01 GB Konzern08 Umschlag_GB - Joachim Sachs

Transcription

The Gothaer Group
Annual Report 2008
FINANCIAL HIGHLIGHTS
Five-Year Summary (consolidated in accordance with IFRS)
Financial Year
2008
€ million
2007
€ million
2006
€ million
2005
€ million
2004
€ million
Gross premiums written*
Net premiums earned*
4,039.4
3,043.1
3,945.1
3,069.6
3,856.6
3,032.4
3,809.4
3,069.6
4,066.3
3,245.2
Policyholder benefits (net)
2,440.2
3,389.8
3,126.4
3,395.9
3,059.0
690.8
673.0
627.0
592.9
688.8
61.7
131.2
120.3
103.1
80.6
21,451.2
21,885.9
21,380.9
20,808.9
19,815.4
711.5
1,316.6
977.5
1,337.0
845.4
19,158.9
19,260.8
18,417.4
17,619.1
16,599.9
Equity
941.8
1,046.9
1,070.7
949.6
861.9
Employees (average number)
5,466
5,610
5,730
6,014
6,382
Underwriting expenses (net)
Consolidated profit for the year
Investments
Investment income
Technical reserves (net)
* Including premiums from the reserve for premium refunds.
The Gothaer Group
With over 3.5 million members and premium income of over € 4 billion, the Gothaer Group ranks among Germany’s
largest insurance groups and is one of the country’s largest mutual insurance associations.
By offering high-quality risk-management and financial concepts, we give our customers comprehensive solutions
that go well beyond the usual scope of insurance and financial products. We attempt to make dealing with insurance and financial matters as pleasant and as simple as possible for our customers. Our employees make every
effort to take the burden off of our customers and act in their best interests in all respects. This, in combination
with the quality of our service and support, distinguishes us from our competitors. This approach results in noticeable added value for our customers and marketing partners.
Gothaer’s customers are for the most part private individuals and medium-sized companies. We offer a wide
variety of insurance products, not only in the personal area, but also for small and medium-sized companies, the
self-employed and freelancers.
The Business Units
Gothaer Versicherungsbank VVaG, a mutual insurance association, is the Group parent. Gothaer Finanzholding AG
manages the Group’s financial activities.
Operational activities are handled essentially by the companies listed below:
Gothaer Allgemeine Versicherung AG is the risk-bearing entity in the area of property and casualty insurance within
the Gothaer Group. This company has ranked among the largest German property insurance companies ever since
its incorporation in the year 1820. Its focus is primarily on comprehensive insurance concepts and multiple-risk
products. Custom solutions that take into account the specific requirements of different branches of business and
industry make Gothaer a reliable partner, not only for private clients, but also for commercial and corporate clients.
Gothaer Lebensversicherung AG can look back upon 180 years of existence. With its three main areas of specialization — insurance, retirement planning and asset building — it can offer virtually any customer a concept with comprehensive coverage that is tailored to suit his or her needs. The Company’s goal is to give private and corporate
customers access to flexible unit-linked-based and conventional product solutions, depending on their risk mentality. The range extends from private annuity and endowment insurance, “Riester” and “Rürup” retirement plans all
the way to term life insurance and occupational disability insurance as well as dread disease coverage. One special
focus is on comprehensive concepts for company pension plans, which reflect Gothaer Leben‘s high service competence and include innovative features like working time accounts .
As the healthcare insurance provider of the Gothaer Group, Gothaer Krankenversicherung AG provides policyholders not only with insurance coverage tailored to their needs and reimbursement of medical expenses, but also
extensive advice in the area of healthcare and comprehensive support in the event of illness. Mainstay services
include preventive measures, active consultation for those with chronic medical problems and case management
for those policyholders afflicted with especially severe illnesses. For Gothaer Krankenversicherung, the healthcare
reform was and remains a major concern since supplementary healthcare policies are becoming more important in
addition to the range of full-coverage healthcare plans now offered. In the years to come, efforts in this area will
also focus on group insurance and corporate healthcare management.
The ASSTEL Insurance Group, which consists of direct insurers that have been marketing standardized, economical
insurance products in the life, health and property insurance segments to private clients throughout Germany
since 1997, complements the Gothaer Group’s portfolio. Group and cooperative insurance is a mainstay activity of
ASSTEL. This involves offering group insurance plans for all employees of a company or members of an association
at especially attractive conditions. In the case of cooperative insurance, ASSTEL coverage is marketed under a
“white label,” i.e., under the name of the cooperation partner. Direct sales to end-users under the ASSTEL name are
handled by phone, fax, through the Internet, by e-mail and through the normal mail service. In the course of the past
years, the Company has quickly worked its way up to the top of many rankings of products, services and providers.
Janitos Versicherung AG, the youngest member of the Gothaer Group, was established as an independent brand in
2005. Janitos concentrates primarily on the area of private automobile and property insurance and is active as a
broker insurer.
Gothaer Versicherungsbank VVaG
Cologne
100 %
Gothaer Finanzholding AG
Cologne
100 %
Gothaer
Allgemeine Versicherung AG
Cologne
100 %
50 %*
CG Car Garantie
Versicherungs-AG
Freiburg
Gothaer
Systems GmbH
Cologne
25.1 %
25.1 %*
ROLAND Rechtsschutz
Versicherungs-AG
Cologne
Gothaer
Lebensversicherung AG
Cologne
100 %
25 %*
Aachener
Bausparkasse AG
Aachen
Gothaer
Pensionskasse AG
Cologne
100 %
100 %
A.S.I.
Wirtschaftsberatung AG
Münster
Gothaer
Invest- und FinanzService GmbH
Cologne
100 %
100 %
Gothaer
Asset-Management AG
Cologne
Gothaer
Krankenversicherung AG
Cologne
100 %
100 %
Hamburg-KölnerVermögensverwaltungs GmbH
Cologne
ASSTEL
Lebensversicherung AG
Cologne
100 %
100 %
GKC Gothaer
Kunden-Service-Center GmbH
Cologne
ASSTEL
Sachversicherung AG
Cologne
100 %
100 %
GSC Gothaer
Schaden-Service-Center GmbH
Berlin
ASSTEL ProKunde
Versicherungskonzepte GmbH
Cologne
100 %
10
0
%
Janitos Versicherung AG
Heidelberg
Gothaer
Risk-Management GmbH
Cologne
* Total Group interest
For purposes of clarity, some Group companies
are not shown or are not shown in their entirety.
74.9 %
Revised: October 2008
Group Annual Report for 2008
in accordance with
International Financial Reporting Standards
(IFRS)
Registered office of the company
Arnoldiplatz 1
50969 Cologne/Germany
TA B L E O F CO N T E N T S
Table of contents
4
Foreword
Letter from the Chairman of the Supervisory Board
Letter from the Chief Executive Officer
8
Brand and Sales
16
Staff
22
Sustainability of Large All-line Mutual Insurance Associations
32
34
38
42
44
55
72
Report of Management
General Economic Situation
Situation of the Insurance Industry
Group Management Report
Capital Management
Segmental Performance
Risk Report
Future Perspectives
78
80
81
82
84
Consolidated Financial Statements
Consolidated Balance Sheet
Consolidated Income Statement
Statement of Changes in Equity
Cash Flow Statement
Segmental Report
148
152
153
154
157
158
160
Notes to the Consolidated Financial Statements
• Group Accounting Policies
• Principles of Consolidation
• Scope of Consolidation
• Accounting Policies
• Notes to the Consolidated Balance Sheet – Assets
• Notes to the Consolidated Balance Sheet – Equity and Liabilities
• Notes to the Consolidated Income Statement
• Corporate Governing Bodies
Representatives of Members
Supervisory Board
Management
Advisory Board
Social Policy Advisory Board
Directorships of Members of the Supervisory Board and Management
• Other Information
166
Auditors’ Report
167
Report of the Supervisory Board
169
Addresses of Major Group Companies
90
91
92
96
109
123
139
Gothaer Group Report 2008
3
4
FOREWORD
Changes Well Mastered
2008 was a year of statutory innovation that was also marked by the crisis on financial
markets. Overall, insurers had to tackle the most serious changes since the post-War
period. The Gothaer Group held its own in this extremely difficult environment, but was
unable to report the increase levels of recent financial years due to the global financial
crisis. After a number of record years and hitherto familiar rises in net profit for the
year, both the capital-investment result and the net profit for the year are now down.
Besides the need to cope with the financial crisis, special focuses in 2008 were the
further development of the Gothaer brand and an increase in transaction speed – i.e.
accelerating our internal processes with our customers in mind:
Dr. Roland Schulz
Chairman of the Supervisory Board
of the Gothaer Group
One gratifying point is the positioning of the Gothaer brand: Gothaer’s brand values,
which are regularly measured by ICON Wirtschafts- und Finanzmarktforschung GmbH,
have been evolving well. Thanks to the stories told in the advertising spots, consumers have internalized the Gothaer brand, as is shown by the advertising recall
value, which has risen by over 20 %. Also, it has been possible to significantly
increase the values for “brand likeability” and “willingness to take out insurance” –
indicators of premium growth. This is important, for it is only when potential customers have a positive perception of Gothaer that they are willing to address their
insurance, retirement-planning and asset-building queries to us for solution. In the
same way, the brand positioning of ASSTEL is of central importance for the future
development of our successful direct insurer. Also – and especially here – basic trust
in the brand will be one of the decisive success factors in future.
Stable in the Crisis as Well
The year 2008 was marked by the global financial crisis, and this of course had, and
is still having, far-reaching ramifications for insurance companies as well. The upheavals in the financial environment have also impacted the Gothaer Group’s business result. The Group was able to continue along its growth path, but had to absorb
losses in its capital-investment result and in the net profit for the year.
Dr. Werner Görg
Chief Executive Officer of the
Gothaer Group
With gross premiums written up 2.4% to over four billion euros compared with the
previous year, the Gothaer Group is again outperforming the market. This good result
was obtained specifically because we are backing comprehensive and near-real time
information in our selling efforts. In 2008, we had to cope with a whole host of
issues, like amendments to Germany’s Insurance Contract Law (VVG), the Insurance
Mediation Directive, or the Ordinance on the Duty to Provide Information. Any one of
these challenges could have impaired the sale of insurance products. Gratifyingly,
exactly the opposite has happened in the Gothaer Group: Gothaer has posted the
best selling result by far for years. The distribution channels “captive-agency organization” and “broker” were significantly revitalized, and the targets substantially
exceeded in all segments.
For the first time in five years, the consolidated profit in the 2008 financial year dipped
due to the turmoil on the capital markets: in the wake of a deteriorating investment
income, the consolidated profit fell to just under € 62 million, so that it is half as high
as in the previous year. Relative to competitors and in view of the worldwide financial
crisis, the Management is very satisfied with the course of business and, specifically,
with the underwriting results. We have dispensed entirely with accounting relief for
shares. The surplus bonuses paid by Gothaer Lebensversicherung AG and Asstel
Lebensversicherung AG for 2009, too, were maintained at the good level of previous
years in the face of market trend.
FOREWORD
5
In order to increase the transaction speed further and, hence, boost customer benefit as well, the build-up of efficient platform-oriented structures remains a central focus of our work. Successful implementation of Gothaer’s Claims Service Center
has been followed by other uniform platforms for Group-wide deployment that are jointly used by ASSTEL and Gothaer. The
working off of business transactions in the property and casualty area, for instance, has been restructured. Private-client
business is being systematically separated from corporate-client business. In the private-client segments, standardized
transactions will in future be differentiated from rather more complex transactions, with the standardized transactions being
processed Group-wide by well-trained and experienced staff in the Gothaer Customer-Service Centre. The rather more complex
transactions, by contrast, will go on being tackled by specialists in the entire private-client area, but also in the corporateclient area. These platforms are also increasingly being used for the Group’s personal insurers in order, step by step, to implement an professionalized work flow within the Gothaer Group.
In the year 2008, the Supervisory Board again discussed a wealth of strategic issues and challenges in depth with Management
on a basis of confidence. It is in this collaboration, but also in the critical, yet constructive support of Management’s work that
we find one of the essential success factors.
Especially in difficult times, what matters is dependability, solidity and the experience of partnership. The Gothaer Group lives
these values and, in the 2008 financial year, proved that constant adjustment to a changing market conditions pays off, as is
shown by growth rates that outperformed the market and by a satisfactory capital-investment result even in an extremely
difficult economic environment. What matters in 2009 is that we seize opportunities for growth and profitability and go on
mastering the crisis so successfully.
The Supervisory Board would like to take this opportunity to thank Management and staff for their committed and professional
work.
Sincerely yours,
Dr Roland Schulz
Gothaer Allgemeine Versicherung AG, the biggest property/casualty insurer in the Group, occupies a very good market position:
in nearly all segments, the company occupies slots among the top 10 in the sector and is growing more strongly – as measured
by gross premiums written – than the other property/casualty insurers on the German insurance market.
Sooner than many competitors, Gothaer Lebensversicherung AG announced in November 2008 that the surpluses for 2009
would remain at the high 2008 level and, hence, be well above the market average. Even in a difficult capital-market situation,
our customers can count on Gothaer dependability. The good return is based on the company’s high substance and earning
power, and on sound capital investments. On the product side, too, the life insurer points the way ahead with innovations:
Gothaer Lebensversicherung AG is the only insurer to have had a unit-linked supplementary occupational disability in combination with the “Rürup” pension in its portfolio since January 2009.
Gothaer Krankenversicherung AG is still growing under its own steam. The portfolio of insured persons goes on evolving positively – despite many political changes that make new business harder. Crucially contributing to this result is the comprehensive
cover MediVita introduced in April 2008. To the delight of our customers, premium adjustments have been very moderate for
five years, and are well below the market rates of increase.
The ASSTEL group, the direct insurer in the Group, focuses on Internet-capable insurance cover and shines in rankings with
top-placed products and the company’s financial strength: ASSTEL Lebensversicherung AG, for instance, is the only direct
insurer to have received five stars from the corporate rating company Morgen & Morgen since 2002 and, since 2003, the best
grade “mmm” from map-report for outstanding performance across many years. The proof for the soundness of the company:
ASSTEL Lebensversicherung AG is maintaining the surpluses for 2009 at the high 2008 level.
The Gothaer Group has so far been coping satisfactorily with the crisis on the financial markets and the concomitant implications for the real economy. We will continue all-out with our strategy of value-oriented steering for the individual companies and
the Group on the basis of actuarial risk models, and press ahead with the associated risk-adjusted capital investment policy.
The Management would like to thank all employees for their commitment. It is especially in difficult economic times that the
steady and committed work of all staff is our most important resource. In the name of the entire Management, I thank our
marketing partners, customers, corporate governing bodies and friends for their support and for their trust in Gothaer.
Sincerely yours,
Dr Werner Görg
Together we can make it.
8
B R A N D A N D SA L E S
New position is paying off
In early 2007, Gothaer started on the step-by-step implementation of its repositioning drive
throughout the company on behalf of “solution-driven orientation”. To this end, “Marketing”,
a project cutting across all segments and headed by the Marketing department, was called
into being. The project’s two main goals are to boost new business with an improved brand
image and to strengthen customer loyalty and cross-selling thanks to greater customer
satisfaction. Both are central factors if Gothaer is to fulfil its corporate mission: “Profitable
Growth”.
The new Gothaer brand promise
The repositioning effort spells out the Gothaer brand promise to its clients, marketing partners and staff, and indicates the content for which Gothaer intends to stand in future. Specifically, Gothaer is promising to make insurance and financial planning – often perceived to be
a complicated and strenuous exercise – convenient and simple for clients. This is to be
achieved by adopting a special solution-driven approach designed to bring clients cognitive,
emotional and administrative relief. In implementing the scheme, what matters is that we
make the promise live and keep the promise by paying fair benefits.
How the promise is kept
Implementation of the repositioning promise is organized in such a way that each point of
contact between Gothaer and its clients and marketing partners is addressed by a separate
part-project. The object of each part-project is to describe the ideal customer experience for
the point of contact concerned in the repositioning effort, and to create the conditions for
putting this into practice and giving the client the benefit. In this approach, the focus is on
five points of contact with Gothaer:
• external communications/Marketing
• products
• advice and service from Sales
• service and communications at operational/adjustment/settlement levels
• staff/corporate culture
The part-projects are headed by the various technical units in charge. In the overall project,
this ensures the desired cross-unit networking and permanent company-wide transparency.
In 2008, the part-projects reached important milestones and were having a measurable
impact. Overall, a contribution was already being made to over-achieving the 2008 production targets.
External communications/marketing
The most important milestones in our external communications were the new advertising
campaigns on TV, in the print media, online and at the point of sale. The focus here was on
three particularly relevant embodiments of Gothaer performance – the products VarioRent
and Heim&Haus as well as Gothaer’s concept-based advice (Konzeptberatung). The repositioning was also reflected in a new tradefair presentation, a complete Gothaer agency design
for the independent field force and new image brochures.
Gothaer’s new tradefair stand at the DKM
Gothaer’s new agency design for advice that’s fun
With communication of the new position, the brand values were evolving strongly in 2007
already, and this policy was continued in 2008, enabling Gothaer to place itself for the first
time among the strongest insurance brands in Germany.
Source: ICON Markentracking, Values in the target group
9
10
Products
To embody the new position in Gothaer’s products as well, a detailed requirement catalogue
has been developed for new products. The key requirements to be met by new Gothaer
products are:
• stringent product design to reflect customer and marketing needs
• flexibility by having options for shaping detail and responding to customer needs
• relief for customers by offering more comprehensive services and assistance
• comprehensibility and clarity for customers
For the implementation phase, product development processes have been revised and
product management given in-depth training.
One product that meets this need to reflect our repositioning in an exemplary fashion is
MediVita, the full-coverage health rate which, thanks to its modular principle and optional
extras, can be adapted to accommodate changing customer requirements at any time. MediVita was a huge success on the market from the word go.
Advice and service from Sales
Gothaer’s repositioning promises to turn insurance and financial planning – a stressful chore
for many customers – into a simple and pleasant experience. This is where Sales has a key
role to play, for only personal advice can explain abstract, complex facts in a way that makes
decision-taking easy for clients. Also, working together with Gothaer should be made simpler
and more agreeable for Sales staff, too. This has involved taking the following important
measures:
• Gothaer concept-based advice (Konzeptberatung), which offers
clients seamless and overlap-free cover in all areas of life, has
been further improved and driven forward in the captive-agency
organization. In 2008 already, all of 56,000 concept-based advice
sessions were held and earned an enthusiastic client response.
• For advice and client contacts, service standards have been
formulated and induction programmes mounted for new independent field-force representatives.
Gothaer Konzeptberatung: high acceptance
in Sales, and enthusiastic clients
• To offer needs-driven, overarching solutions, sales-promotion
events feature products and services that cut across insurance
classes.
Service and communications at operational/adjustment/settlement levels
In the operative service areas, measures in the private-client segment are being taken in a
separate project: “Quality Offensive”. Here, great strides have been made with the introduction and monitoring of high service standards.
In the corporate-client area, the various points of contact with customers and marketing
partners were first analysed and then measures defined for each point of contact to implement the new position. The aim is to keep in touch with customers on a regular basis, e.g. in
the form of annual discussions, in order to re-define their optimal insurance package. Furthermore, numerous measures have been taken to qualify our marketing partners and optimize
internal work processes, so that our clients can be offered even faster solutions in line with
their needs.
Staff/corporate culture
The most important factor in our repositioning effort is that it is being implemented by each
and every member of the company’s staff. For this, the “Corporate Behaviour” project,
headed by HR, was set up. Within the scope of this project, many measures were put in place
to boost the knowledge, acceptance and active cooperation of as many employees as possible in the repositioning programme. Specifically, these activities took place in the following
areas:
• Communications and sensitization: as basis, a new corporate image was created and
implemented via staff events and departmental workshops and via all internal communication media.
• Remuneration and incentives: customer satisfaction was successfully established as a
separate goal in the Group bonus for executives, and a separate reward programme
(GoMax) introduced for employees.
• Selection process, recruitment, qualification: personnel instruments have been analysed
in the light of the new content in the image and repositioning effort, and adjusted accordingly.
The measures have helped significantly enhance employee identification with Gothaer as a
company. In the 2008 staff survey, the relevant values have clearly improved since 2005.
I identify with Gothaer’s
goals.
22
I am proud to work for
Gothaer.
24
I would recommend
Gothaer as employer.
25
I would recommend
Gothaer as insurer.
■ absolutely true
■ mainly true
19
■ partly true
50
39
27
46
48
■ rarely true
21
■ never true
214
6 23
21
4 22
26
33
쏡 쏡 쏡 쏡
Staff survey 2008: Identification with Gothaer
11
10
11
8
■ I can’t judge (yet)
The efforts to anchor the new position in the minds of all staff and ensure daily implementation of its principles will remain an important activity in the coming years. The 2008 staff survey shows that two-thirds of the staff are very familiar by now with the repositioning effort,
and just under one half is implementing it in concrete form. So there is still potential to reap
the full benefits of the new position.
11
12
Gothaer 2008 – Advice that’s fun
In 2008, Sales had to tackle a whole host of difficult issues: amendments to Germany’s
Insurance Contract Law (VVG), the Insurance Mediation Directive, the Ordinance on the Duty
to Provide Information, Germany’s health reform, the flat-rate tax and, not least, the turmoil
on financial markets.
Any one of these challenges could have seriously affected the sale of insurance products.
Gothaer’s Sales, however, went into the year 2008 well equipped.
The final quarter of 2007 had already seen a range of training events being held on changes in
the advisory process.
The very beginning of the year 2008 saw a qualification wave for personal benefit plans. The
aim of this measure was to dovetail the implementation of the VVG reform in Sales with the
sales-promotion measures in the area of personal-benefit schemes and Gothaer’s conceptbased advice.
This was an outstanding success in 2008, and Gothaer posted the best selling result by far in
recent years.
The distribution channels “captive-agency organization” and “broker” were significantly
revitalized, and the self-set targets substantially exceeded in all sub-segments.
Gothaer sends multimedia VVG info package to marketing partners
At the start of the year, Germany’s new Insurance Contract Law (VVG) came into force, and, on
1 July, the regulations on insurance contract information (VVG-InfoV).
To support our marketing partners in implementing this legislation, Gothaer assisted the
captive-agent organization and the broker distribution channel by producing specially tailored
VVG information packages that contain a comprehensive overview of all important new
features.
For both distribution channels, Gothaer produced an exclusive CD-ROM with film and practicerelevant bonus material.
The response to the information package as a whole was positive throughout. This shows that
the need for information on the changes to the law was considerable and that we were able to
give our marketing partners some useful assistance with this compilation.
Focus on customer needs
Acting along these lines, Gothaer has gained an even stronger
“solution-driven” position. In “Gothaer concept-based advice –
Solutions that fit”, it is not the product that is to the fore, but the
customer. The customer’s wishes and needs are the starting point
for holistic advice – a yardstick for the question of which solutions
will match which needs.
With this holistic advice concept, we are excellently positioned in
the captive-agent organization. It supports the independent field
force (SAD) in structured consultation on the subjects of healthcare cover, personal-benefit plans and the securing of property
and assets, while at the same time meeting the statutory requirements by providing for detailed advice documentation in conjunction with a consultation record.
We also adapted our campaigns to this approach. The focuses
were on personal-benefit plans and the securing of property and
assets.
Service for our customers: VERY GOOD
For the second time, Gothaer Versicherungsbank VVaG as distribution channel now underwent an independent check of its service quality carried out by ServiceRating GmbH. The
current verdict, as in the initial rating, was “very good”, with four crowns on the test seal.
The aim of the rating: to make customer service transparent for customers
and measurable against stringent external guidelines. The assessment is
in three parts, including the service efficacy of the independent field force
(SAD) for which the company again received a “very good”. In the second
part, the service management of the SAD, Gothaer was likewise awarded a
“very good”. ServiceRating GmbH praised Gothaer’s aim of backing a
uniform high advice level throughout Germany using the comprehensive
advice software.
Gothaer positioned itself well on the market in 2008 with strong brands,
successful selling and attractive products.
After a looking back with some satisfaction, what matters now is that we
continue to post successful business even in the more difficult underlying
conditions of the year 2009. We must, after all, go on living up to the trust
our customers place in us.
13
Family
16
S TA F F
The 2008 Gothaer staff survey
reflects significant improvements
The 2008 staff survey shows gratifying
improvements in nearly all segments since
2005. Implementation in identified fields
of action has commenced.
In autumn 2008, Gothaer held its third staff survey. Participation rose from 62.9% (2005) to
65.8 % (2008) – a satisfactory development.
The results offer an impressive insight into the opinions, assessments and wishes of Gothaer
employees about essential, mission-critical subjects, like executive conduct, individual
motivation and commitment, and target agreements. In wide areas, definite improvements in
values were recorded relative to the 2005 survey. In some fields of action, it was possible to
maintain an already-high level, e.g. in “leadership and management” or “work satisfaction”.
Especially remarkable values were noted for recommending Gothaer – as employer and
product provider. Here, we have significant improvements throughout the Group. Whereas in
2005, staff were still wishing more personal development options, they were expressing
satisfaction with their advancement and with further-training programs in 2008. Higher
identification with Gothaer and its goals, and strong growth in confidence in the leadership
and management of Gothaer show that good use was made of the results of the 2005 staff
survey to identify improvement potentials and work on them. This is also the brief for the two
fields of action in which staff wish changes today, viz. smoother cooperation across departmental boundaries and reporting lines that will enable staff to do their own job, and work
sequences that generate optimal relief for customers.
The executives of all organizational units will analyse the results together with their staff and
work out binding measures.
Recruitment activities
Personnel recruitment
In 2008, too, recruitment – making efficient use of all recruitment channels – was successful
in both qualitative and quantitative terms. Positive market feedback, backed by Gothaer’s
new brand identity and the resulting increase in name recognition, as well as professional
and inventive implementation of the selection process for qualified staff and executives,
have demonstrated yet again that the Group has taken a future-capable route with its jobapplication procedures. The latter are systematically geared to Gothaer’s competence model,
which forms the basis for recruitment, annual performance and potentials assessment, all the
way to internal personnel development.
There was a stronger focus in 2008 on internal applicants, whose role is being further boosted
by mounting integrated programs designed to advance junior staff and talent. The declared
aim is to exhaust all options for internal staffing and talent promotion before considering any
external recruitment. This ties invaluable knowledge and important experience to Gothaer.
S TA F F
Personnel marketing
In 2008, Gothaer’s response to demographic developments included a systematic strengthening of the employer brand.
The measures focused, first, on internal performers who can be bound to the company in this
way for the long haul; second, on the external core target groups “university graduates”,
“high potentials with professional experience” and “school leavers” who are to be won over
for training at Gothaer. Attractive tasks, high levels of personal responsibility from the outset,
professional qualification options and interesting advancement programs form the basis for
this approach. Gothaer is going to market with the core message: Gothaer offers motivated
staff a range of fulfilling, responsible tasks from the very first day – and, if performance is
right, a fast-track career.
Components in the marketing mix include media campaigns targeting “apprentices” and
“university graduates”, e.g., editorial contributions, pinpointed running of image and job ads,
the distribution of advertising and information material at schools and in events at training
venues, as well as a tradefair presence. The ongoing high number of spontaneous applications for the Student Program, in particular, confirms the attractiveness of the advertising
messages.
Personnel and management development
Entry and development programs
At year’s end 2008, a total of 166 places were filled at Gothaer for training in the area of insurance and finance, so that the high total is unchanged despite various structural changes.
In Cologne, Gothaer is increasingly training students according to an integrated course of studies, the “Cologne Model”. Thanks to the demand and the huge success of previous training
courses, ten training places for integrated students were offered in 2008, all of them being filled.
The development programs “Management Start-up” and “Student Program” address students and university graduates. The “Student Program” complements the academic courses
with practical experience. This gives students a positive impression of the company and its
culture even before they complete their studies. The certification of Gothaer as a “Fair Company” proves that students receive sound training and fair pay while with Gothaer.
In the “Management Start-up Program” university graduates are given two-year customized
training within “job families”, supplemented by joint development measures. The first relay
of the “Management Start-up Program” for university graduates is nearing its end with the
completion of a real project at the start of 2009. Most of the junior staff originally taken on
beyond the planned personnel needs have now already
switched to regular established posts to assume their first
permanent functions there – impressive evidence of the
positive response of the technical departments. Moreover, the first management start-up candidates have
qualified for inclusion in the advanced “Management
Program”. In 2008 already, the second relay’s 14 participants were getting started on the in-depth and varied
entry-level process at Gothaer. As in the first relay, the
hiring focus was again on the “job family” Sales.
The advancement programs already launched in 2002 for
middle and upper management were continued. The
“Management Program” addresses junior managerial
personnel with professional experience. Altogether, there
were 16 employees in this program in 2008. From this
group, candidates are regularly selected to fill vacant
managerial positions, or managers are supported in
performing their first leading and management function.
Access and career paths at Gothaer
17
18
S TA F F
Managerial personnel on the second structural level are targeted by the “Senior Management
Program”. Individual qualification modules for value-, employee- and market-driven management are the core elements in this program.
The “Executive Program” takes up special strategic subjects at the first structural level.
Performance and potential evaluation (PPE)
After the 2008 launch of PPE in our brokers’ sales channel and in branch establishments as
well, executives and employees now have a Group-wide central instrument for feedback on
performance, on identifying development fields and on agreeing promotion measures. PPE is
an important tool for supporting managerial staff in their roles as personnel developers in
their various areas and for further developing a performance culture at Gothaer.
Qualification management further professionalized
Life-long staff-qualification processes continue to rank high at Gothaer. Despite the need to
cut costs in the Group, our willingness to invest in qualifying our employees is unbroken.
In 2008, Gothaer received the “InnoWard” prize, the training award of the German Insurance
Sector, for the integrated training system launched in 2007 (3rd prize in the category Personnel development/Qualification). The new, integrated training system compiles all education
information and processes in the intranet, thus bringing personal further training more
closely to employees’ day-to-day work. The provision of personal, target group-specific
qualification cockpits has enormously improved transparency both in the Group-wide training
options and in their take-up. Gothaer’s training report, which appeared for the third time
already in 2008, builds up on this transparency and is being systematically further developed
to become a steering tool for Group-wide qualification drives.
Women in management: Gothaer on the road to a family-friendly company
The share of women at Gothaer – just under 50% – is already very high. Within the context of
demographic change, the systematic tapping of the “Female” target group – especially in
managerial positions – is advancing to become a mission-critical success factor. With this in
mind, the project “Women in management” is pursuing the goal of achieving a perceptible
increase in the share of women at all structural levels by 2016, compared with 2005.
Activities to date have included detailed analyses and the development of conceptual bases.
Since the work-life balance is a crucial prerequisite for enabling qualified and committed
female employees to rise to the top, the focus in 2008 was on measures designed to create a
family-friendly company. For instance, Gothaer employees were given easier access to scarce
nursery places for under three-year-olds, thanks to collaboration with the operator of a childminding facility. The so-called “Elterntreff” (meeting place for parents) allows Gothaer staff
during their parental leave to maintain contacts with like-minded colleagues and to engage in
exchanges about subjects round and about children, the family and, of course, developments
at Gothaer. To signal its commitment on behalf of families to the outside world as well,
Gothaer in 2008 joined the corporate network “Erfolgsfaktor Familie” (Success Factor Family),
a joint initiative of the Federal Ministry for Family Affairs and the Association of German
Chambers of Industry and Commerce, and signed the “Joint Declaration: Success Factor
Family”.
S TA F F
19
GoFit: Exemplary commitment in company health management
Another building block in personnel management is company
health promotion for all generations. Activities under GoFit promote long-term employee productivity, enhance work satisfaction
and reduce periods of sick leave. They are crucial elements in our
corporate culture and central starting points for tackling demography-related challenges. What is more, Gothaer is scoring success
in actively inputting this program into the communication activities of the Gothaer employer brand.
In 2008, the company was awarded the “Deutscher Unternehmenspreis Gesundheit 2008” (German Corporate Prize for Health 2008)
in recognition of its outstanding commitment to company health
management by the EU Commission in collaboration with Germany’s Federal Association of Company Health Insurance Funds
(BKK). The company is thus moving in the best circles of noted
corporations like Daimler AG, BASF SE, METRO Group, Deutsche
Post World Net, SAP AG and Bertelsmann AG. Staff now have
access to a comprehensive range of preventive services that is also
being widely used. With this prize under its belt, Gothaer,
via its subsidiary MediExpert, intends to increase its presence on
the market as a competent provider of company health promotion.
Eine Kampagne
des Europäischen Netzwerks
zur betrieblichen Gesundheitsförderung
(ENWHP)
Deutscher
Unternehmenspreis Gesundheit 2008
Gothaer Versicherungen
werden ausgezeichnet für herausragendes
Engagement im betrieblichen Gesundheitsmanagement
Köln, den 2. Dezember 2008
Dr. Hildegard Demmer
Stellvertreterin des Vorstandes des
BKK Bundesverbandes
Horst Kloppenburg
Europäische
Kommission
German Corporate Prize for Health 2008
Further central HR projects
In the course of focussing on optimal servicing of SME customers and optimizing the structures in the operational and casualty area, Gothaer Allgemeine and its works councils, after
detailed negotiations, have agreed on a reconciliation of interests and a social plan for the
GoMit project. Socially compatible solutions at a high level have been drawn up for our staff.
Employees willing and able to follow the organizational changes were offered new workplaces, some at a new location, while drawing on mobility benefits. Any staff unable to accept
a change of workplace are given support, including solutions via a transfer agency and transfer company.
HR supported the major project in the Life business line involving the drafting of a futurecapable business model (STEP) in 2008 as well, with implementation of a new organizational
structure in “Life: Operations and Benefits” being successfully backed by personnel management. For many employees, the new organizational structure has meant performing new tasks
in places and with changed procedures. The qualification and change processes required in
this connection were likewise organized and steered by HR.
In 2008, Gothaer created the preconditions for the successful roll-out, as per 1 January 2009,
of a new variable remuneration system (GoMax) for employees subject to agreed wage scales.
At the core of the system are individual target agreements between staff member and executive and a bonus as a reward for performance. In the course of 2008, the company and the
works councils adopted the necessary plant agreement. On this basis, just under 3,000 employees and some 300 executives received comprehensive information and qualifications.
We thank all employees and managerial staff for their commitment and performance in 2008.
Campaign
22
TO P I C A L S U B J EC T
Sustainability of large all-line mutual insurance associations
There are fundamental differences between insurance companies and the rest of industry
when it comes to assessing and determining the sustainability of an enterprise. This is
because enterprises across nearly every sector of the economy are “pre-providers”. Products
and services are delivered first and invoiced afterwards. This means that in all these enterprises, the situational sale of added value for the customer is the first priority and the financial consideration is received at a later date. This “pre-provider” status is crucially important
for the question of sustainability because – exceptions aside – the sustainability of such
enterprises depends almost entirely on their liquidity. Any business that renders a costintensive service in advance, possibly on a considerable scale, and then fails to collect
payment for it is massively at risk in terms of future viability.
In contrast to this, the insurance industry is distinguished by the fact that it initially provides
only a promise of benefit and receives money for that intangible promise of benefit – sometimes a substantial sum of money – at the outset. Any – possible – payment obligation on the
part of the insurer arises only after a time lag, which in some cases exceeds 30 years. This
status as the only “post-provider” in a national economy, casts the question of sustainability
in a totally different light. The criterion of permanently available liquidity that otherwise has a
crucial bearing on sustainability plays practically no role at all in the case of an insurance
company. Unlike in the rest of industry, however, undesirable developments are a matter of
fundamental, even existential significance. Against this backdrop, the balance sheet performance of insurance companies becomes supremely important. At the same time, financial
accounting experience has shown that problematical situations for insurers do not occur as
ad hoc events; they are successively, exponentially worsening developments reflected in a
company’s or group of companies’ balance sheet performance. What may start out as inconspicuous mismanagement or misallocation becomes increasingly significant and develops its
full, possibly existence-threatening impact further in the future. In view of this circumstance,
it makes sense to compare the balance sheet histories of insurance joint stock companies
(AGs), mutual insurance associations (VVaGs) and public insurance enterprises (PIEs). With
the information available, it is possible to extend such a comparison back almost to the end
of the Second World War. To permit a clearer picture of developments emerging now, the
observation period here has been confined to 2000–2007. Extending it to include the years
1950 to 1999 would make no difference to the findings.
However, marked differences exist in the economic gearing of the different legal forms of
insurance enterprise. Insurance joint stock companies in general and listed insurance joint
stock companies in particular have the possibility of recognizing in financial statements any
external financed acquisitions or investments made to expand or stabilize their business
activities. Consequently, share price management through a sustained development of net
worth as well as constant – ideally increasing – dividend payouts are matters of fundamental
importance. This is a way of ensuring a sustainably positive share price, which is a primary
requirement for external financing in two respects. Experience has shown that the only
companies able to realize cash capital increases in the market without problems are companies that can show they have a long and positive history in terms of net worth and dividends.
Apart from this, acquisition of own shares as a future “acquisition currency” is only a feasible
and appropriate way of paying for acquisitions if the performance of the company’s own share
– measured on the basis of the criteria described above – is satisfactory in the long-term for
potential future shareholders.
In contrast to this, external financing and the capital market management it necessarily
entails play at most a secondary role in the case of mutual insurance associations. Because
external financing – with the exception of participation certificates and subordinate loans
within the limits defined in section 53 c of the German Insurance Supervision Act (VAG) –
is insignificant in mutual insurance associations, internal financing is the financing medium
of paramount importance. This means that it is basically up to mutual insurance associations
themselves to generate the liquid and solvency funds needed for all investments, acquisitions, etc..
23
This different targeting of external sources of financing on the part of insurance joint stock
companies and the internal financing performed by mutual insurance associations is clearly
reflected in balance sheet development, as we shall see.
In the following comparison, the mutual insurance association cake shows all the insurancespecific activities and premium volumes that are bundled either in a mutual insurance association itself or in joint stock companies that are majority-owned by mutual insurance associations.
Fig. 1: Property Line Mix (Status 2007)
Joint stock company
Legal Expenses;
8%
Marine; 2%
Mutual
Marine; 3 %
Remainder; 19%
Comprehensive Homeowners; 5 %
Comprehensive Householders; 4 %
Legal Expenses;
4%
Remainder; 9%
Comprehensive Homeowners; 4 %
Accident; 14 %
Fire; 2%
Fire; 3 %
Liability; 13 %
Automotive; 3 2%
Public insurance enterprises
Automotive;
4 9%
Legal Expenses;
3%
Remainder; 13 %
Marine;
0%
Accident; 5 %
Liability;
11 %
Comprehensive Homeowners; 23%
Fire; 9%
Accident; 8%
Automotive; 31 %
The striking thing about the property class mix is that automotive insurance at mutual
insurance associations accounts for a share that is significantly above the average at joint
stock companies and public insurance enterprises. This is essentially due to the fact that the
focus of major mutual insurance associations activities tends to be in the area of automotive
insurance.
Liability;
15 %
24
Fig 2: Growth of Gross Earned Premiums (Total Business)
1 0 .0 %
7. 1 %
8 .0 %
4 .0 %
5. 9 %
5. 0 %
6 .0 %
Life Insurance:
4. 2 %
5. 3 %
4. 9 %
4. 2 %
2. 2 %
3. 9 %
3. 8 %
2 .0 %
1. 9 %
2. 1 %
2 00 1
20 02
0. 7 %
1. 0 %
2. 9 %
0. 4 %
0 .0 %
20 00
200 3
2 004
20 05
2 006
20 07
Mutual
Joint stock company
1 0 .0 %
7. 6 %
8 .0 %
6 .0 %
Health Insurance:
7. 1 %
6. 4 %
4. 9 %
6. 4 %
4. 9 %
5. 1 %
6. 9 %
6. 4 %
3. 9 %
5. 7 %
4 .0 %
4. 8 %
4. 0 %
3. 6 %
2 .0 %
3. 1 %
3. 1 %
0 .0 %
20 00
2 00 1
20 02
200 3
2 004
200 5
2 006
Mutual
Joint stock company
8 .0 %
6. 7 %
20 07
5. 9 %
5. 1 %
6 .0 %
4. 1 %
4 .0 %
2. 5 %
4. 1 %
Property Insurance:
2 .0 %
1. 5 %
3. 2 %
0. 6 %
1. 7 %
1. 6 %
- 0. 4 %
0. 0 %
0. 3 %
0. 8 %
0. 0 %
- 0. 7 %
-2. 0 %
20 00
200 1
20 02
2 00 3
20 04
2 005
200 6
Joint stock company
Fig. 3: Growth of Gross Earned Premiums and Increase in Persons Insured in Health
(얒 2000–2007)
8.0 %
6.7%
7.0 %
6.0 %
6 .2 %
5.4 %
5 .4 %
5.1%
4 .8 %
5.0 %
4.0 %
3.0 %
2 .3 %
2.0 %
1.0 %
0 .9 %
1.0 %
0.0 %
Total premiums
Comprehensive insurance premiums
Joint stock company
Mutual
Policies in force in
comprehensive insurance
PIE
20 07
Mutual
25
The speed of growth within the three insurance classes is not substantially different between
joint stock companies and mutual insurance associations. Only in the area of property
insurance was there a significant surge of growth at mutual insurance associations in 2003
and 2004 – a surge that has now fallen back in line with the growth rates at joint stock
companies. One remarkable development is in private health insurance premium volumes,
specifically with regard to policies in force in comprehensive insurance.
In terms of total health insurance premiums, there is little difference in speed of growth.
The same applies to comprehensive insurance premiums. A remarkable difference, however,
is seen in the number of policies in force in comprehensive insurance. Mutual insurance
associations are growing significantly faster here, especially in comparison to joint stock
companies. The fact that this is not reflected in premiums can be seen as evidence that
mutual insurance associations are much slower to make premium adjustments than joint
stock companies.
Comparison of claim and benefit ratios in health insurance shows no difference between the
three legal forms.
Fig. 4: Claim and Benefit Ratio/Gross Loss Ratio after Run-off
7 0 .0 %
6 7 .7 %
6 8 .4 %
6 7 .6 %
6 4 .9 %
Health Insurance:
6 5 .0 %
6 7 .6 %
6 6 .0 %
6 4 .4 %
6 6 .4 %
6 3 .5 %
6 5 .2 %
6 4 .1 %
6 4 .6 %
6 4 .5 %
6 3 .0 %
6 2 .4 %
6 2 .2 %
6 0 .0 %
2 00 0
20 01
20 02
20 03
2 00 4
2 00 5
2 00 6
Joint stock company
2 00 7
Mutual
8 8 .0 %
8 0 .0 %
7 6 .7 %
7 6 .6 %
7 7 .0 %
7 7 .1 %
Property Insurance:
7 6 .5 %
7 4 .7 %
7 0 .9 %
6 9 .1 %
6 8 .7 %
7 0 .3 %
7 3 .5 %
6 6 .0 %
6 4 .7 %
6 3 .5 %
6 5 .1 %
6 2 .5 %
6 1 .5 %
5 5 .0 %
2 00 0
2 00 1
2 00 2
20 03
20 04
20 05
20 06
Joint stock company
In the area of property insurance, however, loss ratios are significantly higher than those of
insurance joint stock companies. This, in turn, is due to the distinctly different insurance line
mix (Fig. 1). The loss ratio in automotive insurance is traditionally up to 10 % higher than in the
other property and casualty classes. So, in view of mutual insurance associations’ increased
gearing to automotive business, it is only logical that they should have a higher loss ratio. The
negative deflections in 2001 and 2002 resulted from two insurance joint stock companies
being hit hard by the terrorist attack on the World Trade Center. The 2002 figures were
affected by the Elbe/Mulde flooding, which had a particularly dire impact on the underwriting
result of one major insurance joint stock company. The at least outwardly parallel development of mutual insurance associations and insurance joint stock companies in the area of
property and casualty classes since 2003 is largely due to a successive reduction of the
underwriting reserving ratio. The development seen here is one which, starting in 2004, has
2 00 7
Mutual
26
not been observed in this form since the end of the Second World War. While the reserving
ratio at mutual insurance associations rose between 2005 and 2007 from 132 % to 154% of
net premium volume, the reserving ratio at insurance joint stock companies fell over the same
period from 123 % to 116 %. This was a special development not seen in the observation
period since 1950. As at least the major insurance joint stock companies prepare their
consolidated financial statements on the basis of IFRS rules, it can be assumed that this is
evidence of commercial accounting aligning with best estimate reserving based on IFRS.
Because run-off gains realized in the wake of the release of reserves figure in the equation for
underwriting profit (Fig. 7), this successive reduction of underwriting reserves naturally has an
impact on underwriting performance.
Fig. 5: Loss Reserve (Net of Reinsurance) as % of Premiums Written (Net of Reinsurance)
170 %
154 %
1 44%
150 %
1 28%
1 28%
1 16%
1 16%
1 18%
2 000
2 001
2 002
1 25%
130 %
1 32%
1 27%
1 25%
1 23%
110 %
1 17%
1 16%
116 %
1 13%
90 %
70 %
50 %
2 003
2 004
200 5
200 6
200 7
Mutual
Joint stock company
Fig. 6: Gross Operating Cost Ratio as % of Gross Earned Premiums
35 .0 %
(얒 2000–2007)
28.9 %
30 .0 %
26.3 %
25 .0 %
21.6 %
20 .0 %
15.3 %
15.9 %
13. 7 %
15 .0 %
10.5 %
10.8 %
11.1 %
10 .0 %
5 .0 %
Life Insurance
Health Insurance
Joint stock company
Mutual
Property Insurance
PIE
The development of operating costs in the three classes of insurance corresponds to this.
Particularly remarkable here too is the distinctly different development of costs in the area of
property and casualty insurance. As in the case of the significantly differing loss ratios, the
explanation for this again lies in the different class mix in the area of property and casualty
insurance. Because automotive insurance traditionally ranks among the property and casualty
insurance branches with the lowest commissions, the operating cost ratio of mutual insurance
associations is significantly lower than that of the other legal forms.
The previous finding of largely uniform development of the different legal forms is also confirmed by a look at underwriting profit in the different insurance lines.
Fig. 7: Underwriting Profit (Net of Reinsurance) as % of Earned Premiums (gross)
6 .0 %
5 .2 %
4 .8 %
5 .0 %
4 .2 %
4 .1 %
3 .8 %
Life Insurance:
4 .0 %
3 .7 %
5 .0 %
3 .3 %
4 .0 %
4 .0 %
3 .0 %
4 .0 %
3 .9 %
3 .5 %
3 .1 %
2 .0 %
2 .4 %
2 .0 %
1 .0 %
0 .0 %
20 00
2001
2 002
200 3
200 4
2 005
20 06
Mutual
Joint stock company
6 .0 %
Health Insurance:
5 .0 %
4 .7 %
4 .6 %
5 .0 %
4 .1 %
4 .1 %
2 .9 %
2 .9 %
2007
4 .6 %
4 .0 %
2 .6 %
3 .0 %
1 .8 %
2 .0 %
2 .8 %
2 .7 %
2 .4 %
2 .3 %
2 .0 %
1 .0 %
1 .5 %
0 .0 %
20 00
2001
200 2
20 03
20 04
2 005
2006
Mutual
Joint stock company
6 .0 %
4 .2 %
200 7
4 .5 %
4 .6 %
4 .3 %
3 .4 %
4 .0 %
1 .8 %
Property Insurance:
1 .7 %
5 .3 %
4 .3 %
3 .4 %
2 .0 %
2 .0 %
-1 . 4 %
1 .8 %
0 .0 %
2000
2001
- 3 .5 %
-3 .4 %
200 2
2003
2004
2005
200 6
2007
-2 .0 %
-4 .0 %
-6 .0 %
-4 .7 %
Joint stock company
Mutual
While development has certainly run parallel in both life insurance and the property and
casualty classes since 2003, the figures in health insurance and in property insurance up to
2003 show a striking difference. The difference in profits realized in the area of property
insurance in the years 2000 to 2002 has been explained above. The sharply differing trend of
development in the area of health insurance is explained partly by the different treatment of
assets in comprehensive insurance indicated above in Fig. 3. If mutual insurance associations
use more of their gross profit to limit premium adjustments, this impacts on premium rates
for comprehensive insurance with direct benefit for the consumer. Accordingly, underwriting
performance deteriorates at the same time.
27
28
Fig. 8: Appropriation of Gross Pre-tax Profit in Property Insurance
1 20 %
10 2 %
1 00 %
85 %
80%
78 %
78 %
80 %
Joint stock
company:
62 %
58 %
60 %
50%
44 %
4 1%
40 %
25%
20 %
2 4%
20 %
17 %
13 %
9%
14 %
13%
9%
5 %
1 %
0 %
-3 %
-2 0 %
-5 %
2 00 0
2 0 01
2 0 02
20 0 3
2 00 4
2 00 5
2 0 06
20 0 7
- 22 %
-4 0 %
Equity
Shareholders
Tax
12 0 %
10 0 %
8 0 %
Mutual:
60%
52 %
6 0 %
43 %
37 %
36%
4 0 %
35%
40 %
3 0%
1 9%
2 0 %
40 %
26 %
37 %
3 0%
23%
25%
46 %
41 %
3 3%
28 %
23%
2 8%
20%
8%
0 %
0 %
2 0 00
2 0 01
2 0 02
20 03
Equity
20 04
Shareholders
20 0 5
20 0 6
Tax
In line with section 53 c VAG, mutual insurance associations have only limited access to the
medium of external financing. They are therefore totally reliant on internal financing for
meeting current business needs, realizing acquisitions and responding to modifications of
regulatory solvency requirements. So it is not surprising that retention of earnings is crucially
important for mutual insurance associations when it comes to the appropriation of profit.
In contrast to this, insurance joint stock companies in recent years have practically ceased
to retain earnings altogether. This is particularly apparent in the development from 2004 to
2007. On average, insurance joint stock companies released reserves – and also, as we have
seen, provisions – during those years, so they distributed more than the profit they realized
over the period. In contrast to this, the equity retained by mutual insurance associations
remained at a constantly high level.
In view of these dividend payouts, some of which were substantial, it is not surprising that
extraordinary differences should be seen in the development of the solvency of insurance
joint stock companies and mutual insurance associations. In health insurance, for example,
the average solvency margin of the two legal forms was identical in 2000 at 260 % but
steadily changed in the years up to 2007, with the result that mutual insurance associations
now have a margin of more than 300 % while that of insurance joint stock companies has
fallen to 180 %.
In conclusion, it can be said that the development of the different legal forms in terms of
underwriting performance has been virtually identical since the end of the Second World War,
at least up to 2003. In the case of insurance joint stock companies, dividend payouts have
become progressively more important, financed partially by reductions in reserving ratios and
20 0 7
29
Fig. 9: Solvency margin (Actual to Target Solvency)
5 0 0 %
4 0 0 %
3 0 0 %
2 6 2 %
2 6 9 %
2 6 8 %
2 4 2 %
2 4 1 %
2 7 3 %
2 8 5 %
2 9 5 %
2 0 4 %
2 0 0 %
1 9 6 %
2 0 0 4
2 0 0 5
2 0 0 6
2 6 8 %
3 0 4 %
Health Insurance:
2 0 0 %
2 6 0 %
2 1 8 %
1 8 4 %
1 0 0 %
0 %
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 7
Mutual
Joint stock company
5 0 0 %
3 8 1 %
4 0 0 %
3 7 0 %
3 2 5 %
3 4 8 %
3 3 6 %
3 2 6 %
3 2 7 %
3 0 5 %
3 0 0 %
Property Insurance:
2 0 0 %
2 3 5 %
2 4 6 %
2 4 5 %
2 4 3 %
2 1 7 %
1 9 9 %
1 0 0 %
1 8 0 %
1 8 1 %
2 0 0 6
2 0 0 7
0 %
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
Joint stock company
Mutual
resulting in lower solvency margins. In the case of mutual insurance associations, the requirement of constant internal financing evidently produces successful results. Reserving ratios
and solvency margins are steadily and significantly rising.
Whether mutual insurance association or insurance joint stock company is the better legal
form for addressing underwriting challenges cannot be ascertained from the statistics examined here. What certainly can be said, however, is that the economic environment seems to
be more or less identical for both. There is no evidence of drawbacks inherent in one legal
form or the other. A major all-line mutual insurance association needs to address the same
challenges as a major all-line insurance joint stock company. So the future of insurers will be
decided by management efficiency, capital market developments and ultimately the political
environment. Legal form is a “neutral” factor as far as the sustainability of the mutual insurance association is concerned.
(1) The above was presented at the working conference of the Members’ Representatives Meeting of the Gothaer Group
on 9 February 2009 in Cologne. In 2008, the Members’ Representatives Meeting had asked the Management to
organize a working conference on this subject. The opening speeches paving the way for discussion were held by
Prof. Dr. Schradin, managing director of the Institute of Insurance Science at the University of Cologne, and Dr. Görg.
The article published here is based on Dr. Görg’s contribution to the discussion.
Report of Management
32
R E P O RT O F M A N A G E M E N T
General Economic Situation
General Economic Developments in 2008
The financial year 2008 was essentially marked by two developments. The first half of the year
was dominated by concerns over price stability in an environment of slackening general
economic activity and a smouldering financial market crisis. Once again, the principal motor
driving up prices was crude oil, the price of which rose by around 50 % in the first six months
of the year. As a consequence, inflation in the euro zone climbed to 4% by the summer – the
highest it has been since the common European currency was introduced – and prompted the
European Central Bank (ECB) to raise its main refinancing rate from 4% to 4.25 %.
In the second half of the year, the financial market crisis worsened dramatically with the
insolvency of the Lehman Brothers investment bank. Massive state intervention in the form of
guarantees and capital injections helped avoid a total collapse of the financial system but the
action taken by governments and central banks could not prevent the financial market crisis
spreading to the real economy.
On both sides of the Atlantic, national economies are now contracting. Furthermore, in anticipation of a global recession, the price of crude oil has fallen again and is now lower than at
the beginning of 2008. As a result, inflation has decreased sharply.
Capital Market Developments in 2008
In the first half of 2008, the yield of government bonds was initially shaped by growing concern over inflation. Significant spreads were observed as a result. The yield of 10-year US
Treasuries rose from approx. 3.6 % at the end of January to approx. 4.3 % in the middle of
June. European counterparts also increased by around 70 base points and peaked at a yield
of 4.7 %. However, yields fell again as oil prices declined and concern over recession
increased. At the same time, yield curves steepened appreciably.
Broadly speaking, the stock markets moved in only one direction during the year under
review. By summer, the DAX30 and the EuroStoxx50 were more than 20 % down. As a result of
the dramatic developments on the financial markets, this trend strengthened further as fears
of recession turned into certainty. At year-end, the leading international stock markets were
between 40 % and 50 % lower than at the beginning of the year.
Outlook in 2009
With the spread of the financial market crisis, 2009 looks like being a year of recession on
both sides of the Atlantic. The duration and severity of the economic downswing will depend
largely on how much the anticipated reduction of lending by banks impacts on corporate
investment activity and how effectively government economic packages can compensate for a
possible fall in private demand. In view of the economic environment and an anticipated
easing of inflationary pressure, the central banks are likely to loosen the monetary policy
reins even more in 2009. While the ECB still has the option of lowering its main refinancing
rate again, the US Federal Reserve, having already lowered rates to virtually zero, will probably provide the economy with additional liquidity through quantitative easing of monetary
policy.
The expansive monetary policy measures should keep interest rates low, especially at the
short end of the maturity spectrum. In view of governments’ refinancing requirements due to
the support provided for financial markets and the economic stimulus packages introduced,
benchmark bond spreads cannot be ruled out. What is more, when the economy picks up,
interest rates could be pushed up further by the inflation potential of looser monetary policy.
On the stock markets, we again anticipate high uncertainty and falling prices in 2009. Economic conditions in Q1 remained poor, fuelling little hope of positive developments and
leading to further significant price falls in the early weeks of 2009. Interest rate policy measures by central banks will probably not have a lasting effect on stock market activity. The
market will continue to be highly sensitive and responsive to corporate and sectoral news –
a fact that will be reflected in sustained high volatility of both the market as a whole and
individual securities. With the change of government in the United States, there is a prospect
of dramatic, fast-acting measures designed to help support the US economy. In other countries, too, stimulus programmes could attenuate or possibly even halt the recessive trends.
In the second half of the year at the earliest, this development could be reflected in a renewed
rise of share prices and expectations of positive market developments.
33
34
Situation of the Insurance Industry
Developments in the Insurance Industry in 2008
Even in past years, the general economic environment did little to stimulate demand for
insurance. This is largely due to the fact that even in years of vigorous economic upswing, the
financial benefit for private households was scant. Stagnating or even recessive real incomes
were the rule rather than the exception. In the light of Germany’s slide into recession – owing
largely to the property and banking crisis – the general economic environment is now even
worse. In the present situation, it is not anticipated that private households will significantly
increase the amount of money they spend on insurance. Indeed, private households will tend
even more to adopt the long-observed wait-and-see attitude towards longer-term financial
commitments. What is more, trade and industry – even though they account for only a small
percentage of total insurance demand – are likely to review rather than increase their insurance expenditures with a view to making economies during the downswing. Across the
insurance sector as a whole, the German Insurance Association (GDV) anticipates premium
growth of 1.5 % in the financial year 2008 (PY: 0.6 %) – growth which is again fuelled entirely
by personal insurance lines.
Developments in Property/Casualty Insurance
Property/casualty insurance business was essentially marked by three developments last
year: first of all, the sustained, very intense competition generated against the backdrop of
high market penetration, secondly pronounced business cyclicity and finally very moderate
loss experience. While premium income edged up by 0.2 % to € 54.6 billion, an absence of
major loss events meant that losses incurred were recessive in comparison to the prior year –
down 0.8 % at € 41.7 billion. As a result, it is expected that the combined ratio will move down
from 95.7 % to 95.0 % and the underwriting result will rise to an estimated € 2.7 billion
(PY: € 2.3 billion).
In automotive insurance, sustained price competition resulted, as anticipated, in a further fall
in premium income as in the prior year; the revenue total decreased by 2.0 % to € 20.4 billion.
Losses incurred increased in comparison with the prior year figure, driven up by 2.1 % on
balance to € 19.5 billion, largely by numerous hail events. With lower claims expenses in
automotive liability insurance (– 2 %) set against marked upturns in the own damage lines
(+ 13 % in partial own damage and + 9% in comprehensive and collision), the loss ratio for
the financial year will rise from 91.8 % to 96.0 % and thus produce an anticipated negative
underwriting result of € 0.2 billion.
In the property insurance lines, the earnings situation as a whole eased significantly once
again. Premium income increased by 3.3 % to € 14.5 billion. After the marked rise registered
in the prior year (+ 17.8 %), losses incurred fell by 9.2 % to € 10.3 billion. Accordingly, the
combined ratio dropped sharply to 95 % (PY: 105 %). In homeowners insurance in particular,
the general absence of extreme natural hazard events resulted in a 20 % decrease in the
losses incurred in the financial year. With premium income up 7 % at € 4.4 billion, the loss
ratio fell from 110 % to 82 %.
In industrial property business, the slide in premium income seen since 2005 continued with
a 0.3 % downturn in revenues to € 3.7 billion. With a parallel increase in losses incurred –
which rose by 0.7 % to € 2.9 billion – the loss ratio for the financial year is likely to move up
from 77.1 % to 78.4%.
General liability insurance was another area generating no growth in the year under review.
Both premium volume and losses incurred in the financial year stagnated at around € 6.8
billion and € 4.4 billion respectively. With a combined ratio of 86 % (PY: 89%), an underwriting profit in the region of € 1 billion is anticipated.
In personal accident insurance, where losses incurred in the financial year were marginally
lower (down – 0.5 % at € 2.8 billion), a premium upturn of 1 % to € 6.4 billion is expected. The
combined ratio is likely to be around 83 %.
Marine insurers anticipate an increase of 1.5 % in losses incurred for the financial year and a
moderate fall in premium income (– 1 % to € 1.8 billion), so the loss ratio for the financial year
will probably rise to 70 % (PY: 68.4%) and the combined ratio to 91 % (PY: 90 %).
For credit, surety and fidelity insurers, the financial year 2008 brought the first marked
increase in losses incurred for years; the figure rose by 30 % to € 0.9 billion. With premium
revenues virtually stagnating, the loss ratio for the year moved up from 52 % to 67 % and the
combined ratio from 72 % to 87 %.
In view of the unfavourable economic environment, growth prospects also remain very muted
for 2009. In automotive insurance, the increase in new registrations as a result of the scrappage incentive will not halt the sustained premium erosion due to competition. In commercial
business, the growth effect of increasingly turnover-dependent premiums will weaken as a
result of economic slowdown. Growth stimuli could come from the personal property insurance lines and general liability insurance, especially because of existing premium adjustment
clauses. However, it remains to be seen how far these clauses can be implemented in the face
of competition.
Developments in Life Insurance
After the comparative calm of the business environment in 2007, life insurers reported a
number of special factors impacting in a variety of ways in the year under review. The factors
in question included the entry into force of the reform of the German Insurance Contract Act
(VVG) together with the Disclosure of Information Ordinance, the final stage of the “Riester”
policy subsidization programme and, last but not least, an economic upswing that drifted into
a sharp recession at year-end as a result of the financial market crisis.
The VVG reform brought advantages for the consumer but no surge in demand for life insurers.
According to the GDV, the reform generated costs but remains neutral in its effect on demand
and production. The increase in premiums offered in the fourth stage of subsidization for
“Riester” policies was broadly accepted by consumers and accounted for a large part of new
business in 2008.
Because the sharp rise in prices resulted in stagnating real incomes, life insurance profited
little from the economic upswing. Despite the financial crisis, which worsened during the
course of the year, the volume of new business in Q4 was significantly greater than in the
same period in the prior year. Developments in the banking sector probably strengthened
“security” as a motive for demand, with the result that life insurance – with the traditional
guarantees it gives through classical life and annuity products – again became significantly
more attractive.
With new regular premiums up 7.2 % at € 6.87 billion and single premiums rising by 4.0 % to
€ 12.39 billion, premium revenues from new business increased by 5.1 % to € 19.26 billion.
Single-premium policies thus accounted for nearly two-thirds of all new business. Prior-year
comparison shows that without the increase in “Riester” premiums, new regular premium
income would have been 6.5 % lower than in 2007.
After a downturn in the prior year, individual annuity policies accounted for larger shares of
new business again. Although the number of policies concluded fell by 27.8 %, new regular
premiums increased by 17.9% in 2008. A similar development was also seen in unit-linked
annuity policies, which decreased in number by 4.6 % but grew in terms of new regular premium volume by 19.8 % last year. Endowment insurance, in both its conventional and its unitlinked forms, again accounted for smaller shares of new business in the year under review
(– 21.0 % and – 10.5 % respectively by number and 11.4% and – 11.5 % respectively in terms
of new regular premium income). As for “Riester” policies, the high take-up figures of the
prior year failed to be matched. The number of policies decreased by 24.1 % and regular
premium income fell by 8.4%. Including the upward adjustment at the beginning of the year,
new regular premium volume increased by 71.4%. After a massive rise in the prior year, new
basic pension business registered a downturn of 10.5 % in terms of the number of policies
35
36
concluded and 10.0 % in terms of the regular premium income they generated. 2008 showed
again the importance of annuity insurance as a source of new business for life insurers. It
continues to account for 50 % of all new policies concluded and nearly 68 % of the total
premium income they produce. Unit-linked annuity business makes a growing contribution
here. Mid-term cancellations in terms of regular premium income showed a year-on-year
increase of 11.0 % and made for a lapse rate of 5.5 %.
The volume of insurance benefits paid underscores the undiminished high capacity of the
German life insurance industry. At € 71.83 billion, benefit payments to life insurance policyholders reached a record level in 2008, equalling 35.4% of the total benefits paid under the
statutory pension scheme. Future benefits due payable to policyholders decreased for the
first time, by € 2.65 billion. This downturn was due to a reduction of policy reserves for unitlinked policies, which reflects the loss of value of investment certificates in the year under
review. According to initial figures published by the GDV, unit-linked life and annuity policies
with maturity guarantee account for 64.4% of all new unit-linked policy business.
The still-increasing number of policies reaching maturity, combined with a marked rise in
surrenders and contracts transformed into non-contributory policies, were compensated by
increased new business. As a result, gross premiums written by life insurers grew by 1.1 %, as
against 0.8 % in the prior year. Single premiums accounted for 16.0 %, up from 15.5 % in 2007.
The gross premiums written by pension trusts affiliated to the GDV, however, increased by
only 0.3 %, while those of pension funds fell by 36.2 %.
Overall, the increase in premium income for life insurers, pension trusts and pensions funds,
at 0.8 %, remained at the level of the prior-year increase (PY: 0.6 %).
In view of the recessive economic climate, the GDV sees no general economic stimuli for the
German insurance industry in 2009. However, the fact that premium revenues and new
business are developing positively in spite of the financial market crisis underlines people’s
increased need for security and dependable benefits for their retirement. Demographic
change will have a double impact, curbing demand as a result of recessive population figures
in the younger age groups, on the one hand, and producing a steadily rising number of regular maturities, on the other.
The increasing importance of funded provision for old age presents an opportunity for the life
insurance industry. The guarantee of life-long benefits gives life insurance a unique selling
point, which should be reflected again in 2009 by positive developments for “Riester” policies and basic pensions in particular. Conventional endowment insurance is likely to experience a renaissance in 2009. Unit-linked life insurance will possibly no longer be in so much
demand, as long as it fails to offer attractive guarantees.
As far as the development of premiums in the coming year is concerned, the absence of a
further “Riester” stage will have a dampening effect within portfolios, especially since regular
maturities will remain high and, considering the policies concluded in 2004 ahead of the
Retirement Income Act with a five-year premium payment clause, there may be a large number
of exemptions from payment of premium. Overall, the GDV estimates that premium revenues
will decrease in 2009 by around 1.5 %.
Pension trusts and pension funds, which are classed as a form of life insurance, will also be
affected by the deteriorated general economic environment. Assuming that pension trusts
continue to report moderate growth and pension funds can at least keep their premium
volume at the prior-year level, life insurance as a whole (including pension trusts and pension
funds) will probably register a 1 % downturn in premium volume in 2009.
Developments in Private Health Insurance
The “Act to Enhance Competition in Statutory Health Insurance” (GKV-WSG) resulted in radical
changes in both statutory and private health insurance. The introduction of a new basic tariff
on 1 January 2009, in particular, as well as the portability of ageing reserves for insureds
changing company – also a legal requirement as of 2009 – make deep incisions in the business model of private health insurers. Around 8.5 million people with comprehensive private
health insurance have a one-off special right of cancellation in the first half of 2009 and, if
they wish to change insurer, can transfer part of the ageing reserve that has accrued for them
at their existing insurer to the basic tariff of another insurer. Any of these clients opting to
change insurers, however, needs to stay on the new insurer’s basic tariff for at least 18 months.
As of the beginning of 2009, comprehensive insurance may also be offered only with a “right
to change”. This new right is a benefit that needs to be financed and will impact accordingly
on premium rates as of January 2009.
Against this backdrop, net new business in private health insurance still failed to recover from
the negative effects of the healthcare reform in 2008. Disregarding special factors, the “ordinary” net increase in the number of people with comprehensive health insurance last year
totalled 48,900, which is 18 % less than in 2007 – and indeed 58 % less than in the year prior
to the reform.
37
38
Group Management Report
Business Developments and Position of the Group
The dramatically worse economic situation due to the global financial crisis was also a major
challenge for the Gothaer Group in the financial year 2008. Despite the resulting adverse
conditions, the Group remained on its growth course and, for the first time since discontinuing active reinsurance operations, registered premium income in excess of € 4 billion.
After five consecutive years of steadily increasing our consolidated profit for the year, Group
earnings fell short of target because of the turbulence in the capital markets. As a result of a
sharply deteriorated investment result, the Income Statement for 2008 showed consolidated
profit for the year of € 61.7 million. Despite the fact that profit halved in comparison with the
prior year, we consider it a satisfactory result in the light of the economic environment.
Outside the realm of investment, insurance business developed soundly. Higher premiums
were set against lower losses incurred in the Property/Casualty segment. And while new
business developed encouragingly, underwriting expenses showed little change.
Premiums
Premiums written by the insurance companies embraced by the consolidated financial statements increased by 2.4% to € 4.04 billion in 2008. In terms of premium growth, the Group
was thus again among the better performers in the German insurance industry.
Since discontinuing active reinsurance operations, we have been almost exclusively engaged
in primary insurance business. Here, written premiums grew by € 89.3 million to € 4.00 billion.
The upturn was fuelled by a € 47.2 million increase in the Property/Casualty segment and a
€ 52.8 million upsurge in the Life segment. Premium revenues from Health segment business
edged down to € 10.7 million. Reinsurance premiums assumed from insurers outside the
Group totalled € 42.6 million, up from € 37.6 million in the prior year.
To determine the volume of net earned premiums, the reinsurance premiums ceded and
the savings components of unit-linked life insurance need to be deducted from the gross
premiums written. The change in net unearned premiums is also taken into account. At
€ 3.04 billion, net earned premiums remained at the level of the € 3.07 billion registered in
the prior year.
Gross Premiums Written by Line of Insurance
Life*
Health*
Automotive
Comprehensive Householders
Comprehensive Homeowners
Credit and Surety
Fire
General Liability
Marine
Other Insurance Lines
Other Property Insurance Lines
Personal Accident
Reinsurance
Total
* incl. premiums from the reserve for premium refunds.
2008
€ million
2007
€ million
1,614.5
782.7
362.8
95.1
116.9
0.0
64.2
326.2
38.5
182.7
252.1
161.1
1,561.7
793.4
377.6
94.5
110.2
0.4
66.3
319.9
35.2
136.7
253.4
158.2
3,996.8
3,907.5
42.6
37.6
4,039.4
3,945.1
Premiums by Segment in the Financial Year 2008
40.7 % Property/Casualty
40.0 % Life
19.4 % Health
Gross Premiums Written by Region*
2008
€ million
2007
€ million
Domestic
Foreign
3,933.9
62.9
3,845.5
62.0
Total
3,996.8
3,907.5
* Primary business incl. premiums from the reserve for premium refunds.
Our business has traditionally been concentrated in Germany. Over 98 % of premium income
from primary insurance business is generated in the domestic market. The Group’s foreign
business is confined exclusively to countries in the European Economic Area.
Investments
In 2008, the Group continued to seek to stabilize and improve current income in line with the
Gothaer investment strategy. This means – wherever possible – adhering systematically to a
buy and hold policy. In addition, Gothaer attaches great importance to broadly diversified,
decorrelated investments. This results in a broad spread of risk and reduces dependence on
individual income components. For this reason, a highly professional internal risk management service is crucially important for investment. Despite hedging measures in the share
segment, the stresses and strains of the severe financial and economic crisis took a toll on
the Group’s portfolio because, with nearly all market segments moving in a negative direction, the anticipated diversification of risk largely failed to materialize.
The investment policy of the Group is fully geared to meeting the more stringent capitalization
requirements set to be implemented in the future under Solvency II. The relevant investment
strategies are embedded in an efficient asset liability management concept designed to
guarantee maximum target attainment in terms of net yield. One constraint imposed on asset
liability management (ALM) here is presented by the need to ensure risk-bearing capacity at
all times.
The investment volume of the Gothaer Group totalled € 21.45 billion (PY: € 21.89 billion) in
2008. In the year under review, use was made of the accounting option available under
IAS 39.50 for reclassifying financial assets. As a result of this, available for sale investments
with a fair value of € 1.03 billion were reclassified as loans. Owing to this reclassification and
because of reduced fair values, the book value of available for sale financial instruments
decreased from € 10.90 billion to € 8.25 billion. The carrying value of the loan portfolio was
boosted by reclassifications to € 7.01 billion, up from € 6.33 billion in the prior year. The
volume of financial assets held to maturity also increased, rising to € 2.80 billion from the
€ 2.20 billion registered in 2007.
39
40
At € 172.2 million, investment in shares in affiliated and associated companies was greater
than in 2007. This was essentially due to shares in companies which, due to lack of influence,
need to be recognized at fair value as available for sale financial instruments. The carrying
value of all investments at the end of the financial year was € 1.47 billion (PY: € 1.30 billion).
Because more money was on call at balance sheet date, other investments increased from
€ 0.60 billion to € 1.41 billion.
Investments carried at fair value through profit or loss, which were again held to only a limited
extent, included hedging transactions and embedded derivatives resulting from the separation of host and embedded components of hybrid securities.
Investment activities produced a profit of only € 0.71 billion in the year under review (PY:
€ 1.32 billion). This made for a yield on investment of 3.3 % (PY: 6.1 %). The sharp decrease in
investment income was due to a number of factors. Exchange rate stress – essentially due to
the rise of the US dollar – was compounded by pressure from depreciation on hedge fund
investments, from illiquid credit risk bonds and write-downs on indirect property investments. Depreciation on our share investments was wholly neutralized by a put option strategy
implemented in 2007, with the net result that no additional pressure for the investment result
was presented by that investment segment. In line with our investment strategy, which is
focused on increasing current income, current income was further boosted in the year under
review from € 1.22 billion to € 1.26 billion.
Investments
Financial Year 2008
38.5 %
1.9 %
13.9 %
13.1 %
32.7 %
Available for sale
At fair value through profit or loss
Other investments
Held to maturity
Loans
Financial Year 2007
49.8 %
2.0 %
9.2 %
10.0 %
29.0 %
Available for sale
At fair value through profit or loss
Other investments
Held to maturity
Loans
Policyholder Benefits
Policyholder benefits include all payments made to insureds and other claimants by the
insurance companies of the Gothaer Group. In addition to claim payments, this includes
changes in all underwriting reserves that the Group has formed to meet actual and potential
customer claims. These changes involve, in particular, changes in the policy reserves and
reserves for premium refunds of the life and health insurance carriers as well as changes in
the loss reserves of the property and health insurers.
Both gross and net benefits provided to customers by the insurance companies of the Group
decreased against the prior-year figures. In the gross account, benefit volume fell from € 3.68
billion to € 2.67 billion; net of reinsurance, the Group provided benefits totalling € 2.44 billion
in 2008, as compared with € 3.39 billion in the prior year.
The decrease in policyholder benefits was also due to the financial market crisis. While claim
payments in all three segments increased, the recessive investment result in 2008 meant that
the sums that could be allocated to reserves for premium refunds in the Life and Health
segments were significantly smaller. Due to the development of unit-linked life insurance, the
change in the policy reserve in the Life segment was also recessive.
Underwriting Expenses
Gross underwriting expenses include all HR and material expenses incurred for the acquisition and management of insurance policies. Acquisition expenses, which comprise not only
payments but also the change in deferred acquisition costs, increased by € 10.6 million to
€ 331.3 million. Administrative expenses totalled € 455.5 million and, at 1.8 %, grew less
sharply than gross premiums written. Total underwriting expenses amounted to € 786.8
million, which was 2.4% more than in the prior year.
The share of reinsurers in these expenses remained on a par with the prior year at € 96.0
million (PY: € 95.2 million). As a result, net underwriting expenses rose from € 673.0 million
in 2007 to € 690.8 million in 2008.
Consolidated Profit
Because of the factors described above, the positive earnings trend line of recent years could
not be maintained. Consolidated profit for the year was € 61.7 million, following € 131.2 million
in the prior year. The same development can be seen in the operating income, which, at
€ 135.0 million, was nearly half the € 260.3 million posted in the prior year. As a consequence,
tax expenses for the financial year also decreased, from € 86.1 million to € 39.8 million and
minority interests amounted to € 2.6 million (PY: € 6.3 million).
The return on equity, which is the ratio of consolidated profit for the year to average equity
exclusive of minority interests, stood at 6.2 % after 12.4% in the prior year. Even though
general economic developments prevented the financial year from meeting the expectations
that the Gothaer Group had at the beginning of 2008, we are still by and large satisfied with
the consolidated result.
41
42
Capital Management
For insurance groups, capitalization is a key variable or parameter for the assessment of riskbearing capacity and thus an important performance indicator. Capital management enables
us to ensure that adequate capital is always available to meet the operational needs of our
companies and achieve an optimum distribution of funds within the Group. This allows us to
comply with legal provisions as well as with the requirements of regulatory authorities, rating
agencies, analysts and clients, all of which have become significantly more exigent in recent
years. Major constituents of capital management within the Gothaer Group are risk-oriented
management and ALM.
Capitalization
The equity of the Gothaer Group totalled € 0.98 billion (PY: € 1.09 billion) at the end of the
financial year 2008. As a mutual insurance association, the Gothaer Group has no subscribed
capital. We generate equity exclusively by retention of earnings. In addition to the revenue
reserves of the Group parent, Gothaer Versicherungsbank VVaG, the equity shown in the
consolidated financial statements also includes the earnings of Group companies generated
after initial consolidation. Also taken into account in the equity of the Gothaer Group are
unrealized gains and losses on investments available for sale. Changes in equity are shown
on page 81.
As well as Group equity, Gothaer capital management also covers so-called equity surrogates.
Equity surrogates include participation certificates issued by Gothaer as well as suboordinate
liabilities, which are becoming increasingly important. As of 31 December 2008, equity
surrogates had a total carrying value of € 299.7 million (PY: € 361.1 million). Two participation
certificates were repaid on schedule in the financial year.
Management of debt financing in the form of bonds and loans also forms part of capital
management. As of 31 December 2008, Gothaer Group bonds and loans totalled € 199.7
million (PY: € 223.4 million). The decrease in the financial year resulted from the early contract-compliant redemption of bonds and repayment of loans due to the sale of strategic
share investments.
The debt ratio of the Group (defined as debt capital, i.e. bonds and loans including noneligible hybrid capital as a percentage of equity plus eligible hybrid capital) was thus reduced
from 23.4% to 18.7 %.
Equity
Equity surrogates
Participation certificates
Subordinate liabilities
Bonds and loans
Total
2008
€ million
2007
€ million
977.4
1,091.2
35.0
264.7
199.7
96.4
264.7
223.4
1,476.8
1,675.7
Solvency
As the parent company of a German insurance group, Gothaer Versicherungsbank VVaG is required to demonstrate to the Federal Financial Supervisory Authority (BaFin) that its adjusted
solvency is sufficient to meet the needs of the insurance activities of the Group. Adjusted
solvency is calculated by comparing the own funds derived from the equity shown in the
consolidated financial statements of the Gothaer Group (actual solvency) to the need for
capital resulting from the volume of business (plan solvency). At € 1.23 billion, the own funds
of the Gothaer Group exceed the solvency required by € 309.3 million. This represents coverage of 133.4%.
As well as addressing the present requirements of the supervisory authority, we are closely
studying the future solvency requirements that will need to be met for compliance with
Solvency II. Risk models are computed and analyzed for this purpose and any necessary
capital measures taken in the course of risk controlling.
Rating
Rating agencies use “insurer financial strength ratings” to rate an insurance company’s
financial strength and, where applicable, an insurer’s capacity to meet its obligations in
connection with policies. The aim of our capital management is to ensure that we are judged
at all times to be a financially strong insurer. That goal has so far been successfully achieved.
The international rating agency Standard & Poor’s gives the Gothaer Group and its core
companies Gothaer Allgemeine Versicherung AG, Gothaer Lebensversicherung AG and
Gothaer Krankenversicherung AG an A-rating. The companies’ financial stability is rated “very
good”. Gothaer Allgemeine Versicherung AG and Gothaer Lebensversicherung AG are also
given insurer financial strength ratings by the FitchRatings agency. The companies received
an A-rating here from FitchRatings and a “strong” rating for financial strength.
Risk-oriented Management
The Gothaer Group takes a two-pronged approach to risk management. On the one hand, we
set out to minimize our risk capital requirements through highly advanced and integrated risk
management. On the other, we focus on continually improving our capital base in order to
increase our risk-bearing capacity. Gothaer strives for targeted, equity-optimized growth.
With the help of value-oriented management indicators, such as RoRAC targets, which are an
intrinsic element of our incentive and compensation system, we set risk-oriented objectives
not only for the Group but also for the risk bearers.
Gothaer uses internally developed risk models to determine its particular risk position and
manage the rated risks. An early-warning system built into the internal risk models is used to
monitor a whole range of risk parameters and proximity to their threshold values.
Asset Liability Management
Asset liability management (ALM) is another core constituent of capital management. At the
heart of strategic asset allocation for all insurance companies of the Gothaer Group is the
goal of keeping the share of net earnings accounted for by current income at a constant high
level and taking maximum advantage of scope for diversifying investments.
Strategic asset allocation in the Gothaer Group is supported by various ALM techniques (ALM
analyses, Black-Litterman models, risk budgets) and vetted by the Investment Committee.
Asset allocation involves not only taking account of ratios, sectors, currency and duration but
also considering stable-value concepts.
Asset allocation is verified on the basis of both market values and book values, naturally
taking account of all applicable restrictions on investments (section 54 of the German Insurance Supervision Act (VAG), Investment Ordinance (AnlV), BaFin circulars). The risk situation
is reviewed regularly on a quarterly basis. This involves detailed presentation of risk budgets
on the basis of value at risk and shortfall probabilities with regard to the attainment of net
yield targets.
43
44
Segmental Performance
Gothaer Group activities are divided into segments reflecting the Group’s structure: Property/
Casualty, Life, Health and Other Activities. Developments in these segments are described
below. The performance of the most important Group companies in the segments is also
assessed on the basis of financial statements prepared in accordance with national accounting practices.
Property/Casualty Segment
The Property/Casualty segment includes Gothaer Allgemeine Versicherung AG, ASSTEL
Sachversicherung AG, Janitos Versicherungs AG and CG Car-Garantie Versicherungs AG as well
as the Group parent Gothaer Versicherungsbank VVaG. As the largest property insurer in the
Gothaer Group, Gothaer Allgemeine Versicherung AG is responsible for all significant lines
and coverages in the area of property insurance, catering to the needs of both private and
commercial clients. Customers are served by the Group’s exclusive organization, brokers and
cooperation partners. In the financial year 2008, Gothaer Credit Versicherung AG and Gothaer
Allgemeine Versicherung AG merged and now trade as Gothaer Allgemeine Versicherung AG.
The business operations of the former Gothaer Credit Versicherung AG were discontinued in
2002, after which only existing legal liabilities were run off. ASSTEL Sachversicherung AG
provides property insurance products for direct marketing by the ASSTEL insurance group
within the Gothaer Group. Janitos Versicherung AG addresses the core target group of highend private clients in property insurance. CG Car-Garantie Versicherungs-AG is a provider of
automotive repair and warranty insurance.
Performance in the Property/Casualty Segment
Gross premiums from property/casualty business grew by 3.3 % to € 1.64 billion in the year
under review. This upturn in premium income was due to both direct and indirect business
and was generated, in particular, by CG Car-Garantie Versicherungs-AG (+ 24.4%) and Janitos
Versicherung AG (+ 16.3 %). Net earned premiums in the Property/Casualty segment
increased to € 1.31 billion (PY: € 1.27 billion).
Policyholder benefits totalled € 802.6 million in 2008, after € 851.6 million in the prior year.
Increased benefits paid were offset here by income from the change in loss reserves.
A moderate decrease was registered in both gross and net underwriting expenses. The downturn in net expenses from € 424.4 million in 2007 to € 421.7 million last year was essentially
due to lower amortization of deferred acquisition costs.
At € 3.58 billion, the carrying value of the investment portfolio in the financial year remained
on a par with the prior-year figure of € 3.61 billion. In the Property/Casualty segment, the
composition of the portfolio changed. Investments available for sale decreased to € 852.1
million (PY: € 1,111.1 million). This was due partly to lower market values and partly to available for sale securities being reclassified as loans.
Additions to loans due to reclassification were more than offset by disposals, so the total
volume of loans decreased to € 926.6 million (PY: € 955.5 million). Investments in financial
instruments held to maturity increased, boosting their carrying value to € 389.1 million
(PY: € 250.7 million).
The investment result was recessive, at € 224.8 million (PY: € 303.3 million), due to increased
depreciation and a decrease in gains from the disposal of investments.
Overall, the Property/Casualty segment registered an increased operating result of € 252.5
million (PY: € 229.0 million). Owing to higher tax expenses and moderately lower financing
costs, activities in the segment produced a net profit for the year of € 206.7 million (PY:
€ 230.9 million) prior to transfer of profit.
Performance of the Companies
Gothaer Allgemeine (German Commercial Code)
Gross premiums written
Earned premiums net of reinsurance
Investment income
Net income for the year (in 2007 prior to transfer of profit)
Investments incl. deposits retained by ceding companies
Equity
Underwriting reserves
Net loss ratio
Net cost ratio
Net yield
2008
€ million
2007
€ million
1,414.6
1,160.7
114.6
72.2
2,721.8
359.7
2,272.3
67.0 %
31.6 %
4.2 %
1,396.8
1,141.9
135.5
85.0
2,692.8
292.2
2,203.1
66.1 %
31.2 %
5.1 %
Gothaer Allgemeine Versicherung AG succeeded in building on its gratifying performance of
previous years in 2008. By systematically adhering to its strategy of earnings-driven growth,
the company increased its earning capacity despite a difficult economic environment.
Gothaer Allgemeine Versicherung AG registered a growth of 1.3 % in gross premiums written to
€ 1.41 billion for the year under review. Premiums from primary business decreased by 0.3 %
to € 1.3 billion. This downturn in premiums was essentially due to business in the automotive
lines. Reinsurance premiums assumed increased once again, rising by € 21.5 million to
€ 130.6 million.
A sharp fall in new claims reduced loss expenditure from the level to which it had risen in
2007 due to the Kyrill windstorm event. The number of new claims reported decreased by
13.1 % to 424,300, which was less than in 2006. Gross losses incurred mirrored this development with a downturn of 2.7 % to € 834.3 million. As a result, the gross loss ratio was lower
than in the prior year, at 65.1 % (PY: 66.7 %).
After deduction of reinsurers’ shares, losses incurred net of reinsurance totalled € 777.9
million (PY: € 755.0 million) overall. The increase compared to the prior year was essentially
due to the absence of the claim-boosting impact of the Kyrill windstorm event in 2007.
Gross underwriting expenses increased in line with premiums in the financial year 2008,
rising by 2.8 % to € 442.7 million. The gross cost ratio – defined here as the ratio of underwriting expenses to premiums written – moved up from 30.8 % to 31.3 %.
The underwriting result before adjustment of equalization reserves is dependent upon the
development of three significant components net of reinsurance, namely the increase in
premiums earned, the concomitant increase in underwriting expenses and losses incurred.
Calculated on this basis, the underwriting result before adjustment of equalization reserves
amounted to € 5.0 million, which was less than the € 24.1 million posted in the prior year but
still on the positive side. A balance of € 3.5 million needed to be allocated to the equalization
reserves (PY: € 30.5 million). Following this allocation, the underwriting result after adjustment of equalization reserves was a positive € 1.5 million (PY: € – 6.5 million).
Gothaer Allgemeine Versicherung AG again adhered systematically to an investment policy
based on stable current income in the year under review. Despite the adverse macroeconomic
environment, the company achieved another good investment result of € 114.6 million (PY:
€ 135.5 million). The net yield on investments in 2008 was 4.2 % (PY: 5.1 %).
Overall, the underwriting profit after adjustment of equalization reserves coupled with the
positive result in the non-underwriting account produced a net income for the year of € 72.2
million (PY: € 85.0 million).
45
46
ASSTEL Sach (German Commercial Code)
Investment income
Net income for the year
Investments
Equity
Net loss ratio
Net cost ratio
Net yield
2008
€ million
2007
€ million
34.9
28.5
2.2
– 3.5
43.2
13.8
30.2
81.9 %
25.6 %
5.2 %
31.9
24.8
1.3
– 7.1
40.8
17.3
24.8
81.2 %
37.0 %
4.1 %
ASSTEL Sachversicherung AG addresses the direct insurance market. The property and casualty products it markets – as repeatedly confirmed by consumer publications – occupy an
outstanding position in the market.
Registering an increase of € 31.9 million in premiums written to € 34.9 million, the company
stayed on its growth path in the financial year 2008. Earned premium income net of reinsurance rose by € 3.7 million to € 28.5 million. The retention rate increased in comparison to the
prior year, from 78.8 % to 83.0 %.
A total of 19,171 (PY: 17,880) new insurance claims were registered in the year under review.
Accordingly, losses incurred net of reinsurance increased from € 20.2 million to € 23.4 million. The net loss ratio moved up to 81.9% in the financial year (PY: 81.2 %).
Owing to the termination of a marketing cost subsidy, gross underwriting expenses decreased
from € 10.0 million to € 8.0 million. The gross cost ratio fell accordingly, from 31.4% in the
prior year to 23.0 % in the year under review.
As a result of the decrease in underwriting expenses, the net underwriting loss before
adjustment of equalization reserves improved from € 4.5 million in 2007 to € 2.3 million in
the reporting period. An allocation of € 1.6 million had to be made to equalization reserves
in the financial year 2008, as a result of which the underwriting account showed a loss of
€ – 3.9 million (PY: € – 7.4 million) after adjustment of equalization reserves.
The carrying value of the investment portfolio of ASSTEL Sachversicherung AG increased
from € 40.8 million in the prior year to € 43.2 million in the year under review. Despite the
adverse macroeconomic environment, the investment result achieved by the company – at
€ 2.2 million (PY: € 1.3 million) – was very good. The net yield on investments for the year rose
to 5.2 % (PY: 4.1 %).
While the investment result achieved by ASSTEL Sachversicherung AG was good, it did not
compensate for the underwriting result, however, so the company reported a net loss for the
year of € 3.5 million.
Janitos (German Commercial Code)
Investment income
Investments
Equity
Net loss ratio
Net cost ratio
Net yield
2008
€ million
2007
€ million
102.6
37.8
2.8
0.8
38.8
29.8
32.4
48.3 %
35.7 %
7.1 %
88.2
32.7
2.1
2.1
40.4
29.0
27.5
49.2 %
32.5 %
6.3 %
For Janitos Versicherung AG, the financial year was marked by highly dynamic competition
and an intensive price war, especially in the area of automotive insurance. Despite this
environment, the company once again demonstrated its competitive strength. Maintaining its
dynamic growth, it further strengthened brand awareness and increased the number of new
sales connections.
The gross premiums written by Janitos Versicherung AG grew by 15.5 % to € 101.3 million in the
financial year 2008, mainly as a result of high organic growth. Earned premiums net of reinsurance increased significantly in all lines of insurance.
A total of 49,423 claims were reported (PY: 44,942). As a result of this, the volume of gross
losses incurred rose to € 75.7 million (PY: € 64.7 million). The gross loss ratio for the financial
year thus moved to 74.8 % (PY: 73.8 %). After deduction of reinsurers’ shares, losses incurred
net of reinsurance totalled € 18.2 million (PY: € 16.1 million).
Gross underwriting expenses for the financial year came to € 24.4 million (PY: € 20.4 million),
which resulted in a gross cost ratio of 24.1 % (PY: 23.3 %). Net underwriting expenses were
reduced by reinsurance commission income of € 13.9 million in 2008 (PY: € 10.9 million),
putting the net cost ratio at 36.8 % (PY: 33.2 %).
The gross underwriting result before adjustment of equalization reserves was € 0.9 million in
2008 (PY: € 2.4 million). A positive reinsurance result of € 4.4 million led to a net underwriting result of € 5.4 million (PY: € 5.6 million) before adjustment of equalization reserves.
A sum of € 3.3 million (PY: € 1.4 million) was allocated to equalization reserves. After allowance
for this transfer, Janitos Versicherung AG posted a positive net underwriting result of
€ 2.1 million (PY: € 4.2 million).
Investments generated a profit of € 2.8 million in the financial year 2008 (PY: € 2.1 million).
The principal factor shaping the increased investment result were gains from the disposal of
investments.
The other income was € – 3.2 million (PY: € – 2.9 million). The increase was due to the
absolute growth of costs, which affected the other income because of the way costs were
distributed.
Overall, the positive underwriting result and the profit from investment activities combined to
produce a net income for the year after tax of € 0.8 million (PY: € 2.1 million).
47
48
Life Segment
The Life segment includes the activities of Gothaer Lebensversicherung AG, Gothaer
Pensionskasse AG and ASSTEL Lebensversicherung AG.
At the core of the business activities of Gothaer Lebensversicherung AG is the direct and
indirect sale of all forms of life and annuity insurance as well as related supplementary
policies. This also includes the sale of insurance investment products as well as occupational
disability and invalidity insurance. The products of Gothaer Lebensversicherung AG are sold
through the exclusive organization, brokers and cooperation partners of the Group. Gothaer
Pensionskasse AG is a pioneer in Germany in the field of intercompany pension schemes. It
caters for companies that wish to operate a promissory pension scheme for their employees
through a pension trust.
The ASSTEL insurance group handles the direct marketing of insurance and financial services
products for the Gothaer Group. Life insurance products are made available by ASSTEL
Lebensversicherung AG.
Performance in the Life Segment
Gross premiums written in the Life segment, at € 1.61 billion, were 3.4% up on the prior-year
figure. After deduction of reinsurance premiums ceded and a larger volume of savings components than in the prior year, net earned premiums totalled € 959.7 million (PY: € 1.01 billion).
Because of lower technical reserves for our customers, policyholder benefits decreased
sharply to € 833.0 million (PY: € 1.56 billion). The reduction of policy reserves was due largely
to unrealized losses on unit-linked life policies of € 368.5 million, which depressed policy
reserves for those policies accordingly. In addition, recessive investment results meant that
only lower allocations could be made to the national reserve for premium refunds. A negative
development was also seen in the reserve for deferred premium refunds. Benefits paid,
however, remained at the prior-year level.
In line with the upturn in gross premiums, net acquisition expenses also rose from € 133.8
million to € 146.9 million. With administrative expenses constant at € 43.2 million (PY: € 43.1
million), net underwriting expenses increased from € 176.9 million to € 190.1 million.
The carrying value of the investment portfolio was € 14.52 billion (PY: € 14.76 billion) at the
end of the year. The lion’s share of this – € 5.98 billion (PY: € 7.89 billion) – was again made
up of investments available for sale, although the volume of such investments was reduced
by low fair values and reclassification as loans. The carrying value of the loan portfolio
increased accordingly from € 3.94 billion to € 4.65 billion. There was also greater investment
in financial instruments held to maturity, which had a year-end volume of € 1,651.2 million
(PY: € 1,361.0 million).
The gratifying prior-year investment result of € 794.2 million could not be repeated. Because
of the nature of its business, the Life segment was particularly hit by the financial crisis. As a
result of recessive income from the sale of investments as well as increased depreciation
requirements, the investment result for the financial year decreased to € 496.0 million.
Owing to the developments referred to above, it was only possible to achieve an operating
result of € 29.0 million, as compared with € 72.2 million in 2007. However, because tax
expenses were significantly lower than in the prior year, the income statement showed a net
income for the year of € 15.5 million (PY: € 23.1 million) prior to transfer of profits.
Gothaer Leben (German Commercial Code)
2008
€ million
2007
€ million
Policyholder benefits
Investment income
Gross profit
Equity
Acquisition cost ratio
Administrative cost ratio
Net yield
1,242.8
1,147.1
1,209.3
494.4
166.8
11,905.7
270.4
10,322.9
5.8 %
2.8 %
4.1 %
1,198.9
1,114.5
1,671.9
586.1
254.0
11,913.0
270.4
10,066.7
5.5 %
2.9 %
5.0 %
Gothaer Lebensversicherung AG was able to build on the encouraging performance of previous
years and increase its own funds, its earning capacity and its market share in nearly every area.
New business premium grew from € 302.9 million to € 349.6 million. This was an increase of
15.4%, as compared to 5.1 % across the industry. Particularly gratifying here was the 19.2 %
upturn in the sum of new business premiums (the sum of all premiums due over the full term
of new policies written) to more than € 2.8 billion. Owing to a marked increase in maturing
premiums, the regular yearly premium rose by 1.3 %; the industry as a whole registered a
moderate decrease.
New business, which includes insurance policies written as well as increases in insured sums
due to dynamic adjustment, expanded significantly in 2008 in comparison to the prior year.
The sum of new business premiums increased by 19.2 % to € 2.8 billion. The aggregate
insured sum of all policies in force at the end of the year reached € 33.4 billion, which is 3.0 %
more than in the prior year.
The benefits paid by a life insurer include not only the contractually guaranteed insured sums
and annuities paid directly to policyholders as well as surrender expenses and vested
bonuses up to the insured event or premature termination of the policy by the policyholder;
they also include increases in future benefits, in the form of higher policy reserves and
allocations to the accumulated surplus and the reserve for non-experience-rated and experience-rated premium refunds. The benefits paid to policyholders by Gothaer Lebensversicherung AG totalled € 1.2 billion. Compared to the prior-year figure of € 1.7 billion, this constituted a 27.7 % downturn, due essentially to developments in unit-linked life insurance.
Owing to the 19.2 % increase in production, acquisition costs rose to € 164.8 million, which
was 25.6 % more than in the prior year. The acquisition cost ratio, which is the ratio of acquisition costs to the sum of new business premiums, was 5.8 % (PY: 5.5 %). The administrative
cost ratio, which expresses administrative costs as a percentage of the gross premiums
written, improved further to 2.8 % (PY: 2.9%).
Because of the financial crisis, the carrying value of the Gothaer Lebensversicherung AG
investment portfolio in 2008 remained at the same level as in the prior year, at € 11.9 billion.
Despite the adverse macroeconomic environment, the investment result of € 494.4 million
(PY: € 586.1 million) was good in comparison to the market average.
49
50
Gross profit – which is the profit before allocation of surplus to policyholders, taxes on income
and distribution of profit – decreased from € 254.0 million in the prior year to € 166.8 million
in the year under review. The scale of gross profit is largely determined by the investment
result. Owing to the impacts of the financial market crisis, netting all the relevant forms of
income and expenses – the latter including, where applicable, the guaranteed yield on
policyholders’ assets in the amount of the actuarial interest rate – produced a lower surplus
than in the prior year. The greater part of gross profit – € 133.7 million – was allocated to
policyholders in the form of an aggregate transfer of € 69.3 million to the reserve for premium
refunds and direct credits totalling € 64.4 million. After deduction of taxes on income of
€ 13.6 million, the net income for the year prior to transfer of profit was € 19.5 million. This
amount was transferred under the profit transfer agreement concluded between Gothaer
Finanzholding AG and Gothaer Lebensversicherung AG in 2002.
ASSTEL Leben (German Commercial Code)
Policyholder benefits
Investment income
Gross profit
Investments
Equity
Net yield
2008
€ million
2007
€ million
231.8
238.6
270.3
124.5
58.0
2,700.0
19.3
2,142.3
2.3 %
2.4 %
4.7 %
239.0
239.5
295.0
132.5
68.4
2,637.1
19.3
2,041.9
4.4 %
2.5 %
5.1 %
ASSTEL Lebensversicherung AG is a direct marketer of life and annuity insurance products.
New business, which includes insurance policies written as well as increases in insured sums
due to dynamic adjustment, expanded significantly in 2008 in comparison to the prior year.
The sum of new business premiums increased by 116.0 % to € 508.4 million. When comparing
this figure with that of the prior year, it should be noted that the sum of new business in 2008
profited by € 277.9 million from the effect of the progression of “Riester” incentives.
Total business in force at the end of the year reached € 8.7 billion, which was 5.6 % more than
in the prior year. The number of policies decreased by 3.8 % to around 354 thousand. Gross
premiums written fell by 3.0 % to € 231.8 million.
Policyholder benefits by ASSTEL Lebensversicherung AG totalled € 270.3 million. In comparison to the prior-year figure of € 295.0 million, this was a shortfall of 8.4%, essentially due to
developments in unit-linked life insurance.
Owing to the increase in production, acquisition costs rose to € 11.9 million, which was 15.0 %
more than in comparison to the prior year. The acquisition cost ratio fell to 2.3 % (PY: 4.4%)
and the administrative cost ratio to 2.4% (PY: 2.5 %) in 2008.
Despite the financial market crisis, the carrying value of the ASSTEL Lebensversicherung AG
investment portfolio increased slightly to € 2.7 billion (PY: € 2.6 billion) in the year under
review. Although operating in an adverse macroeconomic environment, the company once
again achieved a very good investment result of € 124.5 million (PY: € 132.5 million).
Gross profit – which is the profit before allocation of surplus to policyholders, taxes on income
and distribution of profit – decreased from € 68.4 million in the prior year to € 58.0 million in
the year under review. The scale of gross profit is largely determined by the investment result.
Netting all the relevant forms of income and expenses – the latter including, where applicable,
the guaranteed yield on policyholders’ assets in the amount of the actuarial interest rate –
produced a lower surplus than in the prior year. The greater part of gross profit – € 49.5 million
– was allocated to policyholders in the form of an aggregate allocation of € 27.2 million to the
reserve for premium refunds and direct credits totalling € 22.3 million. Taxes on income
accounted for € 5.3 million (PY: € 10.1 million). The net income for the year prior to transfer of
profit was € 3.2 million. This amount was transferred under the profit transfer agreement
concluded between Gothaer Finanzholding AG and ASSTEL Lebensversicherung AG in 2002.
Health Segment
The Gothaer Group is represented in the Health segment exclusively by Gothaer Krankenversicherung AG. Gothaer Krankenversicherung AG markets its products primarily through the
Gothaer field force. It also operates in the direct insurance market. However, the company
positions itself in the market not only as a health insurer but also as a healthcare service
provider.
Performance in the Health Segment
Gross premiums written in the Health segment totalled € 782.7 million. This was moderately
less than the prior-year figure of € 793.4 million. The main factors responsible for this minor
downturn were moderate premium adjustments as well as changes in the composition of the
portfolio. At € 777.9 million (PY: € 788.3 million), net earned premiums in this segment were
only marginally less than the gross premiums written because only a small percentage of
premium in this particular line is ceded to reinsurers.
The carrying value of the investment portfolio increased from € 4.02 billion to € 4.18 billion in
the financial year. The shift in investment described for the Group as a whole – i.e. a decrease
in investments available for sale and an increase in investments held to maturity as well as
other investments – was also registered in the Health segment. Investment activities generated a profit of € 161.0 million (PY: € 198.4 million). Here too, the adverse macroeconomic
environment took its toll.
Policyholder benefits decreased to € 830.9 million in 2008 (PY: € 873.4 million). This was
largely due to a smaller allocation to policy reserves. Because of the financial crisis, allocations to reserves for premium refunds in the Health segment were also recessive.
Net underwriting expenses for the financial year increased by € 8.4 million to € 76.7 million.
While administrative expenses, at € 22.7 million, remained on a par with the prior year
(PY: € 22.6 million), acquisition expenses increased from € 45.7 million to € 54.0 million as a
result of recessive income from the deferral of acquisition costs.
Owing to the developments described above, the operating result decreased from € 35.0
million to € 21.6 million. Because of significantly reduced tax expenses, however, the net
income in the Health segment increased by € 1.9 million to € 16.2 million.
51
52
Performance of the Company
Gothaer Kranken (German Commercial Code)
Investment income
Gross profit
Investments
Equity
Loss ratio
Net yield
2008
€ million
2007
€ million
724.7
719.9
175.1
104.6
4,231.7
151.0
4,141.4
78.6 %
7.3 %
3.1 %
4.3 %
727.7
722.6
184.2
122.8
3,996.4
152.5
3,860.8
77.7 %
7.3 %
3.1 %
4.8 %
Gothaer Krankenversicherung AG again improved its performance in many areas last year.
New policy production showed a significant year-on-year increase for the fifth year in succession. In terms of number of policies, new business expanded by around 20 % altogether in
relation to the prior year.
The company registered gross premium income of € 724.7 million in 2008, as against € 727.7
million the year before. The main factors responsible for this minor downturn in premium
revenues were moderate premium adjustments as well as a change in the composition of the
portfolio.
Claims paid showed a moderate increase in the year under review. After totalling € 441.3
million in 2007, claims expenditure including claims settlement expenses rose to € 456.4
million last year. In addition, the loss reserve increased by € 9.5 million to € 128.6 million.
The loss ratio, which is the gauge for assessing expenses incurred for insureds, moved up
slightly. From 77.7 % in the prior year, it rose to 78.6 % in the year under review.
Acquisition costs totalling € 52.8 million accrued in the financial year 2008 (PY: € 53.2 million).
The acquisition cost ratio, which is the ratio of acquisition expenses to earned premiums,
stood at 7.3 % as in the prior year. Expenses incurred in connection with the administration of
policies decreased from € 22.8 million to € 22.7 million in the reporting period. Despite the
simultaneous downturn in premium income, the company achieved an administrative cost
ratio – which expresses administrative expenses as a percentage of premiums – of 3.1 % as in
the prior year.
The carrying value of the Gothaer Krankenversicherung AG investment portfolio increased to
€ 4.2 billion in the year under review (PY: € 4.0 billion). Despite the adverse macroeconomic
environment, the company achieved a good investment result of € 175.1 million (PY: € 184.2
million).
Gross profit after taxes decreased from € 122.8 million last year to € 104.6 million. The surplus appropriation ratio included in the ratios catalogued by the German association of
private health insurers indicates the percentage of gross profit distributed to policyholders.
This decreased to 87.1 % in 2008 (PY: 91.9%). The funds were allocated by means of a transfer
of € 54.7 million (PY: € 71.1 million) to the reserve for experience-rated premium refunds and
a transfer of € 12.2 million (PY: € 11.5 million) to the reserve for pool-relevant non-experiencerated premium refunds. Expressed as a percentage of earned premiums, these two figures
form the basis of the ratio of transfer to the premium refunds. This ratio decreased against the
prior year, moving down from 11.4% to 9.2 %.
The net income for the year of € 13.5 million is shown together with retained profit brought
forward of € 5.0 million as balance sheet profit. If the proposal for distribution of profit is
accepted, the sum of € 13.5 million will be distributed to shareholders and € 5.0 million
carried forward.
Other Activities Segment
Companies operating in the Other Activities segment include Gothaer Finanzholding AG and
the Group’s service providers. Gothaer Finanzholding AG, as the holding company of the
Gothaer Group, holds all the shares in the main insurance companies and many other Group
companies. In 2004, a strategic decision was taken to have the Gothaer Group focus exclusively on primary insurance business. The operations of Gothaer Rückversicherung AG were
therefore suspended and the company merged with Gothaer Finanzholding AG. Although
Gothaer Finanzholding AG will continue to handle the portfolio run-off of the former Gothaer
Rückversicherung AG in the coming years, it continues to be included in the Other Activities
segment because its primary function is as a holding company and its income from insurance
premiums as of 2005 is low.
The main service providers include Gothaer Asset Management AG, which invests and manages capital assets for Group companies and third parties.
Gothaer Systems GmbH (formerly IDG Informationsverarbeitung und Dienstleistungen GmbH)
is the Gothaer Group’s data centre and network operator and a provider of other services in
the area of information technology and software programming, including applications development.
Other important services that are needed to maintain Group companies’ operations are
provided by Hamburg-Kölner-Vermögensverwaltung GmbH. The company purchases office
furnishings and supplies for Group companies, rents office space and performs other services
in the areas of facility management, company catering services, printing and advertising.
Gothaer Finanzholding (German Commercial Code)
Investment income
Net income for the year prior to transfer of profit
Equity
Net yield
2008
€ million
2007
€ million
0.6
0.6
154.5
118.0
1,613.1
724.9
318.2
9.4 %
1.6
1.6
166.5
122.0
1,636.5
724.9
350.6
9.5 %
Gothaer Finanzholding AG is responsible for the financial management of the Gothaer Group.
In this capacity, it holds the shares in the joint-stock insurance companies and other major
Group subsidiaries and associates. Since the suspension of active reinsurance operations
and the merger of Gothaer Rückversicherung AG with Gothaer Finanz-holding AG in 2004, the
company has also been responsible for run-off liabilities and obligations in connection with
reinsurance treaties.
Gross premiums written further decreased as anticipated to € 0.6 million (PY: € 1.6 million).
Earned premiums from retained business were at the same level, € 0.6 million (PY: € 1.6
million). These premiums mostly comprised pipeline premiums. After allowance for run-off
gains from prior-year loss reserves, total losses incurred net of reinsurance amounted to
Gross underwriting expenses, which are mainly comprised of bonuses, reinsurance commissions and brokers’ fees as well as internal administrative costs, decreased sharply again in
line with premiums. Bonus and commission expenses totalled € 0.1 million (PY: € 0.7 million).
As a result of further cuts in HR and material costs, internal administrative costs decreased to
53
54
The underwriting result net of reinsurance before adjustment of equalization reserves was
€ – 1.8 million (PY: € – 2.6 million). With the approval of the Federal Financial Supervisory
Authority, the equalization reserves are being reversed evenly over a period of five years. In
2008, they were reduced accordingly for the fourth time by the sum of € 12.3 million, which
was recognized in income. As a result, the underwriting account showed a result of € 10.5
million net of reinsurance (PY: € 9.7 million).
The company achieved yet another excellent investment result in the financial year 2008
– € 154.5 million (PY: € 166.5 million) – maintaining its performance at the high prior-year
level. This gratifying development was due, in particular, to high income from strategic investments, which was boosted by appreciation of the Gothaer Allgemeine AG shareholding’s
book value in the wake of the Gothaer Credit Versicherung AG merger. The net yield on investments was 9.4% in 2008 (PY: 9.5 %).
The positive results achieved in both the underwriting and the non-underwriting accounts
made for a net income for the year after taxes of € 118.0 million. This profit, which was comparable to the prior-year figure, was transferred to Gothaer Versicherungsbank VVaG.
Gothaer Asset Management (German Commercial Code)
Commission income
Net income for the year prior to transfer of profit
Equity
Balance sheet total
2008
€ million
2007
€ million
31.2
20.3
11.6
26.2
25.4
14.9
11.6
30.3
Gothaer Asset Management AG is the financial services provider that manages the investments of the Gothaer Group. The carrying value of assets under management was around
€ 25.0 billion (PY: € 22.5 billion) as of 31 December 2008.
Despite the financial market crisis that struck in the second half of the year, the volume of
commissions received by the company grew to € 31.2 million, which was 22.6 % more than in
the prior year. The commission income related mostly to Group asset management (55 %) and
fund advisory services (39%). The profit of € 20.3 million (PY: € 14.9 million) generated in the
reporting period was transferred in full to Gothaer Finanzholding AG under the terms of the
existing profit transfer agreement in place.
Risk Report
Risk-oriented Management Concept
The core business of our Group companies involves assuming risk and making contractual
commitments to pay claims or benefits. To be able to perform these tasks reliably on a sustainable basis, our corporate governance is geared to the “safety first” principle, i.e. growth
and profit targets are pursued under strict observance of the standards needed to secure the
long-term future of the Company. The framework of acceptable risks that can be consciously
assumed is defined in our risk strategy. This requires that assumption of risk should be
limited, in particular, by our existing risk-bearing capacity and declared risk tolerance, i.e. our
maximum permissible risk exposure. This security aspect is taken into account from various
perspectives by minimum requirements that need to be observed:
• From a regulatory perspective, minimum standards have been defined stipulating that
solvency capital requirements – including a security buffer against unplanned, additional
risks – are fulfilled at all times and that quarterly evidence is presented to show that policy
conditions can be met even in the event of adverse capital market developments such as
those simulated in Federal Financial Supervisory Authority (BaFin) stress scenarios.
• From a rating perspective, we seek to maintain a capital adequacy ratio that, in conjunction
with the other rating factors, is sufficient for at least an A-category rating (financial strength
rating).
• For internal management purposes, we have set a minimum security level of 99.5% (oneyear value at risk based on our own risk model).
Risk Management Organization
Risk management at the individual companies is part of the risk management system of the
Gothaer Group. Its functionality and efficacy is the responsibility of the entire Management.
The tasks of risk identification, analysis, management and monitoring are for the most part
performed close to risks in the operative units. Care is taken to ensure that conflicts of interest in the performance of these tasks are avoided. Outsourced functions are predominantly
fulfilled by Group companies integrated in the Group-wide risk management system. Risk
controlling tasks are performed by the actuarial department and the central risk controlling
unit at Gothaer Finanzholding AG. At the same time, close cooperation takes place with the
Middle Office of Gothaer Asset Management AG, especially on ALM issues. The individual
companies and Gothaer Asset Management AG are also represented in the risk committee
established at Group level. Its responsibilities include monitoring risks from a Group perspective by means of an indicator-based early warning system as well as further developing
uniform cross-Group risk assessment and management methods and processes. Risk management principles, methods, processes and responsibilities are documented in a risk
guideline, a risk manual and an Intranet risk management application.
Attention in the risk management process is focused on investment risks, underwriting risks,
loss of receivables risks in insurance operations, strategic and operational risks and reputation and concentration risks.
The risk management process implemented includes an annual systematic inventory of risks
with half-yearly measures controlling, a qualitative and quantitative risk assessment, various
risk management measures, risk monitoring by the operative units and risk controlling.
Transparency about the risk situation and early implementation of risk-limiting measures are
ensured by regular risk reporting and ad hoc reports on specific developments.
Internal monitoring of the rules of the risk management system, especially in terms of their
efficacy, is regularly reviewed by the Group internal auditing unit. A review of the risk earlywarning system is also part of the audit of the Group companies’ financial statements and the
consolidated financial statements performed by our auditors.
55
56
The regulatory requirements that need to be met by an insurance company’s risk management system were codified at the beginning of 2008 by the provisions of section 64 a of the
German Insurance Supervision Act. At the same time, work continued at European level on
the development of the Solvency II supervisory system. During the year under review, we
made preparations and implemented measures to ensure that we meet the supervisory
requirements on both these fronts. That action included addressing compliance with section
64 a VAG as a project and is geared to the principles contained in the Minimum Requirements
for Risk Management in Insurance Companies (MaRisk VA).
Underwriting Risks
As a matter of principle, the Gothaer Group companies counter underwriting risks with rates
based on actuarial principles and with underwriting guidelines commensurate with risk.
Compliance is systematically monitored through the use of controlling instruments and earlywarning systems that identify trends and negative developments in good time. The adequacy
of underwriting reserves is also subject to annual actuarial verification. In addition, appropriate reinsurance treaties are in place to limit the risks arising from major and accumulation
losses. For the individual Group segments, this means:
General Risk Situation
Property/casualty operations are segmented by target group into private and corporate client
business. The possible impacts of the financial crisis are analyzed and assessed on a continuous basis. Where bank credit dries up, the implications for our corporate client target group
are wide-ranging – from increased insolvency through reduced inclination to invest to generally cautious purchasing behaviour. Insolvency leads to loss of client accounts, a lack of
willingness to invest and purchase results in the absence or decline of demand for insurance
cover and, as a consequence, a tendency towards diminishing premium revenues. As a result
of falling sales for industry in 2009, or 2010 at the latest, and reduced wage bills, insurance
lines with premiums based on annual turnover will register declining premium income. These
lines include liability, marine and even property insurance. The prospectively recessive
inclination to invest will also affect engineering insurance. These negative impacts should be
offset and more than compensated by profitable new business. The poorer economic climate
will also impact on private client business, although to a lesser extent, and will result in
reduced numbers of accident and glass policies in force.
Private Client Business
Private client business is marked by increasing price sensitivity and a pronounced readiness
to change providers on the part of policyholders. Sustained extreme price pressure and a high
degree of market saturation are also evident. Gothaer offers comprehensive and economical
insurance solutions to counter this market trend.
Accordingly, we conducted a premium review last year and lowered the level of our premiums
for private automotive insurance as far as costs and claims experience would permit. The
current product secures our automotive business and positions us well for future market
developments. In addition, the quality of our portfolio is being steadily improved by effective
portfolio management. On the whole, we thus continue to address the market with acceptable premium rates, committing to profit even at the expense of market share.
In property, liability, personal accident and multiple-risk insurance, predatory competition is
increasing. Due to price pressure, market saturation and financial crisis, growth prospects are
seen as low. Addressing this situation, our private client division continues to pursue a dual
product and price strategy. In each insurance line, we offer a basic product that is very well
positioned in popular rankings and test reports because of its price. We also offer premium
products, which provide high-performance solutions for clients. In 2009, we will additionally
conduct a personal accident campaign with a view to securing portfolios and improving new
production.
The natural catastrophes resulting from climate change in recent years will have a significant
negative impact on the underwriting result. Our portfolio management activities, with which
we systematically retain good policies and cut loose policies that are not priced at a level
commensurate with risks, will thus become increasingly important and will be maintained.
Systematic use of ZÜRS, a zoning classification system for identifying exposure to flooding
risks, ensures that underwriting conforms to risk management requirements.
Corporate Client Business
The commercial and industrial business that makes up the corporate client segment is characterized by very intense competition with pressure on premiums and conditions, especially
in industrial property insurance and fleet insurance for major risks. We adjusted to this at an
early stage with a profit-geared cyclical management system and responsible underwriting.
Various activities are conducted to increase market attractiveness. Examples include regular
business and corporate presentations at sales partners and relevant gearing to their needs.
All these efforts have helped generate growth that is above the market average and earnings
that are on target.
The market environment for the largest single insurance class – liability insurance – stabilized
further in the period under review. The exemplary market launch of our environmental damage insurance impacted positively on premium growth and led to a high level of satisfaction
among clients and sales partners.
The policy of refraining from the assumption of highly exposed risks – a policy that has been
observed for many years – was systematically maintained. In addition to these profit-oriented
measures, value-based management resulted in new policies being written.
Property insurance is an area that needs to be seen in a differentiated light. In the commercial
sector, our solution-oriented approach produced an increased volume of new business
despite intense competition. In the industrial sector, the pressure on premiums increased
even more. Portfolio business was largely retained, so no policies were lost after new business was taken into account. Fire safety and security are the concepts that boost earnings in
industry and commerce and offer the client genuine solution-oriented added value.
Marine insurance is a regular source of growth for Gothaer. In carriers liability insurance,
underwriting experience deteriorated somewhat as a result of the tense loss situation.
In engineering insurance, vigorous growth was achieved in machinery and electronic lines.
Renewable energy insurance also contributed to growth as anticipated.
Our position as market leader in windpower plant insurance was further consolidated and
major acquisitions were noted in biogas facility and photovoltaic system insurance. Developments in geothermal risks continue to be closely monitored and initial experience is being
gathered in the insurance of such risks.
57
58
Automotive insurance also needs to be seen in a differentiated light. In commercial automotive insurance, only a minor decrease in premiums was sustained. Extensive insurance was
provided for new risks, which will impact positively on income in 2009. Owing to the selective
underwriting policy pursued, very good underwriting results were achieved. In contrast to
this, industrial fleet insurance saw a further intensification of competition. A combination of
risk management by Gothaer Risk Management GmbH and risk-oriented contracts could not
always be achieved in new business. As a consequence, premium income fell and the underwriting result deteriorated. Growing interest in target-group and multiple-risk products was
noted on the part of clients and agents. While the SME campaign has produced positive
results in the area of multiple-risk products, growth has been achieved in corporate client
business through master agreements.
Reinsurance
The reinsurance structure validated for 2008 in the wake of extensive optimization analysis
was largely retained on the basis of the review of exposure as of 1 January 2009. The context
for the renewal of reinsurance treaties was shaped partly by the natural catastrophes that
occurred in the second half of 2008 but mostly by the impacts of the global financial market
crisis. This resulted in loss of capital for reinsurers across the board. Primary insurers sought
more reinsurance to strengthen their capital base. As a result, reinsurers demanded significantly higher prices, especially in capital-intensive areas such as natural catastrophe business.
Overall, we see a possible but very unlikely risk of a temporal mismatch between primary
insurance and reinsurance protection. This stems from the fact that negotiation of a reinsurance treaty does not normally begin until the primary insurer has already confirmed cover to
policyholders. In the historically unprecedented event of a total collapse of reinsurance
capacities, e.g. in the case of a global financial crisis coinciding with the occurrence of an
extreme natural catastrophe, our risk exposure would significantly increase.
Once again, Gothaer succeeded in placing all contracts for moderately higher prices overall
and kept default risk within narrow limits through broad diversification in line with security
requirements. Default risk was defined with the help of a newly available stochastic tool.
With regard to the concentration of insurance risks, a distinction is made between various
scenarios:
• Low-frequency loss events involving major losses
This loss category includes major losses in the area of automotive liability insurance
because a percentage of the policies in force were written on the basis of unlimited coverage or, in the case of policies written after April 2005, with a limited but very high cover
sum of € 100 million. This potential liability is taken into account in our reinsurance treaties. Major losses could also conceivably result from a terrorist attack. In the case of highcoverage policies (insured sums in excess of € 25 million), terrorism is excluded and the
risk assumed by Extremus if the customer requires insurance against terrorism. For risks
where coverage is below the critical limit, our reinsurance treaties provide limited but
adequate reinsurance protection.
• Cross-segment loss events
This loss category primarily relates to natural hazard events that would cut across Gothaer
segments. These include, in descending order, flood, storm, earthquake and – of significantly less importance (mostly automotive own damage) – hail risks. Decisions on the
scope of reinsurance protection acquired are based on extensive analyses of our entire
portfolio. Those analyses are conducted by leading international reinsurance brokers and
carriers and are performed on the basis of renowned methods of modelling exposure to
natural catastrophes. The models in question include estimates of probability of occurrence and assessments of recurrence intervals. The combined use of RMS, EQECAT and AIR
tools as well as reinsurers’ internal models provides us with a secure basis for findings.
• Geographic or line-based concentration risks
Owing to the good geographic distribution of the Gothaer portfolio, geographic concentration risk is negligible. Line-based concentration is perceptible only in engineering
insurance for wind power facilities. Here too, precautions have been taken against both
accumulation and major losses through a combination of proportional and non-proportional reinsurance protection.
• Risk dependency
Major loss events, in particular those which have a massive financial impact on the reinsurance market, can lead to insolvencies on the part of reinsurers and thus result in default.
We seek to minimize the possible impacts on the Gothaer net account by selecting our
reinsurers with care (see under loss of receivables) and spreading our placements. In the
case of natural hazard events in particular, it has been observed that high losses translate
into high claim payments fairly rapidly and therefore result in an outflow of funds. By
keeping the cash loss limits for our proportional treaties relatively low and agreeing adequate reinstatements for non-proportional cessions, we have made sure that Gothaer is not
affected in such events by liquidity or reinsurance capacity shortages.
Claims
The following table shows the changes in Gothaer Allgemeine Versicherung AG loss ratios and
run-off results across all fields of business and net of reinsurance on the basis of IFRS. The
table covers the years in which financial statements were prepared according to IFRS rules.
2000
2001
2002
2003
2004
2005
2006
2007
2008
Loss ratio (%)
after run-off
Run-off results as %
of initial reserves
74.3
68.3
76.9
63.8
59.3
64.3
59.8
66.9
59.5
5.0
8.9
1.3
2.5
5.4
– 2.3
4.5
0.9
10.0
A detailed year-by-year review of the run-off of our gross primary business without allowance
for annuity reserves is provided in the Notes to the Consolidated Financial Statements.
Risks Arising from Reinsurance Assumed
We act as a reinsurer for a number of cooperation partners. This activity predominantly
involves stable small business and private client lines. Terms are negotiated annually and are
in line with current market conditions. We see no significant risks in our reinsurance business
at the present time.
59
60
Risk Management Methods in the Property/Casualty Segment
Forecast and Change Risk in the Estimation of Reserves
Wherever a model is used, there is a risk that actual results will deviate from projections. In
the case of reserves, however, underestimation needs to be avoided, so a safety margin is
applied. To enable the appropriateness of a safety margin to be assessed, the variability of
the estimate is established by bootstrapping. This provides a basis for quantifying the certainty of the IFRS reserve being enough to cover possible losses, expenses and annuity
payments.
Factors that cannot be adequately assessed by the models used to calculate reserves are
taken into account separately as follows:
• individual major loss analysis: where necessary, individual major loss reserves are
included in the reserve calculation results
• detailed analysis of accumulation loss events, taking account of time of occurrence and
previous run-off and comparing them with such events in the past
• detailed analysis of sub-lines in areas where portfolio shifts have occurred.
Natural Catastrophe, Accumulation Loss and Major Loss Risk
The effects of natural disasters, accumulation losses and major losses on the net side for
Gothaer are largely mitigated by the structure of reinsurance. To keep the impacts on the
gross side as low as possible, information delivered by the ZÜRS zoning classification system
and other models is taken into account in the determination of premiums and underwriting
policy.
Reinsurance Risk
Even a balanced reinsurance structure designed to mitigate the effects of extreme events
entails risk – the risk of possible default by reinsurers. At Gothaer, this risk is taken into
account in the selection of reinsurers (A rating) and is quantified by DFA modelling. It is thus
covered by risk management.
Discounted Reserve Risk
If reserves are discounted, the choice of discount rate and the underlying payment schedule
are critical parameters. As loss reserves are currently not discounted, this risk does not apply
to Gothaer.
Life Segment
The general risk situation for life insurers is broadly defined by the current financial market
crisis and the recession of the real economy associated with it. For one thing, that crisis plays
a dominant role in shaping the investment risks described below, which in turn give rise to
more risks for future bonus payments. For another, changes in demand during the recession
may result in growth risks.
The general risk situation is also determined by current and future changes in the legal environment for life insurers. At the heart of that change at national level is the sweeping reform
of the German Insurance Contract Act (VVG), which entered into force on 1 January 2008.
Possible implementation and cost risks have not materialized. However, we will continue to
observe how customers and agents respond to the changes in transparency, whether the new
regulations lead to changes in cancellation behaviour and how the new rules on precontractual duty of disclosure impact on risk outcomes.
At international level, developments are determined primarily by work on the new international accounting standards (IFRS) for insurance contracts as well as by the restructuring of
the regulatory system (Solvency II).
To minimize environmental uncertainty and any negative impacts it may have on the business
model and growth of our life insurers, it is our general policy to scrutinize changes in the law
before they take effect, analyze their implications and identify possible alternative courses of
action.
Mortality Tables (Biometric Risks)
Policy reserves are calculated on the basis of decrement tables deemed adequate by the
supervisory authority and the German Association of Actuaries (DAV). Particular importance
here is attached to assessing longevity risk. In the estimation of the Responsible Actuary, the
current policy reserves provide sufficient safety margins for the Group companies.
With regard to the (supplementary) occupational disability policy portfolio, the reviews focus
particularly on verifying that policy reserves exceed the reference reserve mandated by the
Federal Financial Supervisory Authority (BaFin). Because of the higher subjective risk, the
(supplementary) occupational disability policy portfolio is analyzed on a regular basis. This
shows that the bases for calculation currently applied at Gothaer Lebensversicherung AG
provide an adequate margin for safety. At ASSTEL Lebensversicherung AG, there was a moderate need for reinstatement in policy reserves and an additional allocation was made accordingly. In response to the new precontractual duty of disclosure rules introduced with the VVG
reform, we incorporated appropriate questions in application forms and modified risk assessment for occupational disability policies accordingly.
New bases for the calculation of reserves for (supplementary) long-term care annuity policies
were published by the DAV at the end of 2008. We have analyzed the portfolios of Gothaer
Lebensversicherung AG accordingly and see no risks at present. However, we will monitor the
portfolios continuously. If necessary, the policy reserves will be increased.
Assumptions on Cancellation Probability (Cancellation Risk)
Cancellation probability is not taken into account in the calculation of premiums or underwriting reserves. In recent years, cancellation behaviour has tended to be unremarkable, mostly
producing a lapse rate lower than the market average. In the last quarter of 2008, however, a
moderate rise was observed in the lapse rate at Gothaer Lebensversicherung AG, which could
be connected with the financial market crisis. We will therefore keep a critical eye on cancellation behaviour to identify any signs of sustained change. The sharp rise in the lapse rate at
ASSTEL Lebensversicherung AG in 2008 was due to reductions in “Riester” premiums by
customers responding to the automatic increase in premiums in the final Riester stage.
Although we regard this as a result of special circumstances, we will also remain vigilant here
for any sign of sustained change in cancellation behaviour.
61
62
For Gothaer Lebensversicherung AG, there is also the risk of increased liquidity being
required for the cancellation of major contracts, which could force us to realize hidden liabilities in the current capital market situation. We counter this risk with selective key account
management for major clients.
Interest Guarantee Risk
Because of the low interest rate phase for government bonds due to the financial market
crisis, coupled with the volatility and risky state of the stock and corporate bond markets, the
German life insurance industry and therefore the Gothaer Group may be exposed to risks
inherent in high guaranteed interest rates, which generally extend over several decades in the
case of life insurance products.
The maximum actuarial interest rate since 1 January 2007 has been 2.25 %. Despite this
downturn, the unchangeable nature of figures guaranteed in policies in force results in a state
of inertia in the reduction of this risk. Consequently, the margin between the average actuarial interest rate for policies in force and the risk-free yields realizable in the capital market
remained narrow in 2008 – and became even narrower in the course of the year. Interest
guarantee risk thus remains one of the major risks for life insurers and has been heightened
even more by the low interest rate phase. We therefore make a point of ensuring that investments are aligned with liability deadlines and thus tailored to the risk-bearing capacity of the
Company. Priority is assigned here to generating a stable long-term flow of income.
Risk Management Methods in the Life Segment
Risks associated with life insurance policies stem mainly from the guarantee of the basic data
used to calculate premiums (interest, biometrics, costs) and the surrender values over the
whole term of the policy. Since it is generally not possible to adjust life insurance premiums
at a later date, these risks are all lessened by appropriate safety margins in the bases for
calculations.
Gothaer employs a variety of instruments to establish the nature and extent of risks arising
from life insurance policies. The main risk connected with a life insurance policy is interest
guarantee risk, which increases in low interest phases in particular. Application of the two DAV
models “Verification of Actuarial Interest for Life Insurance Portfolios” and “Risk Assessment of
Long-term Guarantees”, the GDV model used to determine the viability of future actuarial
interest rates, our own model for determining the maximum actuarial interest rate that can be
financed as well as ALM analyses, the models of the QIS4 Solvency II impact study and our
internal capital requirement model show that Gothaer’s past and future interest guarantees are
acceptable and financeable. There is no interest guarantee risk with unit-linked life policies,
except for guaranteed annuity factors for the term of unit-linked annuity insurance.
Other risks associated with life insurance policies result from adverse changes in mortality,
longevity, invalidity and expenses as well as from a change in cancellation behaviour. These
risks are reduced, amongst other things, by appropriate reinsurance treaties and maximized
reserving at the level of guaranteed surrender values. The extent of Gothaer’s exposure to
these risks is established using embedded value sensitivity analyses and Solvency II QIS4
impact study stress scenarios. For equal relative change, changes in cancellation and
expenses have the most impact. However, the analyses confirm that these risks are acceptable and financeable by Gothaer.
Health Segment
The market and prospects of development for private health insurance will be defined to a
significant extent by the consequences of the healthcare reform (Act to Enhance Competition
in Statutory Health Insurance). While the feared wave of comprehensive policyholders switching insurers and accepting the requirement to stay for 18 months on a basic tariff is unlikely to
materialize on a significant scale, it will be made easier in 2009 for new customers to change
insurers and have part of the ageing reserve formed for them transferred to the new insurer.
This will result, on the one hand, in greater portfolio volatility – also in terms of risks – and,
on the other, in higher premiums for financing the facility to change insurers. The act is still
being examined for compliance with the constitution.
The basic tariff to be introduced by private health insurers provides the same level of benefit
as statutory health insurance schemes. The result is a strengthening of the convergence
between the two health insurance systems, which has been noted for a number of years, and
a “publicization” of private health insurance at the future basic tariff level. This can be seen
from the fact that the cost of social safeguards in the basic tariff have to be shared by all
those with comprehensive private health insurance.
Growth perspectives in our core field of business – comprehensive health insurance – remain
subdued on the whole. In supplementary insurance, however, they continue to be very bright.
The only thing curbing consumer purchasing power here is the economic slowdown. Nevertheless, the constant contraction of the range of statutory health insurance benefits is creating appreciable demand for supplementary insurance. For the companies concerned, this
means having to make appropriate adjustments in terms of sales channels, cooperations and
administrative processes.
Underwriting Risks
Underwriting risks include risks that arise from the composition of portfolios and from premiums that are not commensurate with risks. The risks mentioned have a major bearing on the
ability to allocate adequate reserves for premium refunds and thus have the funds available
to lessen the impact of the development of premiums for our customers. A particularly important role is played here by the recurrent financing of annually granted premium limits, which
are becoming increasingly attractive as a result of the partial portability of ageing reserves
and thus open-ended limiting funds.
We continue to counter these risks by professional underwriting and professional benefit and
health management as well as by the use of controlling tools and early-warning systems. In
view of the composition of our portfolios, attention is particularly focused on the introduction
of the basic tariff as of 1 January 2009 and the anticipated increase in switches from one
private insurer to another as a result of the prorata portability of ageing reserves as of 2009.
Premiums from new business are based on mortality rates that include a safety margin which
is at least equal to that of the latest private health insurance mortality table. The cancellation
probability factors applied are based on our own duration-dependent hospitalization studies
as well as association experience. Extensive scenario computations have been used to estimate the prorata transferability of existing portfolio reserves and reserves for new customers
switching from other private health insurers and to factor the findings into the calculation of
premiums.
Implementation risks exist due to the fact that important parts of the sweeping legislative
changes making up the healthcare reform are open to interpretation. These risks are countered by sound legal analysis and prompt monitoring of developments.
63
64
The actuarial interest rate, one of the most important bases for calculation in private health
insurance, is dependent upon developments in the capital markets. This fact is taken into
account through the use of professional tools for analyzing investments and harnessing the
findings for a more focused investment strategy as well as by the regular performance of
stress tests and extrapolations. In view of developments in the capital markets, however,
there is a greater chance that the net target yield will not be achieved. Investment strategy is
therefore focused on a reasonable risk-return ratio coupled with a high probability of guaranteed actuarial interest being achieved.
Financial risks in the area of health insurance can result from the occurrence of major and
accumulation losses. These risks are taken into account by a comprehensive reinsurance
policy.
Risk Management Methods in the Health Segment
Portfolio Composition, Premiums not Commensurate with Risks, Allocations to Reserves
for Premium Refunds, Recurrent Financing of Premium Limits Granted Annually
As stated above, we address this area of risk with professional underwriting, professional
benefit and healthcare management and other controlling instruments. With regard to portfolio composition, special consideration is also given to the new basic tariff.
Extensive sensitivity analyses are carried out in connection with annual financial projections
in order to examine the impact on the reserve for premium refunds and the financing of
premium limits granted annually. In addition to a basic scenario that reflects the expectations
of the Company, various alternative scenarios are also considered. The alternative scenarios
include, among other things, modified assumptions about benefit claims and new business.
Aside from individual modified assumptions, evaluations are also conducted on combinations of modified assumptions. Worst case scenarios, too, are examined in this context.
In order to test the sensitivity of the main indicators against the individual parameters, the
results of the alternative scenarios are compared with those of the basic scenario. In addition, sensitivity analyses make it possible to portray the entire range of possible ramifications
for the Company and take early action to counter undesirable developments.
Cancellation Probability
The above-mentioned sensitivity analyses are also used to evaluate exposure to cancellation
probability risk. They can be used to examine the impact of a 20 % reduction in cancellations,
for example, or to study the prorata transferability of age reserves anticipated in the wake of
the healthcare reform. In the event of identifiable endangerment of key financial ratios,
countermeasures are taken, such as lowering the cancellation probability used in the calculations.
Mortality Rates
Sensitivity analyses based on various mortality tables as well as on the Company’s latest
actual mortality figures are performed to evaluate the mortality rate risk. The mortality figures
used to calculate premiums are chosen so that a sufficient safety margin is ensured even
after allowance for mortality trends.
As in the case of insurance benefits, a change in the law in 2008 allowed changes in mortality
to trigger premium adjustments and thus promptly eliminate any imbalance between actual
and calculated figures.
Actuarial Interest
Actuarial interest rate risk is addressed at the investment level with professional analytical
tools and the results obtained are systematically harnessed to optimize investment strategy.
The focus of investment activities is on achieving a secure current average yield. This also
applies to the “actuarial company yield” (AUZ), an actuarial interest verification procedure
developed by the DAV that is carried out annually by Gothaer Krankenversicherung. The yield
in investments is also regularly subjected to stress tests and extrapolations as well as sensitivity analyses.
Major and Accumulation Losses
Exposure to major and accumulation loss risk in the area of health insurance is managed by a
comprehensive reinsurance policy tailored to the specific requirements of the Company. The
adequacy of insurance protection is reviewed quarterly on the basis of detailed reinsurance
accounts, after which appropriate adjustments are made as required.
Loss of Receivables Risk
Accounts receivable from policyholders and insurance agents in connection with primary
insurance business at Gothaer Allgemeine Versicherung AG, Gothaer Lebensversicherung AG,
Gothaer Krankenversicherung AG and ASSTEL Lebensversicherung AG totalled € 225.9 million
at balance sheet date. This figure includes valuation allowances that take adequate account
of the risk of possible loss of receivables. The following table shows the age structure of the
receivables handled by our central collection systems.
Receivables outstanding for more than
90 days
180 days
360 days
€ million
72.6
51.3
20.3
The average collection loss (unsuccessful court orders) in the last three years was € 8.9 million,
which represented an average of 2.5 ‰ of gross premiums written.
We cede reinsurance only to first-class reinsurers. 72 % of our reinsurance premiums are
ceded to reinsurers with a rating of AA – or better. In the course of the financial market crisis,
two of our reinsurers were downgraded by the rating agency Standard & Poor’s. This has been
taken into account accordingly in the reinsurance we cede. Accounts receivable in connection
with reinsurance business totalled € 48.4 million at balance sheet date. Accounts receivable
in connection with reinsurance ceded amounted to € 44.9 million. The structure of receivables from reinsurers by rating class was as follows:
Rating Class
AAA
AA
A
BBB
€ million
5.7
11.0
26.4
0.2
Companies with no rating accounted for € 1.5 million of accounts receivable from reinsurers.
As a result of our security policy, loss of receivables in past years has been insignificant.
65
66
Investment Risks
The investment portfolio is designed to meet all of the Gothaer Group’s current and future
payment obligations. The risks associated with it are limited by systematic compliance with
regulatory requirements (e.g. BaFin stress tests), which are seen only as minimum risk management requirements, and with the use of modern controlling systems. All major investment
risks are identified, measured, monitored, reported and managed within the context of risk
management. To improve its risk/earnings ratio, the Gothaer Group attaches a great deal of
importance to diversification of investment in terms of mix and spread. The prime focus of
this investment management is risk-bearing capacity, which is established on the basis of
internal models and ALM.
The wide range of ALM concepts employed at Gothaer includes stochastic risk models such as
ALM projections, asset-only analyses as a module of the early-warning system within the
Group as well as stochastic support for net target yield and surplus statement planning. These
analyses from different perspectives form the basis for the regular verification and adjustment of strategic asset allocation.
In addition, key business ratios are analyzed with the help of empirical distributions and
shortfall probabilities. These ratios include, among other things, net and market value yield,
hidden asset-side net reserves, uncommitted reserves for premium refunds and the own
funds ratio. Regularly defined individual scenarios are also examined. The basis here is
formed by a scenario that is deemed highly likely to occur. Furthermore, analysis is extended
to critical scenarios that are identified in the course of the stochastic evaluation of results.
We also use stochastic indicator-based risk measurements to establish probabilities of failure
to achieve investment income targets at the end of the year. The probabilities are the result of
a simulation of market value development and earnings generated by the major investment
classes based on the Group’s own performance expectations for the year ahead. Other models such as our own capital requirement model or the QIS study models for Solvency II are
also used.
Systematic further development of the risk models used also promotes a sustainable
increase in risk-bearing capacity. Thanks to our investment strategy, we have limited the risks
resulting from investments.
The following three types of risk are monitored and managed within the investment management system described.
Market Change Risks
Investments are exposed to the risk of possible loss of value due to changes in interest, share
prices and exchange rates in the international financial markets. Market change risk management is supported by regular computations based on the use of stochastic and deterministic
models. The investment portfolio is subjected to stress scenarios at regular intervals in order
to measure risk potential.
Interest Change Risk
When interest rates fall, there is a risk that funds can only be reinvested at a lower rate of
interest. Gothaer limits this reinvestment risk by the use of ALM and duration analyses. We
also attempt to increase income, even in a low-interest environment, by making selective use
of interest structures (e.g. steepener bonds). However, a rise in interest rates can also constitute a risk. Accounting control mechanisms aside, Gothaer also counters this risk through
active portfolio management. In addition to the choice of maturity structure of the bond
portfolio, which permits an active investment policy for higher (reinvestment) yields, the
bond portfolio is hedged by selective diversification, including the use of derivatives, interest
structures and quantitative approaches (e.g. trend-following models).
Share Price Risk
The market change risk of shares is managed on the basis of intensive, ongoing observation
of the performance of individual shares, sectors, regions or even styles as well as on the basis
of the specific risk-bearing capacity of the individual Group companies, their respective midrange market prognoses and their relative positions in the marketplace. Investments in
individual stocks are therefore monitored and managed at the level of the respective risk
bearers as an overall portfolio, taking into account various mathematical parameters pertaining to financial risk. In addition to actual management of the share portfolio by active exposure control, company-specific control mechanisms (share options) are deployed to address
unexpected developments and thereby ensure a risk-commensurate response to short-term
fluctuations and limitation of losses in extreme cases. These mechanisms are constantly
monitored in the light of market developments and modified as necessary. Dependencies
upon accounting requirements, profit policy elements and ALM-based aspects of investment
strategy are taken into account when control mechanisms are chosen.
At the beginning of the financial year 2009, share price risk existed on only a very small scale
at Group level because both the liquid share portfolio and the corresponding hedge were
liquidated at the beginning of the year.
Exchange Rate Risk
The existing exchange rate risk is almost entirely hedged at company level.
Stress Scenarios
The Gothaer Group companies satisfy all four variants of the stress test prescribed by the
Federal Financial Supervisory Authority (BaFin), including the more stringent version that
applied up to December 2008. Based on data from financial statements, these stress tests
simulate very negative capital market changes – sometimes for both shares and fixed-income
securities or investment property – and examine the impact on the insurer’s financial statements. The target horizon is the next reporting date. Surplus cover – even in this exaggerated
stress scenario – indicates the risk-bearing capacity and stability of the Gothaer Group
insurance companies.
Sensitivity analysis pursuant to the German accounting standard DRS 5-20 produced the
following figures for the Gothaer Group. An increase in the interest curve of 1 % with a modified duration of 4.84 reduced the market value of fixed-income securities by € 836.7 million in
comparison to the year-end value of the portfolio. Taking into account hedging measures, a
decrease of 20 % in trading prices resulted in a fall in market value of € 362.6 million in the
case of shares and other non-fixed-income financial instruments. A decrease of 10 % in the
market value of the property investments of the Gothaer Group represents € 160.1 million.
67
68
Effect of Stress on Equity
Decrease in
market value
Change in equity
Change in equity
not recognized in recognized in income
income statement
statement
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
Fixed-income securities
836.7
828.2
34.8
46.4
0.0
0.0
Shares and other non-fixedincome financial instruments
362.6
600.0
0.0
0.0
125.4
197.5
Real estate
160.1
134.5
22.2
19.0
0.0
0.0
1,359.4
1,562.7
57.0
65.4
125.4
197.5
Total
Counterparty Default Risk
Counterparty default risk is the risk that arises as a result of default or as a result of a change
in the credit rating or assessment of creditworthiness (credit spread) of security issuers,
counterparties and other debtors with accounts payable to the Company. For risk management purposes, the acquisition of any investment vehicle is permissible only if a qualified
assessment of creditworthiness by an external agency such as Standard & Poor’s or Moody’s
or a qualified internal rating is available. Credit risks are broadly spread to avoid concentration risks. All investments are constantly monitored in this regard. Regular pricing is done
mostly by independent valuation service providers on the basis of mathematical models for
financial assessment and daily updated credit spreads.
Interest-bearing Financial Instruments by Rating Class
AAA
AA +
AA
AA –
A+
A
A–
BBB +
BBB
BBB –
Speculative grade (BB + to D)
Non-rated
2008
Share
2007
Share
48.3 %
5.0 %
3.2 %
9.7 %
4.8 %
9.7 %
5.0 %
5.1 %
49.1 %
3.6 %
2.9 %
10.9 %
5.6 %
7.3 %
4.3 %
4.6 %
2.6 %
2.8 %
1.7 %
3.6 %
1.3 %
0.7 %
4.9 %
3.3 %
The insurance carriers’ interest-bearing financial instruments are divided into two categories
for risk management purposes: “liquidity” and “credit”. The distinction here is whether an
instrument presents only an interest risk or whether an additional credit risk exists because of
the solvency of the issuer. So where a financial instrument is believed to entail no significant
default risk, it is assigned to the “liquidity” category. This is the case, for example, with
German government bonds (bunds) and senior secured covered bonds (Pfandbriefe). The
diagram below shows fair value in the “liquidity” and “credit” categories as an equivalent for
the maximum default risk of the Gothaer Group.
Interest-bearing Financial Instruments by Liquidity and Credit
Financial Year 2008
Financial Year 2007
57.0 % Liquidity
43.0 % Credit
55.5 % Liquidity
44.5 % Credit
In the wake of the financial crisis, special investment impairment analyses were conducted
for critical names. Each instrument identified was written down to the attainable value. The
results of the analyses also led to depreciation at portfolio level.
In certain parts of the bond market, especially in the market for subordinate bank and insurance bonds (Tier 1 and Upper Tier 2), no trading has been conducted since the fourth quarter
of 2008. Because the listed prices of these illiquid bonds are no longer the result of an active
market with willing partners engaged in arm’s length transactions, a switch was made to
mark-to-model valuation in line with IAS 39.AG74 in order to price the bonds as required. In
the course of modelling, cash flow profiles based on internal credit analysis were created to
take account of the anticipated coupon losses and their possible repayment in future years.
These individual payment streams were adequately discounted by applying factors observed
in the market and carried at fair value.
At year-end, fixed-income securities accounted for around 68 % of the investment portfolio on
the basis of market value. In the area of bearer bonds, without taking account of retail funds,
financials (unsecured/ subordinate bonds issued by banks, insurers or financial service
providers) accounted for around 9% of total investment and corporates (unsecured/subordinate bonds issued by companies) for around 6 %. Because of the marked increase in credit
spreads and illiquidity premiums, the fixed-income portfolio had significantly greater hidden
liability than in the prior year, most of it due to subordinate fixed-income securities. Hidden
liabilities continue to exist in the ABS as well as in high yield product classes. Owing to the
severe economic and financial crisis, it is possible that some interest payments on subordinate bank bonds and ABS/CDOs may not be received in the coming financial year. In spite of
the tense financial market situation, we do not anticipate by today’s valuation loss of nominal
value due to nationalization or insolvency, especially in the bank sector.
69
70
Risk Concentrations
The tables below show the financial risk concentrations in the form in which they are monitored and managed in the Gothaer Group. Distinctions are made between rating class (see
table under Counterpart Default Risk), sector, country and issuer concentrations.
Overview of Shares by Sector
Banks
Chemicals
Financial services
Healthcare
Household goods
Industrial goods
Insurance
Oil & gas
Technology
Telecommunications
Utilities
No sectoral affiliation
Other
2008
Share
2007
Share
11.0 %
5.1 %
0.7 %
0.6 %
0.5 %
4.5 %
10.9 %
16.3 %
4.8 %
9.6 %
12.9 %
3.5 %
19.6 %
14.9 %
4.1 %
2.2 %
1.2 %
2.5 %
6.0 %
11.5 %
13.6 %
6.2 %
6.9 %
8.8 %
2.9 %
19.2 %
2008
Share
2007
Share
0.1 %
0.0 %
3.1 %
30.1 %
33.8 %
3.5 %
8.2 %
0.5 %
5.6 %
12.9 %
0.9 %
0.0 %
1.3 %
0.6 %
0.5 %
2.9 %
21.5 %
29.0 %
6.4 %
6.0 %
0.2 %
7.1 %
8.7 %
1.2 %
6.9 %
9.0 %
Overview of Shares by Country
Belgium
Bermuda
Finland
France
Germany
Great Britain
Italy
Luxembourg
Netherlands
Spain
Switzerland
USA
Other
Liquidity Risk
Liquidity risk is the risk of a company being unable to fulfil its financial obligations because of
a lack of adequate funds. Comprehensive Group-wide liquidity management ensures that the
necessary liquidity is always available, even when liquidity requirements peak, and that
timely adjustments can be made during the year through the disposal of marketable securities. The maturity dates and residual terms of liabilities are shown at number 25 in the notes
to the consolidated statements.
Operational and Other Risks
Information and communication technology (IT) is an indispensable tool for an insurance
company and, due to the increasing importance of process support and automation, plays a
central role in Gothaer Group risk management. Because of this dependence on IT, security
mechanisms have been systematically improved and stabilized in recent years. We guarantee
compliance with the provisions of the German Federal Data Protection Act (BDSG) and protect
business-critical applications by using a business continuity management process that not
only ensures technological integrity but also safeguards critical business processes.
Foreseeable changes in population demographics and the current financial market crisis will
produce significant human resource risks. Mention should be made here of the “war for
talent” and the resultant risks in terms of scarcity, departure, motivation, adaptation and
loyalty as well as market developments due to the financial market crisis that are not yet
predictable. Coordinated HR information and management systems guarantee that quantitative and qualitative hazard potentials are promptly identified and countered with appropriate
measures. Prospects for personal development in combination with competitive performance-based incentive instruments help us ensure that employees remain motivated even in
times of constant change and that high performers and individuals with high potential are
retained.
Our managerial principles are based on delegation of responsibility and authority. An effective system of internal control procedures makes it possible to control and monitor all business activities. This also involves the use of multiple organizational checks and balances as
well as cross-process monitoring by internal auditors. For example, mention may be made in
this context of appropriate segregation of duties and the use of the four-eyes principle,
regular plausibility tests and dedicated fraud-detection software.
By keeping abreast of legislative activity and current case law, we are able to respond
promptly to developments and implement change immediately according to the specific
circumstances of the Company.
Internal guidelines and checks are in place – and their observance regularly monitored – to
prevent life insurance or refund-of-premium personal accident insurance being used to
launder money or finance terrorism.
Summary of the Risk Situation
The own funds of € 1.23 billion derived from the consolidated equity of the Gothaer Group
exceeds the amount needed to meet solvency requirements by € 309.3 million.
In 2008, Standard and Poor’s confirmed its A – (very good) financial strength ratings for
Gothaer Allgemeine Versicherung AG, Gothaer Krankenversicherung AG and Gothaer Lebensversicherung AG and FitchRatings again gave A (very good) ratings for Gothaer Allgemeine
Versicherung AG and Gothaer Lebensversicherung AG.
The control mechanisms, instruments and analytical processes described above ensure
effective risk management. At the present time, we see nothing in the risk situation of the
individual Group companies that might jeopardise the fulfilment of commitments assumed
under insurance contracts.
71
72
Future Perspectives
Economic Environment in Germany
Global economic forecasts are currently marked by general uncertainty over the long-term
implications of the financial crisis as well as the impacts of the monetary and financial policy
measures taken and governments’ economic programmes and interventions. There is general
agreement that the world economy has been in economic downswing since the significant
intensification of the financial crisis in autumn 2008 and that a worsening global recession is
anticipated in 2009.
The sharply deteriorated general economic climate also continued into 2009 with a recession
in Germany. Some forecasters see a GDP downturn of more than 5 %.
The principal causes are sharply falling exports and a marked slowdown in orders in the wake
of the global recession. Investment is decreasing and capacity utilization declining at the
same time. On the labour market, negative developments with falling employment are anticipated. Despite an initial rise in real incomes, domestic consumer demand will not increase
significantly.
Gothaer Group
The future development of the Gothaer Group will be largely defined by its core fields of
business, i.e. the Property/Casualty, Life and Health segments. Because these segments
have both shared and separate environments, the prognosis in terms of opportunities for
future development is made on the basis of these segments.
General Situation
Economic recession will impact unfavourably on demand for property and casualty insurance
in 2009 – not only because of its effect on the economic situation of private households.
Commercial and industrial demand is also expected to be subdued. At the same time, the
price sensitivity of private and corporate clients will become even more pronounced while
price competition between providers will persist. In the light of these underlying conditions,
the GDV expects 2009 to bring a further reduction of scope for growth in property and casualty
insurance.
Premium income from the most important class of property and casualty insurance business
– automotive insurance – is already being depressed by portfolio reductions due to shifts
towards more economical no-claims classes and more economical premium segments. In
addition, particularly intense price competition is anticipated in individual fields of business
due to the increasing market share commanded by cut-price insurers, e.g. direct insurers.
Overall, premium revenues from automotive insurance business are expected to decrease by
a further 2 %. Across all lines of insurance, premium volume is expected to remain virtually
the same as in 2008.
Outlook
We fully expect the Gothaer Group to be able to maintain the level of premium income from
property/casualty business in the financial year 2009. Having said that, experience has
shown that the development of premiums within the individual insurance lines will differ from
one line to another.
Private client business in the coming years will be shaped by developments in private automotive business, where premium income is expected to decrease as a result of competition.
In all other lines in this segment, we anticipate a stable level of premiums. In private client
business, we will continue to pursue a balanced business policy line between earnings and
growth in the year ahead. This will include systematic underwriting and constant portfolio
management.
In the commercial client segment, we anticipate moderate premium growth in all lines of
insurance over the next few years, although a deviation from targeted premium volume due to
the present financial market crisis is not ruled out. In liability and engineering insurance
lines, we will take targeted individual risk management measures at relevant clients.
The development of the renewable energies market will also be significant in the years ahead.
To achieve the climate goals set by the German government and the European Union, major
investment in plant and equipment as well as production premises will be needed in the
coming years.
Earnings Targets
In view of the increased intensity of competition, the focus in the coming years will continue
to be on achieving sufficiently high underwriting results in the Property/Casualty segment. At
the same time, we will pursue the goal of successively lowering cost ratios in the planning
horizon and thus maintaining a combined ratio of less than 100 %. The results targeted for the
segment, however, are subject to the major uncertainties currently present in the capital
markets.
73
74
Life Segment
General Situation
Demand for life insurance products in the stricter sense is marked in 2009 by the uncertainty
of the general economic environment due to the financial market crisis’s impacts on the real
economy as well as the poorer economic situation of private households.
Nevertheless, the financial market crisis presents an opportunity for life insurance because
the combination of security, guarantee and yield offered by life insurers’ products makes
them very well positioned vis à vis competitors (banks and investment companies). What will
hamper premium development, however, is the growing number of regular policy maturities.
As in the past, we continue to anticipate no lasting impacts on service insurers’ sales performance from the reform of the German Insurance Contract Act (VVG).
Considerable differences exist in the development forecasts for the individual life insurance
product groups. As a result of the financial market crisis, short-term prognoses for unit-linked
products have worsened, whereas the significance of funded provision for old age will
increase further in 2009. Company pension schemes remain another growth area, both for
deferred compensation and the optimization of pension reserves.
Overall, the GDV anticipates a fall in premium revenues of 2–3 % in 2009.
Outlook
Against the backdrop of the environment described above, we consider the Gothaer Group
well positioned in the Life segment for the years ahead. We are therefore confident that we
will be able to maintain our earnings-driven growth. That confidence is based on the growing
trust of marketing partners, our good ratings and our currently stable surplus bonus. Moreover, our systematic strategic gearing to the field of company pension scheme business will
ensure additional growth stimuli.
Growth Targets
Owing to the increased confidence of our marketing partners, we expect new business in the
areas of insurance coverage, financial planning strategy and asset building to be satisfactory
in comparison with last year and to impact accordingly on premium volume. However, a
temporary reduction of production due to the present financial market crisis is not entirely
ruled out.
Earnings Targets
Earnings in the Life segment hinge crucially on the results of investment. These results are
more volatile under the IFRS system than when national accounting standards are applied.
We will therefore continue to pursue an investment strategy designed to stabilize and
increase current earnings. This should make it possible for us to generate the returns needed
for our companies and customers while continuing to monitor and reduce the risks associated
with investments with the help of our risk management system.
As in the past, we will systematically continue our efforts to streamline our administrative
processes, which will impact accordingly on our administrative cost ratio.
Because of the sustained financial market crisis and the economic crisis associated with it, it
is difficult to forecast earnings for the financial year 2009. Provided that investment results
are stable and on target, the earnings situation in the Life segment is expected to develop
positively in the coming years.
Health Segment
General Situation
Aside from the general economic climate shaped by the financial crisis, the development of
private health insurance business in Germany will again be partly determined by changes in
the political and legal environment in 2009. Some of these changes are presented by the
healthcare reform, which, as of 1 January 2009, confronts private health insurers with radical
innovations such as the introduction of the basic tariff and the prorata portability of ageing
reserves for insureds changing insurers. Because of the requirement to spend a minimum of
18 months on the new insurer’s basic tariff and the resulting restriction of use of the basic
tariff as a vehicle for change, the impacts of the healthcare reform are expected to be limited.
Private health insurance is expected to continue to grow but at a slower pace than in recent
years. Major contributory and causative factors here include demographic change, which will
bring a shift in age structure away from young people – and thus potential new customers –
as well as the general economic and legal environment described above. Moderate premium
adjustments due to rising health costs are anticipated for existing policies. Supplementary
insurance business is expected to continue to grow but will have only a limited impact on
premium development because of the lower average premium it generates.
For the first time since the introduction of the three-year moratorium on 2 February 2007,
which considerably lengthens the period of compulsory insurance for employees, there is
once again an opportunity for growth in this area of the market. Employees with statutory
health insurance who earned more than the annual earnings limit in 2007 for the first time
and who exceed the limit again in 2008 and 2009 may switch to private health insurance
after the three-year moratorium with effect from 1 January 2010.
Overall, premium income from private health insurance is expected to increase by 3 % in 2009.
Outlook
Our strategic gearing in the Health segment will focus on addressing the challenges resulting
from the healthcare reform in 2009.
In view of the consequences of the Act to Enhance Competition in Statutory Health Insurance
and the uncertainty over the long-term future of private comprehensive health insurance, we
have taken a critical look at our business field strategy in the Health segment. Based on the
conclusions drawn, we will subdivide the currently undifferentiated healthcare market into four
segments, which will be addressed in the coming years with different sub-strategies. The first
market segment encompasses conventional comprehensive private health insurance. Here, we
plan to re-gain market shares with a new and now thoroughly competitive range of products.
Even though net annual growth of comprehensive insurance has been recessive in recent
years, we still see opportunities for growth in the changed market environment as of 2009.
The second market segment relates to collective business. Company health schemes are
increasingly gaining importance alongside company pension schemes as a pillar of business.
Our activities here are channelled through the Gothaer Corporate Health Service. The third
market segment is the private/statutory health insurance convergence market, where our
strategy for cooperation with statutory health insurance institutions will be pursued more
intensively. The fourth market segment covers direct/retail cooperation, which we address
through our ASSTEL marketing channel.
75
76
Growth Targets
Despite the departure from the old world of tariffs at the end of 2008, we noted a satisfactory
start for new business with the introduction of the new world of tariffs at the beginning of the
year. Overall, our sights are set on a volume of net new business that will be sufficient for the
portfolio growth sought in 2009. On the premium side, after the erosion of recent years, we
anticipate a return to annually increasing premium revenues in 2009. We will also further
optimize our processes. This is necessary to maintain viable cost ratios, especially in view of
the basic tariff, which differs at company level only in terms of the cost ratios used as the
basis for calculation.
Earnings Targets
The objective in underwriting is to achieve a balanced risk result so that the safety margin will
be available in full as a source of income.
Proceeding on this basis, we intend to stabilize our earnings capacity at the present level.
However, our targets for the Health segment are also subject to the uncertainties present in
the capital markets.
General
No transactions or events of special significance occurred after the reporting date.
The forecasts and assessments of future business development contained in this Annual
Report are provided on the basis of what is known at the present time. Economic developments, upheavals in financial markets, changes in legal, tax and demographic conditions as
well as changes in the competitive environment may cause the parameters underlying the
forecasts to develop differently.
Consolidated Financial Statements
78
CO N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Consolidated Balance Sheet
Assets
Notes
2008
€ million
2007*
€ million
A. Intangible assets
I. Goodwill
II. Other intangible assets
Total A.
>1
>2
25.1
127.7
152.8
25.1
98.2
123.3
B. Tangible assets
>3
207.7
209.3
>4
92.9
0.0
113.2
15.9
1,402.0
1,219.7
70.7
1,472.7
2,802.7
7,011.9
8,251.4
80.8
1,300.5
2,197.4
6,332.9
10,899.3
408.9
3.1
412.0
1,407.6
21,451.2
439.0
3.0
442.0
600.6
21,885.9
D. Investments held under unit-linked life insurance policies
904.1
1,095.6
E. Receivables
I. Receivables from primary insurance business
1. from policyholders
2. from intermediaries
Total I.
II. Other receivables
Total E.
160.8
90.1
250.9
588.1
839.0
138.5
78.5
217.0
610.3
827.3
274.6
361.0
G. Reinsurers’ share of underwriting reserves
I. Unearned premiums
II. Policy reserves
III. Reserves for unpaid claims
IV. Other underwriting reserves
Total G.
79.2
1,327.0
501.7
58.7
1,966.6
62.2
1,357.1
515.9
79.0
2,014.2
H. Reinsurers’ share of underwriting reserves
under unit-linked life insurance policies
0.0
1.3
1,027.8
80.1
947.7
C. Investments
I. Investment property
of which: in disposal groups
II. Shares in affiliated and associated companies
1. Shares in affiliated and associated companies
– non-consolidated
2. Shares in associated companies
– carried at equity
Total II.
III. Investments held to maturity
IV. Loans
V. Investments available for sale
VI. Investments measured at fair value through profit or loss
1. Held for trading
2. By designation
Total VI.
VII. Other investments
Total C.
>5
>6
>7
>8
>9
>10
>11
F. Cash and cash equivalents
I. Deferred acquisition costs
I. Gross
II. Share of reinsurers
Total I.
>12
1,036.9
71.0
965.9
J. Tax assets
I. from current taxation
II. from deferred taxes
Total J.
>13
123.1
317.1
440.2
110.8
255.0
365.8
K. Other assets
>14
10.8
13.4
27,212.9
27,844.8
Total assets
Equity and liabilities
Notes
2008
€ million
2007*
€ million
906.5
– 26.4
774.9
140.8
61.7
941.8
35.6
977.4
131.2
1,046.9
44.4
1,091.3
431.5
16,774.1
2,262.4
1,657.5
379.1
16,160.6
2,319.6
2,415.7
0.0
21,125.5
– 6.1
21,275.0
C. Gross underwriting reserves for unit-linked life insurance policies
904.1
1,095.6
D. Other accruals
I. Provisions for pension benefits and similar obligations
II. Accruals for taxes
III. Other accruals
Total D.
299.4
125.2
109.9
534.5
293.6
129.2
122.4
545.2
35.0
264.7
199.7
96.4
264.7
223.4
859.2
32.0
891.2
1,847.8
987.5
26.7
1,014.2
1,801.9
>25
0.0
3,238.4
0.0
3,400.6
>26
25.9
407.1
0.0
433.0
25.3
411.8
0.0
437.1
27,212.9
27,844.8
A. Equity
I. Revenue reserves
II. Other reserves
>15
III. Consolidated profit for the year attributable to shareholders
of the parent company
Total I.–III. (Consolidated equity)
IV. Minority interests
>16
Total A.
B. Gross underwriting reserves
II. Policy reserves
of which: deferred reserves for premium refunds
in disposal groups
Total B.
E. Liabilities
I. Participation certificates
II. Subordinate liabilities
III. Bonds and loans
IV. Liabilities from primary insurance business
1. towards policyholders
2. towards intermediaries
Total IV.
V. Other liabilities
of which: liabilities toward financial institutions
in disposal groups
Total E.
F. Tax liabilities
I. for current taxation
II. for deferred taxes
of which: deferred taxes in disposal groups
Total F.
Total equity and liabilities
>17
>18
>19
>20
>21
>22
>23
>24
* Comparatives after restatement
79
80
Notes
2008
€ million
2007*
€ million
>27
4,039.4
400.9
3,638.5
3,945.1
390.3
3,554.8
>27
– 52.1
– 16.9
– 35.2
– 27.6
0.5
– 28.1
>27
562.2
2.0
560.2
459.0
1.9
457.1
4. Net premiums earned
>27
3,043.1
3,069.6
5. Investment income
of which: income from associated companies
>28
711.5
22.4
1,316.6
30.7
6. Income from investments held under
unit-linked life insurance policies
>28
– 368.5
45.0
7. Other income
>29
136.4
185.3
3,522.6
4,616.5
>30
2,674.0
233.8
2,440.2
3,683.8
294.0
3,389.8
>31
786.8
96.0
690.8
768.2
95.2
673.0
>32
256.7
293.5
3,387.6
4,356.3
135.0
260.3
30.9
36.7
39.8
86.1
64.3
137.5
2.6
6.3
61.7
131.2
1. Premiums written
a) Gross
b) Share of reinsurers
2. Change in unearned premiums
a) Gross
3. Savings components
a) Gross
Total income
8. Policyholder benefits
a) Gross
9. Underwriting expenses
a) Gross
10. Other expenses
Total expenses
11. Operating result
12. Net interest
13. Taxation
14. Net income for the year
15. Minority interests
16. Consolidated profit for the year attributable to
shareholders of the parent company
>33
Statement of Changes in Equity
Consolidated Equity
As of 1 January 2007
Minorityinterests
Total
€ million
€ million
Revenue
reserves
Other
reserves
€ million
€ million
Consolidated profit
for the year
€ million
738.9
211.5
120.3
56.5
1,127.2
0.8
0.0
0.0
0.3
1.1
0.0
– 79.7
0.0
6.0
– 73.7
Change in scope of
consolidation
Unrealized gains and losses
on investments
Net profit for the year
previous year
reporting period
Dividend
Other
120.3
0.0
– 120.3
0.0
0.0
0.0
0.0
– 85.1
0.0
0.0
9.0
131.2
0.0
0.0
6.3
– 4.6
– 20.1
137.5
– 4.6
– 96.2
As of 31 December 2007
774.9
140.8
131.2
44.4
1,091.3
0.0
0.0
0.0
0.0
0.0
0.0
– 167.2
0.0
– 1.8
– 169.0
131.2
0.0
– 131.2
0.0
0.0
0.0
0.0
0.4
0.0
0.0
0.0
61.7
0.0
0.0
2.6
– 7.8
– 1.8
64.3
– 7.8
– 1.4
906.5
– 26.4
61.7
35.6
977.4
Change in scope of
consolidation
on investments
previous year
reporting period
Dividend
Other
As of 31 December 2008
As a mutual insurance association, the Group parent, Gothaer Versicherungsbank VVaG, has
no subscribed capital. Equity is generated exclusively through retention of earnings.
81
82
Cash Flow Statement
Net income for the year**
of which: taxes on income paid (net)
of which: net interest
Change in underwriting reserves
2008
€ million
2007*
€ million
64.3
– 61.4
– 27.7
137.5
– 61.6
– 34.3
559.7
1,045.9
– 190.3
224.5
Change in deferred acquisition costs
– 18.2
8.2
Change in deposits with ceding undertakings/received from
reinsurers and settlements of receivables and liabilities
– 13.8
– 33.5
Change in investments measured at fair value through profit and loss
125.8
159.0
– 198.1
– 243.4
Change in deferred tax assets and deferred tax liabilities
– 21.6
23.8
Change in other balance sheet items
– 30.9
7.3
– 178.1
– 433.1
822.3
27.2
36.4
36.4
957.5
959.8
Change in underwriting reserves for unit-linked life insurance policies
Change in other receivables and other liabilities
Realized gains and losses on investments
Correction for investment income and expenses with no effect
on the movement of funds
Correction for other income and expenses with no effect
on the movement of funds
Cash flow from operating activities
Cash outflow for the purchase of consolidated companies
0.0
0.0
Cash inflow from the disposal of consolidated companies
0.0
36.7
Cash outflow for the purchase of other investments
– 4,897.3
– 6,641.8
Cash inflow from the disposal of other investments
4,073.8
5,872.7
– 58.8
– 116.7
Change in investments under unit-linked life insurance policies
Other cash inflows
9.5
54.6
– 76.5
– 53.3
– 949.3
– 847.8
Cash outflows for company owners and minority shareholders
– 1.7
– 36.9
Dividend
– 7.8
– 4.6
Other cash outflows
Cash flow for investing activities
Changes in participation certificates and subordinate liabilities
– 61.4
– 5.8
Other
– 23.7
– 197.9
Cash flow for financing activities
– 94.6
– 245.2
Change in cash and cash equivalents
– 86.4
– 133.2
Cash and cash equivalents at the beginning of the period
361.0
494.4
0.0
– 0.2
274.6
361.0
Change in cash and cash equivalents due to change in scope
of consolidation
Cash and cash equivalents at the end of the period
** Including minority interests
Other Information
Acquisitions and Disposals of Subsidiaries
No subsidiaries were acquired or sold in the financial year. The shares in capiton Beteiligungsgesellschaft für Personalservice mbH, which in turn holds an interest in the associated company Trenkwalder Personaldienst AG, were sold in the previous year. The information on the
effect on the consolidated financial statements refers to both companies. No subsidiaries
were acquired in the previous year.
Effects on the Cash Flow Statement
2008
€ million
2007*
€ million
Cash outflow for the purchase of undertakings
Cash inflow from the disposal of undertakings
0.0
0.0
0.0
36.7
Total purchase price
of which in cash
Total proceeds
of which in cash
0.0
0.0
0.0
0.0
0.0
0.0
36.7
36.7
Cash and cash equivalents acquired through purchases
Cash and cash equivalents transferred through disposals
0.0
0.0
0.0
0.0
2008
€ million
2007*
€ million
Assets
B. Investments
C. Receivables
D. Cash and cash equivalents
E. Other assets
0.0
0.0
0.0
0.0
0.0
0.0
– 10.6
0.0
36.7
0.0
Equity and Liabilities
A. Equity
B. Underwriting reserves
C. Other accruals
D. Liabilities
0.0
0.0
0.0
0.0
– 6.9
0.0
– 19.2
0.0
Effects on the Consolidated Balance Sheet
83
84
Segmental Report
Consolidated Balance Sheet – Assets
Property/Casualty
Life
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
0.0
0.0
0.0
0.0
II. Other intangible assets
73.4
61.8
14.8
9.3
Total A.
73.4
61.8
14.8
9.3
13.4
18.2
2.0
3.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
232.4
214.1
692.0
562.3
927.2
942.9
344.9
366.4
1,159.6
1,157.0
1,036.9
928.7
III. Investments held to maturity
389.1
250.7
1,651.2
1,361.0
IV. Loans
926.6
955.5
4,654.2
3,944.6
V. Investments available for sale
852.1
1,111.1
5,979.1
7,886.6
VI. Investments measured at fair
value through profit or loss
1. Held for trading
2. By designation
47.9
0.0
50.0
0.0
262.9
3.1
314.9
3.0
47.9
50.0
266.0
317.9
200.0
89.1
931.7
325.9
3,575.3
3,613.5
14,519.1
14,764.7
0.0
0.0
904.1
1,095.6
E. Reinsurers’ share of underwriting reserves
552.2
548.7
1,391.6
1,430.6
F. Reinsurers’ share of underwriting reserves
under unit-linked life insurance policies
0.0
0.0
0.0
1.3
38.1
48.8
778.3
747.8
714.7
666.9
578.3
580.2
4,967.1
4,957.9
18,188.2
18,632.5
I. Goodwill
B. Tangible assets
C. Investments
I. Investment property
of which: in disposal groups
II. Shares in affiliated and
associated companies
1. Shares in affiliated and
– non-consolidated
2. Shares in associated companies
– carried at equity
Total II.
Total VI.
VII. Other investments
Total C.
D. Investments held under unit-linked
life insurance policies
G. Deferred acquisition costs
H. Other segment assets
Total assets
*
Comparatives after restatement
Health
Other Activities/Consolidation
Total
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
0.0
0.0
25.1
25.1
25.1
25.1
17.9
5.5
21.6
21.6
127.7
98.2
17.9
5.5
46.7
46.7
152.8
123.3
1.5
1.8
190.8
186.3
207.7
209.3
0.0
0.0
0.0
0.0
92.9
0.0
113.2
15.9
92.9
0.0
113.2
15.9
228.9
162.9
248.8
280.4
1,402.0
1,219.7
92.9
94.5
– 1,294.3
– 1,323.0
70.7
80.8
321.8
257.4
– 1,045.5
– 1,042.6
1,472.7
1,300.5
762.3
585.7
0.0
0.0
2,802.7
2,197.4
1,493.0
1,510.3
– 61.9
– 77.5
7,011.9
6,332.9
1,283.9
1,510.5
136.3
391.1
8,251.4
10,899.3
96.6
0.0
66.8
0.0
1.5
0.0
7.2
0.0
408.9
3.1
439.0
3.0
96.6
66.8
1.5
7.2
412.0
442.0
219.3
90.3
56.6
95.3
1,407.6
600.6
4,176.9
4,021.0
– 820.1
– 513.4
21,451.2
21,885.9
0.0
0.0
0.0
0.0
904.1
1,095.6
0.4
0.4
22.4
34.5
1,966.6
2,014.2
0.0
0.0
0.0
0.0
0.0
1.3
149.5
151.2
0.0
0.0
965.9
947.7
149.5
118.2
122.0
202.2
1,564.6
1,567.5
4,495.7
4,298.1
– 438.2
– 43.7
27,212.9
27,844.8
85
86
Consolidated Balance Sheet – Equity and Liabilities
Property/Casualty
Life
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
431.3
379.1
0.0
0.0
51.0
50.5
13,361.9
12,950.0
1,761.6
1,797.9
52.7
53.5
21.4
24.5
1,020.4
1,592.0
0.0
0.0
0.0
0.0
2,265.3
2,252.0
14,435.0
14,595.5
0.0
0.0
904.1
1,095.6
C. Other accruals
203.8
202.7
59.0
70.9
D. Other segment liabilities
of which: other segment liabilities in
disposal groups
822.0
975.0
2,517.2
2,550.7
0.0
0.0
0.0
0.0
3,291.1
3,429.7
17,915.3
18,312.7
A. Gross underwriting reserves
II. Policy reserves
of which: deferred reserve for premium
refunds in disposal groups
Total A.
B. Gross underwriting reserves for
Total segment liabilities
Equity (including minority interests)**
Total equity and liabilities
*
** Equity is shown only for the Group as a whole. Segmentation would result in an inaccurate presentation of capitalization due
to interlocking intersegmental arrangements
Health
Total
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
0.1
0.0
0.0
0.0
431.5
379.1
3,370.9
3,168.5
– 9.7
– 8.4
16,774.1
16,160.6
130.7
121.1
317.4
347.1
2,262.4
2,319.6
724.1
774.0
– 108.4
25.2
1,657.5
2,415.7
0.0
0.0
0.0
– 6.1
0.0
– 6.1
4,225.8
4,063.6
199.4
363.9
21,125.5
21,275.0
0.0
0.0
0.0
0.0
904.1
1,095.6
29.4
30.1
242.3
241.5
534.5
545.2
89.3
46.5
242.9
265.5
3,671.4
3,837.7
0.0
0.0
0.0
0.0
0.0
0.0
4,344.5
4,140.2
684.6
870.9
26,235.5
26,753.5
977.4
1,091.3
27,212.9
27,844.8
87
88
Property/Casualty
Life
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
0.0
0.0
0.0
0.0
1,641.6
1,641.6
1,588.5
1,588.5
1,614.5
1,614.5
1,561.7
1,561.7
1,305.0
1,273.7
959.7
1,006.0
of which: from associated companies
224.8
7.6
303.3
7.0
496.0
15.2
794.2
13.5
4. Income from investments held under
0.0
0.0
– 368.5
45.0
128.5
126.3
31.2
55.6
1,658.3
1,703.7
1,118.3
1,900.8
6. Policyholder benefits (net)
802.6
851.6
833.0
1,569.0
7. Underwriting expenses (net)
421.7
424.4
190.1
176.9
8. Other expenses
181.5
198.4
66.2
82.6
1,405.8
1,474.4
1,089.3
1,828.6
252.5
229.0
29.0
72.2
10. Net interest
15.9
16.4
5.3
6.1
11. Taxation
29.8
– 18.3
8.3
43.1
206.7
230.9
15.5
23.1
0.0
85.0
22.7
16.8
206.7
145.9
– 7.2
6.3
1. Gross premiums written
from insurance business with other
segments
from insurance business with
non-related third parties
2. Net premiums earned
5. Other income
Total income
Total expenses
9. Operating result
12. Net income for the year prior
to transfer of profit
13. Expense from transfer of profit
14. Net income for the year after transfer
of profit
16. Consolidated profit for the year
attributable to shareholders of the
parent company**
*
** The consolidated profit for the year is shown only for the Group as a whole. Segmentation would result in an inaccurate presentation
due to interlocking intersegmental arrangements
Health
Total
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
0.0
0.0
0.0
0.0
0.0
0.0
782.7
782.7
793.4
793.4
0.6
0.6
1.5
1.5
4,039.4
4,039.4
3,945.1
3,945.1
777.9
788.3
0.6
1.6
3,043.1
3,069.6
161.0
7.3
198.4
6.2
–170.3
–7.7
20.8
4.0
711.5
22.4
1,316.6
30.7
0.0
0.0
0.0
0.0
–368.5
45.0
12.2
19.3
–35.4
– 15.9
136.4
185.3
951.0
1,005.9
–205.0
6.5
3,522.6
4,616.5
830.9
873.4
–26.3
95.8
2,440.2
3,389.8
76.7
68.3
2.3
3.4
690.8
673.0
21.8
29.2
–12.8
– 16.8
256.7
293.5
929.4
970.9
– 36.8
82.5
3,387.7
4,356.3
21.6
35.0
– 168.2
– 76.0
135.0
260.3
0.0
0.0
9.7
14.3
30.9
36.7
5.4
20.8
– 3.8
40.4
39.8
86.1
16.2
14.3
–174.1
– 130.7
64.3
137.5
0.0
0.0
–22.7
– 101.8
0.0
0.0
16.2
14.3
–151.4
– 28.9
64.3
137.5
2.6
6.3
61.7
131.2
89
90
Notes to the Consolidated Financial Statements
Group Accounting Policies
Gothaer Versicherungsbank VVaG (GVB) is the parent of the Gothaer Group. Gothaer Versicherungsbank VVaG must therefore prepare consolidated financial statements and a Group
management report pursuant to sections 341 i, 341 j and 290 et seq. of the German Commercial
Code (HGB). Gothaer Versicherungsbank VVaG exercises the option pursuant to section
315 a(3) HGB that permits preparation of the consolidated financial statements and Group
management report in compliance with International Financial Reporting Standards (IFRS)
instead of the German Commercial Code. The informational value of these IFRS consolidated
financial statements is equivalent to that of consolidated financial HGB statements. The
consolidated financial statements were prepared on the basis of the standards applied in the
course of the financial year. However, the International Accounting Standards Board (IASB)
has been gradually replacing its International Accounting Standards (IASs) by the International Financial Reporting Standards (IFRSs) since 2003. In addition, the interpretations of the
International Financial Reporting Interpretations Committee (IFRIC), formerly the Standing
Interpretations Committee (SIC), were also observed. The IASB had not completed its regulations governing the recognition and measurement of insurance transactions in 2008. Consistent with the framework of IFRS and IAS 1/IFRS 4, US Generally Accepted Accounting Principles
(US GAAP) were therefore applied, in particular Financial Accounting Standards (FAS) 60 and 97.
The consolidated financial statements are denominated in euros and amounts are shown in
millions of euros. The consolidated financial statements consist of the consolidated balance
sheet and income statement, the statement of changes in equity, the cash flow statement,
segmental reports and the notes to the consolidated financial statements. The consolidated
financial statements are supplemented by a Group management report. In addition to business developments in the various segments, the latter contains statements on capital management as well as a risk report and outlook.
In keeping with the internal organizational structure of the Gothaer Group, the segmental
reports distinguish between the segments Property/Casualty, Life, Health and Other Activities (primary segment). Geographic segmentation (secondary segment) is omitted since our
business is concentrated in Germany and the conditions for reportable geographic segments
pursuant to IAS 14.35 do not apply. The business operations of Gothaer Rückversicherung AG
were discontinued and the company was merged with Gothaer Finanzholding AG in the
financial year 2004. Financial information will be disclosed in the Other Activities segment,
which includes Gothaer Finanzholding AG, for the duration of the run-off of reinsurance
business in force. The presentation of the segments includes consolidation of intrasegmental
transactions, but not, however, intersegmental transactions. Intersegmental consolidation is
shown under Other Activities/Consolidation.
The cash flow statement shows the change in cash and cash equivalents for the financial
year. A distinction is made here between cash flows from current operating activities, investing activities and financing activities. The indirect method is used to report cash flows from
current operating activities. In this case, net income for the year is adjusted to eliminate the
effects of transactions of a non-cash nature (in particular write-ups/write-downs, changes in
reserves, receivables and liabilities). Net income or loss for the period is also adjusted for
items of income or expense associated with investing or financing cash flows. The direct
method is used to report cash flows from investing activities, Inflows and outflows of funds
from the accounts of the various companies are shown here. Essentially, inflows and outflows
of funds in connection with acquisitions/disposals are shown here. Cash flows are adjusted
to eliminate the effects of changes in the scope of consolidation. The direct method is used to
report cash flows from financing activities. Cash and cash equivalents include current credit
balances with financial institutions, checks and cash on hand.
Principles of Consolidation
The financial statements as of 31 December 2008 of all companies whose accounts are
included in the consolidated financial statements consistently reflect application of Group
accounting policies. Interim financial statements as of 31 December 2008 were prepared for
special funds with a 31 January 2009 closing date. In one case a special fund is, however, included without preparation of interim financial statements pursuant to IAS 27.27. In addition,
financial statements with cut-off date 30 September 2008 allowing for material transactions
between 30 September 2008 and 31 December 2008, of six associated companies and 15
property holding companies were included pursuant to IAS 27.27. For reasons of materiality,
the financial statements of the associated companies were not adapted to the uniform
accounting policies of the Gothaer Group.
Subsidiaries and special funds are consolidated if they are controlled directly or indirectly by
the Group. The day on which the Gothaer Group assumes control of a company is taken as the
date of first-time consolidation. The acquisition method of accounting is used for purposes of
capital consolidation. This involves recognition of the proportionate share of the assets,
liabilities and contingent liabilities of the acquired undertaking corresponding to the parent
company’s share of the equity of the subsidiary at fair value (complete revaluation). A positive
difference is allocated to the proportionate share of hidden reserves and charges contained
in the assets and liabilities, and goodwill. Goodwill is recognized as an asset and tested for
impairment at least once a year. Negative differences are recorded under the same headings
as positive differences and charged to the income statement in the year in which they originate.
Income generated by subsidiaries after first-time consolidation is included in the revenue
reserves of the Group after deduction of any minority interests. Minority interests are shown
on the face of the balance sheet under equity.
Intragroup operating receivables and payables, expenses and income and profits are eliminated unless they are of insignificant importance for presentation of the net assets, financial
position and results of operation of the Group.
91
92
Scope of Consolidation
Consolidation is subject to materiality, which is established on the basis of equity. Companies are consolidated when a certain equity threshold is exceeded, If the threshold fails to be
reached after initial consolidation, the company in question is not deconsolidated on
grounds of immateriality. Materiality is applied as a criterion only to companies that are not
engaged in insurance business. All the Gothaer Group insurers are consolidated as a matter
of principle. Accordingly, the consolidated financial statements cover 52 subsidiaries (PY: 43)
on the basis of IAS 27. These include six insurance companies (PY: seven), a pension trust
and 45 other companies (PY: 35), 27 special-purpose entities (PY: 26) were also consolidated
under SIC 12.
Five companies (PY: five) jointly owned with non-affiliated companies were recognized on a
pro rata basis in accordance with IAS 31. Four of those companies were recognized on a pro
rata basis because although the Company is a majority shareholder, it holds only 50 % of the
voting rights. The assets and liabilities of the joint ventures are as follows:
2008
€ million
2007*
€ million
Short-term assets
Long-term assets
20.2
425.2
65.9
358.6
Short-term liabilities
Long-term liabilities
56.4
241.0
41.8
186.2
Expenses
Income
260.3
275.5
197.5
221.7
10 companies in which an interest is held (PY: 12) were recognized in the consolidated financial statements as associates and evaluated by the equity method in accordance with IAS 28.
The following changes occurred in the scope of consolidation of the Gothaer Group in the
financial year 2008. Gothaer Credit Versicherung AG and Gothaer Allgemeine Versicherung
AG, which were fully consolidated in the previous year, were merged with effect from 1 January
2008 and now trade under the name Gothaer Allgemeine Versicherung AG. Ten property
holding companies were included in the consolidated financial statements for the first time.
Five of these property holding companies were established in 2008, the other five received a
capital increase which raised them above the materiality threshold for the first time. Nine of
these property holding companies are fully consolidated; one is consolidated at equity. In
addition, two special investment funds were merged in the year under review.
A profit of € 7.6 million was recorded from the sale of shares in Flemming Dental AG, Inometa
Technologie GmbH & Co. KG and svt System- und Verfahrenstechnik Verwaltungs-Gesellschaft
mbH, all of which were recognized as associates by the equity method.
All the consolidated companies of the Gothaer Group in 2008 (with the exception of the
special-purpose entities) are listed below. A further list of holdings pursuant to section 313 (4)
of the German Commercial Code (HGB), which also includes subsidiaries, joint ventures and
associated companies, is published on the Company Register (Unternehmensregister) website.
Subsidiaries (fully consolidated pursuant to IAS 27)
Interest*
%
Equity**
€ thousand
Profit**
€ thousand
Allgemeine Versicherungs-Software GmbH, Cologne
100.00
2,760.7
85.2
ASSTEL Lebensversicherung AG, Cologne
100.00
19,305.0
0.0
ASSTEL ProKunde Versicherungskonzepte GmbH,
Cologne
100.00
2,958.6
0.0
ASSTEL Sachversicherung AG, Cologne
100.00
13,821.0
– 3,509.4
BECURA Beteiligungen und Unternehmensberatung
Berlin GmbH, Cologne
99.50
– 1,396.6
– 279.3
capiton automotive Kapitalbeteiligungsgesellschaft
mbH, Berlin
72.69
3,224.6
– 3,353.1
caption Power GmbH, Berlin
72.69
13,815.4
– 1,017.7
capiton Zweite Holding GmbH & Co. KG, Berlin
99.00
21,891.5
153,217.9
capiton Zweite Kapitalbeteiligungsgesellschaft mbH,
Berlin
99.00
42,753.3
119,997.6
CPI Asia G-Fdr LP GmbH & Co. KG, Frankfurt a.M.
100.00
21,076.4
– 5,526.7
GG-Grundfonds Vermittlungs GmbH, Cologne
100.00
– 15,195.7
– 678.9
Gothaer Allgemeine Versicherung AG, Cologne
100.00
349,501.8
72,167.3
Gothaer Asset Management AG, Cologne
100.00
3,905.3
0.0
Gothaer Beteiligungsgesellschaft USA/Carlyle mbH,
Göttingen
100.00
2,036.3
42.4
Gothaer Dritte Kapitalbeteiligungsgesellschaft mbH,
Cologne
99.50
81,766.4
6,332.6
Gothaer Erste Kapitalbeteiligungsgesellschaft mbH,
Cologne
100.00
5,520.4
– 19.2
8,537.8
Gothaer Erste META-Kapitalbeteiligungsgesellschaft
mbH, Cologne
99.50
35,202.2
Gothaer Finanzholding AG, Cologne
100.00
724,928.5
0.0
Gothaer Grundbesitz GmbH, Cologne
100.00
11,643.8
1,117.8
Gothaer Immobilien Beteiligungsgesellschaft
Méditerranée mbH, Göttingen
100.00
333.1
12.5
Gothaer Invest- und FinanzService GmbH, Cologne
100.00
2,909.7
– 1,719.7
Gothaer Krankenversicherung AG, Cologne
100.00
140,767.3
13,500.0
Gothaer Lebensversicherung AG, Cologne
100.00
209,099.4
0.0
Gothaer Pensionskasse AG, Cologne
100.00
20,100.0
500.0
Gothaer Prüfungs GmbH, Cologne
100.00
13.1
– 5.0
Gothaer Systems GmbH, Cologne
100.00
3,871.9
88.6
Gothaer Vierte Kapitalbeteiligungsgesellschaft mbH,
Cologne
99.25
21,627.3
2,824.7
Gothaer Zweite Beteiligungsgesellschaft Niederlande
mbH, Göttingen
100.00
2,133.4
657.0
Gothaer Zweite Kapitalbeteiligungsgesellschaft mbH,
Cologne
100.00
293.4
202.2
* In the case of interests that are partially held indirectly, economic interests are calculated
** Separate financial statements according to HGB
93
94
Interest*
%
Equity**
€ thousand
Profit**
€ thousand
Gotham City Residential Partners I GmbH & Co. KG,
Frankfurt a.M.
100.00
11,027.4
– 298.0
Hamburg-Kölner-Vermögensverwaltungsgesellschaft
mbH, Cologne
100.00
3,579.5
0.0
Janitos Versicherung AG, Heidelberg
100.00
29,757.9
800.5
JP Morgan IIF German 1 GmbH & Co. KG,
Frankfurt a.M.
83.33
79,570.6
– 1,329.3
kk Metalltechnik GmbH, Berlin
72.69
– 4,301.2
– 18,859.6
MediExpert Gesellschaft für betriebliches
Gesundheitsmanagement mbH, Cologne
100.00
146.4
5.0
90.00
2,904.7
– 24.6
Munich CARLYLE Productions GmbH & Co. KG,
Grünwald
100.00
– 63,976.0
891.6
RE AEW Value Investors Asia Feeder GmbH & Co. KG,
Cologne
100.00
15,571.4
– 21.3
RE Brazil Real Estate Opportunities Fund I Feeder
GmbH & Co. KG, Cologne
100.00
8,884.4
– 24.5
RE BREP Real Estate Partners VI Feeder GmbH & Co. KG,
Cologne
100.00
20,918.1
– 18.2
RE Brockton Capital Fund I Feeder GmbH & Co. KG,
Cologne
100.00
18,598.2
1,570.3
RE Carlyle Infrastructure Partners Feeder
100.00
17,357.0
– 3,972.1
RE Carlyle Realty Partners V Feeder GmbH & Co. KG,
Cologne
Mermont Holdings GmbH, Munich
100.00
23,157.5
258.5
RE Colony Realty Partners II Feeder GmbH & Co. KG,
Cologne
100.00
25,808.6
758.7
RE Feeder GmbH, Cologne
100.00
84.4
59.4
RE LaSalle Japan Logistic Fund II Feeder
100.00
3,966.9
– 27.8
RE O’Conner Capital Partners II Feeder GmbH & Co. KG,
Cologne
100.00
25,790.4
– 25.2
RE Gothaer PLA Residential Fund III Green Feeder
100.00
3,811.1
– 31.0
100.00
26,387.5
136.2
75.76
9,987.5
– 1,214.3
100.00
3,232.5
– 187.8
RE Red Fort India Real Estate Fund I Feeder
Tishman Speyer China Feeder (Scots/C). L.P.,
Edinburgh, Scotland
Unterstützungskasse der BERLIN-KOELNISCHE
Lebens- und Sachversicherung GmbH, Cologne
Joint-Venture Undertakings (consolidated on a proportionate basis pursuant to IAS 31)
Interest*
%
Equity**
€ thousand
Profit**
€ thousand
CG Car-Garantie Versicherungs-AG, Freiburg i.Br.
50.00
52,264.4
14,917.1
KILOS Beteiligungs GmbH & Co. Vermietungs-KG,
Pöcking
93.69
44,736.3
2,544.0
TRIFORUM Verwaltung GmbH & Co. Objekt
Hallbergmoos KG, Pöcking
93.10
688.4
– 2,380.8
TRIFORUM Verwaltung GmbH & Co. Objekt IKS Köln KG,
Pöcking
93.10
247.3
7,213.7
TRIFORUM Verwaltung GmbH & Co. Objekt
Neu-Isenburg II KG, Pöcking
94.00
8,047.1
– 30.5
Associated Companies (consolidated at equity pursuant to IAS 28)
Interest*
%
Aachener Bausparkasse AG, Aachen
ARI-Armaturen Albert Richter GmbH & Co. KG, Schloss Holte-Stukenbrock
BIOCEUTICALS Arzneimittel AG, Bad Vilbel
DKV EURO SERVICE GmbH & Co. KG, Düsseldorf
HSBC NF China Real Estate GmH & Co. KG, Düsseldorf
KOKI TECHNIK Holding GmbH, Konstanz
Morgan Stanley Infrastructure Partners Luxembourg Feeder, Senningerberg, Luxemburg
Reum Beteiligungs GmbH, Hardheim
ROLAND Rechtsschutz-Versicherungs-AG, Cologne
W. Classen GmbH & Co KG, Kaisersesch
25.00
25.00
24.82
44.89
41.67
27.84
23.31
33.29
25.10
20.00
95
96
Accounting Policies
Description of Accounting Policies
Introduction
Financial statements are prepared on a going concern basis. Income and expenses are recognized when they occur. i.e., they are reported in the periods to which they relate. Settlement
date accounting within the meaning of IAS 39 is used for purposes of recognition of financial
assets. The respective companies are taken as cash-generating units within the meaning of
IAS 36 for purposes of recognition and measurement of impairment losses.
New International Financial Reporting Standards
The following standards were applied in the financial year for the first time.
IAS 39/IFRS 7 – Reclassification of Non-derivative Financial Instruments
In response to the financial market crisis, the IAS 39.50 rules on the reclassification of financial instruments were amended in July 2008. Under the amended rules, entities are now
permitted to reclassify financial instruments that are measured at fair value through profit
and loss, provided they are non-derivative financial instruments. A new option was also
created, allowing financial instruments measured at fair value through profit and loss and
classified as assets available for sale to be reclassified as loans. In addition, IFRS 7.12 was
amended to include disclosures relating to the use of the new reclassification option. The
Gothaer Group used the option to reclassify available for sale financial instruments as loans.
IFRIC 14 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements
and their Interaction
IFRIC 14 addresses the measurement of pension plan surpluses that may be recognized as
assets. IFRIC 14 concerns in particular minimum funding requirements. Application of IFRIC 14
did not result in adjustments within the Gothaer Group.
The following standards which are not mandatory for the reporting period, were not applied
ahead of schedule by the Gothaer Group.
IFRS 8 – Operating Segments
IFRS 8 adopts the management approach for identification of reportable segments for purposes of segmental reporting instead of the so-called risk and reward approach of IAS 14.
Under the management approach, the information that is regularly made available to chief
decision-makers for decision-making purposes is now of decisive importance. At the same
time, the management approach is also adopted for purposes of measurement in the case of
segments instead of the financial accounting approach under IAS 14. IFRS 8 is mandatory for
annual periods beginning on or after 1 January 2009. Earlier application is permissible. Firsttime adoption of IFRS 8 by the Gothaer Group will lead to changes of figures presented in the
segmental reporting.
IAS 1 (revised 2007) – Presentation of Financial Statements
As a result of the revision of IAS 1, a statement of financial position as of the beginning of the
earliest comparative period is required in the case of retrospective restatement, correction of
errors or reclassification of items in the financial statements. The presentation of the income
statement and the statement of changes in equity has also been changed. Changes in unrealized gains or losses, which constitute what is referred to as other comprehensive income, are
no longer to be shown in the statement of changes in equity, but instead in an expanded
income statement. The income statement thus shows total comprehensive income and not, as
in the past, only items affecting revenues and expenses. IAS 1 (revised in 2007) is mandatory
for annual periods beginning on or after 1 January 2009. Earlier application is permissible.
The changes do not concern valuation, but only presentation issues.
IFRS 3 – Business Combinations and IAS 27 – Consolidated and Separate
Financial Statements
The adoption of the revised IFRS 3 as well as IAS 27 marked the completion of the IASB
“Business Combinations – Phase II” project with FASB. The revised version of IFRS 3 refines
the accounting rules concerning business combinations by, amongst other things, changing
the definition of a business combination, extending the scope of application and modifying
the rules on recognition and evaluation of assets and liabilities in the context of a business
combination. The new version of IFRS 3 is required to be applied prospectively to all transactions that occur after 1 July 2009. Earlier application is permissible only for transactions
that occurred after 30 June 2007. The Gothaer Group did not make any corporate acquisitions
in either 2007 or 2008. The amendments to IAS 27 establish the new rule that changes in
investments in subsidiaries with no impact on control need to be recognized in consolidated
financial statements as equity transactions. The amended IAS 27 needs to be applied for the
first time to financial years beginning after 1 July 2009. Earlier application is permissible only
for financial years beginning after 30 June 2007. The initial application of IAS 27 will give rise
to no significant changes in the consolidated financial statements of the Gothaer Group.
Both IFRS 3 and IAS 27 have yet to be endorsed by the EU and incorporated into European
law.
97
98
Changes in Accounting Policies as well as Accounting Errors
Under the rules of IAS 8, changes in accounting policies as well as accounting errors are
required to be corrected by retrospective adjustment. In the 2007 financial statements, errors
occurred in the calculation of deferred taxes as well as deferred acquisition costs. These have
been adjusted as shown below.
Consolidated Balance Sheet – Assets
31.12.2007
Annual Report
2007
€ million
Adjustment
IAS 8
31.12.2007
€ million
€ million
1,005.2
22.7
1,027.8
268.7
– 13.7
255.0
31.12.2007
Annual Report
2007
€ million
Adjustment
IAS 8
31.12.2007
€ million
€ million
140.7
0.1
140.8
135.3
– 4.1
131.2
2,401.8
13.9
2,415.7
412.9
– 1.0
411.8
31.12.2007
Annual Report
2007
€ million
Adjustment
IAS 8
31.12.2007
€ million
€ million
1,317.0
– 0.4
1,316.6
8. Policyholder benefits
a) Gross
3,669.9
13.9
3,683.8
790.9
– 22.7
768.2
73.5
12.6
86.1
6.4
– 0.1
6.3
135.3
– 4.1
131.2
I. Deferred acquisition costs
I. Gross
J. Tax assets
II. from deferred taxes
Consolidated Balance Sheet – Equity and Liabilities
A. Equity
II. Other reserves
III. Consolidated profit for the year attributable to
shareholders of the parent company
B. Gross underwriting reserves
Reserves for premium refunds
F. Tax liabilities
II. for deferred taxes
9. Underwriting expenses
a) Gross
13. Taxation
16. Consolidated profit for the year attributable
to shareholders of the parent company
Intangible Assets
In the case of intangible assets, a distinction is made between goodwill and other intangible
assets.
Goodwill is recognized under intangible assets in the consolidated financial statements upon
first-time consolidation if the cost of an acquisition exceeds the proportionate share of the
equity acquired after the release of hidden reserves. Goodwill is regularly tested for impairment within the meaning of IAS 36 (impairment only approach).
For the purpose of impairment testing, the book values of the companies, including the
goodwill allocated to the companies, are set against the relevant recoverable amount. The
recoverable amount is based on fair value less costs to sell. If no direct market prices can be
observed, valuation is normally by the net asset value method. Calculation of the net asset
value is based on the latest financial projections approved by the management, which normally have a planning horizon of 3 to 5 years. For the period beyond the detailed planning
horizon, a detailed analysis of past experience is used to establish a reasonable going concern value that is extrapolated into the future on the basis of growth assumptions appropriate
for the market.
If goodwill is found to be impaired, an impairment loss is recognized. The loss is recorded
under other expenses. Negative goodwill is considered in the same item as positive goodwill.
The latter is reversed directly through profit and loss in the year of occurrence. Reversals are
recognized as other income.
Other intangible assets include internally generated and purchased software as well as
purchased property/casualty insurance policies in force. All internally generated intangible
assets meet the requirements of IAS 38. They are recognized at cost less any impairment
losses and amortized over their useful lives (1 to 10 years) by the straight-line method.
Acquired policies in force are amortized in line with the realization of the surpluses relating to
the policies.
Tangible Assets
Property, plant and equipment held for own use are shown under tangible assets. These
assets are carried at cost less depreciation. We refer to the comments on “investment property” for information on regular depreciation of buildings held for own use on the basis of the
component approach. Other tangible assets are normally subjected to straight-line depreciation over a useful life of 3 to 13 years. Tangible assets are also regularly tested for impairment
within the meaning of IAS 36. In the event of impairment. the carrying amount of impaired
tangible assets is reduced to the recoverable amount. In the event the reasons leading to an
impairment loss in the past no longer apply. the carrying amount of the asset is increased to a
maximum of cost less accumulated depreciation. Both impairment losses and reversals are
shown in the income statement.
99
100
Investments
Investment Property
Investment property is recognized in accordance with IAS 40 at cost less accumulated depreciation and any accumulated impairment losses. The component approach is applied for
purposes of determination of the rate of depreciation. In this case, each part of the buildings
is depreciated separately over useful lives of from 10 to 80 as a function of the specific building classes. In the case of permanent impairment, the carrying amount is reduced to the
recoverable amount, which is the higher of the net selling price and the value in use. Subsequent costs are recognized as assets if they are significant and qualify for recognition under
IAS 40. The fair values of properties are disclosed in the notes. Fair values are determined by
external evaluators on the basis of the Valuation Ordinance (Wertermittlungsverordnung) and
the Valuation Guidelines (Wertermittlungsrichtlinien). In general, the income capitalization
approach is employed.
Shares in Affiliated and Associated Companies
Shares in non-consolidated subsidiaries are recognized under investments in affiliated
companies. They are carried at fair value in the “available for sale” category. In the case of
listed shares, the prices as of the reporting date are used; in other cases, third-party valuations are used or carrying amounts determined using the net asset value approach. Calculation of the net asset value is based on the latest financial projections approved by the management, which normally have a planning horizon of 3–5 years. For the period beyond the
detailed planning horizon, a detailed analysis of past experience is used to establish a
reasonable going concern value that is extrapolated into the future on the basis of growth
assumptions appropriate for the market.
Changes in fair value are recognized in equity through other reserves after any allocation to
reserves for deferred premium refunds and after deduction of deferred taxes. In the event of
permanent impairment, however, the carrying amount is reduced to fair value and the loss
recognized through profit and loss.
Interests in associated companies with a major bearing are recognized in the consolidated
financial statements at equity, i.e., at the proportionate share of equity. Income resulting
from increases or expense resulting from decreases in the proportionate share is then shown
under investment income. The proportionate share of equity is determined on the basis of the
most recent annual financial statements available. For reasons of materiality, the carrying
amounts in the financial statements of associated companies are retained and not adapted
to the uniform accounting policies of the Group.
Associated companies that are not accounted for at equity are carried at fair value as available for sale investments. The same accounting and valuation rules are used here as for nonconsolidated shares in affiliated companies.
The net yield on shares in affiliated and associated companies includes current income, any
gains or losses on disposals and, where applicable, impairment losses. Current income
includes, dividend payments from affiliated and associated companies on the one hand as
well as income realized upon consolidation of associated companies on the other hand.
Held to Maturity Investments
Held to maturity Investments include bearer bonds and other loans that the Company intends
to hold to maturity. These investments are carried at amortized cost. Any premiums or discounts are spread over the entire term using the effective interest method. Impairment tests
are also carried out as of each reporting date. In the event it is determined that permanent
impairment is likely, the carrying amount is reduced to the present value of expected future
cash flows. In the event impairment from the past is reduced, the carrying amount is
increased up to a maximum of initial cost less accumulated amortization. Both impairment
losses and reversals are shown in the income statement under investment income.
The net yield on held to maturity investments includes current income, any gains or losses on
disposals and, where applicable, impairment losses or reversals. Current income also
includes amortization income or expense as well as interest income. Write-ups and writedowns also include translation differences in the case of securities denominated in foreign
currencies as well as impairment losses and reversals.
Loans
Loans include fixed-income securities that are not listed on an active market as well as
mortgage loans, policy loans and other loans. As in the case of held to maturity investments,
loans are accounted for using the effective interest method. Impairment tests are also carried
out as of each reporting date. The treatment of impairment losses and reversals is the same
as that used for held to maturity investments. The components of the net yield on loans
correspond to those of the net yield on held to maturity investments.
Available for Sale Investments
Available for sale investments include stocks, investment fund certificates, other non-fixedincome securities and other shares. In addition, this heading includes bearer bonds, other
fixed-income securities, registered bonds and receivables due in connection with promissory
notes and loans that are not carried as loans or held to maturity investments. These items are
recognized at fair value. In the case of publicly traded financial instruments, the trading price
is taken as fair value. In the case of financial instruments that are not publicly traded, fair
value is determined with the help of yield curves, discounted cash flow methods or prices
obtained from outside valuation services. If appropriate, temporary changes in fair value are
transferred to equity under other reserves after transfers to reserves for deferred premium
refunds and deduction of deferred taxes. In the case of likely permanent impairment, on the
other hand, the carrying amount is reduced to fair value and the loss shown in the income
statement. The Gothaer group considers shares and interests in associated companies to be
impaired if the fair value falls significantly below cost or has continuously remained below
cost in the course of the nine months preceding the reporting date. In the case of fixedincome securities, permanent impairment is assumed in the event of a significant change in
creditworthiness. This may occur if there is a significant deterioration in ratings or if fair value
falls considerably below cost. If the reasons for an impairment loss taken in the past no
longer apply, the value of equity instruments is increased with no effect on the income statement.
In the case of fixed-income securities, impairment losses are reversed in an amount of up to a
maximum of cost less accumulated amortization and impairment losses. Gains and losses on
disposals are determined on the basis of the difference between the proceeds from the
disposal and cost or, as the case may be, cost less accumulated amortization and any impairment losses.
101
102
The net yield on available for sale investments includes current income, gains or losses on
disposals and any impairment losses or reversals. Current income includes dividend payments from non-fixed-income investments and interest from fixed-income securities, including amortization income or expense. Write-ups and write-downs also include translation
differences in the case of fixed-income securities denominated in foreign currencies as well
as impairment losses and reversals.
Investments Measured at Fair Value through Profit or Loss
In addition to investments held for trading, this item also includes investments by designation. The trading portfolio includes exclusively derivative financial instruments. If the components of hybrid financial instruments cannot be separated, such instruments are assigned to
the category by designation. Investments in the two subcategories are recognized at fair
value, which is obtained on the basis of stock exchange prices or valuation (use of external
prices or option price models) as of the reporting date. Changes in fair value are recognized in
investment income through profit or loss. Gains and losses on disposals are determined on
the basis of the difference between the proceeds from the disposal and fair value as of the
previous closing date.
The net yield on investments measured at fair value through profit or loss includes current
income, gains or losses on disposals and any impairment losses or reversals. Current income
includes mainly interest on income of fixed-income securities. Changes in fair value are
reflected in impairment losses or reversals.
Other Investments
Other Investments include deposits with financial institutions, deposits with ceding undertakings and those financial instruments that cannot be assigned to any other heading. They
are recognized as loans at (amortized) cost or at nominal value pursuant to IAS 39. The fair
value of Other investments generally corresponds to the carrying amount. The net yield on
Other Investments includes current income, any gains or losses on disposals and, where
applicable, any impairment losses or reversals.
Non-Current Assets Held for Sale
Properties posted under non-current assets held for sale in the financial year 2007 were sold
in 2008.
Investments Held under Unit-Linked Life Insurance Policies
Investments held to cover unit- or index-linked life insurance are shown separately from other
investments. They are recognized at fair value. Changes in value affect neither net profit for
the year nor equity since the corresponding underwriting reserve changes commensurately.
Receivables
Receivables are recognized pursuant to IAS 39 as loans at nominal value less any necessary
write-offs. The fair value of receivables generally corresponds to the carrying amount.
Deferred Acquisition Costs
FAS 60 defines acquisition costs as all variable costs that are directly incurred in connection
with the acquisition or extension of insurance contracts. Such costs include commissions for
intermediaries as well as fees for medical examinations. Acquisition costs are capitalized and
amortized on a systematic basis.
In the area of property/casualty insurance, acquisition costs incurred in connection with new
contracts are amortized on a straight-line basis over the legal term of the contract of up to
three years. Acquisition costs capitalized in previous years will be completely amortized by no
later than the year 2009.
In the case of life insurance policies recognized pursuant to FAS 60, acquisition costs are
amortized in proportion to recognition of premium income. Annual amortization is determined on the basis of same assumptions and factors used to determine policy reserves. In
the case of life insurance contracts that fall under FAS 97, acquisition costs are amortized in
proportion to the emergence of estimated profits. Estimates of future profits are based on
assumptions as regards the development of biometric risks, cancellations, investment
income and bonuses due to policyholders. Assumptions are regularly examined to determine
whether they are appropriate. If necessary, the bases used for calculation are revised and
deferred acquisition costs are increased or reversed accordingly.
In the case of health insurance, acquisition costs are amortized over the term of the contract.
Amortization is determined on the basis of the calculations used to determine policy
reserves. In the case of short-term health insurance contracts with unearned premiums,
amortization is proportional to recognition of premium revenue.
Deferred acquisition costs are assessed for impairment as of each reporting date by carrying
out a test of recoverability.
Deferred Taxation
Temporary differences between carrying amounts in the IFRS balance sheet and the tax base
are accounted for by recognition of deferred tax assets or liabilities. Deferred taxes may also
result from the carryforward of unused tax losses or from consolidation issues. Deferred tax
assets are recognized only if it is probable that it will be possible to utilize the temporary
difference against taxable profit. IAS 12.56 requires that the carrying amounts of deferred tax
assets be reviewed as of each reporting date. The tax rate is determined on the basis of the
respective tax situation of individual items or that of the Group companies. Changes in tax
rates are taken into account as soon as they are enacted. Deferred taxes are to be consistently
recognized in connection with the business transactions from which they result. That means
that transactions affecting only the balance sheet result in deferred taxes that are shown
directly in equity and that transactions affecting only the income statement result in deferred
taxes that are shown in the income statement.
Other Assets
All other assets are shown at cost less accumulated depreciation or at nominal value less any
necessary impairment losses.
103
104
Equity
Equity consists of revenue reserves, other reserves, consolidated profit and minority interests. Other reserves mainly include unrealized gains and losses on available for sale financial
instruments after transfers to reserves for deferred premium refunds and adjustment for
deferred taxes and the effects of consolidation.
Underwriting Reserves
Gross underwriting reserves are shown under liabilities. The shares of reinsurers are shown
on the assets side and are determined on the basis of the individual reinsurance contracts.
Unearned Premiums
Unearned premiums from property and casualty insurance and short-term health insurance
policies are updated daily on an individual basis. No expenses are deducted (reduction in
unearned premiums as a function of a specific uniform expense ratio for commissions and
administrative expense) for recognition of unearned premiums as liabilities entails recognition of deferred acquisition costs. Unearned premiums are not recognized in the case of longterm life and health insurance contracts since the policy reserve is determined as a function
of premium recognition.
Policy Reserves
The provisions of FAS 60 pertaining to long-duration insurance contracts provide the basis for
recognition of revenue and measurement of policy reserves in the area of life and health
insurance. On the other hand, life insurance policies providing benefits that are determined
by the performance of the investments covering the policyholder account are carried pursuant
to FAS 97. In the case of insurance contracts that primarily involve the transfer of financial
risks, the provisions of IAS 39 are applied.
Policy reserves for all life insurance contracts carried pursuant to FAS 60 are estimated on an
individual basis using the prospective method. Taking into account adequate safety margins,
accounting assumptions are based on expected investment yields, mortality, morbidity,
cancellation frequency as well as adjustment expenses and periods during which no premiums are paid. The estimates also include the results of the Company’s own observations and
external data. The policy reserve contains bonuses already allocated and declared to policyholders as well as those components of premiums that may not be recognized in the income
statement until after the reporting date.
Policy reserves for unit- and index-linked life insurance are determined in compliance with
FAS 97 and mainly include payments received from policyholders, withdrawals to cover risks
and expenses as well as changes in the market value of the corresponding investments.
Those components of the policy reserve that correspond to the market values of the investments assigned to these contracts are disclosed separately. In the case of contracts recognized pursuant to IAS 39, policy reserves are determined on the basis of the corresponding
cash flows using the effective interest method.
Policy reserves for health insurance contracts are determined on the basis of the difference
between the present value of future benefits, including claim adjustment expenses, and the
present value of estimated premium income. The reserves are determined on the basis of
current actuarial assumptions and adequate safety margins using the prospective unlocking
approach. This enables insurers to adjust premiums. The assumptions made at the beginning
of a contract are retained until the premiums for that contract are adjusted. The assumptions
then remain in place until the next adjustment.
Reserves for Unpaid Claims
Reserves for unpaid claims include liabilities in connection with insurance policies, of uncertain amount or timing. In the area of property and casualty insurance, the ultimate cost of
settlement per year is estimated pursuant to FAS 60 on the basis of past experience using
recognized statistical methods and taking into account current or anticipated trends and
calculated along with the cost of loss settlement. This provides the basis for determination of
the required loss reserves. For reasons of materiality, individual loss reserves are established
for some lines of property and casualty insurance on the basis of past experience when they
are of importance for losses incurred but not reported. With the exception of reserves for
annuities in connection with property and casualty insurance, loss reserves are not discounted. Uniform standards transferring gross to net reserves were adopted across the Group
in the financial year. To produce more realistic estimates, adjustments were also made for
hyperinflation and safety margins. For technical reasons, estimated liabilities may differ from
actual expenses.
In the area of life insurance, reserves for unpaid claims – unless covered by settlement with
lead managers in the case of group contracts – are estimated for each individual claim on the
basis of experience as of 31 December. In the case of claims under supplementary occupational disability insurance policies that have not yet been settled, reserves are established in
an amount based on past experience. Reserves for losses incurred but not yet reported are
established for insured events occurring after the general estimate is made and before 31 December through estimation of the amounts at risk on the basis of the individual claims, i.e.
essentially the difference between benefits to be paid and available cover. General reserves
in an amount based on past experience are established for mortalities occurring during the
financial year but not reported.
In the area of health insurance, reserves for unpaid claims are estimated with the help of a
statistical approximation method. The estimate is based on the percentage of claims incurred
as of the reporting date and settled as of the date of establishment of the reserves and a
factor derived from experience in the past three financial years. Separate estimates are made
for the previous year and earlier financial years.
Other Underwriting Reserves
Other underwriting reserves mainly include reserves for premium refunds.
Reserves for premium refunds in the area of life and health insurance include all amounts to
be used for payment of bonuses to policyholders in compliance with national or regulatory
requirements, legal provisions or contractual conditions. Reserves for premium refunds,
including deferred premium refunds, comply with the definition of discretionary participation
features pursuant to IFRS 4.
In 2008 the new Minimum Premium Refund Ordinance (MindZV) had to be applied for the first
time. When the respective results are positive, policyholders participate with 90 %, 75 % or
50 % in the result sources of investment income, risk income and other income. It can be
estimated that on the basis of this ordinance the minimum participation of the policyholders
in the total surpluses continues to be approx. 90 % on average.
Discretionary payments of bonuses that are not already included in the policy reserves are
carried as liabilities under reserves for premium refunds and liabilities from primary insurance business.
105
106
In the case of health insurance plans modelled on life insurance, the German Ordinance on
the Determination and Distribution of Interest and Profit in Health Insurance (ÜbschV)
requires that 80 % of profit determined in accordance with section 4.1 ÜbschV be transferred
to reserves for experience-rated premium refunds, whereby the minimum amount transferred
is to be reduced by the interest already credited pursuant to section 12 a.1 of the German
Insurance Supervision Act (VAG). In the case of private compulsory long-term care insurance,
80 % of profit determined in accordance with section 4.1 a ÜbschV is to be transferred to
reserves for experience-rated premium refunds, whereby the minimum amount transferred is
to be reduced by the amount transferred to non-experience-rated premium refunds for group
insurance contracts. In addition to experience-rated premium refunds, non-experience-rated
premium refunds also exist in the case of health insurance that result in particular from
amounts from the area of long-term care insurance and section 12 a.3 VAG. Reserves are also
established pursuant to sections 12.4 a (legal supplement) and 12 a.2 VAG in the case of
health insurance. These reserves are used to permit lower premiums in the future and are
therefore included as a component of reserves for premium refunds.
In the event of changes in the value of the assets or liabilities of life and health insurers as a
result of differences between the German Commercial Code (HGB) and IFRS, such differences
are taken into account in the reserve for deferred premium refunds in an amount estimated to
be due to policyholders upon realization.
Premium deficiency reserves are established for various insurance portfolios since future
premiums and the corresponding investment income of these portfolios are not expected to
cover anticipated claims and expenses. However, only that portion in excess of deferred
acquisition cost calculated at the level of the line of insurance is included in premium deficiency reserves.
Equalization reserves established pursuant to the provisions of HGB are not considered
liabilities and are therefore not recognized under IAS 37.
Adequacy of Underwriting Reserves
Application of IFRS 4 requires regular assessment of the adequacy of insurance liabilities
(liability adequacy test). The adequacy of life insurance underwriting reserves is assessed
pursuant to FAS 60 by means of what is referred to as loss recognition test. This involves
estimation of future cash flows, taking into account realistic estimates of mortality and other
reasons for termination as well as expense ratios. The cash flows are discounted at a rate
commensurate with current expectations. The results of the loss recognition test show that
reserves and future revenues estimated on the basis of realistic assumptions currently suffice
to cover all contractual obligations. The margins of safety included in the underlying assumptions for health insurance underwriting reserves are sufficiently high so that it is possible to
dispense with assessment of appropriateness of the liabilities.
Underwriting Reserves for Unit-Linked Life Insurance
In addition to policy reserves, other underwriting reserves are also established here for liabilities in connection with life insurance policies that transfer investment risk to policyholders or
provide index-linked benefits.
The approach used for recognition of investments held for life insurance policyholders is the
same as that used for recognition of gross policy reserves pursuant to FAS 97.
Investments assigned to unit-linked life insurance are carried separately from those of the
Group. In this case, unrealized gains and losses result in an increase or decrease in the
corresponding reserves. All gains on these investments accrue to policyholders, as do all
losses.
Provisions for Pension Benefits and Similar Obligations
Group companies for the most part use defined-benefit plans to provide pension benefits.
Defined-benefit pension plans are accounted for pursuant to IAS 19 using the projected unit
credit method and taking into account actuarial assumptions. Recognition is based on the
use of current mortality tables, disability and fluctuation probability, assumptions on
increases in income and benefits, and a realistic discount rate. Actuarial gains and losses
result from differences between actual obligations and benefits paid and obligations and
benefits anticipated on the basis of actuarial assumptions as well as from changes in actuarial
assumptions. Actuarial gains and losses are accounted for using the corridor method pursuant to IAS 19.92.
Tax Accruals and Other Accruals
Tax accruals are established in accordance with the provisions of national tax law. Other
accruals and provisions are established in amounts based on the best estimate of the outflow
of funds required to settle the corresponding obligations as of the reporting date. Long-term
accruals and provisions are discounted if the interest effect is significant.
Liabilities
This item includes participation certificates, subordinate liabilities, bonds and loans,
deposits received from reinsurers and other liabilities. These liabilities are all recognized at
repayable amounts. This item also includes investments held for trading with a negative fair
value.
Premiums
Savings components are deducted from gross premiums in the case of insurance policies that
primarily cover assignment of financial risk or explicitly include insurance and savings components since only that revenue may be recognized under earned premiums that covers
insured risks and expenses. Premiums earned also do not include those components of
premiums that may be recognized as revenue only after the reporting date.
107
108
Currency Translation
The consolidated financial statements of the Gothaer Group are denominated in euros. All
companies whose accounts are included in the consolidated financial statements denominate their financial statements in euros. Since our business is concentrated in Germany,
currency translation is of insignificant importance for our Group.
Cash and cash equivalents denominated in foreign currencies are translated at the exchange
rate prevailing as of the reporting date. Non-monetary items denominated in foreign currencies that are carried at historical cost are translated at the exchange rate prevailing at the time
of acquisition. Non-monetary items denominated in foreign currencies that are carried at fair
value are translated at the exchange rate at the time of valuation. Underwriting liabilities
involving payment in foreign currencies must be covered by funds in the same currency
(congruent coverage) to the extent possible due to the difficulty of estimating such contingent
liabilities.
Differences in connection with monetary financial instruments that result from translation of
items denominated in foreign currencies as of the reporting date at an exchange rate that
differs from that used for first-time recognition are shown in the income statement.
Leasing Agreements
Intangible assets and tangible assets are used under operating leases. In the case of operating leases, assets are not recognized by the lessee since the lessor retains the related benefits and risks of ownership. Lease payments are recognized as expense in the financial year in
which they occur.
Finance leases exist in the area of EDP hardware. Assets used under finance leases are recognized as assets by the lessee. Lease payments due at future dates are recognized as liabilities.
Other Information
Due to the presentation of amounts in millions of euro, rounding differences may occur in
tables.
Comments on the information on insurance policies required under IFRS 4 as well as information on financial instruments required under IFRS 7 are provided in the risk report within the
management report where they are not provided in the Accounting Policies and Notes to the
Consolidated Financial Statements.
Notes to the Consolidated Balance Sheet – Assets
[1] Goodwill
Change in the Financial Year
Gross as of 31.12. of previous year
Accumulated impairment as of 31.12. of previous year
Balance as of 31.12. of previous year
2008
€ million
2007
€ million
33.8
8.7
25.1
33.8
8.7
25.1
0.0
0.0
0.0
0.0
25.1
8.7
33.8
25.1
8.7
33.8
Change in scope of consolidation
Impairment
Balance as of 31.12. of financial year
Accumulated impairment as of 31.12. of financial year
Gross as of 31.12. of financial year
No companies were acquired in 2008. In addition and as in the previous year, the test for
impairment showed no need for a write-down.
[2] Other Intangible Assets
Internally generated
Purchased
Total
2008
2007
2008
2007
2008
2007
€ million € million € million € million € million € million
Accumulated amortization
as of 31.12. of previous year
150.9
138.4
269.2
252.5
420.1
390.9
109.7
41.2
101.3
37.1
212.2
57.0
199.9
52.6
321.9
98.2
301.2
89.7
Additions
Disposals
Amortization
23.8
0.0
9.7
12.6
0.0
8.5
30.0
0.2
14.4
18.0
1.3
12.3
53.9
0.2
24.1
30.5
1.3
20.7
Accumulated amortization
as of 31.12. of financial year
55.3
41.2
72.4
57.0
127.7
98.2
119.3
174.6
109.7
150.9
219.3
291.7
212.2
269.2
338.6
466.3
321.9
420.1
Other intangible assets have a useful life of between one and ten years.
109
110
[3] Tangible Assets
Accumulated depreciation as of 31.12. of previous year
Additions
Disposals
Scheduled depreciation
Accumulated depreciation as of 31.12. of financial year
2008
€ million
2007
€ million
496.4
287.1
209.3
554.8
317.5
237.3
23.4
9.2
15.8
22.7
35.3
15.4
207.7
295.9
503.6
209.3
287.1
496.4
The balance consists of € 165.5 million (PY: € 168.6 million) for self-occupied property and
€ 42.2 million (PY: € 40.7 million) for tangible assets.
The fair value of self-occupied property comes to € 199.1 million (PY: € 204.2 million).
[4] Investment Property
Accumulated depreciation as of 31.12. of previous year
Additions
Disposals
Scheduled depreciation
Impairment
Reversals
Accumulated depreciation as of 31.12. of financial year
2008
€ million
2007
€ million
241.1
127.9
113.2
697.1
324.6
372.5
0.0
16.4
1.9
2.0
0.0
0.8
253.8
2.4
5.3
1.4
92.9
105.9
198.8
113.2
127.9
241.1
The fair value of investment property comes to € 128.3 million (PY: € 148.7 million). Operating
expenses directly attributable to rented property, including repairs and maintenance, come to
Impairment losses were incurred exclusively in the Other Activities segment. Additions in
2007 refer completely to new acquisitions.
[5] Shares in Affiliated and Associated Companies
Ten (PY: 12) associated companies were carried at equity in the amount of € 70.7 million
(PY: € 80.8 million). The corresponding goodwill of these associated companies comes to
€ 24.2 million (PY: € 25.8 million). The decrease in goodwill in comparison to the prior year is
due to the disposal of an associated company. Any negative consolidation differences are
amortized directly in the financial year in which they occur. No negative differences occurred
in the financial year 2008. In the prior year, a difference of € 0.1 million was amortized in
connection with a successive acquisition. The fair value of the associated companies consolidated at equity totalled € 424.1 million (PY: € 413.0 million).
Financial Information on Associated Companies*
Assets
Liabilities
Sales revenues
Profit
2008
2007
2008
2007
2008
2007
2008
2007
€ million € million € million € million € million € million € million € million
Consolidated
Non-consolidated
781.3
209.8
751.9
294.1
691.7
36.7
658.6
36.1
1,463.9
118.9
1,330.6
126.3
20.7
122.1
26.2
192.2
* The last two available financial statements of the associated companies are the basis for the above figures
Other affiliated and associated companies are not consolidated because they are of insignificant economic importance or because the Company’s interest is less than 20 %. These interests are recognized as available for sale investments at fair value. Unrealized gains and
losses were shown under equity after deduction of deferred taxes and deferred reserves for
premium refunds.
Shares in Affiliated and Associated Companies – Non-Consolidated
Amortized cost
Unrealized gains
Unrealized losses
Fair value
2008
2007
2008
2007
2008
2007
2008
2007
Affiliated
companies
404.1
285.0
105.0
100.2
4.0
16.8
505.1
368.4
Associated
companies
791.8
701.9
120.2
170.4
15.1
21.0
896.9
851.3
1,195.9
986.9
225.2
270.6
19.1
37.8
1,402.0
1,219.7
Total
[6] Held to Maturity Investments
Amortized cost
Unrealized gains
Unrealized losses
Fair value
2008
2007
2008
2007
2008
2007
2008
2007
Bearer bonds
Other loans
2,761.8
40.8
2,156.6
40.8
14.8
0.0
0.3
0.0
424.2
5.3
210.3
3.4
2,352.4
35.5
1,946.6
37.4
Total
2,802.7
2,197.4
14.8
0.3
429.5
213.7
2,387.9
1,984.0
111
112
Maturities
Amortized cost
Fair value
2008
€ million
2007
€ million
2008
€ million
2007
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
49.0
97.1
286.5
148.1
394.8
1,428.0
399.2
41.5
23.0
86.1
146.7
136.4
1,394.2
369.5
30.5
87.9
261.4
136.3
368.8
1,210.7
292.3
36.8
21.7
76.8
132.1
129.4
1,260.3
326.9
Total
2,802.7
2,197.4
2,387.9
1,984.0
Rating Classes
Amortized cost
Fair value
2008
€ million
2007
€ million
2008
€ million
2007
€ million
AAA
AA
A
BBB
BB
B
CCC and lower
Non-rated
67.9
214.5
1,366.3
1,039.9
111.4
0.0
0.0
2.6
0.0
52.1
1,035.7
961.7
145.4
0.0
0.0
2.5
67.6
198.3
1,237.5
812.2
70.6
0.0
0.0
1.7
0.0
49.4
941.8
865.2
124.9
0.0
0.0
2.7
Total
2,802.7
2,197.4
2,387.9
1,984.0
Impairment
2008
€ million
2007
€ million
Amortized cost before impairment
Impairment
Due to significant change in creditworthiness
Due to significant decrease in fair value
245.7
18.4
6.9
9.2
5.5
5.9
Fair value after impairment
229.6
7.0
[7] Loans
Amortized cost
Unrealized gains
Unrealized losses
Fair value
2008
2007
2008
2007
2008
2007
2008
2007
Mortgage loans
474.3
526.6
7.0
0.0
0.0
16.5
481.3
510.1
Loans and advance payments
on insurance
policies
58.1
57.3
0.0
0.0
0.0
0.0
58.1
57.3
Loans to affiliated
companies
21.7
17.8
0.0
0.0
0.0
0.0
21.7
17.8
Loans to associated companies
26.0
54.7
0.0
0.0
0.0
0.0
26.0
54.7
Other loans
32.2
29.8
0.0
0.1
4.4
1.3
27.8
28.6
1,141.7
37.2
83.1
0.0
48.7
0.0
1,176.0
37.2
Registered bonds 2,311.8
2,604.1
22.8
1.4
39.2
138.7
2,295.4
2,466.8
Promissory notes
2,946.1
3,005.4
19.4
3.5
100.7
193.5
2,864.8
2,815.3
Total
7,011.9
6,332.9
132.3
5.0
193.0
350.0
6,951.1
5,987.9
Bearer bonds
Loans to associated companies include € 17.8 million (PY: € 45.2 million) in loans to consolidated companies and € 8.2 million (PY: € 9.5 million) in loans to non-consolidated companies.
Maturities
Loans
Amortized cost
Fair value
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
582.0
841.1
560.8
1,066.4
564.3
2,054.0
1,343.3
516.3
555.2
827.1
587.4
1,032.2
1,955.8
858.9
569.3
842.0
557.8
1,050.4
569.3
2,077.4
1,284.9
493.5
540.5
792.5
562.1
950.2
1,869.7
779.4
Total
7,011.9
6,332.9
6,951.1
5,987.9
113
114
Rating Classes
Loans
Amortized cost
Fair value
2008
€ million
2007
€ million
2008
€ million
2007
€ million
AAA
AA
A
BBB
BB
B
CCC and lower
Non-rated
2,210.1
2,018.3
1,696.3
442.5
14.5
2.5
1.3
626.4
2,549.5
2,183.2
798.5
21.5
0.0
0.0
0.0
780.2
2,194.6
1,977.9
1,660.5
462.6
17.2
1.5
1.3
635.5
2,420.8
2,045.1
738.3
20.5
0.0
0.0
0.0
763.2
Total
7,011.9
6,332.9
6,951.1
5,987.9
Impairment
Loans
2008
€ million
2007
€ million
Impairment
427.3
25.6
22.1
12.0
3.8
2.1
393.2
19.7
Reclassification in accordance with IAS 39.50
In accordance with IAS 39.50, available for sale financial instruments with a fair value of
€ 1.03 billion were reclassified as loans. These financial instruments had carrying value, i.e.
amortized costs of € 1.06 billion at the end of the financial year and a fair value of € 1.10
billion and income and expenses totalling € 59.3 million was recorded in the income statement.
For some of these financial instruments, prices were determined by mark-to-model valuation
in line with IAS 39.AG74 because the listed prices of these loans were no longer the result of
an active market with willing partners engaged in arm’s length transactions. In the course of
modelling, loan-specific cash flow profiles based on internal credit analysis were created to
take account of the anticipated coupon losses and their possible repayment in future years.
These individual cash flows were adequately discounted by applying factors observed in the
market and carried as fair value.
Change in fair value until time of reclassification
Realized gains and losses
Change in fair value without reclassification
(shadow accounting)
Realized gains and losses
2008
€ million
2007
€ million
– 117.0
– 0.8
– 123.2
– 0.5
– 43.7
– 0.8
0.0
0.0
The effective yield of the reclassified financial instruments was between 3.4% and 20.3 %.
The anticipated cash flows amounted to € 1.14 billion and were distributed as follows:
Payment times of anticipated cash flows
2008
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
Total
28.9
18.4
62.5
54.6
47.2
929.0
1,140.7
115
116
[8] Available for Sale Investments
Amortized cost
Unrealized gains
Unrealized losses
Fair value
2008
2007
2008
2007
2008
2007
2008
2007
Non-fixed-income
securities
2,454.1
3,040.1
176.9
587.5
573.5
123.3
2,057.5
3,504.3
5,316.1
6,829.4
130.7
27.3
170.9
320.5
5,275.9
6,536.2
Registered
bonds
32.5
26.1
0.6
0.0
0.0
0.7
33.1
25.4
Promissory
notes
703.6
674.8
3.5
0.0
0.1
2.3
707.0
672.6
Other loans
176.2
170.5
1.9
0.0
0.2
9.6
177.9
160.8
8,682.5 10,740.9
313.6
614.8
744.7
456.4
Fixed-income
securities
Bearer bonds
Total
8,251.4 10,899.3
Maturities
Fixed-income
Amortized cost
Fair value
2008
€ million
2007*
€ million
2008
€ million
2007
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
271.1
152.0
539.0
338.7
623.4
3,534.3
769.9
179.9
382.8
180.0
611.6
499.0
4,404.4
1,443.1
260.8
152.3
538.2
336.6
617.5
3,528.7
759.8
179.4
380.5
179.0
598.7
487.5
4,210.5
1,359.4
Total
6,228.4
7,700.8
6,193.9
7,395.0
Rating Classes
Fixed-income
Amortized cost
Fair value
2008
€ million
2007*
€ million
2008
€ million
2007
€ million
AAA
AA
A
BBB
BB
B
CCC and lower
Non-rated
3,751.3
1,326.9
402.3
264.9
111.8
146.4
2.3
222.5
4,298.1
1,327.7
1,181.6
409.8
128.2
129.1
4.6
221.7
3,821.0
1,339.7
394.8
225.0
97.2
94.1
2.3
219.8
4,166.8
1,310.7
1,060.1
379.5
128.7
124.7
4.2
220.3
Total
6,228.4
7,700.8
6,193.9
7,395.0
Concentration of default risks is avoided through strict limits for all fixed-income securities
imposed by the supervisory bodies of the Gothaer Group. In addition, the amounts and
ratings of individual exposures are constantly monitored to permit timely identification of
possible defaults.
The effective interest rates on our fixed-income securities lie between 0.0 % and 12.8 %. All
valuation categories include financial instruments with variable coupons that are dependent
upon market conditions or specific corporate events.
Impairment
2008
€ million
2007
€ million
Impairment
Due to permanent negative fair value reserve
Due to repeated impairment of impaired investments
1,849.3
272.0
5.6
266.5
15.6
52.1
0.0
50.8
8.1
28.3
1,509.5
184.8
117
118
[9] Investments Measured at Fair Value through Profit or Loss
Historical cost
Fair value
2008
€ million
2007
€ million
2008
€ million
2007
€ million
0.0
0.0
0.0
0.0
323.2
85.7
112.5
326.5
Total
By designation
Fixed-income
0.0
0.0
408.9
439.0
4.0
3.2
3.1
3.0
Total
4.0
3.2
412.0
442.0
Held for trading
Non-fixed-income
Fixed-income
The Gothaer Group does not use hedge accounting within the meaning of IAS 39. All derivative
financial instruments are therefore shown under investments held for trading.
Derivatives are financial instruments whose value changes as a function of the changes in one
or more underlying variables. Derivative financial instruments are used within the Gothaer
Group for purposes of performance management and protection of investment portfolios
against falling prices. In particular, forward foreign exchange contracts are used to protect
against exchange rate risks and interest swaps to protect against changes in interest rates. All
derivative financial instruments are recognized on the basis of conventional option, future or
swap models.
Derivative Financial Instrument Valuation Models
Derivative
Pricing method
Parameters
Pricing modell
Quoted price
–
–
Total return Swaps
Theoretical price
Market value of
Reference instrument
yield curve
Cash value
method
Yield swaps
Theoretical price
Swap curve
Money market yield curve
Cash value
method
Forward exchange transaction
Theoretical price
Spot rate
Money market yield curve
Cash value
method
Credit default swaps
Theoretical price
Credit spreads
Recovery rates
yield curve
Cash value
method
Listed share options
Embedded derivatives are separated from the host contracts and shown under investments
held for trading. Hybrid financial instruments are generally fixed-income securities that have
been combined with a derivative. All embedded derivatives are separated from their host
contracts in compliance with the provisions of IAS 39.11(a) when their characteristics and
risks are not closely related to those of the respective host contracts and they go beyond the
interest risks of the respective host contracts. Host contracts are recognized as fixed-income
securities at amortized cost under loans or investments held to maturity or alternatively at fair
value under available for sale investments.
Separation of derivatives from underlyings involves two categories of securities. One category
includes bonds with interest coupons and/or redemption linked to a reference instrument
(e.g., stock indexes or hedge funds). Such structures consist of a plain vanilla bond and a
long call or a total return swap on the underlying reference asset. In the case of a total return
swap, we assume that the yield of the plain vanilla bond is variable and in line with the
market. The total fluctuation in fair value is thus recognized through profit and loss at total
return swap level. The other category includes separate recognition of credit linked notes. In
this case, the embedded credit default swap used to hedge the credit risk is shown separately.
Derivative financial instruments with a negative fair value are shown in equity and liabilities
under item E. Liabilities.
As required by IAS 39.11(c). hybrid instruments in special funds are accounted for as financial
instruments at fair value under the subheading “by designation.”
The maximum credit risk of financial instruments recognized by designation at fair value
through profit or loss is € 3.1 million (PY: € 3.0 million). No credit derivatives exist that reduce
the credit risk of these financial instruments. Since the ratings of these financial instruments
have not worsened after they were purchased, any changes in fair value are in our opinion
due exclusively to market fluctuations.
Maturities
Investments measured at Fair Value through Profit or Loss
Fixed-Income
Held for trading
By designation
2008
€ million
2007
€ million
2008
€ million
2007
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
6.8
14.7
2.9
5.9
1.6
49.8
4.0
46.5
0.8
28.6
14.9
90.5
145.2
0.0
0.4
0.9
0.0
0.0
1.5
0.3
0.0
0.0
0.0
0.0
0.0
0.0
3.0
0.0
Total
85.7
326.5
3.1
3.0
Rating Classes
Investments measured at Fair Value through Profit or Loss
Fixed-Income
Held for trading
By designation
2008
€ million
2007
€ million
2008
€ million
2007
€ million
AAA
AA
A
BBB
BB
B
CCC and lower
Non-rated
0.0
0.0
0.0
0.1
0.5
0.6
0.3
84.2
7.9
0.0
0.0
0.0
0.0
0.0
0.0
318.6
0.0
0.0
0.0
0.0
0.0
3.1
0.0
0.0
0.0
1.3
0.0
0.0
1.4
0.3
0.0
0.0
Total
85.7
326.5
3.1
3.0
119
120
[10] Other Investments
2008
€ million
2007
€ million
Deposits with ceding undertakings
Bank deposits
Other
61.7
1,307.9
38.0
74.7
490.5
35.4
Total
1,407.6
600.6
The carrying amount of other investments corresponds to fair value.
[11] Receivables
2008
€ million
2007
€ million
Receivables from primary insurance business
from policyholders
from intermediaries
Accounts receivable in connection with reinsurance business
Accounts receivable from affiliated and associated companies
Deferred interest and rent
Other
160.8
90.1
56.2
11.2
307.6
213.1
138.5
78.5
69.9
9.4
288.3
242.7
Total
839.0
827.3
The carrying amount of receivables corresponds to fair value. No prepayments were made.
There are also no receivables from related companies.
Other Investments/Receivables
Maturities
Deposits with ceding
undertakings
Bank deposits
Other receivables
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
60.9
0.0
0.0
0.0
0.0
0.0
0.8
74.0
0.0
0.0
0.0
0.0
0.0
0.7
1,307.9
0.0
0.0
0.0
0.0
0.0
0.0
490.5
0.0
0.0
0.0
0.0
0.0
0.0
875.8
6.9
7.4
5.3
5.7
16.1
44.9
865.2
3.8
6.4
3.7
2.9
12.6
43.5
Total
61.7
74.7
1,307.9
490.5
962.1
938.1
In addition to the receivables shown on line E. Receivables on the face of the balance sheet,
other receivables include the tax refunds due in the amount of € 123.1 million (PY: € 110.8
million) that are shown on line J. I. of the balance sheet.
[12] Deferred Acquisition Costs (net)**
Property/
Casualty***
Life
Health
Total
2008
2007
2008 2007*
2008
2007
2008 2007*
€million €million €million €million €million €million €million €million
Balance as of 31.12. of the
previous year
Gross
Share of reinsurers
55.5
6.7
93.6
6.1
821.2
73.4
822.1
86.7
151.2
0.0
Adjustment of previous year
Gross
Share of reinsurers
0.0
0.0
– 10.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
financial year
Gross
Share of reinsurers
Net
55.5
6.7
48.8
82.8
6.1
76.7
821.2
73.4
747.7
822.1
86.7
735.4
151.2
0.0
151.2
New deferred acquisition costs
Gross
Share of reinsurers
35.4
9.1
35.0
6.7
114.9
1.2
99.4
0.8
15.9
0.0
22.7
0.0
166.3
10.3
157.1
7.5
Amortization
Gross
Share of reinsurers
42.8
5.8
62.4
6.2
96.8
13.6
100.4
14.1
17.6
0.0
15.4
0.0
157.2
19.4
178.2
20.2
financial year
Gross
Share of reinsurers
Net
48.1
10.0
38.1
55.5
6.7
48.8
839.3
61.0
778.3
821.2
73.4
747.7
149.5
0.0
149.5
*
143.9 1,027.8 1,059.6
0.0
80.1
92.8
0.0
0.0
0.0
0.0
– 10.8
0.0
143.9 1,027.8 1,048.8
0.0
80.1
92.8
143.9
947.7 956.0
151.2 1,036.9 1,027.8
0.0
71.0
80.1
151.2
965.9 947.7
** Figures based on full consolidation
*** Including portfolio of policies in force of Gothaer Finanzholding AG
121
122
[13] Tax Assets
Deferred tax assets are based on the one hand on deferred taxes arising from tax loss carryforwards and on the other hand on lower carrying amounts for investments under IFRS than
under the tax balance sheet and higher carrying amounts for provisions for pension benefits.
In the current financial year. corporate income tax loss carryforwards in the amount of € 207.9
million (PY: € 226.0 million) and trade tax loss carryforwards in the amount of € 218.3 million
(PY: € 238.8 million) were considered not utilizable so that no deferred tax assets were
recognized. They can be used without time limitation.
[14] Other Assets
Inventories
Other assets
Total
2008
€ million
2007
€ million
3.3
7.5
3.6
9.8
10.8
13.4
Notes to the Consolidated Balance Sheet – Equity and Liabilities
[15] Other Reserves
Unrealized gains and losses on available
for sale investments
Less:
Reserves for deferred premium refunds
Deferred taxes
Effects of consolidation
Total
2008
€ million
2007*
€ million
– 224.9
391.2
– 203.0
– 30.3
5.9
249.2
– 1.1
7.7
2.5
135.4
The amount shown on line A. II. on the face of the balance sheet under other reserves also
includes separate reserves in the amount of € – 28.9 million (PY: € 5.4 million) resulting from
reclassification of securities. Investments previously classified as available for sale were
reclassified as investments held to maturity or loans when revised IAS 39 was adopted in
2005. In addition, the new option set out in IAS 39.50 was used and other available for sale
financial instruments reclassified as loans. Unrealized gains and losses on these reclassified
investments are shown as a separate reserve under other reserves. This reserve is either
reversed upon disposal of the reclassified investments or amortized over the residual term of
the investments.
Changes in Other Reserves
2008
€ million
2007*
€ million
Allocations/reversals shown directly in equity
Allocations/reversals shown in the income statement
– 116.9
– 50.3
56.2
– 126.9
Total
– 167.2
– 70.7
On the one hand, changes in other reserves are carried to the income statement upon disposal
of securities and realization of the related reserves or losses. On the other hand, “hidden”
losses are reversed shown as write-downs in the income statement in the event of impairment.
Expense in the amount of € 171.2 million (PY: € 10.7 million) was incurred in the financial year
2008 due to write-downs. In addition, the separate reserves resulting from the reclassification
of securities were amortized.
Changes in unrealized gains and losses on available for sale investments that remained in
the portfolio of the Group are on the other hand shown directly in equity.
123
124
[16] Minority Interests
2008
€ million
2007*
€ million
Unrealized gains and losses on available for sale investments
Other equity
5.8
2.6
27.2
7.7
6.3
30.4
35.6
44.4
[17] Underwriting Reserves*
2008
2007
Gross
€ million
Re
€ million
Net
€ million
Gross*
€ million
Re
€ million
Net*
€ million
Unearned premiums
Policy reserves
Reserves for unpaid claims
Other underwriting reserves
431.5
16,774.1
2,262.4
79.2
1,327.0
501.7
352.3
15,447.1
1,760.7
379.1
16,160.6
2,319.6
62.2
1,357.1
515.9
316.9
14,803.5
1,803.7
1,647.6
9.9
64.4
– 5.7
1,583.2
15.6
2,399.4
16.3
73.2
5.8
2,326.2
10.5
Total
21,125.5
1,966.6
19,158.9
21,275.0
2,014.2
19,260.8
Maturities
Underwriting Reserves – Gross
Unearned premiums
Policy reserves
Total
Unearned premiums
Policy reserves
Total
Up to 1 year
1 to 5 years
2008
€ million
More than
5 years
2008
€ million
Unspecified
maturities
2008
€ million
2008
€ million
Total
2008
€ million
330.3
792.5
751.4
101.2
2,822.0
555.9
0.0
8,875.3
876.8
0.0
4,284.3
78.3
431.5
16,774.1
2,262.4
64.9
7.4
103.1
1.9
0.0
0.0
1,479.6
0.6
1,647.6
9.9
1,946.5
3,584.1
9,752.1
5,842.8
21,125.5
Up to 1 year
1 to 5 years
2007
€ million
Unspecified
maturities
2007
€ million
Total
2007
€ million
More than
5 years
2007
€ million
2007
€ million
318.2
851.2
732.3
61.0
2,756.8
567.9
0.0
8,477.1
929.8
0.0
4,075.4
89.6
379.1
16,160.6
2,319.6
66.0
14.0
135.4
1.5
0.0
0.0
2,198.0
0.8
2,399.4
16.3
1,981.7
3,522.6
9,406.9
6,363.8
21,275.0
125
126
Maturities
Underwriting Reserves – Share of reinsurers
Up to 1 year
1 to 5 years
2008
€ million
More than
5 years
2008
€ million
Unspecified
maturities
2008
€ million
2008
€ million
Unearned premiums
Policy reserves
Total
2008
€ million
35.1
90.0
148.4
44.1
326.4
123.3
0.0
800.1
132.8
0.0
110.5
97.2
79.2
1,327.0
501.7
0.2
– 5.7
0.0
0.0
0.0
0.0
64.2
0.0
64.4
– 5.7
268.0
493.8
932.9
271.9
1,966.6
Up to 1 year
1 to 5 years
2007
€ million
Unspecified
maturities
2007
€ million
Total
2007
€ million
More than
5 years
2007
€ million
2007
€ million
Unearned premiums
Policy reserves
43.7
98.6
136.7
18.5
331.3
120.4
0.0
822.3
141.5
0.0
105.0
117.3
62.2
1,357.1
515.9
0.0
5.8
0.0
0.0
0.0
0.0
73.1
0.0
73.2
5.8
Total
284.8
470.2
963.8
295.4
2,014.2
Total
[18] Unearned Premiums*
Property/Casualty**
Life
Health
Total
2008
2007
2008
2007
2008
2007
2008
2007
Gross
Share of
reinsurers
431.3
379.1
0.0
0.0
0.2
0.0
431.5
379.1
79.2
62.2
0.0
0.0
0.0
0.0
79.2
62.2
Net
352.1
316.9
0.0
0.0
0.2
0.0
352.3
316.9
* Figures based on full consolidation
** Including portfolio of policies in force of Gothaer Finanzholding AG
[19] Policy Reserves*
Property/Casualty**
Life
Health
Total
2008
2007
2008
2007
2008
2007
2008
2007
Gross
Share of
reinsurers
51.0
Net
51.0
0.0
50.5 13,352.2 12,941.6
0.0
1,327.0
3,370.9
1,357.1
0.0
50.5 12,025.2 11,584.5
3,370.9
3,168.5 16,774.1 16,160.6
0.0
1,327.0
1,357.1
3,168.5 15,447.1 14,803.5
Changes in Life Insurance Policy Reserves
2008
Allocations
Amount used
Reversals
2007
Gross
€ million
Re
€ million
Gross
€ million
Re
€ million
12,941.6
1,357.1
12,494.3
1,380.3
1,550.9
1,140.3
0.0
0.7
30.8
0.0
1,478.3
1,031.0
0.0
0.8
0.0
24.0
13,352.2
1,327.0
12,941.6
1,357.1
127
128
Changes in Health Insurance Policy Reserves
2008
2007
Gross
€ million
Re
€ million
Gross
€ million
Re
€ million
3,168.5
0.0
2,920.6
0.0
202.4
0.0
0.0
0.0
0.0
0.0
247.9
0.0
0.0
0.0
0.0
0.0
3,370.9
0.0
3,168.5
0.0
Allocations
Amount used
Reversals
[20] Reserves for Unpaid Claims*
Property/Casualty**
Life
Health
Total
2008
2007
2008
2007
2008
2007
2008
2007
Gross
Share of
reinsurers
2,078.9
2,145.1
52.8
53.5
130.7
121.0
2,262.4
2,319.6
500.9
515.2
0.4
0.3
0.4
0.4
501.7
515.9
Net
1,578.0
1,629.9
52.4
53.2
130.3
120.6
1,760.7
1,803.7
Changes in Reserves for Unpaid Property/Casualty Insurance Claims
Gross
Share of reinsurers
Net
Plus losses incurred (net)
Losses in the financial year
Losses in the previous year
Total
Less claims paid (net)
Losses in the financial year
Losses in the previous year
Total
Currency translation
Other changes
Net
Share of reinsurers
Gross
2008
€ million
2007
€ million
2,145.1
515.2
1,629.9
2,135.7
549.9
1,585.8
1,553.7
– 763.8
789.9
872.7
– 12.0
860.7
1,118.3
– 273.0
845.3
– 1.2
4.7
466.7
345.9
812.6
– 1.6
– 2.4
1,578.0
500.9
2,078.9
1,629.9
515.2
2,145.1
Run-Off of Gross Reserves for Unpaid Claims of Gothaer Allgemeine Versicherung AG
(primary insurance)
Year of occurrence
Financial year
2001 2002 2003 2004 2005 2006 2007 2008
€million €million €million €million €million €million €million €million
2001
Reserves 01.01.
–
500.0
205.9
143.2
109.7
97.3
81.0
82.5
Payments
Reserves 31.12.
Run-off
535.1
500.0
–
258.1
205.9
35.9
59.2
143.2
3.5
25.6
109.7
7.8
14.8
97.3
– 2.3
10.3
81.0
5.9
7.0
77.4
– 3.5
12.3
71.5
– 1.3
2002
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
568.5
498.0
–
498.0
256.7
199.1
42.2
199.1
62.7
129.7
6.7
129.7
30.4
109.0
– 9.7
109.0
18.2
87.3
3.4
87.3
13.9
76.9
– 3.5
85.1
10.9
72.1
2.1
2003
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
–
–
–
–
449.5
407.4
–
407.4
204.0
171.3
32.0
171.3
58.3
122.3
– 9.3
122.3
23.9
92.7
5.7
92.7
13.3
80.6
– 1.2
81.7
7.5
67.0
7.2
2004
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
–
–
–
–
–
–
–
–
433.5
399.9
–
399.9
196.5
170.8
32.6
170.8
52.8
116.0
2.0
116.0
24.0
93.0
– 0.9
93.0
13.5
79.3
0.2
2005
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
403.9
385.1
–
385.1 171.2
209.8
53.6
171.2 128.7
4.1 – 11.1
128.7
24.0
84.9
19.8
2006
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
396.8
406.4
–
2007
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
469.1
421.1
–
421.1
206.8
188.1
26.3
2008
Reserves 01.01.
Payments
Reserves 31.12.
Run-off
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
431.3
447.1
–
406.4 168.5
218.5
58.6
168.5 125.7
19.3 – 15.8
129
130
[21] Other Underwriting Reserves**
2008
2007
Gross
€ million
Re
€ million
Net
€ million
Gross*
€ million
Re
€ million
Net*
€ million
Reserve for premium refunds
Other
1,647.6
9.9
64.4
– 5.7
1,583.2
15.6
2,399.4
16.3
73.1
5.8
2,326.3
10.5
Total
1,657.5
58.7
1,598.8
2,415.7
79.0
2,336.8
Other Underwriting Reserves According to Segments (net)**
Property/Casualty***
Life
Health
Total
2008
2007
2008
2007*
2008
2007*
2008
2007*
Reserve for
premium refunds
Other
12.2
14.7
10.9
7.8
867.9
0.9
1,536.2
2.7
703.1
0.0
779.2
0.0
1,583.2
15.6
2,326.3
10.5
Total
26.9
18.7
868.8
1,538.9
703.1
779.2
1,598.8
2,336.8
*
Reserves for premium refunds (bonus reserve) include on the one hand the profit-related
or non-profit-related amounts credited to policyholders in compliance with national or
regulatory requirements, legal provisions or contractual conditions; on the other hand, they
also include the deferred premium refunds resulting from differences in assets and liabilities
between the German Commercial Code (HGB) and IFRS. In accounting for deferred premium
refunds, care is taken to ensure that they are no less – at each legal entity – than the appropriated reserves for premium refunds.
Changes in Reserves for Life and Health Insurance Premium Refunds (Bonus Reserve)
Life
Health
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
Amounts transferred pursuant to
national requirements (gross)
As of 31.12. of previous year
Allocations
Amount used
As of 31.12. of financial year
741.1
107.7
127.9
720.9
663.6
159.0
81.5
741.1
572.0
131.1
111.0
592.1
539.7
153.4
121.1
572.0
Reserve for deferred premium
refunds (gross)
868.2
0.0
868.2
889.9
69.8
959.7
207.2
0.0
207.2
166.5
13.5
180.0
Change in unrealized gains
and losses on available for
sale investments
– 353.5
– 216.1
– 98.6
– 19.3
Other changes
– 303.5
211.2
124.6
868.2
2.4
111.0
46.5
207.2
932.1
64.2
867.9
1.609.3
73.1
1.536.2
703.1
0.0
703.1
779.2
0.0
779.2
Gross
Share of reinsurers
Net
Changes in Reserves for Property/Casualty Insurance Premium Refunds (Bonus Reserve)
2008
€ million
2007
€ million
Amounts transferred pursuant to national requirements (gross)
Allocations
Amount used
Reversals
10.9
3.8
1.4
0.9
12.4
12.1
0.9
1.4
0.7
10.9
Gross
Share of reinsurers
Net
12.4
0.2
12.2
10.9
0.0
10.9
131
132
[22] Provisions for Pension Benefits and Similar Obligations
The companies of the Gothaer Group provide pension benefits for their employees and insurance agents. Both defined benefit and defined contribution plans are used. Total obligations
arising from provisions for pension benefits came to € 299.4 million (PY: € 293.6 million) in
the financial year.
Defined Benefit Plans
In case of defined benefit plans, annuitants are promised specific benefits through the
company or a pension scheme. The contributions of the company are not fixed in advance.
Pension schemes are pension funds and benefit associations and societies that insure mainly
employees of domestic enterprises.
Defined benefit plans are based on the use of actuarial estimates and assumptions. The
assumptions described below were used in the financial year 2008.
Actuarial Assumptions
The basic biometric values for both years are based on the Prof. Dr. Heubeck 2005 G Mortality
Tables. Anticipated yields are mostly at the level of anticipated bonuses for Gothaer
Lebensversicherung AG’s life insurance policies. The following assumptions were used:
2008
Discount rate
Expected rate of return on plan assets
Increase in salaries
Increase in benefits
Average remaining service time (in years)
Fluctuation probability
5.70 %–6.00 %
4.50 %
2.50 %
2.00 %
17
6.00 % to age 35
3.00 % to age 45
2007
5.00 %–5.30 %
4.50 %
2.30 %–3.00 %
1.80 %–2.30 %
17
6.00 % to age 35
3.00 % to age 45
The present value of provisions for pension benefits as of 31 December 2008 represents total
estimated obligations as of that time less plan assets and unrecognized actuarial gains. The
individual steps involved in calculation the are presented below in tabular form.
Reconciliation of Defined Benefit Obligations (DBO)
2008
€ million
2007
€ million
Present value of defined benefit obligations
Current service cost, including interest
Interest cost
New actuarial gains/losses on liabilities
Pension benefits paid from plan assets
Pension benefits paid by employer
Transfers in
Transfers out
618.4
10.5
32.0
– 20.3
– 14.4
– 14.5
0.0
– 1.3
652.1
12.1
28.7
– 47.2
– 13.3
– 14.0
0.0
0.0
610.4
618.4
Capital cover comes to 56.5 % (PY: 53.7 %).
Reconciliation of Plan Assets
2008
€ million
2007
€ million
Plan assets as of 31.12. of previous year
Expected return on plan assets
Actuarial gains/losses on plan assets
Employer contributions to plan assets
Pension benefits paid from plan assets
332.3
14.7
6.3
6.1
– 14.5
325.8
13.6
0.8
5.3
– 13.3
Plan assets as of 31.12. of financial year
344.9
332.3
Reinsurance and direct insurance account for 4.3 % (PY: 4.1 %) of plan assets and assets of
the pension funds for 95.7 % (PY: 95.9%).
Reconciliation of Actuarial Gains/Losses
2008
€ million
2007
€ million
– 7.4
40.7
– 20.3
– 47.2
– 6.2
– 0.8
0.0
– 0.1
– 33.9
– 7.4
2008
€ million
2007
€ million
610.4
618.4
Net obligations as of 31.12. of financial year
– 344.9
265.5
– 332.3
286.1
33.9
7.4
0.0
0.0
299.4
293.6
Unrecognized gains/losses as of 31.12. of previous year
Actuarial gains/losses on liabilities
Amortization of actuarial gains/losses
Unrecognized gains/losses as of 31.12. of financial year
Provisions for Pension Benefits
Unrecognized actuarial gains/losses
Unrecognized service costs as of 31.12. of financial year
Provisions for pension benefits as of 31.12. of financial year
The estimate of provisions for pension benefits as of 31 December 2009 assumes among
other things knowledge of the provisions for pension benefits as of 31 December 2008 and
service costs as of 31 December 2009. Service costs are estimated on the basis of the future
amortization. The amount of the amortization is estimated on the basis of other values.
The individual steps involved in the calculations are shown in the tables below.
133
134
Expected Defined Benefit Obligations (DBO)
2008
€ million
2007
€ million
618.4
652.1
Interest cost
Transfers in
Transfers out
Pension benefits paid
10.5
32.0
0.0
– 1.4
– 30.0
12.1
28.7
0.0
0.0
– 27.7
Expected defined benefit obligations
629.5
665.2
Experience-based adjustments came to € 19.1 million in the financial year (PY: € 46.7 million).
Of this amount, € – 12.1 million (PY: € 14.1 million) is accounted for by changes in the portfolio
and € 31.2 million (PY: € 32.6 million) by changes in parameters. Experience-based adjustments in plan assets came to € 8.0 million (PY: € 3.8 million) in the financial year.
Actuarial Gains/Losses on Liabilities
2008
€ million
2007
€ million
610.4
618.4
Expected defined benefit obligations
Actual payments of pension benefits
Expected payments of pension benefits
629.5
– 28.9
– 30.1
665.2
– 27.2
– 27.8
Actuarial gains/losses on liabilities
– 20.3
– 47.4
2008
€ million
2007
€ million
Plan assets as of 31.12. of previous year
Expected employer contributions to plan assets
Expected pension benefits paid from plan assets
332.2
14.7
5.1
– 15.1
325.8
13.6
2.8
– 13.8
Expected plan assets as of 31.12. of financial year
336.9
328.4
Expected Plan Assets
Actuarial Gains/Losses on Plan Assets
2008
€ million
2007
€ million
344.9
336.9
– 6.1
14.4
– 5.1
15.1
332.3
328.4
– 5.3
13.3
– 2.8
13.8
6.3
0.9
2008
€ million
2007
€ million
10.5
32.0
– 14.7
0.0
12.1
28.7
– 13.6
0.1
0.0
0.0
0.0
0.0
27.8
27.3
2008
€ million
2007
€ million
Provisions for pension benefits as of 31.12. of previous year
Pension cost for financial year
Transfers in
Transfers out
Actual pension benefits paid by employer
Actual employer contributions to plan assets
293.6
27.8
0.0
– 1.4
– 14.5
– 6.1
285.6
27.3
0.0
0.0
– 14.0
– 5.3
299.4
293.6
Expected plan assets as of 31.12. of financial year
Actual employer contributions to plan assets
Actual pension benefits paid from plan assets
Expected benefits paid from plan assets
Pension Costs
Interest cost
Amortization of cost of plan amendments
For vested benefits
For non-vested benefits
Pension cost
Changes in Provisions for Pension Benefits
Estimated income from plan assets came to € 14.7 million (PY: € 13.6 million) and actual
income from plan assets to € 21.0 million (PY: € 14.4 million). Plan assets are invested exclusively in fixed-income securities.
135
136
Amortization Amount
2008
€ million
2007
€ million
610.4
618.4
344.9
0.0
– 299.4
– 33.9
62.2
0.1
0.0
0–19
332.3
0.0
– 293.6
– 7.4
62.2
0.0
0.0
0–19
2009
€ million
2008
€ million
9.7
33.9
– 15.3
0.2
10.5
32.0
– 14.7
0.0
28.5
27.8
2009
€ million
2008
€ million
Provisions for pension benefits as of 31.12. of previous year
Expected pension cost
Expected pension benefits paid by employer
299.4
28.5
– 15.4
– 6.0
293.6
27.8
– 14.9
– 5.2
Expected provisions for pension benefits
306.5
301.3
Unrecognized cost of plan amendments for financial year
Unrecognized gains/losses as of 31.12. of financial year
Corridor pursuant to IAS 19.92
Gains/losses outside of corridor
Amortization as of 31.12. of financial year
Amortization period in years
Expected Pension Costs
Interest cost
Expected Pension Costs
Expected Provisions for Pension Benefits
Defined Contribution Pension Plans
2008
€ million
2007
€ million
Pension commitments based on deferred income
Direct insurance paid for employers
Direct insurance paid for employees
Lump-sum taxes
0.8
0.1
0.2
0.1
0.9
0.1
0.2
0.1
Total
1.2
1.3
Defined contribution pension plans involve either direct commitments or direct insurance. In
this case, predetermined amounts are paid, for example, as a function of compensation, and
the rights of the recipient exist in the form of a pledge or title against an insurance company
and the obligation of the employer is fulfilled upon payment of premiums.
[23] Accruals for Taxes
This item includes taxes on income and other taxes recognized as liabilities on the basis of
provisions of national tax law. Deferred taxes are shown under tax assets and liabilities.
[24] Other Accruals
Accrual for jubilee obligations
Accrual for part-time pre-retirement/early retirement
Accrual for social plan
Other
Total
Change in the financial year
Amount used
Reversals
Allocations
Maturities
Up to 1 year
1 to 5 years
After 5 years
Total
2008
€ million
2007
€ million
19.2
46.3
8.8
35.6
21.3
40.4
11.6
49.1
109.9
122.4
2008
€ million
2007
€ million
122.4
0.0
122.4
164.2
– 35.6
128.6
19.7
12.7
19.9
24.5
19.3
37.6
109.9
122.4
2008
€ million
2007
€ million
18.6
58.7
32.6
13.0
78.4
31.0
109.9
122.4
137
138
[25] Liabilities
Participation certificates
Subordinate liabilities
Bonds and loans
Other liabilities
Deposits received from reinsurers
Liabilities in connection with primary insurance business
towards policyholders
towards intermediaries
Liabilities in connection with reinsurance business
Liabilities toward affiliated and associated companies
Other
Total
2008
€ million
2007
€ million
35.0
264.7
199.7
96.4
264.7
223.4
1,409.4
1,434.8
859.2
32.0
37.3
3.2
397.9
987.5
26.7
52.4
4.0
310.7
3,238.4
3,400.6
The liabilities in connection with primary insurance business mainly include accumulated
interest-bearing surpluses and premium deposits from life insurance. Aside from derivative
financial instruments with negative fair values, the other liabilities include social security
liabilities, trade payables and sundry liabilities.
Liabilities
Maturities
Participation
certificates
Subordinate
liabilities
Bonds and
Investments Other liabilities
loans held for trading
2008
€m
2007
€m
2008
€m
2007
€m
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
No fixed maturity
0.0
0.0
0.0
0.0
0.0
15.0
20.0
0.0
61.4
0.0
0.0
0.0
0.0
15.0
20.0
0.0
0.0
0.0
0.0
0.0
0.0
250.0
0.0
0.0
0.0
0.0
0.0
0.0
14.7
250.0
0.0
1.4
47.8
0.0
6.0
79.4
65.0
0.0
0.0
2.9
47.8
0.0
0.0
6.0
166.7
0.0
0.0
76.8
1.1
4.8
8.7
12.8
79.1
0.0
1.5
0.0 1,205.2 1,411.0
26.2
19.0
20.0
0.6
2.9
2.1
0.7
2.6
0.5
0.0
6.4
0.5
3.4
6.9
0.5
0.0 1,337.1 1,371.6
4.2
0.0
0.0
Total
35.0
96.4
264.7
264.7
199.7
223.4
184.9
35.2 2,580.0 2,806.2
14.7
2008 2007*
€m
€m
2008 2007*
€m
€m
2008 2007*
€m
€m
The presentation of other liabilities according to maturities includes tax liabilities in the
amount of € 25.9 million (PY: € 25.3 million) that are shown under item F.I. on the face of the
balance sheet.
The financial instruments with negative fair values included in Other liabilities are shown
separately here. Derivative financial instruments are generally not rated and have no cost.
[26] Tax Liabilities
Deferred tax liabilities are mainly due to higher carrying amounts under IFRS than under the tax
balance sheet in the case of investments and lower carrying amounts for underwriting reserves.
Notes to the Consolidated Income Statement
[27] Premiums*
Property/Casualty**
Life
Health
Total
2008
2007
2008
2007
2008
2007
2008
2007
Premiums
written***
Gross
Share of
reinsurers
Change in
unearned
premiums
Gross
Share of
reinsurers
Savings
components
Gross
Share of
reinsurers
Net premiums
earned
*
1,642.2
1,590.0
1,614.5
1,561.7
782.7
793.4
4,039.4
3,945.1
301.5
1,340.7
286.6
1,303.4
94.6
1,519.9
98.6
1,463.1
4.8
777.9
5.1
788.3
400.9
3,638.5
390.3
3,554.8
– 52.0
– 27.6
0.0
0.0
– 0.1
0.0
– 52.1
– 27.6
– 16.9
– 35.1
0.5
– 28.1
0.0
0.0
0.0
0.0
0.0
– 0.1
0.0
0.0
– 16.9
– 35.2
0.5
– 28.1
0.0
0.0
562.2
459.0
0.0
0.0
562.2
459.0
0.0
0.0
0.0
0.0
2.0
560.2
1.9
457.1
0.0
0.0
0.0
0.0
2.0
560.2
1.9
457.1
1,305.6
1,275.3
959.7
1,006.0
777.8
788.3
3,043.1
3,069.6
Figures based on full consolidation
*** Including premiums from the reserve for premium refunds
Gross premiums in the amount of € 3,996.8 million (PY: € 3,907.5 million) were written in the
area of primary insurance business in the financial year. Reinsurance assumed accounted for
gross premiums in the amount of € 42.6 million (PY: € 37.6 million).
In the case of unit-linked life insurance policies, only that part of the premium used to cover
risks and expenses is included. Savings components are therefore not included in premiums
earned.
139
140
[28] Investment Income
Investment Income According to Segments** (according to type of income or expense)
Current income
Write-ups
Gains on disposals
Current expenses
Write-downs
Losses on disposals
Property/
Casualty***
Life
Health
Other
Activities
Total
2008 2007*
€mill. €mill.
2008 2007*
€mill. €mill.
2008 2007*
€mill. €mill.
2008 2007*
€mill. €mill.
2008 2007*
€mill. €mill.
125.4
38.4
42.4
6.3
100.9
54.4
166.7
12.6
101.2
68.4
24.2
11.1
854.6
206.3
326.4
179.7
527.5
299.6
745.8
83.8
375.0
98.7
134.2
143.3
240.8
78.3
35.1
57.0
134.8
31.6
211.6
15.5
25.1
31.9
21.9
13.1
41.8
1.0
171.4
5.6
41.4
11.6
44.6
176.8
380.5
828.4
130.8
185.3
155.6
Total
92.7 1,262.4 1,216.8
3.6 324.2 115.5
86.7 575.3 588.0
35.2 248.6 234.2
20.0 804.6 200.3
1.7 397.2 169.2
126.1
711.5 1,316.6
The result from investments held under unit-linked life insurance policies consists of € 6.8
million (PY: € 89.1 million) unrealized gains and € 375.3 million (PY: € 44.1 million) unrealized losses.
No disclosures pursuant to IFRS 7.20(c) are required.
Expenses and income in connection with shares in associated companies are shown below.
2008
€ million
2007
€ million
Write-ups
Gains on disposals
Write-downs
Losses on disposals
35.4
2.8
15.8
0.0
33.4
0.1
2.8
0.0
Total
22.4
30.7
Investment Income According to Segments** (according to type of investment)
Property/
Casualty
Life
2008 2007*
€mill. €mill.
2008 2007*
€mill. €mill.
Health
2008
€mill.
2007
€mill.
Other
Activities
2008
€mill.
Investment property
0.9
0.9
2.3
120.8
0.9
1.5
Shares in affiliated
and associated
companies
8.2
33.9
15.4
70.5
7.3
23.3
27.9
Held to maturity
investments
16.6
11.4
85.3
85.4
27.5
26.6
Loans
28.4
29.8
197.7
164.2
64.7
Available for sale
investments
– 9.1
144.8
279.4
363.5
Investments
measured at fair
value through
profit or loss
– 4.2
17.5 – 53.0
Other
investments
10.1
6.9
6.2
44.6
Less cost of portfolio
management
Total
2007
€mill.
5.2 – 24.6
Total
2008 2007*
€mill. €mill.
9.3
98.7
103.5
58.8
231.3
0.5
1.3
129.9
124.7
65.6
– 6.9
3.9
283.9
263.6
73.2
77.0
121.2
68.4
464.7
653.7
99.8
8.6
17.2
9.6
2.9 – 39.0
137.3
33.1
22.9
5.6
6.0
3.8
5.9
52.6
41.6
68.4
179.7
98.7
57.1
31.9
5.7
35.2
248.7
234.2
176.8
380.5
828.4
130.8
185.3
155.6
126.1
711.5 1,316.6
141
142
Investment Income and Expenses
Income
Expenses
Current
income
2008
€ million
Write-ups
8.2
0.0
5.0
3.9
0.0
Shares in affiliated and
105.1
2.6
29.7
74.4
4.3
Held to maturity investments
145.2
5.4
3.7
22.0
2.4
Loans
311.9
3.3
9.1
36.5
3.9
Available for sale Investments
Non-fixed-income
Fixed-income
300.8
342.4
0.0
14.7
221.5
51.9
280.4
13.2
138.4
34.8
Investments measured at fair
Held for trading
By designation
4.3
0.3
298.2
0.0
198.0
0.1
370.5
1.2
167.5
0.7
44.2
0.0
56.3
2.5
45.2
1,262.4
324.2
575.3
804.6
397.2
Investment property
Other investments
Total
2008
€ million
Gains on Write-downs
disposals
2008
2008
€ million
€ million
Losses on
disposals
2008
€ million
Portfolio management expenses (current expenses) came to € 248.7 million (PY: € 234.2
million).
Current income includes interest in the amount of € 40.5 million (PY: € 1.9 million) from
impaired fixed-income securities.
Investment Income and Expenses
Income
Expenses
Current
income
2007*
€ million
Write-ups
17.8
1.4
87.3
7.8
0.0
Shares in affiliated and
179.1
0.1
98.5
41.1
5.2
Held to maturity investments
139.7
0.0
17.8
27.1
5.8
Loans
271.6
0.0
4.9
6.1
6.8
Available for sale Investments
Non-fixed-income
Fixed-income
253.4
304.3
0.0
0.0
226.1
12.0
46.1
26.6
20.1
49.4
Investments measured at fair
Held for trading
By designation
9.0
0.3
114.0
0.0
141.4
0.0
45.4
0.1
81.7
0.2
41.6
0.0
0.0
0.0
0.0
1,216.8
115.5
588.0
200.3
169.2
Investment property
Other investments
Total
2007*
€ million
Gains on Write-downs
disposals
2007
2007*
€ million
€ million
Losses on
disposals
2007
€ million
[29] Other Income
Income from commissions and services
Interest and similar income
Sales revenues
Other
Total
2008
€ million
2007
€ million
23.9
17.4
34.7
60.4
22.9
14.6
43.6
104.2
136.4
185.3
143
144
[30] Policyholder Benefits (net)
Benefits paid to Property/Casualty Insurance Policyholders*/**
2008
€ million
2007
€ million
1,031.8
186.5
845.3
1,051.5
239.0
812.5
Changes in reserves for unpaid claims
Gross
Share of reinsurers
Net
– 71.0
– 15.4
– 55.6
8.5
– 33.1
41.6
Changes in policy reserves and other underwriting reserves
Gross
Share of reinsurers
Net
– 3.6
– 11.4
7.9
8.3
8.7
– 0.4
Premium refunds
Gross
Share of reinsurers
Net
5.4
0.4
5.0
1.4
0.0
1.4
Other underwriting income(–)/expenses(+)
Gross
Share of reinsurers
Net
9.2
5.3
3.9
9.6
2.2
7.4
806.5
862.5
Claims paid
Gross
Share of reinsurers
Net
Total
Benefits paid to Life and Health Insurance Policyholders**
Life
Health
2008
€ million
2007*
€ million
2008
€ million
2007*
€ million
Claims paid
Gross
Share of reinsurers
Net
1,195.0
153.9
1,041.1
1,176.1
158.7
1,017.4
456.6
3.6
453.0
441.3
4.1
437.2
Changes in reserves
for unpaid claims
Gross
Share of reinsurers
Net
– 0.7
0.1
– 0.8
– 6.4
0.1
– 6.5
9.7
0.0
9.7
2.7
0.1
2.6
– 322.1
– 32.8
– 289.3
220.6
– 24.9
245.5
202.4
0.0
202.4
247.8
0.0
247.8
96.6
0.0
96.6
160.1
0.0
160.1
131.0
0.0
131.0
153.4
0.0
153.4
– 122.3
– 8.9
– 113.4
104.7
– 12.6
117.3
30.7
0.0
30.7
33.3
0.0
33.3
Changes in policy reserves and
other underwriting reserves
Gross
Share of reinsurers
Net
Premium refunds
Due to national regulations
Gross
Share of reinsurers
Net
Deferred premium refunds
Gross
Share of reinsurers
Net
Total premium refunds
Other underwriting
income (–)/expenses (+)
Gross
Share of reinsurers
Net
– 16.8
277.4
161.7
186.7
25.0
– 47.3
72.3
69.7
– 48.3
118.0
0.4
0.0
0.4
1.2
0.0
1.2
Total
806.5
1,651.8
827.2
875.5
145
146
[31] Underwriting Expenses (net)**
Property/
Casualty***
Underwriting expenses
(gross)
Payments
Change in deferred
acquisition costs
Administrative expenses
(gross)
Underwriting expenses
(gross)
Of which less:
Commissions and profit
sharing received on
reinsurance business ceided
Payments
Change in deferred
acquisition costs
Total
*
Life
Health
Total
2008
€mill.
2007
€mill.
2008
€mill.
2007*
€mill.
2008
€mill.
2007
€mill.
2008
€mill.
2007*
€mill.
105.9
99.0
183.6
147.5
52.8
53.2
342.3
299.8
7.3
27.3
– 20.0
0.9
1.7
– 7.3
– 11.0
21.0
389.7
381.8
43.2
43.1
22.7
22.6
455.5
447.5
502.9
508.1
206.8
191.5
77.2
68.5
786.8
768.2
82.2
80.9
4.3
1.3
0.5
0.2
87.0
82.5
– 3.3
– 0.6
12.4
13.3
0.0
0.0
9.0
12.7
424.0
427.8
190.1
176.8
76.7
68.3
690.8
673.0
[32] Other Expenses
2008
€ million
2007
€ million
Expenses for commissions and services
Interest and similar expense
Personnel expenses
Other amortization and depreciation
Other
21.9
27.8
63.7
18.6
124.7
22.5
34.3
64.9
16.6
155.2
Total
256.7
293.5
Personnel expenses does not include expenses of the insurance companies. Those costs are
assigned to functional areas through cost unit accounting.
Other amortization and depreciation mainly includes amortization of intangible assets and
depreciation of operating and office equipment. This item does not include amortization and
depreciation of the insurance companies. As in the case of personnel expenses, the latter are
allocated to functional areas.
[33] Taxation
Actual tax expenses for the financial year
Actual non-period tax expenses
Deferred taxes as a result of the occurrence or reversal of
temporary differences
Deferred taxes as a result of the occurrence or use
of tax loss carryforwards
Deferred taxes as a result of the write-down of a deferred tax claim
Deferred taxes as a result of the write-up of a deferred tax claim
Deferred taxes resulting from changes in tax rates
Taxes on income
2008
€million
2007*
€million
64.4
– 3.0
67.8
– 6.2
– 47.2
6.4
23.6
3.0
– 1.0
0.0
23.3
15.3
0.0
– 20.5
39.8
86.1
The taxes shown in the income statement also include change in deferred taxes as well as the
actual taxes to be paid by the individual Group companies. The actual taxes to be paid essentially resulted from the minimum taxation of Gothaer Versicherungsbank VVaG and the companies grouped with it for tax purposes as well as to regular taxation of the personal insurers.
Deferred taxes take account of the deferred taxation for differences in valuation between the
IFRS balance sheet and the tax balance sheet as well as differences due to consolidation
processes. In addition to tax expenses recognized in income, a deferred tax change of € 45.2
million (PY: € 19.8 million) was recognized directly in equity in the financial year.
The anticipated tax expense was calculated on the basis of the German income tax rate. This
was 32 % (PY: 39%) and took account of 15 % corporation tax (PY: 25 %), the solidarity surcharge of 5.5 % of the corporation tax payable and an average trade tax rate.
Taxation
Reconciliation
Operating result less net interest
x Expected tax rate
= Expected tax expenses
Adjusted to correct for:
Tax-exempt income/expense
Other tax attributions or deductions
Effects of tax losses
Effects of policyholders’ profit sharing
Non-period taxes
Other effects
Changes in tax rates
= Taxes on income
2008
€million
2007*
€million
104.1
32 %
33.3
223.6
39 %
87.2
– 31.6
– 29.1
12.7
50.1
– 3.0
7.4
0.0
– 65.0
57.5
26.8
10.2
– 6.3
– 3.8
– 20.5
39.8
86.1
147
148
Representatives of Members
Dr. Martin Willich, Chairman
Chief Executive Officer
Studio Hamburg GmbH,
Hamburg
Konrad Kraft, Vice Chairman
Diplom-Kaufmann,
Krailling
Gesine Rades, Vice Chairman
Diplom-Kauffrau,
Auditor/tax accountant,
Noer
Heiner Alck
Physical therapist,
Warendorf
Peter Arndt
Diplom-Ingenieur,
Berlin
Georg Behre
Diplom-Ingenieur,
Officer of
TÜV Rheinland Kraftfahrt GmbH,
TÜV Rheinland Group,
Gelsenkirchen
Helmut Berg
Albig
Jürgen Blittersdorf
Pharmacist (Retd.),
Oberstaufen
Up to 20 June 2008
Dr. Walter A. Blum
Executive officer of
Deutsche Bank AG Düsseldorf (Retd.),
Wuppertal
Up to 20 June 2008
Klaus Bronny
Diplom-Betriebswirt,
Corporate consultant
Essen
Prof. Dr. Helmut Cox
Professor of Economics,
Economic Policy and Public Economy
at the University of Duisburg-Essen,
Ratingen
Werner Dacol
Managing Director of
Aachener Siedlungs- und
Wohnungsgesellschaft mbH,
Cologne
Dr. Heinz Dräger
Chairman of the Executive
Board of VdZ,
Remagen
Sabine Engler
Diplom-Kaufmann,
Saarbrücken
Andreas Formen
Leverkusen
Gerhard Groß
Independent wholesaler,
Mannheim
Bernd Grubel
Diplom-Kaufmann,
Darmstadt
Bernhard Hennecke
National President
of Kolpingwerk Deutschland,
Wenden
Up to 12 April 2008
Horst Horrmann
Minister of Culture (Retd.),
Peine
Prof. Dr. Dr. h. c. Ulrich Hübner
President of the Institute for Insurance Law and
Insurance Business of the University of Cologne,
Professor of Insurance Law, Civil Law, Commercial Law,
International and Foreign Private Law,
Cologne
Up to 3 August 2008
Walter Hüglin
Master Painter,
Weilheim
Norbert D. Hüsson
Betriebswirt, Master Painter, Managing
Partner of Hüsson FGB GmbH,
Düsseldorf
149
Bernhard John
Diplom-Ingenieur, Managing Director of
MAFINEX Technologiezentrum GmbH,
Mannheim
Dr. Johannes Ludewig
Executive Director
Community of European Railways (CER),
Alfter (Bonn)
Heinz Kiesel
Master Plumber,
Munich
Prof. Dr. Claus Luttermann
Professor at the
Catholic Unversity of Eichstätt-Ingolstadt,
Ingolstadt
Bernd Kieser
Managing Director of ms.conect S.L.,
Sant Just Desvern-Bellsoleig (Spain/Bcn)
Dr. Ing. Hans-Herbert Klein
Consulting engineer VBI,
Sulzbach
Wolfgang Klemm
Chamber musician,
Raesfeld
Peter Ködderitzsch
Textile merchant,
Werther
Elke Köhler
Specialist in General Medicine,
Vice President of
Landesärztekammer Brandenburg,
Executive Officer of Hartmannbund
– Verband der Ärzte Deutschlands e.V.,
Chairwoman of Hartmannbund,
State of Brandenburg Section,
Executive Officer of Ärzte-Union Brandenburg e.V.,
Jüterbog
Hans-Otto Kromberg
Diplom-Kaufmann,
Managing Partner of
Kromberg & Schubert KG,
Wuppertal
Dr. Hans-Werner Lange
Chief Executive Officer of
TUPAG-Holding-AG,
Effelder
Wolfgang Leibnitz
Notary (Retd),
Essen
Aribert Lieske
Tax Consultant,
Düsseldorf
Hans Mauel
Managing Director,
Erftstadt
Ilse Meidinger-Weidenmüller
Secretary,
Darmstadt
Up to 31 December 2008
Dr. med. Peter Nagel
General practitioner (Retd),
Goslar/Hahnenklee
Eckhard Netzmann
Diplom-Ingenieur,
Consultant,
Berlin
Siegfried Nimsch
Diplom-Verwaltungswirt,
Erster Polizeihauptkommissar a. D.,
Witten
Rudolf Nüllmeier
Diplom-Finanzwirt,
Tax accountant
Essen
Christian Oelting
Diplom-Bau-Betriebs-Ingenieur,
Managing Partner of DTW
Deponie-, Tief- und Wasserbau GmbH & Co.,
Pinneberg
Eberhard Pamberg
Proprietor/Director of
EMONT AG, UnternehmensbeteiligungenVermögensverwaltung,
Porrentruy (Switzerland)
Ilse Peiffer
Secretary,
Witten
150
Dr. Angelika Prehn
Specialist in General Medicine,
President of Kassenärztliche Vereinigung Berlin,
President of Berufsverband der Allgemeinärzte
Berlin und Brandenburg,
Berlin
Dr. Roland Reistenbach
Dentist,
Siegburg
Dr. Herbert Schiffers
Consulting engineer,
Elchingen
Up to 20 June 2008
Uwe Schumacher
Oberstudienrat (Retd),
Usingen/Taunus
Walter Stelzl
Göttingen
Christian Sutter
Diplom-Kaufmann,
Managing Partner
of A. Sutter GmbH,
Essen
Prof. Dr. jur. Jürgen Vocke
Judge (Retd),
Member of the Landtag of Bavaria,
President of Landesjagdverband Bayern e.V.,
Ebersberg
Axel F. Waschmann
Executive Officer of
EWE Aktiengesellschaft (Retd),
Oldenburg
Albrecht Wendenburg
Lawyer and Notary,
Celle
Lutz Wittig
Diplom-Physiker,
Schwanewede
Spokesman:
Albrecht Wendenburg
Lawyer and Notary,
Celle
Honorary Chairman:
Dr. Karlheinz Gierden
Oberkreisdirektor and Bankdirektor (Retd),
Frechen-Königsdorf
Honorary Member:
Prof. Dr. A. Wilhelm Klein
General Director (Retd),
Honorary Chairman of the Supervisory Board of
Gothaer Versicherungsbank VVaG,
Cologne
151
152
Supervisory Board
Dr. Roland Schulz, Chairman
Former Managing Director,
Düsseldorf
Dr. Heiko Lange, Vice Chairman
Member of Executive Board of
Lufthansa (Retd),
Bad Soden
Carl Graf von Hardenberg
Chairman of the Supervisory Board of
Hardenberg-Wilthen AG,
Nörten-Hardenberg
Jürgen Wolfgang Kirchhoff
Diplom-Ingenieur,
Managing Partner and COO of
Kirchhoff Automotive GmbH & Co.,
Iserlohn
Eberhard Pothmann
Fully Authorized Representative,
Member of Corporate Management of
Vorwerk & Co. KG Group,
Düsseldorf
Dr. Gerd G. Weiland
Lawyer,
Hamburg
as of 20 June 2008
Honorary Chairmen:
Hansgeorg Klanten
Director (Retd),
Cologne
Prof. Dr. A. Wilhelm Klein
General Director (Retd),
Cologne
Dr. Hans Vossloh
Diplom-Kaufmann,
Honorary Chairman of the Supervisory Board of
Vossloh AG,
Werdohl
Management
Dr. Werner Görg, Chairman
Cologne
Dr. Helmut Hofmeier
Bergisch Gladbach
Michael Kurtenbach
Bornheim
as of 1 January 2009
Thomas Leicht
Cologne
Jürgen Meisch
Cologne
Dr. Hartmut Nickel-Waninger
Cologne
Dr. Herbert Schmitz
Cologne
The list of names of members of the Supervisory Board
and Management consists of information to be provided in
the Notes to the Financial Statements pursuant to section
314(1) No. 6 of the German Commercial Code (HBG).
153
154
Advisory Board
Peter Adler
Co-Owner of Hans Adler oHG,
Bonndorf
Dr. Hubert Fexer
Lawyer,
Regensburg
Klaus Michael Baur
Publisher and Editor in Chief
Badische Neueste Nachrichten
Badendruck GmbH,
Karlsruhe
Dr. Theodor Gräbener
Diplom-Kaufmann,
Managing Partner of
Theodor Gräbener GmbH & Co. KG,
Wilnsdorf-Rödgen
Dieter Bettels
Diplom-Volkswirt,
Managing Director and Partner of
Hermann GmbH & Co. KG,
Hildesheim
Alexander Grundmann
Chief Executive Officer
Vereinigte Postversicherung VVaG,
VPV Lebensversicherungs-AG
VPV Allgemeine Versicherungs-AG,
Fellbach
Up to 19 November 2008
Richard Borek
Owner and
Richard Borek GmbH & Co. KG,
Braunschweig
Holger Brückmann-Turbon
Diplom-Kaufmann,
Managing Director
HBT Holdings GmbH,
Cologne
Willm-Hendric Cronenberg
Julius Cronenberg o.H.,
Arnsberg
Peter Ditsch
Managing Partner of
Brezelbäckerei Ditsch GmbH,
Mainz
Rolf Ehrhardt
Managing Partner of
Ehrhardt & Hellmann Bauunternehmung GmbH,
Homburg (Saar)
Prof. Dr. Dr. h.c. Axel Ekkernkamp
Medical Director/Managing Director of
Unfallkrankenhaus Berlin,
Heidesee
Dr. Johannes Evers
Landesbank Berlin AG,
Berlin
Werner Hanf
NetCologne Gesellschaft für Telekommunikation
GmbH,
Cologne
as of 1 April 2008
Dieter Härthe
Honorary Consul
BWA Bundesverband für Wirtschaftsförderung und
Außenwirtschaft/Dt. Wirtschaftsverband e.V.
Bonn
Andreas Helbig
Diplom-Kaufmann,
Städtische Werke AG,
Kassel
Matthias Hentschel-Röber
Engineer, Baumeister,
MHR Hoch- und Tiefbau,
Schneeberg
Peter Hoffmann
Albatros Versicherungsdienste GmbH,
Büttelborn
Erhard Hoffmeyer
Obermeister der Maler- und Lackiererinnung,
Partner and Managing Director of
Farbe und Raum GmbH,
Heiligenstadt
Karl Friedrich Erbprinz von Hohenzollern
Fully Authorized Representative of
Fürst von Hohenzollern Group,
Sigmaringen
Hans-Dieter Kettwig
Enercon GmbH,
Grosse Fehn
as of 1 July 2008
155
Andreas Pieper
Pieper Verwaltungs- und
Vermietungsgesellschaft mbH, PPS GmbH,
various rental companies organized under civil law,
Gelsenkirchen
Hermann Reichenecker
Managing Partner of
Storopack Hans Reichenecker GmbH,
Metzingen
Dr. Karsten Kölsch
Ahlers AG
Herford
As of 1 January 2008
Dr. Bernhard Reuther
Managing Partner of
Reuther Verpackung GmbH & Co. KG,
Neuwied
Hans Jürgen Kulartz
Landesbank Berlin AG,
Berlin
Peter Riegelein
Diplom-Kaufmann,
Hans Riegelein + Sohn GmbH & Co. KG,
Cadolzburg
Andreas Mosler
Diplom-Wirtschaftsinformatiker,
Spokesman of the Management of
Frank Walz- und Schmiedetechnik GmbH,
Tornesch
Klaus Riemenschneider
Chairman of Administrative Board of
Endress + Hauser Holding AG,
Wehr
Goetz Neumann
Head Legal, Taxation and Insurance of
Wacker Chemie AG,
Vaterstetten
Dr. Dirk Niedermeyer
Kammerdirektor,
Fürst zu Bentheimische Domänenkammer,
Steinfurt
Up to 29 April 2008
Ralf Oelßner
Diplom-Volkswirt,
Member of Supervisory Board of
Delvag Luftfahrtversicherungs-AG,
Delvag Rückversicherungs-AG,
Lohmar
Dr. med. Ulrich Oesingmann
President of
Bundesverband der Freien Berufe,
Dortmund
Herbert Rohkohl
Corporate Officer,
Head Finance and Accounting of
UHL Kies- und Baustoffgesellschaft mbH,
Steinach i. K.
Gert Rohrseitz
ECKA Granulate GmbH & Co. KG,
Zirndorf
Christian Sander
Diplom-Ingenieur,
frisch menü GmbH,
Kassel-Harleshausen
Dr. h.c. Klaus Schmid
Diplom-Kaufmann,
President of DEKRA e.V./AG,
Böblingen
Dr. Christoph Schug
HT Troplast GmbH,
Mönchengladbach
156
Heinz Willi Siemes
Siemes Einkaufs- und Beteiligungs-GmbH,
Mönchengladbach
Up to 16 March 2008
F. Michael Stallmann
Diplom-Kaufmann,
FMS Capital GmbH,
Marl-Polsum
Dr. Christian Simon
Fully Authorized Representative of
Fichtner Management Beratung AG,
Deisenhofen
Up to 1 June 2008
Dr. Eugen Trautwein
Majority Shareholder and Chairman of
Advisory Board of E/D/E GmbH,
Wuppertal
Göran Sjöstrand
Mangaging Director CFO of
IKEA Deutschland Service GmbH,
Königstein
Erich Staake
Diplom-Kaufmann
Spokesman of Executive Board of
Duisburger Hafen AG,
Düsseldorf
Dr. Notker Wolf, OSB
Abbott Primate of
Benedictine Confederation,
Rome
Hans-Joachim Zinser
Managing Partner of
Modehaus Zinser GmbH & Co.,
Tübingen
157
Social Policy Advisory Board
Prof. Dr. Dr. h. c. Bert Rürup, Chairman
Professor at the
Technical Universiy of Darmstadt,
Chairman of German Council of
Economic Experts,
Darmstadt
Dr. Hans Jürgen Ahrens
Königswinter
Heinz-Werner Bonjean
Diplom-Volkswirt,
Master Painter,
Bonjean Maler und Lackierer GmbH,
Cologne
Heinrich Breitbach
Chairman of
Group Works Council of DEKRA AG,
Stuttgart
Dr. Claus-Michael Dill
Damp Holding AG,
Berlin
Dominique Döttling
Managing Partner of
Döttling & Partner
Beratungsgesellschaft mbH,
Mainz
Michael Hennrich
Lawyer, Member of Bundestag,
Chairman of
Ausschuss für Wohnungswirtschaft und
Wohnungspolitik im Zentralverband von
Haus & und Grund Deutschland,
Kirchheim unter Teck
As of 1 July 2008
Dr. Heinrich L. Kolb
Member of Bundestag,
Social Policy Speaker of the
FDP parliamentary group,
Babenhausen
Arno Metzler
Lawyer, Managing Director of
Bundesverband der Freien Berufe (BFB),
Member of the European Economic and
Social Committee Brussels,
Berlin-Frohnau
Ralf Oelßner
Diplom-Volkswirt,
Delvag Luftfahrtversicherungs-AG,
Delvag Rückversicherungs-AG,
Lohmar
Annette Widmann-Mauz
Member of the Executive Committee of the
CDU/CSU parliamentary group,
Healthcare Policy Speaker and
Chairman of the Healthcare Work Group of the
CDU/CSU parliamentary group,
Balingen
Prof. Dr. Klaus-Peter Wiedmann
Professor at the
Leibniz University Hannover,
Burgwedel
Christian Zahn
Chairman of Sponsor Committee of
Deutsche Rentenversicherung Bund,
Chairman of
Verband der Angestellten-Krankenkassen,
Hamburg
Eike Maria Hovermann
Lippstadt
158
Directorships of Members of the Supervisory Board
and Management
Supervisory Board
Membership on Other
Supervisory Boards
Dr. Roland Schulz
Gothaer Finanzholding AG,
Chairman
ASSTEL Lebensversicherung AG,
Chairman as of 1 January 2008
Gothaer Krankenversicherung AG,
Chairman
Gothaer Allgemeine Versicherung AG,
Chairman
Gothaer Lebensversicherung AG,
Vice Chairman as of 1 January 2008
Stüttgen & Haeb AG, Vice Chairman
Carl Graf von Hardenberg
Gothaer Allgemeine Versicherung AG
Hardenberg Wilthen AG, Chairman
m3Team AG
Volksbank Göttingen
Jürgen Wolfgang Kirchhoff
Dr. Heiko Lange
LSG Lufthansa Service Holding AG
Eberhard Pothmann
Vescore Solutions AG, Switzerland,
Administrative Board
Jafra S. A. Luxembourg,
Board of Directors
Vorwerk Household Appliances
Co. Ltd. GmbH China,
Chairman Board of Directors
Vorwerk International AG
Switzerland,
Administrative Board
Dr. Gerd Gustav Weiland
(as of 20 June 2008)
Gothaer Finanzholding AG,
ASSTEL Lebensversicherung AG
Verlagsgesellschaft Madsack
GmbH & Co. KG
Radio Madsack GmbH & Co. KG
Reset Consultants AG, Chairman
Comparable Domestic and
Foreign Directorships and Officerships
FAUN S. A. France
up to 31 December 2008
Märkische Bank eG, as of 5 June 2008
Management
Membership on
Other Supervisory Boards
Comparable Domestic and Foreign
Directorships and Officerships
Dr. Werner Görg
ASSTEL Sachversicherung AG,
EurAPCo B.V.
Chairman
Roland Rechtsschutz-Versicherungs-AG
Gothaer Pensionskasse AG, Chairman
Zweite Gothaer Vermögensverwaltungs AG,
Chairman
Dr. Helmut Hofmeier
A.S.I. Wirtschaftsberatung AG
Fingro AG
Gothaer Asset Management AG
Janitos Versicherung AG,
as of 1 October 2008
Versorgungskasse Gothaer
Versicherungsbank VVaG,
Chairman
Pensionskasse BERLIN-KÖLNISCHE
Versicherungen VVaG,
Chairman as of 1 April 2008
Michael Kurtenbach
(as of 1 January 2009)
A.S.I. Wirtschaftsberatung AG,
Vice Chairman
Gothaer Systems GmbH, Chairman
Versicherungen VVaG, as of 1 April 2008
Thomas Leicht
(as of 1 January 2009)
Janitos Versicherung AG,
Ordinary member up to 29 February 2008,
Chairman as of 1 March 2008
A&O Vertriebs-AG, as of 1 July 2008
Jürgen Meisch
Gothaer Pensionskasse AG
Zweite Gothaer Vermögensverwaltungs AG,
Vice Chairman
Gothaer Asset Management AG,
Chairman
CG Car-Garantie Versicherungs-AG
Aachener Bausparkasse AG, Chairman
ROLAND Rechtsschutz-Versicherungs-AG,
Flemming Dental Service GmbH,
up to 30 April 2008
Versorgungskasse Gothaer
Versicherungsbank VVaG
Versicherungen VVaG,
Vice Chairman as of 1 April 2008
Dr. Hartmut Nickel-Waninger Janitos Versicherung AG,
Vice Chairman
ASSTEL Sachversicherung AG,
Vice Chairman
A&O Vertriebs-AG, Chairman
A.S.I. Wirtschaftsberatung AG,
Chairman
Fingro AG, Chairman
Dr. Herbert Schmitz
ASSTEL Sachversicherung AG
Zweite Gothaer Vermögensverwaltungs AG
ROLAND Schutzbrief-Versicherung AG,
Gothaer Systems GmbH, Vice Chairman
BKK Gothaer VuD,
Chairman of the Administrative Board
up to 30 September 2008
Versorgungskasse
Gothaer Versicherungsbank VVaG,
Vice Chairman
Deutsche BKK, Administrative Board
159
160
Other Information
Personnel Expenses
2008
€ million
2007
€ million
Wages and salaries
Social security contributions and employee benefits
Expenses for employees’ pensions
271.6
46.1
13.9
283.2
40.7
12.9
Total
331.6
336.8
2008
2007
4,402
695
5,097
4,555
706
5,261
193
176
188
160
5,466
5,610
Number of Employees (average for the year)
In house
Field
Apprentices
Employees of joint-venture undertakings
Total
Remuneration of Members of the Supervisory Board and Management
Disclosure Pursuant to Section 314(1) No. 6 of the German Commercial Code
Management received remuneration in the amount of € 4.1 million (PY: € 4.2 million) in 2008.
Retirement and survivors’ benefits for former members of management came to € 2.1 million
(PY: € 2.1 million). Further accruals in the amount of € 21.1 million (PY: € 22.5 million) exist for
current pensions and pension entitlements for this group of individuals.
Remuneration paid to the Supervisory Board came to € 0.7 million (PY: € 0.6 million). Remuneration paid to members of the Advisory Board came to € 0.3 million (PY: € 0.3 million). No
payments were made to former members of the Supervisory Board and the Advisory Board or
deferred.
Loans in the amount of € 0.3 million (PY: € 0.3 million) were granted to members of Management in the financial year. The interest rate was 2.5 %. The residual term comes to 7 years. No
loans were granted to members of the Supervisory Board in the financial year.
Disclosures pursuant to IAS 24.16
Key management personnel. i.e., Management of Gothaer Finanzholding, received remuneration in the amount of € 5.5 million (PY: € 5.0 million) in the financial year. Provisions in the
amount of € 6.9 million (PY: € 5.9 million) were established for pension benefits to be paid to
this group of individuals upon termination of the employment relationship.
Provisions, Contingent Liabilities and Contingent Assets
The information on provisions, contingent liabilities and contingent assets provided herein
goes beyond that required by IAS 37, according to which disclosure is required only in cases in
which an outflow of funds is not improbable. Although this does not apply in the case of the
Gothaer Group, information is disclosed pursuant to sections 251 and 285 No. 3 HGB.
The Group has contingent liabilities in the amount of € 69.4 million (PY: € 72.2 million). This
amount is accounted for virtually completely by surety insurance of Gothaer Credit
Versicherung AG.
To support Hypo Real Estate (HRE), the German federal government adopted a rescue package
in October 2008, backed by the Bundesbank and also the German financial services industry.
As part of the rescue package, the financial institutions were obliged to back up the guarantee of a liquidity line given by the government. The Gothaer Group’s share of the € 8.5 billion
back-up guarantee is € 25.5 million.
Other Financial Commitments
The Group has liabilities in the amount of € 642.8 million (PY: € 698.8 million) arising from
commitments to make payments in connection with investments.
ASSTEL Sachversicherung AG, Gothaer Allgemeine Versicherung AG and Janitos Versicherung
AG are members of “Verkehrsopferhilfe e.V.”. Membership entails an obligation to contribute
to the funds this association requires to carry out its activities. Contributions are based on the
respective shares of the premium income generated by member companies from direct
automotive and liability insurance in the year prior to the past calendar year.
Group companies also belong to insurance pools such as Deutsche Kernreaktor VersicherungsGemeinschaft and Pharma-Rückversicherungsgemeinschaft. In the event of default on the
part of any of the other members, the respective Group company is obligated to assume its
pro rata share of any such default. Shares are also held in EXTREMUS Versicherungs-AG.
In accordance with sec. 124 ff of the German Insurance Supervision Act (VAG), the life insurance
companies of the Group are members of the guarantee fund for life insurers (Sicherungsfonds
für die Lebensversicherer). In addition to the obligatory current contributions, the fund can
levy special contributions up to 1 ‰ of the sum of net underwriting reserves on the basis of
the Guarantee Fund Financing Ordinance (Life). Furthermore, the companies have committed
to make financial resources available to the guarantee fund – or alternatively to Protektor
Lebensversicherungs-AG – in the event of the fund not having the resources needed to handle
an rescue case. This commitment amounts to 1 % of the sum of net underwriting reserves less
contributions already made to the guarantee fund. The total commitment to the guarantee
fund at balance sheet date was € 125.1 million.
On the basis of statutory amendments to sec.124 ff VAG, health insurers are also required to
become members of a guarantee fund. After the assumption of insurance contracts, the fund
can levy special contriubtions up to 2 ‰ of the sum of net underwriting reserves for the
fulfilment of its duties. The commitment in the area of health insurance is € 8.3 million.
161
162
Underwriting Pools and Coinsurance
In the area of syndicated life insurance, data are used as reported by the lead manager of the
syndicates. In the case of syndicated business under our management, proportionate values
are used; such business is otherwise accounted as primary business.
In the area of health insurance, a coinsurance arrangement is in place that involves a group of
private insurance companies that provide long-term care coverage under the Long-Term Care
Insurance Act of 26 May 1994 for members of the health insurance plan for postal employees
(PBeaKK) and the health insurance plan for railway employees (KVB). The association of private
health insurers (PKV) prepares financial statements and settles accounts with the individual
member insurance companies on a pro rata basis, and the results of these accounts flow into
the consolidated financial statements.
Basis for Allocation of Interest to Policyholders
In the case of conventional products, interest is allocated to policyholders in the area of life
insurance in the form of a guaranteed interest credit on the one hand and a bonus (withprofits) on the other hand. The bonus is determined by Management on the basis of legal
provisions. In the case of unit-linked products, policyholders assume the risk of any investment losses. No interest credits are made in this case.
The distribution of any surplus in connection with private health insurance is subject to the
provisions of national legislation, in particular the German Insurance Supervision Act (VAG)
and an ordinance that governs the determination and distribution of surplus interest and
profit for health insurance plans (ÜbSchV).
Pursuant to section 12 b VAG, any transfer of funds from reserves for premium refunds is
essentially subject to the approval of an independent trustee. The trustee must verify in
particular that the interests of the insured and especially of older insured are adequately
protected.
Section 12a(1) VAG stipulates that holders of health insurance policies and voluntary longterm care insurance (care and daily allowance) that resemble life insurance are entitled to an
annual credit for interest on the total positive balance of the ageing reserve for the respective
insurance as of the end of the previous financial year. This credit is equal to 90 % of the
average investment income in excess of the basic actuarial interest rate used (excess interest).
The funds accumulated in this manner are used for the most part to partially or completely
finance increases in premium payments resulting from higher premiums in the case of
insureds who have reached the age of 65 and also to reduce premiums in the case of insureds
who have reached the age of 80.
Section 12 a(1) VAG requires that at least 80 % of the surplus determined on the basis of the
respective regulatory requirements be allocated to the reserve for premium refunds (with
separate accounts for health insurance organized along the lines of life insurance and for
private compulsory long-term care insurance).
Related Party Disclosures
In compliance with IAS 24, Related Party Disclosures, business relationships with non-consolidated companies that could from the point of view of the Gothaer Group be of significant
importance are reported below.
GSC Gothaer Schaden-Service-Center GmbH
GSC Gothaer Schaden-Service-Center GmbH carries out communication-intensive business
processes (call centers) and other services and also adjusts claims for Gothaer Allgemeine
Versicherung AG and Gothaer Versicherungsbank VVaG.
Revenues in the amount of € 12.8 million (PY: € 11.5 million) in 2008 were received exclusively from companies of the Gothaer Group, with Gothaer Allgemeine Versicherung AG
accounting for 97.9% of the total. At € 6.5 million (PY: € 6.2 million), personnel expense
represented the most important expense item in the income statement.
Receivables from affiliated companies amounted to € 66.7 thousand (PY:€ 70.1 thousand).
Liabilities towards affiliated companies in the amount of a total of € 2.8 million (PY: € 3.0
million) consist to 79.2 % of liabilities towards Gothaer Allgemeine Versicherung AG, including a loan in the amount of € 1.7 million to Gothaer Schaden-Center-Service GmbH.
GKC Gothaer Kunden-Service-Center GmbH
GKC Gothaer Kunden-Service-Center GmbH performs services involving communicationintensive business processes (call centers) as well as other services such as policy processing
and sales support for Gothaer Allgemeine Versicherung AG.
Revenues in the amount of € 31.5 million (PY: € 20.5 million) recorded in 2008 resulted
mainly from the processing of contractually defined business transactions and the handling
of telephone queries in connection with the private customer business of Gothaer Allgemeine
Versicherung AG. Revenues were offset in particular by personnel expense in the amount of
€ 10.9 million (PY: € 7.0 million) and other operating expenses in the amount of € 18.1 million
(PY: € 15.1 million). The latter amount includes mainly start-up costs for EDP and communication systems.
Receivables from affiliated companies amounted to € 2.3 million (PY: € 2.0 million) for the
financial year are for the most part distributed evenly among the companies whose accounts
are included in the consolidated financial statements of the Gothaer Group. Liabilities
towards affiliated companies in the amount of a total of € 20.1 million (PY: € 14.7 million)
include amounts due to Gothaer Systems GmbH, ASSTEL ProKunde Versicherungskonzepte
GmbH and Gothaer Finanzholding AG.
163
164
Pensus Pensionsmanagement GmbH
Pensus Pensionsmanagement GmbH is responsible for the administration of pension plans
for private and public sector companies and customer support. Revenues received from
companies of the Gothaer Group, in particular Gothaer Lebensversicherung AG, Gothaer
Allgemeine Versicherung AG and Gothaer Versicherungsbank VVaG, accounted for € 0.7
million of total revenues in the amount of € 1.9 million for 2008 (PY: € 1.8 million). As in the
previous year, personnel expenses came to € 1.1 million. Liabilities amounted to € 1.2 million
(PY: € 0.4 million) and receivables to € 0.6 million (PY: € 0.6 million) of which € 0.1 million
(PY: € 0.1 million) from affiliated companies.
Gothaer Risk-Management GmbH
The goal of Gothaer Risk-Management GmbH is to offer customers seamless risk management
services. Significant items in the 2008 financial statements included revenues in the amount
of € 2.6 million (PY: € 2.4 million) and personnel expense in the amount of € 1.3 million (PY:
€ 1.3 million). Business relationships between Gothaer Risk-Management GmbH with companies of the Gothaer Group are reflected in particular in revenues in the amount of € 1.7 million
(PY: € 0.9 million) from Gothaer Allgemeine Versicherung AG.
Leasing
Finance leases are used exclusively for hardware with a net carrying amount of € 9.2 million
(PY: € 4.3 million). These lease agreements have a residual term of three years. This results in
minimum lease payments in the amount of € 10.1 million (PY: € 4.5 million). This amount is
shown below according to remaining terms.
Minimum Lease Payments under Finance Leases
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
Total
2008
€ million
2007
€ million
2.6
2.6
2.6
2.2
0.0
0.0
0.0
1.6
1.6
1.3
0.0
0.0
0.0
0.0
10.1
4.5
Operating leases are used mainly for software, hardware and company vehicles. Total future
minimum lease payments in connection with operating leases come to € 93.9 million (PY:
€ 113.5 million). This amount is shown below according to remaining terms.
Minimum Lease Payments under Operating Leases
2008
€ million
2007
€ million
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 10 years
After 10 years
38.9
24.2
27.4
3.0
0.4
0.0
0.0
44.4
26.6
23.4
19.1
0.0
0.0
0.0
Total
93.9
113.5
Post-Balance Sheet Events
No events occurred after the reporting date that would require separate disclosure.
The management of Gothaer Versicherungsbank VVaG approved the consolidated financial
statements for submission to the Supervisory Board on 30 April 2009. The Supervisory Board
is responsible for examining the consolidated financial statements and issuing a statement
as to whether or not it approves the consolidated financial statements.
Cologne, 30 April 2009
Management
Dr. Görg
Dr. Hofmeier
Kurtenbach
Meisch
Dr. Nickel-Waninger
Dr. Schmitz
Leicht
165
166
Auditors’ Report
We audited the consolidated financial statements prepared by Gothaer Versicherungsbank
VVaG, Cologne – consisting of the balance sheet, income statement, statement of changes in
equity, statement of cash flows and notes to the consolidated financial statements – and the
report of management on the Group for the financial year from 1 January to 31 December
2008. In accordance with the International Financial Reporting Standards (IFRS) as applied in
the EU and the complementary provisions of commercial law pursuant to Section 315 a(1) of
the German Commercial Code (HGB), management of the parent company is responsible for
the preparation of the consolidated financial statements and the report of management on
the Group. Our responsibility is to provide an opinion on the consolidated financial statements and the report of management on the Group on the basis of our audit.
We conducted our audit of the consolidated financial statements in compliance with section
317 HGB and the German generally accepted principles for the audit of annual financial
statements issued by the Institut der Wirtschaftsprüfer (IDW). Accordingly, an audit is to be
planned and performed to obtain reasonable assurance of detecting material misstatements
or non-compliance with laws and regulations in the presentation of the net assets, financial
position and results of operations in the consolidated financial statements and the report of
management on the Group in accordance with applicable accounting principles. Auditing
procedures are determined to take into account knowledge of the business activities as well
as of the economic and legal context of the Group and an evaluation of possible misstatements. The audit includes an assessment of the efficacy of the internal system of control
procedures and, primarily on a test basis, examination of evidence supporting amounts and
disclosures in the consolidated financial statements and the report of management on the
Group. The audit includes assessment of the annual financial statements of consolidated
companies, the scope of consolidation, the accounting and valuation principles applied and
significant estimates made by the management of the company as well as evaluation of the
overall presentation of the consolidated financial statements and the report of management
on the Group. We believe that our audit provides a sufficiently reasonable basis for our
opinion.
Our audit resulted in no reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements
comply with IFRS, as applied in the EU, and the complementary provisions of commercial law
pursuant to section 315 a(1) HGB and give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance with these requirements. The
report of management on the Group is consistent with the consolidated financial statements,
conveys a true and fair view of the situation of the Group and accurately presents the opportunities and risks of future developments.
Cologne, 7 May 2009
KPMG AG
Wirtschaftsprüfungsgesellschaft
(formerly
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft)
(Dr. Ellenbürger) (Beerlage)
Wirtschaftsprüfer Wirtschaftsprüfer
167
Report of the Supervisory Board
The Supervisory Board monitored the conduct of business by management in the course of
the reporting period in fulfilment of its duties under the law and the bylaws of the Company.
Management regularly submitted written reports on business developments and the situation
of the Company and reported orally to the Board at five meetings. The committees of the
Board were also involved in informational and oversight activities. The Investment Committee
and the Executive Committee each met three times.
The issues addressed regularly included developments as regards premiums, losses incurred
and underwriting expenses as well as the effect thereof on the financial statements. The
Supervisory Board also monitored the development of the number of members and measures
taken to expand and improve the qualifications of the captive agency organization.
Management regularly informed the Supervisory Board of its mid-term corporate planning,
the solvency developments, the risk strategy and the risk situation of Group companies.
Management reported to the Supervisory Board in depth on developments on the capital
markets and the resultant effects on investments and investment income, and discussed the
possible effects of the financial market crisis on the macroeconomic developments with its
implications for the insurance industry. Reports also covered developments as regards
strategic holdings, the distribution channels used by the Group companies and measures
adopted to effect processes involving structural change.
The Supervisory Board paid particular attention to the activities aimed at sharpening market
positioning in external communications and their impact on product, price, distribution and
communication policy. For internal anchorage, the maxim “Profitable growth through systematic solutions for clients delivered with the best personnel and partners” was introduced as a
basis for the cultural transformation with mandatory guidelines for all employees. The Board
also made a special point of focusing on the Company’s activities for promoting and developing managers. Regular meetings at which Group managers present their division are held for
this purpose.
After the Gothaer/Baloise merger failed to be realized at the beginning of the year. Management reported in depth on ideas for possible mergers and cooperative ventures in the
national and Central European environment.
The Chief Risk Officer briefed the Supervisory Board on the risk management report for 2007
and progress in the area of risk management in 2008. The Group Audit Manager reported to
the Supervisory Board on the results of audits carried out 2007 and the audit plan for 2008.
The financial strength ratings carried out for Group companies in 2008 also resulted in positive findings. The ratings document the continued security and financial strength of the
Group. Gothaer Allgemeine Versicherung AG and Gothaer Lebensversicherung AG again
confirmed the ratings received in the past from Standard & Poor’s (A –) and FitchRatings (A).
Gothaer Krankenversicherung AG confirmed the Standard & Poor’s A – rating, and the company’s Assekurata rating improved one class to A (good).
The financial statements for the 2008 financial year with the report of management and the
consolidated financial statements for 2008 prepared in accordance with IFRS and the report
of management on the Group were audited, including in each case assessment of the earlywarning system, by the auditor appointed pursuant to section 341 k HGB, KPMG AG
Wirtschaftsprüfungsgesellschaft, Cologne.
Both sets of financial statements received an unqualified audit opinion from the audit firm.
The auditors attended the corresponding meetings of the Supervisory Board and reported on
the material results of the audit.
168
The Supervisory Board received the audit reports submitted and took note of and approved
the results of the audits.
After examination of the presented financial statements and management report for the 2008
financial year and the consolidated financial statements and report of management on the
Group for the 2008 financial year, the Supervisory Board raised no objections. The Supervisory Board approved the financial statements and the consolidated financial statements for
the year 2008. The financial statements are therefore adopted pursuant to section 172 of the
German Stock Corporation Act (AktG).
The Supervisory Board approves Management’s proposal for the use of retained profit.
The Supervisory Board thanks Management and all employees of the Gothaer Group for their
work in the course of the past year.
Cologne, 26 May 2009
The Supervisory Board
Dr. Roland Schulz
Chairman
169
Adresses of Major Group Companies
Arnoldiplatz 1
50969 Cologne
Tel.: 0221-308-00
www.gothaer.de
Arnoldiplatz 1
50969 Cologne
Tel.: 0221-308-00
www.gothaer.de
Gothaer Allee 1
50969 Cologne
Tel.: 0221-308-00
www.gothaer.de
Gothaer Lebensversicherung AG
Arnoldiplatz 1
50969 Cologne
Tel.: 0221-308-00
www.gothaer.de
ASSTEL Lebensversicherung AG
Schanzenstr. 28
51063 Cologne
Tel.: 0221-9677-677
www.asstel.de
Gothaer Krankenversicherung AG
Arnoldiplatz 1
50969 Cologne
Tel.: 0221-308-00
www.gothaer.de
ASSTEL Sachversicherung AG
Schanzenstr. 28
51063 Cologne
Tel.: 0221-9677-677
www.asstel.de
Gothaer Pensionskasse AG
Arnoldiplatz 1
50969 Cologne
Tel.: 0221-308-00
www.gothaer.de
Janitos Versicherung AG
Im Breitspiel 2–4
69126 Heidelberg
Tel.: 06221-709-1000
www.janitos.de
CG Car-Garantie Versicherungs-AG
Gündlinger Str. 12
79111 Freiburg
Tel.: 0761-4548-0
www.cargarantie.de
Arnoldiplatz 1 · 50969 Cologne/Germany
Tel. 0221 308-00
Fac. 0221 308-103
10 81 41/2008
www.gothaer.de

01 GB Konzern08 Umschlag_GB - Joachim Sachs

Transcription

Similar documents

Term Life Insurance - American Family Insurance

Evolution of Engineering Solutions on the Development of Hard

High Oleic Sunflower Production Contract

Inside: Who`s Eligible for AAFMAA Membership and Insurance?

Credit Limit Request Form – Prisma Invest

Gotemba Premium Outlets

The Gothaer Group Annual Report 2010

How to read your statement

Life Insurance Buyer`s Guide

Glass of wine