talanx group annual report 2011 en
talanx group annual report 2011 en
talanx group annual report 2011 en
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Overall assessm<strong>en</strong>t of<br />
the economic situation<br />
IVC, xRoCC<br />
Divid<strong>en</strong>d<br />
Non-financial<br />
performance indicators<br />
Core managem<strong>en</strong>t ratios<br />
From Group parameters and strategic programme<br />
planning of the segm<strong>en</strong>ts/divisions:<br />
Risk budget,<br />
capital adequacy ratio (CAR)<br />
Our five core managem<strong>en</strong>t ratios<br />
Corporate Governance Remuneration <strong>report</strong> Ev<strong>en</strong>ts of special<br />
Risk <strong>report</strong> Forecast and<br />
significance<br />
opportunities <strong>report</strong><br />
Financial perspective<br />
Finance<br />
Internal perspective<br />
Processes<br />
■ IVC – intrinsic value creation<br />
Value creation of the segm<strong>en</strong>t/division in accordance with value-based managem<strong>en</strong>t (as an absolute amount)<br />
■ xRoCC – Excess Return on Company’s Capital<br />
Value creation of the segm<strong>en</strong>t/division in accordance with value-based managem<strong>en</strong>t (relative to the company’s capital)<br />
■ Divid<strong>en</strong>d/profit transfer of the segm<strong>en</strong>t/division<br />
■ Risk budget<br />
Definition of available risk capital per segm<strong>en</strong>t/division<br />
■ Capital adequacy ratio (CAR)<br />
Minimum solv<strong>en</strong>cy level of the segm<strong>en</strong>t/division (ratio of company’s capital to risk-based capital)<br />
Group holding company and Group segm<strong>en</strong>ts/divisions use a consist<strong>en</strong>t performance metric to manage business.<br />
Managem<strong>en</strong>t indicators<br />
As part of our performance managem<strong>en</strong>t, we measure economic<br />
value creation from strategic planning through to operational managem<strong>en</strong>t<br />
using our c<strong>en</strong>tral managem<strong>en</strong>t indicator, namely intrinsic<br />
value creation (IVC).<br />
The IVC <strong>en</strong>ables us to id<strong>en</strong>tify and consist<strong>en</strong>tly allocate the value<br />
contributions of the Group at differ<strong>en</strong>t hierarchical levels – Group,<br />
segm<strong>en</strong>t/division and company. The IVC and its methodological<br />
determination form the basis on which the value contributions of<br />
the segm<strong>en</strong>ts/divisions and of the individual operational units can<br />
be measured and compared – making allowance for their specific<br />
characteristics – in order to reliably id<strong>en</strong>tify value-creating areas.<br />
The core managem<strong>en</strong>t ratios, the operational managem<strong>en</strong>t ratios<br />
and their respective degrees of goal accomplishm<strong>en</strong>t create the<br />
transpar<strong>en</strong>cy needed to optimise the allocation of capital and<br />
resources, to pinpoint risks and opportunities and to initiate further<br />
measures.<br />
The methodological determination of the IVC – and h<strong>en</strong>ce of the<br />
economic value creation – is carried out unchanged according to<br />
the uniform scheme for our life and non-life companies. Under this<br />
approach, the intrinsic value creation repres<strong>en</strong>ts the economic net<br />
income in each period less the cost of capital.<br />
Operational managem<strong>en</strong>t ratios<br />
Operational requirem<strong>en</strong>ts from the segm<strong>en</strong>ts/divisions:<br />
Market and customer perspective<br />
Market/customers<br />
Learning and developm<strong>en</strong>t perspective<br />
Staff<br />
The IVC is calculated on the basis of differ<strong>en</strong>t specific ratios for life<br />
and non-life.<br />
NOPAT<br />
Cost of<br />
risk-based<br />
capital<br />
Cost of excess<br />
capital<br />
IVC<br />
non-life<br />
In non-life business (i.e. property/casualty insurance and non-life<br />
reinsurance), the IVC measures the differ<strong>en</strong>ce betwe<strong>en</strong> the NOPAT<br />
(net operating profit after adjustm<strong>en</strong>ts and tax) and the cost of riskbased<br />
capital and excess capital.<br />
The NOPAT is an economically informative performance and managem<strong>en</strong>t<br />
ratio for the <strong>report</strong>ing period in question. It is composed<br />
of the net income for the year as recognised under IFRS after tax<br />
and fair value adjustm<strong>en</strong>ts that arise out of the change in differ<strong>en</strong>ces<br />
betwe<strong>en</strong> pres<strong>en</strong>t values and carrying amounts in the balance<br />
sheet (e.g. loss reserve discount, excess loss reserves, fair value<br />
changes not recognised in income).<br />
Talanx Group. Annual Report <strong>2011</strong><br />
35