Access America 2006 Annual Report Download - page 36

Financial results
34
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 calculation of deferred
taxes are the local rates applicable in the countries concerned. Substantively enacted changes in tax laws
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, deferred service income, claim reserves and
other technical provisions.
Premiums written and service revenue attributable to future periods are deferred under unearned premium
reserves respectively under service deferred income 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
supplemented by 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-technical
provisions.
Pension and similar reserves are calculated taking local circumstances into account as well as expected future
trends in salaries and wages, retirement rates and pension increases.
Defined benefit plans are recognised using the method of accruing actuarial gains and losses through
income.
Provisions 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 companies (current accounts), deferred income and other liabilities.
Income statement
Turnover
Turnover includes insurance premiums and service revenue.
Premiums earned
Premiums written for travel insurance are reported proportionately as income over the term of the insurance
contract on a daily basis.
Claims and service administration expenses (internal claims handling costs ICHC and internal service
handling costs ISHC)
Claims and service handling costs are assessed according to business management criteria and reported
under claims incurred and service administration expenses.
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.