talanx group annual report 2011 en

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148 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 Securities loaned in the context of securities lending continue to be carried in the balance sheet since the material opportunities and risks resulting from such securities still remain within the Group. Other invested assets are recognised for the most part at fair value. Insofar as these financial assets are not listed on public markets (e.g. participating interests in private equity firms), they are carried at the latest available “net asset value” as an approximation of fair value. Loans included in this item are recognised at amortised cost. Funds held in accounts receivable and payable, and contracts without sufficient technical risk Funds held by ceding companies are receivables due under reinsurance provided to our clients in the amount of the cash deposits contractually withheld by such clients; funds held under reinsurance treaties (shown under liabilities) represent the cash deposits furnished to us by our retrocessionaires. Neither of these types of deposit triggers any cash flows and the funds cannot be used without the consent of the other party. Funds held by ceding companies/funds held under reinsurance treaties are recognised at acquisition cost (nominal amount). Appropriate allowance is made for credit risks. Insurance contracts that satisfy the test of a significant risk transfer to the reinsurer as required by IFRS 4 but fail to meet the test of risk transfer required by US GAAP are recognised using the “deposit accounting” method and eliminated from the technical account. The compensation elements for risk assumption booked to income under these contracts are shown under other income/expenses. The balances are shown as contract deposits on the assets and liabilities sides of the balance sheet, the fair values of which correspond approximately to their book values. Investments for the account and risk of holders of life insurance policies This item consists of policyholders’ investments under unit-linked life insurance policies. The insurance benefits under these insurance contracts are linked to the unit prices of investment funds or a portfolio of separate financial assets. The assets are kept and invested separately from other invested assets. They are recognised at fair value. The unrealised gains or losses are offset by changes in the technical provisions. Policyholders are entitled to the profits generated; they are likewise liable for the incurred losses. Reinsurance recoverables on technical provisions The reinsurers’ portions of the technical provisions are calculated according to the contractual conditions of the underlying technical provisions using a simplified method; the reader is referred to the explanatory notes on the corresponding liabilities-side items. Appropriate allowance is made for credit risks. Accounts receivable Accounts receivable on reinsurance business and other receivables are measured at nominal value; where necessary, value adjustments are made on an individual basis. We use separate adjustment accounts to recognise the value adjustments on accounts receivable; in all other cases, the underlying assets are depreciated directly.
Nature of risks Notes on the balance sheet – assets Notes on the balance sheet – liabilities Notes on the statement of income Other information List of shareholdings Deferred acquisition costs Commissions and other costs that are closely connected with the renewal or conclusion of insurance contracts and variable in relation to the acquired new business are capitalised under deferred acquisition costs (in accordance with FASB ASC 944). Deferred acquisition costs are regularly tested for impairment using an adequacy test. The actuarial bases are also subject to ongoing review and adjustment as necessary. In the case of property/casualty insurance companies and non-life reinsurance, acquisition costs are normally deferred pro rata for the unearned portion of the premiums. They are amortised at a constant rate over the average contract period. In the case of life insurers and in life/health reinsurance, the deferred acquisition costs are determined in light of the period of the contracts, the expected surrenders, the lapse expectancies and the anticipated interest income. The amount of amortisation generally depends on the gross margins of the contracts calculated for the corresponding year of the contract period. Depending on the type of contract, amortisation is taken either in proportion to the premium income or in proportion to the expected profit margins. In the case of life reinsurance treaties classified as “universal life-type contracts,” the deferred acquisition costs are amortised on the basis of the expected profit margins from the reinsurance treaties, making allowance for the period of the insurance contracts. A discount rate based on the interest rate for medium-term government bonds was applied to such contracts. In the case of annuity policies with a single premium payment, these values refer to the expected policy period or period of annuity payment. Deferred tax assets IAS 12 “Income Taxes” requires that assets-side deferred taxes be established if asset items are to be recognised in a lower amount or debit items in a higher amount in the consolidated balance sheet than in the tax balance sheet of the relevant Group company and if these differences will lead to reduced tax burdens in the future. Such valuation differences may arise between the tax balance sheets drawn up in accordance with national standards and the IFRS balance sheets of the companies included in the consolidated financial statements drawn up in accordance with uniform group standards. Deferred tax assets are also recognised for tax credits and on tax loss carry-forwards. The assessment as to whether deferred tax claims from tax loss carry-forwards can be used, i.e. 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. Insofar as deferred taxes refer to items carried directly in shareholders’ equity via the other income/ expenses, the resulting deferred taxes are also recognised outside the statement of income. Deferred taxes are based on the current country-specific tax rates. In the event of a change in the tax rates on which the calculation of the deferred taxes is based, appropriate allowance is made in the year in which the change in the tax rate is adopted in law. Deferred taxes at Group level are booked using the Group tax rate of 31.6%, unless they can be allocated to specific companies. Talanx Group. Annual Report 2011 149
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Group Annual Report 2011 Straightfo
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.� ,� �.� �,� Non-Life
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OuR VISION Talanx is the leading gl
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Our brands HDI-Gerling focuses part
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By contrast with the technical acco
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Dr. Heinz-Peter Roß Torsten Leue D
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Supervisory Board Committees Compos
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A further focus of our deliberation
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The annual financial statements are
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You can stand and work better on a
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Re-launch with a modern and efficie
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Forward together with a goal-orient
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under its own power and through acq
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Our targets: ambitious, but achieva
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Our premium volume has risen steadi
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Our target: to be fit for the futur
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Group management report. Detailed i
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Overall assessment of the economic
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Our Locations Argentina L’UNION d
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Italy Hannover Re Services Italy S.
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Glossary. A-C Accumulation risk Und
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L-P Lapse rate for life insurance p
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Index of key terms Acquisitions Cen
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ie Ireland. Hannover Life Re (Irela
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talanx group annual report 2011 en

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