talanx group annual report 2011 en

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154 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 The provision for premium refunds is constituted in life insurance for obligations that relate to the surplus participation of policyholders and that have not yet been definitively allocated to individual insurance contracts on the balance sheet date. It consists of amounts allocated to policyholders in accordance with national regulations or contractual provisions and amounts resulting from temporary differences between the IFRS consolidated financial statement and the local annual financial statements (provision for deferred premium refunds, shadow provision for premium refunds) that will have a bearing on future calculations of surplus distribution. In particular for German life insurers, the applicable regulatory requirements of the Insurance Supervision Act (VAG) and the Decree on Minimum Premium Refunds in Life Insurance need to be observed. We regularly subject all technical provisions to an adequacy test in accordance with ifrs 4. If current experience indicates that future income will not cover the expected expenses, the technical provisions are adjusted in income or an additional provision for anticipated losses is established after writing off the deferred acquisition costs. We review the adequacy of the benefit reserve on the basis of current assumptions as to the actuarial bases. Shadow accounting IFRS 4.30 allows unrealised, but recognised profits and losses (deriving predominantly from changes in the fair value of assets classified as “available for sale”) that are reported in equity (Other Comprehensive Income, OCI) to be included in the measurement of technical items. This may affect the following items: deferred acquisition costs, present values of future profits (PVFPs), provisions for maturity bonuses of policyholders, provisions for deferred costs and the provision for premium refunds. The aforementioned asset and liability items and their corresponding amortisation schemes are determined on the basis of the estimated gross margins (EGMs). The latter are modified accordingly following subsequent recognition of unrealised gains and losses. The resulting adjustments are carried as so-called shadow adjustments to the affected items. The contra item in equity (OCI) is reported analogously to the underlying changes in value. Technical provisions in the area of life insurance insofar as the investment risk is borne by policyholders In the case of life insurance products under which policyholders bear the investment risk themselves (e.g. in unit-linked life insurance), the benefit reserves and other technical provisions reflect the fair value of the corresponding investments; these provisions are recognised separately. We refer the reader to the explanatory notes on the asset item “Investments for the account and risk of holders of life insurance policies,” page 148.
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 Other provisions This item includes the provisions for pensions and other post-employment benefit obligations. The Group companies normally grant their employees pension commitments based on defined contributions or defined benefits. The type and amount of the commitments depend on the pension plans in force at the time when the commitment was given. They are based principally on an employee’s length of service and salary level. In addition to these pension plans, executive staff and Board members, in particular, enjoy individual commitments as well as commitments given under the benefits plan of the Bochumer Verband. In addition, various German companies have, for quite some time now, offered the opportunity to obtain pension commitments through deferred compensation. The employee-funded commitments included in the provisions for accrued pension rights are protected by insurance contracts with various insurance companies within the Group. Furthermore, Group employees have the opportunity to make additional provision for retirement through direct life insurance policies, variously structured pension funds, or the payment of deferred compensation to provident funds run by insurance companies. Additional similar obligations based upon length of service exist at some Group companies. In the case of pension commitments based on defined contributions, the companies pay a fixed amount to an external pension fund. The commitment given by the company is fully discharged upon payment of the contribution. In the case of pension commitments based on defined benefits, the employee receives a specific pension commitment from the company or a pension fund. The contributions payable by the company to fund the commitment are not fixed in advance. If the pension commitments are balanced against assets of a legally independent entity (e.g. a fund) that may be used solely to cover the pension assurances given and cannot be seized by any creditors, the pension commitments are to be recognised less the assets. Pension commitments under defined benefit plans are measured in accordance with IAS 19 “Employee Benefits” using the projected unit credit method. Not only are the benefit entitlements and current annuities existing as at the balance sheet date measured, but allowance is also made for their future development. The interest rate used for discounting the pension commitments is based upon the rates applicable to first-rate fixed-income corporate bonds in accordance with the currency and duration of the pension commitments. The amounts payable under defined contribution plans are expensed when they become due. Actuarial gains or losses from pension commitments and plan assets derive from divergences between the estimated risk experience and the actual risk experience (irregularities in the risk experience, effects of changes in the calculation parameters and unexpected gains or losses on plan assets). The Group uses the “corridor method” defined in IAS 19 to recognise its actuarial gains and losses. Under the corridor method, a portion of the actuarial gains and losses is recognised in profit or loss to the extent that the hitherto unrecognised actuarial gains or losses at the beginning of the financial year exceed the higher of the following amounts: 10% of the present value of the earned pension entitlements or 10% of the fair value of any plan assets. The amount outside the corridor – divided by the expected average remaining working lives of the beneficiaries – is included as income or expense in the statement of income. Talanx Group. Annual Report 2011 155
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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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