talanx group annual report 2011 en
talanx group annual report 2011 en
talanx group annual report 2011 en
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Nature of risks Notes on the balance<br />
sheet – assets<br />
Notes on the balance<br />
sheet – liabilities<br />
Notes on the<br />
statem<strong>en</strong>t of income<br />
Other information List of shareholdings<br />
The loss and loss adjustm<strong>en</strong>t exp<strong>en</strong>se reserves are constituted for paym<strong>en</strong>t obligations from insurance<br />
claims that have occurred but have not yet be<strong>en</strong> settled. They relate to paym<strong>en</strong>t obligations<br />
under insurance and reinsurance contracts in respect of which the amount of the insurance b<strong>en</strong>efit<br />
or the due date of paym<strong>en</strong>t is still uncertain. To this ext<strong>en</strong>t, they are based on estimates that may<br />
vary from the actual paym<strong>en</strong>t. The loss and loss adjustm<strong>en</strong>t exp<strong>en</strong>se reserves are subdivided into<br />
reserves for claims <strong>report</strong>ed by the balance sheet date and reserves for claims that have already<br />
be<strong>en</strong> incurred but not yet <strong>report</strong>ed (IBNR) by the balance sheet date.<br />
The loss and loss adjustm<strong>en</strong>t exp<strong>en</strong>se reserves are calculated on the basis of recognised actuarial<br />
methods used to estimate future claims exp<strong>en</strong>diture including exp<strong>en</strong>ses associated with loss<br />
adjustm<strong>en</strong>t, provided no estimates for individual cases need to be tak<strong>en</strong> into account (as regards<br />
estimates for individual cases, we refer to our explanatory remarks on major losses). The reserves<br />
are recognised according to best estimate principles in the amount that will probably be utilised.<br />
Receivables arising from recourse, salvages or knock-for-knock agreem<strong>en</strong>ts are tak<strong>en</strong> into account<br />
wh<strong>en</strong> calculating the “best estimate.” In order to measure the “ultimate liability,” the expected ultimate<br />
loss ratios are calculated for all lines of non-life reinsurance with the aid of actuarial methods<br />
such as the chain ladder method. The developm<strong>en</strong>t of a claim until completion of the run-off is<br />
projected on the basis of statistical triangles. In this context it is assumed that the future rate of<br />
inflation of the loss run-off will be analogous to the average rate of the past inflation contained<br />
in the data. The more rec<strong>en</strong>t underwriting years in actuarial projections are subject to greater<br />
uncertainty, although this is reduced with the aid of a variety of additional information. Particularly<br />
in reinsurance business, a considerable period of time may elapse betwe<strong>en</strong> the occurr<strong>en</strong>ce of<br />
an insured loss, notification by the insurer and pro-rata paym<strong>en</strong>t of the loss by the reinsurer. The<br />
realistically estimated future settlem<strong>en</strong>t amount (“best estimate”), which is calculated on the basis<br />
of the information provided by ceding companies, is therefore brought to account. This estimate<br />
draws on past experi<strong>en</strong>ce and assumptions as to the future developm<strong>en</strong>t, taking account of market<br />
information. The amount of the provisions and their allocation to occurr<strong>en</strong>ce years are determined<br />
using established forecasting methods of non-life actuarial sci<strong>en</strong>ce. Provisions for insurance business<br />
assumed are calculated in accordance with the data provided by the prior insurers (in the case<br />
of Group business) or on the basis of actuarial analyses (in the case of non-Group business).<br />
In addition, provisions are established for claims which have be<strong>en</strong> incurred but not <strong>report</strong>ed<br />
(IBNR reserves).<br />
In some cases, suffici<strong>en</strong>t statistical data is not available for major losses. In these instances appropriate<br />
reserves are established after analysis of the portfolio exposed to such risks and, as appropriate,<br />
after individual scrutiny. These reserves repres<strong>en</strong>t the best estimates of the Group.<br />
With the exception of a few reserves, the loss and loss adjustm<strong>en</strong>t exp<strong>en</strong>se reserves are not discounted.<br />
Talanx Group. Annual Report <strong>2011</strong><br />
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