talanx group annual report 2011 en

194
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 funds held by ceding companies represent the cash and securities deposits furnished by Group
companies to cedants; these funds do not trigger any cash flows and cannot be realised by cedants
without the consent of our companies. The durations of these deposits are matched to the corresponding
provisions. In the event of default on such a deposit, the technical provision would be
reduced by the same amount. The credit risk is therefore limited; accordingly, it is not shown in the
above table.
With respect to business ceded, we reduce the default risk on accounts receivable from reinsurers
by carefully selecting our reinsurers through our Group’s in-house reinsurance broker Talanx Reinsurance
Broker AG and reviewing their credit status on the basis of opinions from internationally
respected rating agencies.
In the three primary insurance segments, the claims arising out of outward reinsurance, i.e. the
cession of our assumed risks – the reinsurance recoverables – were EUR 4.5 (4.1) billion. The resulting
reinsurers’ shares in the provisions for unpaid claims totalled EUR 3.4 (3.1) billion.
The ratings of our counterparties for reinsurance recoverables on unpaid claims at the Group level
were as follows:
AAA AA A BBB < BBB without
In %
Reinsurance recoverables on
technical provisions — (2) 53 (40) 31 (44) 1 (—) — (—) 15 (14)
84 (86)% of our reinsurers are rated A or better. In determining the ratings, allowance has already
been made for any collateral received – such as deposits or letters of credit.
The accounting balance, defined as the reinsurers’ share in earned premiums minus the reinsurers’
share in the gross claims and the gross operating expenses, in the year under review was
EUR 52 (−EUR 565) million.
The accounts receivable from outward reinsurance business in the three primary insurance segments
(after deduction of value adjustments) amounted to EUR 407 (740) million. The change
versus the previous year (EUR 333 million) results essentially from improved accuracy in calculating
the balance of accounts receivable and liabilities (new offsetting method). As at the balance sheet
date, more than 51 (60)% of these accounts receivable were rated A or better.
In the two reinsurance segments, the claims due from retrocessionaires amounted to
EUR 2.0 (1.4) billion as at the balance sheet date. Altogether 91 (92)% of retrocessionaires have an
investment grade rating. Of these, almost 90 (92)% are rated A or better. The large proportion of reinsurers
with top ratings reflects our policy of avoiding default risks in this area wherever possible.