talanx group annual report 2011 en

190
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
Due to these risks, the calculation bases and our expectations may prove inadequate. Our life
insurers use a variety of tools to counter this possibility:
In calculating premiums and technical provisions, the Group companies use prudently quantified
actuarial bases, the adequacy of which is regularly assured through continuous reconciliation of
the claims expected according to the withdrawal tables and the claims actually incurred. In addition,
the actuarial bases make appropriate allowance for the risks of error, random fluctuation
and change by applying commensurate safety loadings.
Life insurance policies are typically longterm contracts with a discretionary surplus distribution.
Minor changes in the assumptions with respect to the biometric factors, interest rates and
costs on which tariffs are based are absorbed by the safety loadings built into the actuarial bases.
If these safety loadings are not required, they generate surpluses that are for the most part – in
accordance with statutory requirements – passed on to policyholders. The impact on profitability
in the event of a change in the risk, cost or interest rate expectations can thus be limited by
adjusting the policyholders’ future surplus participation.
We regularly review the lapse patterns of our policyholders and the lapse trend of our in-force
portfolio.
Additional protection is obtained against certain – primarily biometric – risks by taking out
reinsurance treaties.
The same biometric risks are of special importance in life and health reinsurance, too. Here our
reserves are based mainly on the information provided by our ceding companies. The plausibility
of these figures is checked against reliable biometric actuarial bases. Furthermore, local insurance
regulators ensure that the reserves calculated by ceding companies satisfy all requirements
in terms of the actuarial methods and assumptions adopted (e.g. use of mortality and morbidity
tables, assumptions regarding lapse rates, etc.). The lapse and credit risks are also of importance in
the context of prefinancing cedants’ new business acquisition costs. The interest guarantee risk,
on the other hand, is of only minimal risk relevance in most instances due to the structure of the
contracts.
The volume of reinsurance cover relative to the gross written premium is measured by the retained
premium ratio; shown below broken down by segments, this indicates the proportion of written
risks retained for our own account:
Retention by segments 2011 2010 2009
In %
Retail Germany 93.6 92.9 90.4
Retail International 82.8 84.1 83.3
Life/Health Reinsurance 91.0 91.7 90.7
Total 91.8 91.8 90.1