talanx group annual report 2011 en

64
The Talanx Group Strategy Enterprise
management
Talanx Group. Annual Report 2011
Research and
development
The amortisation to be taken on acquired insurance portfolios
produces a charge to net income, to the extent that it is attributable
to the shareholders’ portion, of EUR 58 (152) million. The recognised
insurance-related assets – in relation to the policyholders’ share –
are opposed by corresponding provisions for premium refunds.
The balance sheet item “Technical provisions in the area of life
insurance insofar as the investment risk is borne by policyholders”
fell by EUR 347 million in step with the decrease in the item “Investments
for the account and risk of holders of life insurance policies”,
which is comprised of the investments relating to unit-linked insurance
products. In the case of these life insurance products, under
which policyholders themselves carry the investment risk, the technical
liabilities reflect the fair values of the corresponding assets.
In addition to the sale of the insurance portfolios of PB Pensionskasse
AG, Hilden, (Retail Germany segment) and HDI Seguros S. A.
de C. V., León, (Mexico) (Retail International segment), the sale of
PARTNER OFFICE AG (Retail Germany segment) and the scheduled
sale of ASPECTA Assurance International AG, Vaduz (Liechtenstein)
(Retail International segment) are also recognised under the item
“Non-current assets and assets of disposal groups classified as held
for sale”. It is highly likely that all of the above sales transactions
will be concluded within one year. In the previous year, the sale of
the operating companies of Clarendon Insurance Group, Inc. (CIGI),
Wilmington (Non-Life Reinsurance segment) scheduled for the year
under review was recognised under this item. An overall presentation
of these procedures and of the assets classified as held for sale
during the year and disposal groups can be found in the subsection
of the Notes entitled “Non-current assets held for sale and disposal
groups.
Asset management and objectives
Group assets are managed according to the fundamental principle
of perpetual growth and performance. A systematic and disciplined
investment process ensures consistency and sustainability of results.
In this context, strategic and tactical asset allocation is a main focus
of our efforts. In addition to regulations governing Group risk, and
the general legal framework, asset allocation also takes full account
of the requirements of the respective business models. Mapping
of the liabilities side of the balance sheet in the form of a cashflowand
currency structure, duration matching, and the fulfillment of
specific requirements with regard to cash holding are all factors
which exert a key influence on asset allocation and, thus, also on the
risk-weighted return of our portfolios.
Markets and
general conditions
Business
development
Assets and
financial position
Moreover, the forthcoming enactment of Solvency II is exerting an
ever greater influence on the way in which the Group manages its
assets. Thus, derivative financial instruments are increasingly being
used in connection with e.g. life insurance companies in the Retail
Germany segment in order to secure satisfactory returns in the
future, and to make a positive contribution to meeting Solvency II
criteria. In addition, durations have been increased successively
in order to harmonise the Group’s liability/asset profile. The high
ratings quality of the invested assets in the respective portfolios has
always been maintained.
Although numerous rating downgrades left their mark on 2011,
more than 86% of instruments in the asset category of fixedincome
securities are rated “A” or better. A broad-based system
designed to limit accumulation risks results in a balanced mix of
assets, the risk-reducing aspects of which have proven their worth
during the Eurozone crisis, too.
Asset risk management is embedded in the Group system of limits
and thresholds, which itself is derived from the Group’s holistic risk
management concept. The goal here is to deploy asset allocation in
order to achieve the best possible returns without jeopardising the
risk budget which must be adhered to at all times.
Numerous instruments are deployed in order to measure and
monitor key risks comprehensively and continuously. They include
stress tests, value-at-risk calculations, and the daily monitoring of
limits, e.g. in respect of accumulation risks. With the aid of instruments
such as these, it has been possible even in times of crisis to
manage the corresponding risks and to tailor portfolios accordingly.
It would be accurate to say that the Talanx Group pursues a conservative
investment policy.
Talanx Asset Management GmbH functions as a central interface
for risk measurement and risk controlling in relation to the
Group’s investments. In this way, Group units acquired or newly
established in the context of the strategic corporate objectives are
also promptly integrated into the systems of Talanx Asset Manage-