talanx group annual report 2011 en

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Financial statements Notes
General information
Talanx Group. Annual Report 2011
Accounting principles
and policies
Segment reporting Consolidation,
business combinations
Non-current assets held for
sale and disposal groups
In accordance with IAS 39 “Financial Instruments: Recognition and Measurement,” financial assets/
liabilities, including derivative financial instruments, are recognised/derecognised in the directly
held portfolio upon acquisition/sale as at the settlement date. When added to the portfolio, financial
assets are allocated to one of the four categories “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 how the instruments are categorised,
the trans action costs directly connected with their acquisition may be recognised. Subsequent
measure ment of financial instruments depends on the above categorisation and is carried out
either at amortised cost or at fair value. The amortised costs are determined from the historical costs
after allow ance for amounts repayable, premiums or discounts amortised within the statement of
income using the effective interest rate method, and any unscheduled impairment. 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.
Financial instruments due on demand are recognised at their nominal value. Such instruments
include cash in hand and funds held by ceding companies.
The item “Investments in affiliated companies and participating interests” includes not only
investments in subsidiaries that are not consolidated because of their subordinate importance
for the presentation of the assets, financial position and net income of the Group, but also other
participating interests. Associated companies not measured at equity on account of their subordinate
importance are also carried in this item of the balance sheet. Investments in listed companies
are recognised at fair value on the balance sheet date; other investments are recognised at cost, less
impairments where applicable.
Loans and receivables are non-derivative financial instruments with fixed or determinable payments
that are not listed on an active market and are not intended to be sold at short notice.
They consist primarily of fixed-income securities in the form of borrower’s note loans, registered
debentures and mortgage loans. They are carried at amortised cost using the effective interest rate
method. The individual receivables are tested for impairment as at the balance sheet date. Unscheduled
depreciation is recognised if the loan or receivable is no longer expected to be repaid in full or
at all (see also our explanatory remarks in the “Impairment” section in this chapter). Reversals are
recognised in earnings via the statement of income. The upper limit of the write-up is the amortised
cost that would have arisen at the measurement date without impairment.
Financial assets held to maturity comprise financial assets that entail fixed or determinable payments
and have a defined due date but which are not loans or receivables. The Group has the intention
and ability to hold the securities recognised here until maturity. The procedure for measuring
and testing impairment is the same as for “loans and receivables.”