talanx group annual report 2011 en

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
Liabilities
Shareholders’ equity
The common shares, reserves (additional paid-in capital, retained earnings) and cumulative other
comprehensive income are recognised in shareholders’ equity. The common shares and additional
paid-in capital comprise the amounts paid in by the shareholder of Talanx AG on its shares. The
retained earnings consist of profits generated and reinvested by Group companies, consolidated
special purpose entities and special investment funds since they have belonged to the Group as
well as income and expenses from changes in the consolidated group. In addition, in the event of a
retrospective change in accounting policies, the adjustment for previous periods not included in the
financial statement is recognised in the opening balance sheet value of the retained earnings and
comparable items of the earliest reported period. Unrealised gains and losses from changes in the
fair value of financial assets held as available for sale are carried in cumulative other comprehensive
income; translation differences resulting from the currency translation of foreign subsidiaries as
well as unrealised gains/losses from the valuation of associated companies at equity are also recognised
under the other reserves. In addition, write-ups on available-for-sale variable-yield securities
are recognised under this item of shareholders’ equity. In the year under review various derivatives
were used as hedging instruments in the context of cash flow hedges. The fluctuations in the value
of these derivatives are recognised in a separate reserve item in equity.
The shares of non-controlling interests are shown after net income in the consolidated statement of
income. Non-controlling interests in shareholders’ equity are consequently recognised as a separate
component of shareholders’ equity. They refer to the shares held in the shareholders’ equity of
subsidiaries by third parties outside the Group.
Technical provisions (gross)
The technical provisions are shown for gross account in the balance sheet, i.e. before deduction
of the portion attributable to reinsurers. The reinsurers’ portions of the technical provisions are
calculated and recognised on the basis of the individual reinsurance treaties. Measurement of the
technical provisions is based on FASB Accounting Standards Codification (ASC 944 et seq.; formerly
FAS 60, FAS 97 and FAS 120).
In the case of short-term insurance contracts, those portions of premiums already collected that
are apportionable to future risk periods are deferred on a pro rata temporis basis and recognised
as unearned premiums. These premiums are earned – and thus recognised as income – over the
terms of the insurance contracts based on the amount of insurance cover provided or as they
fall due. This premium income is normally deferred by specific dates for insurance contracts
(predominantly in primary insurance); in reinsurance business assumptions are made if the data
required for a calculation pro rata temporis is unavailable. Unearned premiums also include
amounts charged on the conclusion of certain longterm contracts (e.g. payment protection
insurance). The unearned premiums are equivalent to the insurance cover to be granted in future
periods.
Talanx Group. Annual Report 2011
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