(18) Subordinated liabilities

In order to optimise the Group’s capital structure and to ensure the liquidity (solvency) required by regulators, various Group companies have in the past issued long-term subordinated debt instruments that in some cases are listed on exchanges.

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N110 COMPOSITION OF LONG-TERM SUBORDINATED DEBT
  FIGURES IN EUR MILLION
    Nominal
amount
Coupon Maturity Rating 4) Issue 31.12.2013 31.12.2012
  Hannover Finance (Luxembourg) S. A. 500 Fixed (5%), then floating rate 2005/no final maturity (a+; A) These guaranteed subordinated bonds were offered to the holders of debt issued in 2001 in partial exchange thereof. They may be called first on 1.6.2015 and at each coupon payment date thereafter. 493 489
  Hannover Finance (Luxembourg) S. A. 500 Fixed (5.75%), then floating rate 2010/ 2040 (a+; A) These guaranteed subordinated bonds were issued in 2010 on the European capital market. They cannot be called for ten years. 498 498
  Hannover Finance (Luxembourg) S. A. 750 Fixed (5.75%), then floating rate 2004/ 2024 (a+; A) These guaranteed subordinated bonds were issued on the European capital market. They were called in entire nominal amount on 17 January 2014 and repaid on 26 February 2014. 749 749
  Hannover Finance (Luxembourg) S. A. 500 Fixed (5.0%), then floating rate 2012/ 2043 (a+; A) These guaranteed subordinated bonds in the amount of EUR 500 million were issued in 2012 on the European capital market. They cannot be called for ten years. 497 497
  HDI-Gerling Industrie Versicherung AG 142 Fixed (7%), then floating rate 2004/ 2024 (bbb+; A–) These subordinated bonds are listed on the Euro MTF Market of the Luxembourg Stock Exchange and cannot be called until 2014. 144 149
  HDI Lebensversicherung AG (vormals HDI-Gerling Lebensversicherung AG) 1) 110 Fixed (6.75%) 2005/no final maturity (—; A–) These subordinated bonds are listed on the Euro MTF Market of the Luxembourg Stock Exchange and cannot be called until 2015. 112 113
  Talanx Finanz 2) 113 Fixed (4.5%) 2005/ 2025 (bbb; BBB) These guaranteed subordinated bonds were originally issued in an amount of EUR 350 million. They are listed on the Luxembourg Stock Exchange. 112 112
  Talanx Finanz 500 Fixed (8.37%), then floating rate 2012/ 2042 (bbb; BBB) These guaranteed subordinated bonds in the amount of EUR 500 million were issued in 2012 on the European capital market. They cannot be called for ten years. 500 500
  Open Life Towarzystwo Ubezpieczeń Życie S. A. 3) 2 Fixed (2.5%), plus WIBOR 3M 2013/ 2018 (—; —) This subordinated loan of EUR 2 million was concluded in 2013 and has a term that expires in 2018. 2
  Total           3,107 3,107
  1) As at the balance sheet date, Group companies in addition held bonds with a nominal value of EUR 50 million (of these EUR 10 million are consolidated in the consolidated financial statements, with the remaining EUR 40 million being blocked)
2) As at the balance sheet date, Group companies in addition held bonds with a nominal value of EUR 96 million (consolidated in the consolidated financial statement)
3) Not included in the calculation of Group solvency
4) (Debt rating A. M. Best; debt rating S&P)
   
N111 FAIR VALUES OF SUBORDINATED LIABILITIES MEASURED AT AMORTISED COST
  FIGURES IN EUR MILLION
    31.12.2013 31.12.2012
  Amortised cost 3,107 3,107
  Unrealised gains/losses 249 351
  Fair value 3,356 3,458
   

The fair value of the debt is generally based on quoted, active market prices. If such price information is not available, fair value is determined on the basis of the recognised effective interest rate method or estimated, e.g. using other financial assets with similar rating, duration and yield characteristics. The effective interest rate method is always based on current market interest rates in the relevant fixed interest-rate duration periods.

The net result of EUR 188 (177) million from subordinated liabilities in the year under review consisted of interest expenses in the amount of EUR 187 (177) million and income from amortisation (EUR 1 [0] million).

N112 SUBORDINATED LIABILITIES: MATURITIES
  FIGURES IN EUR MILLION
    31.12.2013 31.12.2012
  One year or sooner
  Later than one year, up to five years 2
  Later than five years, up to ten years
  Later than ten years, up to 20 years 1,005 1,010
  Later than 20 years 1,495 1,495
  Without fixed maturity 605 602
  Total 3,107 3,107