2 17 7 ,5 0 3 12 6 ,17 5

T + 1 year 31,766 29,765 22,208 62,935 61,662 74,536 72,767 55,174 57,410

T + 2 years 45,102 31,182 55,170 93,204 90,147 110,635 105,717 88,144

T + 3 years 42,866 51,241 75,125 108,062 105,567 132,702 128,618

T + 4 years 57,333 65,368 83,441 115,899 122,898 149,444

T + 5 years 65,106 71,985 89,695 126,903 134,678

T + 6 years 68,685 76,349 96,928 137,316

T + 7 years 71,923 81,872 105,288

T + 8 years 75,556 89,189

T + 9 years 81,432

T 2 0 0 8 2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16

T + 1 year 84,725 79,075 132,580 180,633 163,151 193,313 214,092 182,704 179,639

T + 2 years 76,020 111,662 135,116 160,607 167,558 206,656 205,867 181,719

T + 3 years 99,711 110,870 122,999 161,785 175,192 203,005 208,564

T + 4 years 102,076 99,702 120,746 166,673 173,776 206,681

T + 5 years 87,958 98,451 127,205 169,825 173,141

T + 6 years 86,156 106,691 127,107 167,053

T + 7 years 93,378 106,438 124,149

T + 8 years 93,701 103,624

T + 9 years 91,713

1,9 8 8 8 2 6 14 4 - 18 6 - 2 ,13 7 - 4 ,3 11 9 7 9 3 ,6 8 2 - 3 ,12 1

Cumulative payments for the year in question and previous years

Loss and loss adjustment expense reserve (net) for the year in question and previous years,

plus payments made to date on the original reserve.

*) Cha nge ye a r - on- ye a r of the fina l loss re se rve = run- off re sult >>>

*) Example: Calculate the difference in 2008 (EUR 93,701 minus EUR 91,713 = EUR 1.988). This figure is recorded and then updated in each subsequent period, for example in 2009, with the change from for example 2008 to 2009 being carried forward. Hence, in 2009 the first step involves calculating the difference between the two amounts for 2009 and then subtracting the result from the value for 2008 (calculation for 2009: EUR 106,438 less EUR 103,624 = EUR 2.814 , from which the amount of EUR 1.988 is subtracted, resulting in an amount of EUR 826 for 2009). The process is then repeated for each subsequent year RUN-OFF OF THE NET LOSS RESERVE As loss reserves are inevitably based to some degree on estimates, they will always feature some residual uncertainty. The difference between last year’s estimate and the current appraisal of the reserve is expressed in terms of a net run-off result. In addition, reinsurance treaties with terms that do not correspond to a calendar year or that were concluded on an underwriting-year basis often make it impossible for claims expenses to be allocated precisely to the current or prior financial year. In cases where the original loss estimate corresponds to the actual final loss in the original currency, efforts are taken to avoid a purely indexed run-off result being returned even after the figure has been converted into the company’s reporting currency (euro). The table above sets out the net loss reserves for the years 2008 to 2017. The chart shows the run-off of the net loss reserves established as at each balance sheet date, which comprise the provisions constituted in each case for the current and preceding occurrence years. The run-off of the reserve for individual occurrence years is not shown in this regard, and has been replaced by the run-off of the reserve constituted annually in the balance sheet as at the balance sheet date. The company’s total net loss and loss adjustment expense reserves amount to EUR 126,175. The values returned for the 2008 financial year include the prior-year values no longer shown separately in the run-off triangle. The published run-off results reflect the changes in the final losses that materialised in 2017 for the individual run-off years. In line with IFRS-regulations, a Liability Adequacy Test (LAT) was performed and the outcome was positive.



69

K. OTHER PROVISIONS

15 . Provision For Pensions


11 12

- 1,144

11 1,156

Provision for pensions

Tota l

Other

Long- term benefits (guarantee and commutation pension contract)

In 2017 the provision was transferred to HDI Global SE, the Netherlands following the staff.

16 . Sundry Provision


5 9 5 519

- 404

- 595 - 328

- 5 9 5 Ba lance as a t 31.12 of the year under review

Ba lance as a t 31.12 of the previous year

Additions

Utilisation


- 225

- 370

- 595

Short term employee benefits (Holiday provision)

Long term employee benefits (Jubilee provision)

Tota l

Both the Jubilee provision and the Holiday provision were transferred to HDI Global SE, the Netherlands following the staff. L. LIABILITIES

17 . Othe r Lia bilitie s

2 0 17 2 0 16

24,836 16,758

10,263 15,968

1,062 2,067

292 485

77 1,446

- 16,450

- 56

3,784 5,960

4 0 ,3 14 5 9 ,19 0

Provision for consulting fees


Liabilities from co- insurance

Payables to brokers


Advance payments received

Tax liabilities (VAT / IPT)

Other various liabilities

Liabilities to affiliated companies

Provision for audit fees and annual report expenses

EUR 5,023 (2016: EUR 0) of the accounts payable on co-insurance business of EUR 10,263 relates to liabilities to affiliated companies. The “Advance payments received” relates to the transfer of the Renewal rights to HDI Global SE, the Netherlands, of which the last tranch was transferred 1 January 2017. Other liabilities have a maturity of up to one year.


NOTES TO THE 2017 FINANCIAL STATEMENTS | INCOME STATEMENT

70

NOTES TO THE 2017 FINANCIAL STATEMENTS – INCOME STATEMENT

18 . Pre mium


Ma rine Prope rty Lia bility Motor Engine e ring Tota l

Written premium 7,449 328 10,096 540 3,289 2 1,7 0 2

Ceded written premium - 21,444 - 742 - 11,590 - 456 - 23,603 - 5 7 ,8 3 5

Change in gross unearned

premiums16,340 9,484 3,360 4,875 10,853 4 4 ,9 12

Change in ceded

unearned premiums- 692 - 617 - 543 - 10 9,899 8 ,0 3 7

Ne t pre miums e a rne d 1,6 5 3 8 ,4 5 3 1,3 2 3 4 ,9 4 9 4 3 8 16 ,8 16



Written premium 57,695 34,779 28,230 19,692 14,037 15 4 ,4 3 3

Ceded written premium - 14,640 - 7,898 - 10,100 - 690 - 8,048 - 4 1,3 7 6


premiums6,240 623 6,666 - 72 8,236 2 1,6 9 3


premiums (NGM)- - 900 - - - - 9 0 0

Change in ceded

unearned premiums- 13,221 - 3,456 - 7,339 - 10 - 4,846 - 2 8 ,8 7 2

Ne t pre miums e a rne d 3 6 ,0 7 4 2 3 ,14 8 17 ,4 5 7 18 ,9 2 0 9 ,3 7 9 10 4 ,9 7 8

2 0 17

2 0 16

The gross written premium fell by EUR 132,731. This decrease is caused by selling the renewal rights to HDI Global SE, the Netherlands. The increase of the ceded figures is attributable to the change in the reinsurance programs for Marine, Liability and Engineering, which are now fully covered as of accident year 2017. Almost 56% (2016: 88%) of the total gross written premium relates to the Netherlands, with 37 % (2016:5%) relating to Germany. The remainder of the countries contribute 7% to the companies’ gross written premium. The NGM-portfolio is sold in 2016, including the EUR 900 gross unearned premium reserve.



71

19 . Cla ims And Cla ims Expe nse s


GrossMa rine Prope rty Lia bility Motor Engine e ring Tota l

Claims and claims

expenses paid18 ,4 9 6 2 5 4 3 3 ,4 14 6 16 4 ,3 5 8 5 7 ,13 8

Change in loss and loss

adjustment expense

reserves

- 1,0 3 1 - 4 8 8 - 3 ,0 0 3 - 1,3 4 9 - 8 8 1 - 6 ,7 5 2

Tota l 17 ,4 6 5 - 2 3 4 3 0 ,4 11 - 7 3 3 3 ,4 7 7 5 0 ,3 8 6

.Re insure rs' sha re

Claims and claims

expenses paid14 ,6 8 3 - 3 ,8 9 4 2 1,0 9 1 - 3 ,2 4 2 5 ,0 8 5 3 3 ,7 2 3

Tota l 14 ,6 8 3 - 3 ,8 9 4 2 1,0 9 1 - 3 ,2 4 2 5 ,0 8 5 3 3 ,7 2 3

.Ne t

Claims and claims

expenses paid3 ,8 13 4 ,14 8 12 ,3 2 3 3 ,8 5 8 - 7 2 7 2 3 ,4 15


adjustment expense

reserves

- 1,0 3 1 - 4 8 8 - 3 ,0 0 3 - 1,3 4 9 - 8 8 1 - 6 ,7 5 2

Tota l 2 ,7 8 2 3 ,6 6 0 9 ,3 2 0 2 ,5 0 9 - 1,6 0 8 16 ,6 6 3


GrossMa rine Prope rty Lia bility Motor Engine e ring Tota l

Claims and claims

expenses paid56,133 24,394 38,170 13,657 12,687 14 5 ,0 4 1


adjustment expense

reserves

- 833 1,094 - 2,347 - 671 120 - 2 ,6 3 7

Tota l 5 5 ,3 0 0 2 5 ,4 8 8 3 5 ,8 2 3 12 ,9 8 6 12 ,8 0 7 14 2 ,4 0 4

.Re insure rs' sha re

Claims and claims

expenses paid27,692 8,209 22,423 - 1,138 5,594 6 2 ,7 8 0

Tota l 2 7 ,6 9 2 8 ,2 0 9 2 2 ,4 2 3 - 1,13 8 5 ,5 9 4 6 2 ,7 8 0

.Ne t

Claims and claims

expenses paid28,441 16,185 15,747 14,795 7,093 8 2 ,2 6 1


adjustment expense

reserves

- 833 1,094 - 2,347 - 671 120 - 2 ,6 3 7

Tota l 2 7 ,6 0 8 17 ,2 7 9 13 ,4 0 0 14 ,12 4 7 ,2 13 7 9 ,6 2 4

2 0 17

2 0 16

The relative increase of the ceded figures is attributable to the change in the reinsurance programs for Marine, Liability and Engineering, which are now fully covered as of accident year 2017. For property and Motor the reinsurers’ share was negative due to releases of reinsurance claim reserves.



72

2 0 . Ope ra ting Expe nse s

Figures in EUR 1,000 2 0 17 2 0 16

52,197 142,404

16,164 48,185

6 8 ,3 6 1 19 0 ,5 8 9

8,102 7,979

2,798 14,283

10 ,9 0 0 2 2 ,2 6 2 Tota l Ope ra ting e xpe nse s

Operating expenses in claims and claims expenses

Operating expenses in acquisition costs and administrative expenses

Of whic h:

Claims and claims expenses

Acquisition costs and administrative expenses

Tota l Te c hnic a l e xpe nse s (Gross)


8,102 -

1,454 1,149

1,111 4,914

107 12,626

55 1,276

23 760

48 1,537

10 ,900 22 ,262

IT expenses

Housing

Other

Tota l Opera ting expenses

Service Level Agreement

Depreciation

Staff costs

Audit, legal and compliance


171 8,997

- 76 1,577

12 1,398

- 654

107 12 ,626

Pension

Tota l S ta ff costs

Salaries

Social securities

Other

The staff costs consist of remuneration paid to members of the Supervisory Board during the year under review amounted to EUR 36 (2016: EUR 40) and remuneration paid to the members of the Board of Directors amounted to EUR 135 (2016: EUR 322) which were short-term benefits. There were no post-employee benefits in 2017. The Service Level Agreement relates to service provided by HDI Global SE, the Netherlands in order to facilitate the run-off organisation.



73

2 1. Ne t Inve stme nt Inc ome



Current income from real

estate311 110 568 164 167 1,3 2 0

Dividends from related

companies- - - - - -

Interest 958 338 1,754 506 514 4 ,0 7 0

Appreciation 53 19 97 28 29 2 2 6

Realised gains/losses on

investments78 27 142 41 42 3 3 0

Investment expenses - 761 - 268 - 1,393 - 402 - 408 - 3 ,2 3 2

Ne t inve stme nt

inc ome6 3 9 2 2 6 1,16 8 3 3 7 3 4 4 2 ,7 14

2 0 17



Current income from real

estate- - - - - -

Dividends from related

companies3 1 5 2 2 13

Interest 1,212 465 1,884 661 768 4 ,9 9 0

Appreciation - 15 - 6 - 23 - 8 - 10 - 6 2

Realised gains/losses on

investments114 44 178 62 72 4 7 0

Investment expenses - 116 - 45 - 180 - 63 - 74 - 4 7 8

Ne t inve stme nt

inc ome1,19 8 4 5 9 1,8 6 4 6 5 4 7 5 8 4 ,9 3 3

2 0 16

The investment income has been allocated to the different lines of business in accordance with their share in the total technical provisions.



74

2 1. Ne t Inve stme nt Inc ome

Ord inary

invest ment

income

Gains on

d isposalExpenses

Impairment

lossesInt erest T o tal

- - - - 505 - - 5 0 5

- - - - 476 4 7 6

- - - - 194 19 4

-

Fixed- income securities - - - - 2,857 2 ,8 5 7

Equity securities - - - - 26 2 6

Variable- yield securities - - - - 514 5 14

1,320 566 - - 1,965 - - 7 9

- 306 - 1,078 - 3 - 7 6 9

1,3 2 0 8 7 2 - 1,0 7 8 - 2 ,4 7 0 4 ,0 7 0 2 ,7 14


Investments in affiliated

companies and partic ipating

interests

Loans and receivables

Financial assets held to maturity

Financial assets available for sale

Investment property

Other

Ne t inve stme nt inc ome

Ord inary

invest ment

income

Gains on

d isposalExpenses

Impairment

lossesInt erest T o tal

- - - - 62 - - 6 2

- - - 881 8 8 1

- - - - 231 2 3 1

Fixed- income securities - - - - 3,396 3 ,3 9 6

Equity securities - 469 - - 1 4 7 0

Variable- yield securities - - - - 481 4 8 1

- - - - - -

- - - - 464 - - 4 6 4

- 4 6 9 - - 5 2 6 4 ,9 9 0 4 ,9 3 3

2 0 16

Investments in affiliated

companies and partic ipating

interests

Loans and receivables

Financial assets held to maturity


Other

Ne t inve stme nt inc ome


Investment property

The total investment position is EUR 248,754 (2016: EUR 296,856).



75

2 2 . Attribution Of Othe r Inc ome / Expe nse s

Figures in EUR 1,000 2 0 17 2 0 16

18 ,7 0 5 10 ,6 2 4

16,037 -

1,300 1,938

634 690

413 -

- 382

- 7,200

- 252

321 162

8 7 5 6 ,3 18

692 471

144 168

- 4,230

- 1,386

39 63

17 ,8 3 0 4 ,3 0 6 Othe r inc ome /e xpe nse s

Specific allowance for receivables

Sale of renewal rights from NGM portfolio and Danish branch office

Currency exchange gains

Sundry income

Sale of part of the portfolio to a third party

Other taxes

Specific allowance for receivables

Sale of renewal rights from HDI- Gerling Verzekeringen N.V. to branch office

Othe r non- te c hnic a l inc ome

Othe r non- te c hnic a l e xpe nse s

Depreciation

Currency exchange losses

Sundry expenses

Other interest expenses

Interest income

In 2014 HDI-Gerling Verzekeringen N.V. sold renewal rights to HDI Global SE, the Netherlands. In 2014 and 2015 parts have been recognised as income. In 2017 the remaining amount was recognised as income. In 2017, no employees were employed by the company (2016: 147.2 fulltime employees). This is due to the transfer of employees to HDI Global SE, the Netherlands per 1 January 2017.

23 . Taxes On Income


- -

70 71

3,537 - 1,596

- 2,796 1,009

811 - 516

Income tax

Recognised tax expenditure

Actual tax for the year under review

Actual tax for other periods

Deferred taxes due to temporary differences

Deferred taxes from loss carryforward

The tax expenditure includes both domestic income tax and comparable taxes on income incurred by foreign branches. Determination of the income tax includes the calculation of deferred taxes. The company forms a fiscal unity with HDI Global SE, the Netherlands , Hannover Risk Consultants B.V. and H.J. Roelofs-Assuradeuren B.V. Taxes payable via the fiscal unity were recorded relative to the taxable result shown in the separate financial statements of the respective companies. The effective tax burden amounts to 4.6% (2016: -/- 63.0%) and differs from the applicable tax burden of 25.0% (2016: 25.0%). The effective tax burden of 4.6% for 2017 is the result of non-deductible results of the foreign branches in Denmark, Germany and France (EUR 3.0 million and tax expenses not attributable to the reporting period (EUR -16.2 million)).


NOTES TO THE 2017 FINANCIAL STATEMENTS | NATURE OF RISKS

76

Re c onc ilia tion Of Expe c te d And Re c ognise d Inc ome Ta x Expe nse s

Figures in EUR 1,000 2 0 17 2 0 16

25% 25%

- 4,428 205

4,042 796

- 753 - 557

- - 12

1,950 - 948

8 11 - 5 16

Income tax

Re c ognise d ta x e xpe nditure

Expected tax rate

Expected expense for income taxes

Tax- exempt income

Non- deductible result foreign branches

Non- deductible expenses

Tax expenses not attributable to the reporting period

24 . NATURE OF RISKS

The disclosures provided below complement the risk reporting in the management report and reflect the requirements of IFRS 4 and IFRS 7. For fundamental qualitative statements, for example regarding the organisation of our risk management or the assessment of the risk situation, please see the risk report contained in the report of the Board of Directors. OPERATIONAL RISKS The qualitative component of operational risk management is discussed in the report of the board of directors. Against the background of deficiencies that materialised in incidents as published by the De Nederlandsche Bank N.V. (DNB) in 2014, the further implementation of an effective system of internal controls in alignment with the company’s activities in run-off has priority for HDI-Gerling’s management and it is a focus of internal and external audits. CLASSES OF FINANCIAL INSTRUMENTS IFRS 7 “Financial Instruments: Disclosures” sets out all the disclosures required for financial instruments. Some disclosure requirements are to be met by establishing classes of financial instruments. The grouping made in this context must facilitate a minimum distinction between financial instruments measured at fair value and those measured at amortised cost. The classes need not necessarily be identical to the categorisation of financial instruments pursuant to IAS 39.6 or IAS 39.45–46 for the purpose of subsequent measurement. The classes established for our financial instruments were guided by the needs of our portfolio and our balance sheet structure; the degree of detail of the stated classes may vary to the extent permitted according to the required disclosure. In effect, the following classes of financial instruments have been established:



77

Cla sse s Of fina nc ia l Instrume nts

Fina nc ia l instrume nts a ssoc ia te d

with inve stme nts

Investments in

affiliated companies

and partic ipating

Fair value, amortised

cost

Loans and

receivables Amortised costFinancial assets held

to maturity Amortised cost

Othe r fina nc ia l a sse ts

Funds held by ceding companies

Funds held under reinsurance treaties

Fair value

Amortised cost

Amortised cost

Underlying technical provisionReinsurance recoverables in technical

provisions

Accounts receivable from insurance

businessNominal value

Cla sse s of fina nc ia l instrume nts Me a sure me nt ba sis


RISKS FROM INSURANCE CONTRACTS Risks from insurance contracts consist principally of insurance risks, default risks (from reinsurance companies), liquidity risks and market risks. Provisions are not taken up at their discounted value. MANAGEMENT OF TECHNICAL RISKS IN PROPERTY/CASUALTY INSURANCE Insurance risks in non-life business (primary insurance and reinsurance) derive primarily from the premium/loss risk and the reserving risk. The insurance business is based upon the acceptance of individual risks from policy holders (in primary insurance) or cedants (in reinsurance) and spreading these risks over the insured/reinsured community and over time. For the insurer, the fundamental risk (premium/loss risk) lies in providing insurance coverage, the amount and due date of which are unknown, from premiums that are calculated in advance and cannot be changed. PREMIUM/LOSS RISK We counter the premium/loss risk by taking out appropriate reinsurance. The volume of reinsurance cover relative to the gross written premium is measured by the retained premium ratio; (2017: -/- 166.5%, 2016: 73.2%). The reinsurance share increased as a result of the change in reinsurance structure. As of 1 January 2017 the change in the reinsurance programs for Marine, Liability and Engineering, are fully covered as of accident year 2017. NET LOSS RATIO AS A PERCENTAGE OF THE PREMIUM EARNED The table below reflects the net loss ratio (including claim handling costs) for previous years. The table below includes the figures from the company financial statements.

Year 2017 2016 2015 2014 2013

In % 105.0 75.8 84.9 91.2 62.2



78

RESERVING RISK

To ensure that we will be able to meet our benefit commitments at all times, we establish provisions and continuously analyse their adequacy using actuarial methods. These analyses also provide insights into the quality of the written risks, their spread across individual lines with differing risk exposures, and anticipated future claims payments. In addition, our portfolios are subject to active claims management. Analyses of the size and frequency distribution of claims facilitate the systematic management of our risks. The loss reserves calculated using actuarial methods are supplemented where necessary by additional reserves based on our own actuarial claims estimates and an IBNR (incurred but not reported) reserve for losses that have already occurred but have not yet been notified to us as claims. In view of the long run-off of such claims, especially in liability business, various risk classes and regions are distinguished for the purpose of calculating the IBNR reserves. Run-off triangles are another tool used to verify our assumptions within the company. These triangles show how the reserves change over time as claims are paid and the reserves to be established at each balance sheet date are recalculated. Adequacy is monitored using actuarial methods. In addition, the quality of our own actuarial calculations for the adequacy of our reserve is verified in annual reviews by external actuaries and auditors. We monitor and manage the reserving risk essentially by analysing the loss reserves using actuarial methods. The following analysis is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis.


Change in

assumptions

Increase /

(decrease ) on

gross

liabilities

Inc rease /

(decrease ) on

ne t liabilities

Average claim expenses (unallocated) + 10% 1,525 1,525

Average claims outstanding + 10% 31,037 11,013

Average claim expenses (unallocated) - 10% (1,525) (1,525)

Average claims outstanding - 10% (31,037) (11,013)

2017


Change in

assumptions

Increase /

(decrease ) on

gross

liabilities

Inc rease /

(decrease ) on

ne t liabilities

Average claim expenses (unallocated) + 10% 2,200 2,200

Average claims outstanding + 10% 40,962 40,962

Average claim expenses (unallocated) - 10% (2,200) (2,200)

Average claims outstanding - 10% (40,962) (40,962)

2016

MANAGEMENT OF CREDIT RISKS FROM INSURANCE CONTRACTS Bad debts may arise on receivables due under insurance business. In order to limit this risk, we take care to ensure the good credit quality of debtors, as measured in terms of standard market rating categories. Our choice of reinsurers also takes into account internal and external expert assessments, such as market information from brokers. Accounts receivable from policyholders and insurance intermediaries are generally unsecured. The default risk for accounts receivable from policyholders is mitigated first and foremost by means of an effective dunning process and the reduction of outstanding items. Intermediaries are subject to credit checks. General bad debt provisions are also established to allow for the default risk. The default risk on these receivables is subject to constant monitoring within the scope of our risk management. Credit risks also arise in primary insurance business in connection with accounts receivable from reinsurers and in reinsurance business from recoverables due from retrocessionaires on account of the fact that the gross business written is not always fully retained, and that portions are ceded/retroceded as necessary instead. In outward reinsurance we are careful to monitor high levels of financial soundness on the part of our reinsurers, especially in the case of long-tail accounts. A significant proportion of our reinsurance partners are carefully selected by Talanx Security Committees on the basis of external ratings and their credit status is constantly monitored and – where necessary – appropriate measures are taken to secure receivables. With respect to business ceded, we reduce the default risk on accounts receivable from reinsurers by carefully selecting most of our reinsurers through Talanx Reinsurance Brokers AG and reviewing their credit status on the basis of opinions from internationally respected rating agencies.



79

RATING OF OUR COUNTERPARTIES FOR REINSURANCE The ratings of our counterparties for reinsurance recoverables on unpaid claims were as follows:

In % AAA AA A BBB Without

Reinsurance recoverables on technical provisions - 41 52 - 7

93% of our reinsurers are rated A or higher (2016: 93%). In the year under review the accounting balance, defined as the reinsurers' share in earned premiums minus the reinsurers' share in gross claims was EUR 4.1 million (2016: EUR 6.9 million). The accounts receivable from reinsurance business amounted to EUR 18.7 million (2016: EUR 36.9 million). LIQUIDITY RISKS UNDER INSURANCE BUSINESS The liquidity risk is the risk of a mis-match between assets and liabilities (including off-balance sheet items) or income and expenditure in terms of interest rate, interest typical terms, basic currencies, liquidity-typical terms and sensitivity to changes in price levels. We think this risk is inherently low for our company. We have taken controlling measures to ensure the availability of the necessary liquidity when this is required for claim settlement. In this way we mitigate possible liquidity shortages by reinsuring a substantial part of the accepted risks and by including “cash clauses” or “simultaneous payment clauses” in the reinsurance agreements. This means we can claim the share of the reinsurer in cash at short notice. In addition, we maintain a minimum amount in cash that allows us to meet short-term obligations. In part given our investment policy we have the necessary liquidity at our disposal. For instance, we invest part of our portfolio in bonds in the liquid part of the market. These are bonds with large daily turnovers on the stock exchanges. We believe this approach provides adequate financial flexibility. MARKET RISKS UNDER INSURANCE BUSINESS In previous years, external developments meant that our price policy had to be stricter for us to remain competitive. Nevertheless we have been able to maintain a prudent price policy. A clear picture of the risk profile and a selective underwriting policy are essential for an appropriate level of premium income. The combined ratio is an indicator of business development in the area of property/casualty insurance, and it results from planning relating to premium development and expenses. During the detailed planning period, premiums and costs are budgeted, to produce the combined ratio. MARKET RISKS FROM INVESTMENTS The risks from investments principally encompass the market risk (which includes the foreign currency risk, the risk associated with changes in fair value due to interest rate movements, the cash flow risk due to interest rate movements, and the market price risk), the default risk and the liquidity risk. MANAGEMENT OF MARKET RISKS FROM INVESTMENTS The structure of our investments under own management (excluding funds held by ceding companies) is examined regularly in order to asses the strategic and tactical asset allocation.

We ighting Of Ma jor Asse t Classes

Paramete r as pe r

investment

guide lines

Position as a t

31.12 .2017

Position as a t

31.12 .2016

In %

Bonds (direct holdings and investment funds) at least 50 86.3 89.0

Listed equities (direct holdings and investment funds) at most 25 1.3 1.0

Real estate (direct holdings and investment funds) at most 5 2.2 0.3 The bonds, listed equities and real estate are clearly within the defined Talanx Group limits. Within the terms of our company’s risk-carrying capacity and regulatory requirements, we endeavour to balance the investment goals of security, profitability, liquidity mix and spread. The main challenges in terms of achieving these goals are market risks, default risks and liquidity risks. In 2017 the own-use real estate has been reclassified to investment property.



80

INTEREST RISKS Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the company to cash flow interest risk, whereas fixed interest rate instruments expose the company to fair value interest risk. The company’s interest risk policy requires it to manage interest rate risk by maintaining an appropriate mix of fixed and variable rate instruments. A decline in the interest rate level has reduced investment income. The effects will have an impact on equity as fixed-income assets are considered to be instruments available for sale.

Changes In Va lue Of Investments

Scenarios for changes in the value of the fixed income investments at the balance sheet date are:

In EUR million

Y ie ld inc rease / decrease Changes in

portfolio

- 100 BPS +7.8

- 50 BPS +3.9

+ 50 BPS - 3.8

+100 BPS - 7.4

The scenario does not include financial instruments held to maturity, loans with particular car-lease companies and participation interests. CURRENCY RISKS Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The company’s principal transactions are carried out in euros, which is the same currency as its insurance and investment. The company’s exposure to foreign exchange risk is not significant

Currency Struc ture Of The Fixed- Income Investments

Currency in % In EUR million in % In EUR million

EUR 100.0 248.8 99.9 296.7

USD 0.0 - 0.1 0.2

Other - - - -

Tota l fixed- income investments 100 .0 248 .8 100 .0 296 .9

31.12 .2017 31.12 .2016

Most of the investments in fixed income securities (99.9%) are euro based. The currency translation risk is therefore limited. EQUITY PRICE RISKS Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in equity prices (other than those arising from interest rate or foreign exchange rate risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in the market. Since the company’s exposure in equity related investments is 1.3% of the total investments, the company has no significant concentration of equity price risk. DEFAULT RISKS The risks of counterparty default requiring monitoring consist of counterparty credit risks and issuer’s risks. Along with the lists of approved counterparties and issuers specified by the Board of Directors, monitoring of the limits defined per rating category constitutes a vital precondition for investment decisions. We monitor the credit status of counterparties and debtors carefully in order to avoid default risks. Key indicators here are the ratings assigned by external agencies such as S&P or Moody’s. New investments are restricted to investment grade securities in order to limit the credit risk.



81

On the basis of the current information available and experiences from the finance department, management has made an assessment of the financial exposure at year-end 2017. The assessment contains a considerable level of uncertainty given the limited information available about exposure related to current accounts. This resulted in a best estimate total amount of EUR 8.9 million for insurance business and EUR 4.9 million for reinsurance business which has been provided for at year-end 2017. The maximum default risk exposure (of our financial investments under own management) on the balance sheet date, exclusive of collateral or other agreements that serve to minimise the default risk, was as follows:

Ma ximum De fa ult Risk Exposure

Figures in EUR million

Me a sure d

a t

a mortise d

c ost

Me a sure d

a t fa ir

va lue

Tota l Me a sure d

a t

a mortise d

c ost

Me a sure d

a t fa ir

va lue

Tota l

Financial assets available for sale - 206.8 2 0 6 .8 - 256.8 2 5 6 .8

Loans and receivables 25.4 - 2 5 .4 25.6 - 2 5 .6

Financial assets held to maturity 7.8 - 7 .8 7.8 - 7 .8

Shares - 3.2 3 .2 - 3.0 3 .0

Investments in affiliated companies and partic ipating

interests 0.2 - 0 .2 2.8 - 2 .8

Investment property 5.4 - 5 .4 0.9 - 0 .9

Tota l fixe d- inc ome inve stme nts 3 8 .8 2 10 .0 2 4 8 .8 3 7 .1 2 5 9 .8 2 9 6 .9

3 1.12 .2 0 17 3 1.12 .2 0 16

Fixe d- Inc ome Inve stme nts And Loa ns (Exc luding Othe r Inve ste d Asse ts)

Figures in EUR million

Me a sure d

a t

a mortise d

c ost

Me a sure d

a t fa ir

va lue

Tota l Me a sure d

a t

a mortise d

c ost

Me a sure d

a t fa ir

va lue

Tota l

Corporations 19.8 71.9 9 1.7 19.4 79.5 9 8 .9

Covered bonds 5.5 63.1 6 8 .6 5.6 79.7 8 5 .3

EU Member states 2.3 44.7 4 7 .0 2.4 53.9 5 6 .3

Semi- Governmental entities 5.6 18.6 2 4 .2 5.8 19.1 2 4 .9

Mortgages - Asset backed securities - 8.5 8 .5 - 24.6 2 4 .6

Investment property 5.4 - 5 .4 0.9 - 0 .9

Mortgage loans - - - 0.2 - 0 .2

Other 0.2 3.2 3 .4 2.8 3.0 5 .8

Tota l fixe d- inc ome inve stme nts 3 8 .8 2 10 .0 2 4 8 .8 3 7 .1 2 5 9 .8 2 9 6 .9

3 1.12 .2 0 17 3 1.12 .2 0 16

More than 18.9% (2016: 19.0%) of the fixed income investments and loans at reporting date were stable European Union government bonds.



82

The rating structure of the fixed-income investments (excluding other invested assets, policy loans and mortgage loans) is as follows:

Ra ting Struc ture Of The Fixe d- Inc ome Inve stme nts

Ra ting in % In EUR million in % In EUR million

AAA 35.2 87.5 41.0 121.3

AA 28.1 69.8 26.2 77.9

A 18.2 45.3 17.1 50.8

BBB 11.7 29.1 10.6 31.5

BB 0.4 1.0 0.3 1.0

NR 6.4 16.1 4.8 14.4

Tota l fixe d- inc ome inve stme nts 10 0 .0 2 4 8 .8 10 0 .0 2 9 6 .9

3 1.12 .2 0 17 3 1.12 .2 0 16

At the end of the reporting period, 81.5% (2016: 84.5%) of our investments in fixed-income securities were issued by obligors with an investment-grade rating (AAA to A). MANAGEMENT OF CONCENTRATION RISKS A broad mix and spread of asset classes is maintained in order to diversify the investment portfolio. The concentration risk is restricted by a limit and threshold system within the investment guidelines that is monitored by Talanx Asset Management. The amount and proportion of investments that can be made in more risk-exposed assets are also restricted by the company’s investment guidelines. Overall, the measurement and monitoring mechanism described here results in a prudent, broadly diversified investment strategy. MANAGEMENT OF LIQUIDITY RISKS The liquidity risk refers to the risk of being unable to convert investments and other assets into cash in a timely manner in order to meet financial obligations when they fall due. Due to the lack of liquidity of the markets, it may not be possible to sell holdings (or to do so only with some delay) or to close open positions (except with price markdowns). We mitigate the liquidity risk by liquidity planning and by matching the duration of investments and our financial obligations (including claims run-off patterns). For a presentation of the investments and gross provisions and of the reinsurers’ shares in those investments (broken down according to their expected or contractual maturities), please see the notes on the corresponding balance sheet items. The funds held under reinsurance treaties represent collateral withheld for technical provisions ceded to reinsurers and retrocessionaires and to this extent do not trigger any cash flows. The changes in the funds held under reinsurance treaties normally follow the changes in the corresponding ceded technical provisions. These funds therefore have no contractually fixed maturity; they are liquidated in line with the run-off of the corresponding provisions.


NOTES TO THE 2017 FINANCIAL STATEMENTS | RELATED PARTIES

83

Cash Flows Of Liabilities

The following tables show the cash flows of the liabilities of the company by item broken down on the basis of expected maturity:


<1 year 1- 5 years 6 - 10 years 11- 15 years >15 years Tota l

Technical provisions 88,044 165,034 75,898 18,773 2,990 350,739

Other provisions 1 4 5 1 - 11

Other liabilities 40,314 - - - - 40,314

Deferred tax liabilities 3,210 4,987 782 137 57 9,173

2017


<1 year 1- 5 years 6 - 10 years 11- 15 years >15 years Tota l

Technical provisions 165,408 198,013 97,118 29,613 8,757 498,909

Other provisions 739 576 435 1 - 1,751

Other liabilities 59,190 - - - - 59,190

Deferred tax liabilities 4,394 5,260 2,580 787 233 13,254

2016

25 . Re la ted parties' disc losure

Parties are considered to be related if one party has the ability to directly or indirectly control the other party or exercise significant influence over the other party in making financial or operational decisions. The Group’s related parties include the parent, subsidiaries, associates and other related parties. HDI-Gerling Verzekeringen N.V. has several business relationships with related parties. Information about the transactions between related parties, e.g. purchases or sales of goods (finished or unfinished), purchases or sales of property and other assets, rendering or receiving of services, leases, transfers under finance agreements. THE PARENT The parent of HDI-Gerling Verzekeringen N.V. is directly HDI Global SE and indirectly Talanx AG (Group structure included in the final page of this report). The outstanding balance for Talanx AG is related to note 6 Financial Assets Held to Maturity.

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

195 7,804 195 7,841

- 1,976 68,125 - 4,509 54,714


Ta lanx AG HDI- Gerling Verzekeringen N.V. is

holding a fixed- income security

(held to maturity).

HDI Globa l SE HDI Global SE provides reinsurance

coverage and bought renewal rights

2017 2016


NOTES TO THE 2017 FINANCIAL STATEMENTS | RELATED PARTIES

84

SUBSIDIARIES Transactions between HDI-Gerling Verzekeringen N.V. and its subsidiaries meet the definition of related party transactions.

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

825 194 - 252 - 631

737 - 77 22 - 814


H.J. Roe lofs-

Assura de ure n B.V .

(HJR)

Among other items premiums, claims

and taxes from HJR (a small

insurance intermediary) are paid

from the bank account of HDI-

Gerling Verzekeringen N.V. These

amounts are settled in a separate

non- consolidated intercompany

account.

2 0 17 2 0 16

Ha nnove r Risk Consulta nts

B.V . (HRC)

Among other items salaries and

pension premiums for employees of

HRC, as well as various HRC taxes

are paid from the bank account of

HDI- Gerling Verzekeringen N.V.

HRC provides risk consulting

services for (among others) HDI-

Gerling on a monthly basis. All these

amounts are settled in this separate

non- consolidated intercompany

account.

The income includes dividend pay out by Hannover Risk Consultants B.V. of EUR 654 (2016: EUR 0) and H.J. Roelofs-Assuradeuren B.V. of EUR 754 (2016: EUR 0) ASSOCIATES Transactions between HDI-Gerling Verzekeringen N.V. and its associated companies also qualify as related party transactions. Pursuant to a revised version of IAS 24, “Related Party Disclosures” (“IAS 24 R”) the definition of a related party has been amended, in part, to clarify that an associate includes subsidiaries of an associate.

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

6,404 32,967 - 16,588 50,284

- 1,518 26,493 3,486 15,888

- 284 - - 343 - 87

- - - - 52

- 8,585 10,024 7,526 15,654


Ta la nx Asse t Ma na ge me nt

GmbH

Providing asset management,

controlling and accounting services.

Ta la nx Se rvic e AG Talanx Service provides supporting

activities

Ta la nx Re insura nc e

(Ire la nd) Ltd.

Talanx RE Ireland provides

reinsurance activities

HDI Global Network SE provides

reinsurance coverage.

2 0 17 2 0 16

Ha nnove r

Rüc kve rsic he rung AG

Hannover Rückversicherung AG

provides reinsurance coverage.

HDI Globa l Ne twork SE

https://annualreport.deutsche-bank.com/2011/ar/notes/additionalnotes/38relatedpartytransactions.html


NOTES TO THE 2017 FINANCIAL STATEMENTS | OTHERS

85

OTHER RELATED PARTIES Other transactions with related parties reflect the following.

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

T ransact io ns

(expenses-

/ inco me+)

Outstanding

balances

(assets+/

liabilit ies-)

- 446 381 - 555 381


We stbla a k Va stgoe dfonds

I B.V . a nd "Stic hting

Administra tie ka ntoor

We stbla a k" (STAK)

HDI- Gerling Verzekeringen N.V. is

renting office space from Westblaak

Vastgoedfonds I B.V. The shares of

Westblaak Vastgoedfonds I B.V. are

held by STAK. HDI- Gerling

Verzekeringen N.V. has a 33.19%

share in STAK. HDI- Gerling

Verzekeringen N.V. has given surety

to Westblaak Vastgoedfonds I B.V.

for an amount of EUR 1 million. One

HDI- Gerling Verzekeringen N.V. key

employee is a board member of

STAK. HDI- Gerling Verzekeringen

N.V. employees partic ipate in

Westblaak Vastgoedfonds I B.V.

through STAK.

2 0 17 2 0 16

STAFF Remuneration paid to members of the Supervisory Board during the year under review amounted to EUR 36 (2016: EUR 40), while remuneration paid to the members of the Board of Directors amounted to EUR 135 (2016 : EUR 322), which were short-term benefits. There were no post-employee benefits in 2016 and 2017.

26 . Off Ba lance Sheet Commitments

LEASES The operational lease for vehicles is pre-financed by a loan given to the lessor amounting EUR 1,897 (201: EUR 1,931). This loan is included in note 5 “loans and receivables”. The lease expenses for 2017 amounted to EUR 1,027 (2016: 1,188). The off-balance sheet commitments of EUR 2,969 (2016: EUR 3,129) were entered into as part of leasing agreements, of which EUR 1,038 (2016: EUR 1,039) is due within one year, EUR 1,931 (2016: EUR 2,090) is due between one and five. As of 2017 the expenses were being invoiced to HDI Global SE, the Netherlands. OTHER Furthermore the company has commitments of EUR 164 (2016: EUR 220) as part of bank guarantees. The decrease of EUR 57 relates to one bank guarantee which has been expired in 2017. An other off-balance sheet commitment relates to a surety of EUR 1,000 (2016: EUR 1,000) which has been given to Westblaak Vastgoedfonds l B.V. HDI Gerling Verzekeringen N.V. has received a collateral from Hannover Rück SE for the amount of EUR 30.0 million.



86

27 . Auditor Services And Fees

With reference to Section 2:382a(1) and (2) of the Netherlands Civil Code, the following fees for the financial year have been charged by Mazars Paardekooper Hoffman Accountants N.V., KPMG Network and Price-waterhouse Coopers N.V. to the company and its branches:


Mazars

Accountants

N.V .*

Other

KPMG Ne twork

Price -

wa te rhouse

Coopers N.V .

Tota l

2017 2017 2017 2017

Audit of the financial statements 639 - - 639

Other audit engagements 173 - - 173

Tax- related advisory services - 14 35 49

Tota l 812 14 3 5 8 6 1


Mazars

Accountants

N.V .*

Other

KPMG Ne twork

Price -

wa te rhouse

Coopers N.V .

Tota l

2016 2016 2016 2016

Audit of the financial statements 380 - - 380

Other audit engagements 226 - - 226

Tax- related advisory services - 342 338 680

Tota l 6 0 6 3 4 2 3 3 8 1,286

*) Mazars Paardekooper Hoffman Accountants N.V. The fees for other audit engagements includes an audit in relation to reporting to regulators (Solvency II) or other external parties.The fee for the audit of the financial statements and other engagements is on accrual basis EUR 0.4 million (2016: EUR 0.6 million).

28 . Fisca l Unity

The company forms a fiscal unity with Hannover Risk Consultants B.V., H.J. Roelofs-Assuradeuren B.V. and HDI Global SE, the Netherlands. Taxes payable via the fiscal unity were recorded relative to the taxable result shown in the separate financial statements of the respective companies. The effective tax burden amounts to 4.6% (2016: 63.0%) and differs from the applicable tax burden of 25.0% (2016: 25.0%).

29 . Distribution Of Profits

In accordance with Article 23 of the Articles of Association, the result for the year is at the disposal of the annual shareholders’ meeting. The Board of Directors proposes charging the positive result amounting to EUR 18.5 million to shareholders’ equity.



87

30 . Branch Offices

The company has branch offices in Denmark (Copenhagen, HDI-Gerling Forsikring, Filial af HDI-Gerling Verzekeringen N.V.), Germany (Cologne, HDI Gerling Verzekeringen N.V. Niederlassung Deutschland) and France (Paris, HDI-Gerling Verzekeringen N.V., Direction pour la France). The branch-offices activities are considered an extension of the reporting entity’s activities.

31. Post Ba lance Sheet Events

In the shareholers’meeting it is proposed to approve a dividend payout of EUR 60.0 million, based on the capital policy target capitalization as described in chapter “Solvency”. Rotterdam, 5 April 2018, The Supervisory Board: U.H. Wollschläger H.A. Daugird Dr. J. ten Eicken F.W. Warmelink

The Board of Directors: W.J. Garhammer R.M. Fischer


89

OTHER INFORMATION

OTHER INFORMATION 89

INDEPENDENT AUDITOR’S REPORT 90

GLOSSARY 94

ADDRESSES 97

COLOPHON 98

GROUP STRUCTURE 99


OTHER INFORMATION

90

OTHER INFORMATION

INDEPENDENT AUDITOR’S REPORT

To the Shareholder and the Supervisory Board of HDI-Gerling Verzekeringen N.V.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2017 INCLUDED IN THE ANNUAL REPORT OUR OPINION

We have audited the financial statements 2017 of HDI-Gerling Verzekeringen N.V., (“the Company”), based in Rotterdam. In our opinion the financial statements give a true and fair view of the financial position of HDI-Gerling Verzekeringen N.V. as at 31 December 2017 and of its result and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (“EU-IFRS”) and with Part 9 of Book 2 of the Dutch Civil Code. The financial statements comprise:

the statement of financial position as at 31 December 2017; the income statement, the statement of comprehensive income,

the statement of changes in equity and the cash flow statement for the year then ended; and

the notes, comprising a summary of significant accounting policies and other explanatory information.

BASIS FOR OUR OPINION We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.

We are independent of the Company in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. MATERIALITY

Based on our professional judgement, we determined materiality for the financial statements as a whole at € 7.5 million. Materiality has been based upon 5% of equity. The equity and solvency of HDI-Gerling Verzekeringen N.V. are key indicators for the users of its financial statements. As such, we have based materiality on equity. We also take misstatements and or possible misstatements into account that, in our judgement, are material for qualitative reasons. For example, certain items, such as related party transactions, management remuneration disclosures and going concern disclosures are subject to lower materiality levels when planning and executing our audit procedures as they are of particular interest to the user of the financial statements and may otherwise not be subject to audit procedures. We agreed with the Audit Committee of the Supervisory Board that we would report to them misstatements identified during our audit above € 224,000 as well as misstatements below that amount that, in our view, must be reported on qualitative grounds.

OUR KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.


OTHER INFORMATION

91

These matters were addressed in the context of our audit on the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. VALUATION OF INVESTMENTS At year-end 2017, the Company owns financial instruments classified as available for sale amounting to € 210 million. These financial instruments are managed by Talanx Asset Management GmbH (“TAM”) based on a service level agreement. Regarding the valuation of these financial instruments, the Company relies on the internal controls performed by TAM. As TAM is considered as a service organization, we applied the international auditing standard regarding the use of service organisations and derived reliance on the internal controls as performed by TAM. We sent specific audit instructions to the auditor of the service organisation and reviewed the audit documentation provided. In addition we performed mainly analytical procedures on the investments and reconciled the data received from TAM to the financial statements. ESTIMATES USED IN CALCULATION OF THE LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES HDI-Gerling Verzekeringen N.V. has material insurance claim loss and loss adjustment expense reserves, amounting to € 326 million representing over 59% of the Company’s total liabilities at year-end 2017. The measurement of these reserves involve significant judgment on uncertain future outcomes including the timing and ultimate full settlement of claims. The Company used actuarial methods and modeling to determine management’s best estimate of the ultimate claim charge. We assessed and tested the internal procedures to record and maintain key technical data as reported claims, claim payments et cetera, the extraction of these data from the IT systems of the Company, as well as the input of these data into the actuarial models used. In addition we have tested internal procedures to ensure appropriate technical data with regard to reinsurance. We assessed the Company’s methodology for calculating loss reserves and loss adjustment expense reserves, the liability adequacy test and the assessment of the internal controls in this respect, including the analysis of the movements in loss reserves. We involved our actuarial specialists to assist us in performing the audit procedures in this area, which included:

recalculating best estimate reserves for the main part of the loss reserves by using alternative actuarial methods;

analysis of run-off results of previous periods.

We also assessed the adequacy of the disclosures regarding these liabilities in the financial statements to determine they are in accordance with EU-IFRS. ASSESSMENT OF EXPOSURE RELATED TO RECEIVABLES AND LIABILITIES FROM INSURANCE BUSINESS

As disclosed in note 12 and note 24 in the paragraph ‘operational risks’ the Company has significant receivables and payables to insurance intermediaries (brokers). In 2015 management initiated a project to clarify the current accounts position. Management has made an assessment of the financial exposure for HDI-Gerling Verzekeringen N.V. with regard to the current accounts position. Based on this assessment a provision for credit risk is included in the Accounts receivable on insurance business. As disclosed in note 12 the assessment contains a considerable level of uncertainty given the limited information on the exposure to current accounts. We have tested the internal procedures with regard to handling and analysis of current accounts and assessed management’s analysis and assessment of financial exposure. solvency

We involved our actuarial specialists to assist us in performing audit procedures with regard to the Solvency calculations based on Solvency II, which included in addition to the procedures described in the previous paragraph regarding loss and loss adjustment expense reserves:

verifying the accuracy of the calculations of the market value balance sheet used to determine Own Funds for selected balance sheet items, using our own actuarial specialists and alternative actuarial methods, if applicable;

assessing the appropriateness of evidence used and judgement applied in assumption setting by the company for both the best estimate liability and the Solvency Capital Ratio (SCR);

analysing the outcome of the internal prepared calculations and analysis of the movements in the Solvency II capital position during the year and sensitivities as at 31 December 2017 and discussing the outcome with the company’s Risk department;

verifying the reconciliation between the disclosures in the annual accounts to the output of the internal reporting on Solvency II. This also includes reconciliation of input for the market value balance sheet used for Own Funds with other fair value disclosures in the annual accounts.


OTHER INFORMATION

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We assessed the design and operating effectiveness of the internal controls over the Solvency II calculations. This included, where relevant, interpretation of guidelines, comparison of judgments made to current and emerging market practice and re-performance of calculations on a sample basis. INTERNAL CONTROL Against the background of deficiencies that materialised in incidents as published by De Nederlandsche Bank N.V. (DNB) in 2014, further implementation of an effective internal control system remains an area of priority for management (note 24 of the financial statements). In our risk assessment and audit approach specific focus was attributed to the operational effectiveness of the key internal controls. This focus has led to intensified audit testing procedures, in particular with regard to segregation of duties between premium and claim handling including the relevant IT systems used by the Company. For main parts of these testing procedures we made use of the expertise of our IT auditors. REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT In addition to the financial statements and our auditor’s report thereon, the annual report contains other information that consists of:

report of the Board of Directors; report of the Supervisory Board; other information pursuant to Part 9 of Book 2 of the Netherlands

Civil Code. Based on the below procedures performed, we conclude that the other information:

is consistent with the financial statements and does not contain material misstatements;

contains the information as required by Part 9 of Book 2 of the Netherlands Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the annual accounts or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Netherlands Civil Code and the Dutch Auditing Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the annual accounts. Management is responsible for the preparation of the other information, including the Report of the Board of Directors in accordance with Part 9 of

Book 2 of the Netherlands Civil Code and other information pursuant to Part 9 of Book 2 of the Netherlands Civil Code. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

ENGAGEMENT We were appointed as auditors of HDI-Gerling Verzekeringen N.V. by the Supervisory Board on 26 March 2014 and have operated as statutory auditor since that date. NO PROHIBITED NON-AUDIT SERVICES We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS RESPONSIBILITIES OF MANAGEMENT AND THE SUPERVISORY BOARD FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the report of the Board of Directors in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant doubt on the Company’s ability to continue as a going concern. The Supervisory Board is responsible for overseeing the Company’s financial reporting process.


OTHER INFORMATION

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OUR RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all errors and fraud. Misstatements may arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgement and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:

identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control;

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,

future events or conditions may cause a company to cease to continue as a going concern;

evaluating the overall presentation, structure and content of the financial statements, including the disclosures; and

evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report. We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the supervisory board, we determine the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest. Rotterdam, 5 April 2018

Mazars Paardekooper Hoffman accountants N.V.

Original has signed by C.A. Harteveld RA


GLOSSARY

94

GLOSSARY ACQUISITION COSTS Fixed and variable costs arising from writing insurance contracts. ADMINISTRATIVE EXPENSES The costs of ongoing administration connected with the product of insurance coverage. AMORTISED COST OF FINANCIAL ASSET OR FINANCIAL LIABILITY The amount at which the financial asset or financial liability is measured at initial recognition less any principal repayments plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. AVAILABLE FOR SALE (AFS) This is a category of financial assets, other than derivative financial instruments, designated as available for sale or that are not classified as loans, held-to-maturity investments, or financial assets at fair value through profit or loss. They are measured at fair value with gains and losses recognised through equity. BRANCH-OFFICE HDI Global SE, the Netherlands CARRIER HDI-Gerling Verzekeringen N.V. CLAIMS RATIO The claims ratio consists of the claims, including claims handling costs, expressed as a percentage of net written premiums. CREDIT RISK The risk that one party to a financial instrument will cause a financial loss for the other party by failing to fulfil an obligation. COMBINED RATIO The sum of the > loss ratio and the > expense ratio (net), after allowance for interest income on funds withheld and contract deposits, as a proportion of net premiums earned. To calculate the combined ratio, claims and claims expenses including interest income on funds withheld and contract deposits are taken into account. This ratio is used by both property/casualty insurers and property/casualty reinsurers.

COMMISSION The remuneration paid by a primary insurer to agents, brokers and other professional intermediaries. CURRENCY RISK The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. DEFERRED ACQUISITION COSTS (DAC) Costs directly attributable to the acquisition of new business for insurance and participating investment contracts are deferred provided they are covered by future margins on these contracts. Acquisition and selling costs for non-participating investment contracts and investment management contracts that are directly attributable to securing investment management services are also deferred. EARTNED PREMIUMS Proportion of written premiums attributable to insurance cover in the financial year. EQUITY METHOD A method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee. The profit or loss of the investor includes the investor’s share of the profit or loss of the investee. EXPENSE RATIO The ratio of acquisition costs and administrative expenses (net) to net premium earned. FAIR VALUE The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FINANCIAL RISK Financial risk means the uncertainty of a return and the potential for monetary loss. Financial risk includes credit risk, equity risk, property risk, inflation risk, interest rate risk, currency risk, insurance risk and liquidity risk. GOODWILL The positive difference between the cost of an acquired activity and our share in the fair value of the assets, liabilities and contingent liabilities of the acquired subsidiary on the acquisition date.


GLOSSARY

95

GROSS WRITTEN PREMIUMS Total premiums (earned or unearned) in a given period on insurance and reinsurance contracts HELD FOR SALE A business or group of assets for which the carrying amount will be recovered principally through a sale transaction rather than through continuing use. IMPAIRMENT A write-down(impairment loss) that is recognised if the present valueof the estimated future cash flows of an asset falls below its carrying amount. INCURRED BUT NOT REPORTED (IBNR) PROVISION A provision for claims that have occurred by the reporting date but have not yet been reported to the insurer. INSURANCE CONTRACT A contract under which one party (the insurer) accepts, in exchange for a premium, significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. INSURED EVENT An uncertain future event that is covered by an insurance contract and creates insurance risk. INTEREST RATE RISK The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) Reporting standards and interpretations for companies adopted by the International Accounting Standards Board (IASB). These comprise:

International Financial Reporting Standards (IFRS); International Accounting Standards (IAS); and Interpretations by the International Financial Reporting

Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).

INVESTMENT CONTRACTS Any contract not included in the scope of IFRS 4 is classified as an investment contract and treated as a financial instrument. Investment contracts can be reclassified as insurance contracts after inception if the insurance risk becomes significant.

LEASE An agreement where the lessor transfers the right to use an asset for an agreed period to the lessee in return for a series of payments. LEGAL AND REGULATORY RISK The risk of not complying with laws and regulations, including risks related to legal proceedings, compliance and tax. LIQUIDITY RISK The risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. LOSS RATIO The net loss ratio based on amounts reported in the financial statements: the ratio of claims and claims expenses (net), one element of which is the net other technical result, including amortization of the shareholders’ portion of the PVFP – to net premiums earned. > PVFP MARKET RISK The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. MORTGAGE-BACKED SECURITIES Mortgage-backed securities are securities where the cash flows are covered by the principal and/or interest payments in a portfolio of mortgages. NET COMBINED RATIO A measure of profitability used by an insurance company to indicate how well it is performing in its daily operations. A ratio below 100% indicates that the company is making underwriting profit while a ratio above 100% means it is paying out more money in claims and expenses than it is receiving from premiums. The net combined ratio is calculated by taking the sum of net incurred losses and net expenses and dividing this by net earned premium. NET EXPENSE / COMMISSION RATIO The ratio of underwriting expenses (including commissions) to net premiums earned. This ratio measures the company's operational efficiency in underwriting its book of business. NET INVESTMENT INCOME Investment income consists of cash and stock dividends, interest and rental income receivable for the year, fair value changes in investments through profit or loss, impairment charges on available-for-sale investments,


GLOSSARY

96

impairment charges on loans and receivables at amortised cost, and gains and losses on the sale of investments. NET LOSS RATIO The ratio of incurred losses and loss-adjustment expenses less the reinsurance to net premiums earned. This ratio measures the company's underlying profitability, or loss experience, on its total book of business. NET WRITTEN PREMIUMS Gross written premiums less reinsurance premiums paid in a given period. OPERATIONAL RISK The risk that losses may occur from inadequate or malfunctioning of internal processes or systems, human error, criminal behaviour or external events and risks relating to matters such as fraud and crime prevention, personnel, IT/infrastructure, business protection, projects and programmes, business processes, third parties and distribution. PREMIUMS EARNED The portion of net written premiums in the current and previous periods that relate to the expired part of the term or the policy, calculated by deducting movements in the provision for unearned premiums and unexpired risks from the net premiums. PROVISION FOR UNEARNED PREMIUMS The proportion of written premiums, gross of commission payable to intermediaries, attributable to subsequent periods. RETAINED PREMIUM RATIO The net written premium divided by the gross written premium. SOLVENCY II The new regulatory framework for insurance companies operating in the European Union. SOLVENCY CAPITAL REQUIREMENT A solvency capital requirement is the amount of funds required to be held in the European Union. A solvency capital requirement is a formula-based figure calibrated to ensure that all quantifiable risks are taken into account. The solvency capital requirement covers existing business as well as new business expected over the course of twelve months, and it must be recalculated at least once a year. STRATEGIC RISK The risk that targets are not achieved because the company fails to respond, or responds inadequately, to changes in the business environment and risks related to matters such as mergers and acquisitions, brands and reputation,

risk management, audits, corporate social responsibility, climate, customers and communications. SUBSIDIARY An entity, including an entity without legal personality such as a partnership, over which another entity (the parent) exercises control. TAGETIK The group consolidation software used by Talanx AG, also used for amongst others performance management purposes. TECHNICAL PROVISIONS Provisions for unearned premiums, unexpired risks and claims outstanding.


ADDRESSES

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ADDRESSES HDI-GERLING VERZEKERINGEN N.V. Westblaak 14 NL 3012 KL Rotterdam P.O. Box 925 NL 3000 AX Rotterdam Phone +31 (0)10 4036 100 Fax +31 (0)10 4036 275 E-mail [email protected] Website www.hdi.global Chamber of Commerce nr. 24167746 Haaksbergweg 75 NL 1101 BR Amsterdam Phone +31 (0)20 5650 655 E-mail [email protected] Website www.hdi.global SUBSIDIARIES HANNOVER RISK CONSULTANTS B.V. Westblaak 14 NL 3012 KL Rotterdam P.O. Box 925 NL 3000 AX Rotterdam Phone +31 (0)10 4036 100 Fax +31 (0)10 4036 275 H.J. ROELOFS-ASSURADEUREN B.V. Westblaak 14 NL 3012 KL Rotterdam P.O. Box 925 NL 3000 AX Rotterdam Phone +31 (0)10 4036 100 Fax +31 (0)10 4036 275

BRANCH OFFICES HDI-GERLING FORSIKRING, HDI-GERLING VERZEKERINGEN N.V. FILIAL AF HDI-GERLING VERZEKERINGEN N.V. Indiakaj 6, 1.sal DK 2100 København Ø Phone +45 (0)3336 9595 Fax +45 (0)3336 9596 NIEDERLASSUNG DEUTSCHLAND Charles-de-Gaulle-Platz 1 D 50679 Cologne Phone +49 (0)221 167 950 Fax +49 (0)221 167 930 HDI-GERLING VERZEKERINGEN N.V. DIRECTION POUR LA FRANCE Tour Opus 12 - La Défense 9 77 Esplanade du Général de Gaulle FR – 92914 Paris, La Défense Cedex Phone +33 (0)1 44055 600 Fax +33 (0)1 44055 666


COLOPHON

98

COLOPHON COPYRIGHT HDI-Gerling Verzekeringen N.V., 2018 FOR MORE INFORMATION HDI-Gerling Verzekeringen N.V. Westblaak 14 NL 3012 KL Rotterdam P.O. Box 925 NL 3000 AX Rotterdam Phone +31 (0)10 4036100 Fax +31 (0)10 4036275 E-mail [email protected] Website www.nl.hdi.global

mailto:[email protected]


GROUP STRUCTURE

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Documents

ANNUAL REPORT - hdi.global · HDI-Gerling Verzekeringen N.V. | Annual Report 2017 ... target solvency II ratios of 150% for 2017 and 120% for 2018 and ongoing. In addition, it is