Securities lending

On 12 December 2008 Talanx AG concluded a securities lending transaction with WestLB. Shares were transferred with a value date of 18 December 2008 and returned on 15 January 2009. Cash collateral amounting to 105% of the market value of the shares was furnished by the borrower; the underlying market value of the share was EUR 13.44. Floating-rate interest was paid on the cash collateral at the EONIA O/N rate; the borrower additionally paid a loan fee.

Upon inception of the securities lending transaction Talanx AG booked a withdrawal of the designated shares from its securities portfolio. The subject matter of the agreement was the return of shares of the same type and quality, i.e. of the same issuer, on 15 January 2009, without agreement of compensatory payments for any losses of value. As the lender, Talanx AG therefore retained unchanged all opportunities and risks associated with the equity investment – especially the potential for or risk of changes in the value of the equities – on the basis of the firmly agreed return transfer.

The transaction was thus recognized as a secured lending transaction. Talanx AG continued to recognize the loaned 1,200,000 shares on 31 December 2008 with a book value of EUR 19 million. At the same time, we carried a loan liability with a book value of EUR 16 million for the cash collateral received.