R+V Versicherung AG Annual Report

Notes
Accounting policies
Basis of preparation
The annual financial statements of R+V
Versicherung AG for 2002 were prepared in
accordance with the provisions of the Handelsgesetzbuch
(HGB – German Commercial
Code), the Aktiengesetz (AktG –
German Public Companies Act) and the
provisions of the Versicherungsaufsichtsgesetz
(VAG – German Act on Private
Insurance Undertakings) as well as the
Verordnung über Rechnungslegung von
Versicherungsunternehmen (RechVersV –
German Federal Regulations on Insurance
Accounting) of November 8, 1994.
Use of simplification procedure
The annual financial statements for 2002
also cover all business assumed by R+V
Group companies in 2002, domestic and
foreign third-party life insurance business
and the business of our branch office in
Singapore.
As other non-life business underwritten on
the international reinsurance market is often
settled with the transferring parties long
after the balance sheet date, the provision
laid down in section 27 (1) in conjunction
with section 3 of the RechVersV on approximation
and simplification procedures has
been applied. In line with this, business with
a gross premium volume of €387.7 million
or a 40.5% share of total premiums written
was included one year in arrears. Technical
provisions were increased sufficiently to
meet current and future obligations.
Intangible assets were valued at cost and
written down over their estimated useful
life. Additions in the fiscal year were generally
written down pro rata.
Land, land rights and buildings including
buildings on third-party land were recorded
at acquisition or manufacturing cost less
write-downs. Straight-line depreciation was
performed using the rate allowed by tax
law.
41
Shares in affiliated companies and
associates and other investments were
recorded at cost. Investments held in
foreign currencies were translated using
the exchange rate applicable at the time of
acquisition.
Investments in associates were valued
according to the length of time they have
been held by the Company, as were other
variable-yield securities, bearer bonds
and other fixed-income securities, other
loans and deposits with banks.
Shares, investment certificates and other
variable-yield securities, bearer bonds
and other fixed-income securities were
reported in line with the strict principle of
the lower of cost or market. Write-ups were
made in accordance with section 280 (1)
HGB. These items also include derivative
financial instruments; these were combined
with existing securities in the portfolio to
form microhedges for hedge accounting
purposes.
The equities component for the mixed
funds assigned to the fixed assets in line
with section 341b HGB was valued at the
average rate for the year plus 10%. The
fixed-income component was carried at
the principal amount; derivative hedges
were included at their hedge rate.
The acquisition costs in euros of securities
held in foreign currencies were calculated
using the price of the security and the
exchange rate as of the time of acquisition;
the market value in euros was calculated on
the basis of the price of the security and
the exchange rate as of the balance sheet
date.
Other loans and deposits with banks
were reported at their repayment value,
insofar as specific valuation allowances did
not have to be performed. Deposits with
banks in foreign currencies were translated
using the exchange rate as of the balance
sheet date.