talanx group annual report 2011 en

298 Talanx Group. Annual Report 2011
D–K
Deferred taxes
Term denoting the difference between the
taxes calculated on the profit reported in
the commercial balance sheet and those
carried in the tax balance sheet, which then
evens out in subsequent months. Deferred
taxes are recognised in order to offset this
difference in those cases where it is evident
that it will be eliminated over time.
Deposit accounting
An accounting method for the recognition
of short-term and multi-year insurance and
reinsurance contracts with no significant
underwriting risk transfer.
Derivative
Financial products derived from under lying
primary instruments such as equities, fixedincome
securities and foreign exchange
instruments, the fair value of which is
determined inter alia on the basis of the
underlying security or other reference asset.
Derivatives include swaps, options and
futures.
Due diligence audit
Auditing of a participating interest in the
run-up to acquisition or merger. It encompasses,
in particular, a systematic analysis
of the strengths and weaknesses of the
proposition, analysis of the risks associated
with the acquisition and a well-founded
valuation of the item in question.
Duration
Ratio in investment mathematics that represents
the average commitment period of
the cash value of a financial instrument. The
duration can thus also be considered a measure
of the interest rate risk associated with
a financial instrument.
Earned premiums
Proportion of written premiums attributable
to the insurance protection in the financial
year.
EBIT
Earnings before interest and tax.
> operating profit
Embedded value
Benchmark used to measure the performance
of life insurance enter prises. It is
composed of the sum total of free assets
(net asset value) plus the present value of
the projected stream of future after-tax
profits on the in-force insurance portfolio.
Equalisation reserve
Provision constituted to offset significant
fluctuations in the loss experience of individual
lines over a number of years.
Equity method
Method of accounting used to measure
equity investments (associated companies)
in the consolidated financial statement.
Expenditures on insurance business
(acquisition costs and administrative
expenses)
Sum total of commissions, sales, personnel
and material costs as well as regular administrative
expenses.
Expense ratio
Ratio of acquisition costs and administrative
expenses (net) to net premium earned.
Exposure
Level of danger inherent in a risk or portfolio
of risks.
Facultative reinsurance
Participation on the part of the reinsurer in
a particular individual risk assumed by the
primary insurer.
Fair value
Fair value is the amount for which an asset
could be exchanged, or a liability settled,
between knowledgeable, willing parties in
an arm’s length transaction.
Funds held by ceding companies/
funds held under reinsurance treaties
Collateral provided to cover insurance liabilities
which an insurer retains from the liquid
funds which it is to pay to a reinsurer under
a reinsurance treaty. In this case, the insurer
shows funds held under a reinsurance treaty,
while the reinsurer shows funds held by a
ceding company. Interest is payable on such
funds held.
Goodwill
The amount that a purchaser is prepared to
pay – in light of future profit expectations –
above and beyond the value of all tangible
and intangible assets after deduction of
liabilities.
Gross
In insurance: before deduction of reinsurance.
Hybrid capital
Capital in the form of subordinated debt
and surplus debenture that exhibits a hybrid
character of equity and debt.
Impairment
Unscheduled write-down taken if the present
value of the estimated future cash
flows of an asset falls below the carrying
amount.
Insurance-linked securities
Financial instruments used to securitise
risks under which the payment of interest
and/or nominal value is dependent upon
the occurrence and magnitude of an insured
event.
Investment grade
Rating of BBB or better awarded to an entity
on account of its low risk of default.
Issuer
Public entity or private enterprise that issues
securities, e.g. the federal government in the
case of German Treasury Bonds or a jointstock
corporation in the case of shares.