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Ordinary result
Interest income and interest
expense are recognised on an
accrual basis. Dividends are
recognised as income when
received.
Interest on finance leases is
recognised as interest expense
over the term of the respective
lease.
Income taxes
Income tax expense includes
current income taxes and deferred
income taxes.
Explanation of the accounting
and valuation policies differing
from Swiss law
The most important differences are
summarised below.
Investments available for sale
(afs investments)
Investments available for sale are
shown in the balance sheet at market
value with the unrealised gains /
losses being included under other
reserves in shareholders equity.
Claim equalisation reserves
Claim equalisation reserves and
catastrophe reserves are not
allowed under Mondial Assistance
Group accounting policies because
they do not represent a present
obligation toward third parties.
Claims reserves
Claims reserves tend to be
somewhat lower under Mondial
Assistance Group accounting
policies because they are not
calculated in accordance with the
prudence concept but at the best
estimate of the ultimate cost.
Acquisition costs
Under Mondial Assistance Group
accounting policies acquisition
costs are capitalised and
amortised over the term of policy.
Goodwill
Goodwill with an indefinite useful
life is not amortised under Mondial
Assistance Group accounting
policies. Impairment testing for
goodwill is carried out at least
annually and if an impairment is
applicable, it is recognised through
the income.
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Deferred tax
The calculation of deferred tax is
based on temporary differences
between the carrying amounts of
assets or liabilities in the published
balance sheet and their tax basis,
and on differences arising from the
application of uniform valuation
policies for consolidation purposes.
The tax rates used for the calcula-
tion of deferred taxes are the local
rates applicable in the countries
concerned. Anticipated changes
are already taken into account as
at balance sheet date.
Impairment of assets
All assets are reviewed regularly to
ensure that no further value
adjustments are required. Valuation
write-downs are charged to the
income statement if any permanent
diminution in value is identified.
Write-downs are based on the
relevant estimated recoverable
amounts.
Accounting for operating leases
Accounting for equipment and
vehicles under operating leases,
whereby the risks and benefits
relating to ownership of the assets
remain with the lessor, are not
recorded in the balance sheet and
all related expenses are accounted
for in the income statement in the
period they arise.
Technical provisions
Technical provisions include
unearned premium reserves,
claim reserves and other technical
provisions.
Premiums written attributable to
future periods are deferred under
unearned premium reserves on a
pro-rata basis, over the period of
the contract on a daily basis. Claim
reserves are assessed according to
local regulatory requirements, on a
case by case basis and are supple-
mented by IBNR reserves (reserves
for claims Incurred But Not
Reported) based on management
and statistical estimates.
Non-technical provisions
These include personnel provisions
and similar liabilities, provision for
income taxes and other non-tech-
nical provisions.
Pension and similar reserves are
calculated taking local circum-
stances into account as well as
expected future trends in salaries
and wages, retirement rates and
pension increases.
Defined benefit plans are recognised
under IAS 19, using the method of
accruing actuarial gains and losses
through income.
Provision for income taxes are
calculated in accordance with the
relevant local tax regulations.
Other liabilities
Other liabilities include deposits
received from reinsurers, loans,
liabilities direct/indirect business,
liabilities with associated compa-
nies (current accounts), deferred
income, deferred service income
and other liabilities.
Income statement
Turnover
Turnover includes insurance
premiums and service revenue.
Premiums earned
Premiums written for travel insu-
rance are reported proportionately
as income over the term of the
insurance contract on a daily basis.
Claims and service administration
expenses (ICHC / ISHC)
Claims and service handling costs
are assessed according to
business management criteria and
reported under claims incurred and
service administration expenses.
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