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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 calculation of deferred taxes are the local rates applicable
in the countries concerned. Substantively enacted changes in tax law are already taken into account as at the 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 an other than temporary diminution in value is identified. Write-downs are based on the relevant estimated
recoverable amounts.
Accounting for operating leases
Equipment and vehicles held 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 deferred service 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 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-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 retained 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.
Notes to the consolidated financial statement
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