Consolidation

Consolidation principles

The consolidated financial statement was drawn up in accordance with uniform Group accounting policies. As a general rule, the subsidiaries included in the consolidated financial statement prepare an annual financial statement as at 31 December. Certain special funds and private equity companies have diverging financial years; they are consolidated on the basis of interim financial statements as at 31 December.

The capital consolidation of the subsidiaries and special funds follows the purchase method. All assets and liabilities of the subsidiary are recognized at fair value at the time of acquisition or at the time when a controlling interest is obtained. A difference arising out the netting of the acquisition costs with the fair value of the assets and liabilities is recognized as goodwill under intangible assets. Immaterial and negative goodwill are recognized in the statement of income in the year of their occurrence – scheduled amortization is not taken. The book value of goodwill is tested for impairment annually, or within the year if there are indications of possible impairment. Unscheduled amortization is taken if a goodwill impairment is established.

Minority interests in shareholders’ equity or in the net income of majority-owned subsidiaries of Talanx AG are shown separately in equity in the item "Minority interests" or in the statement of income in the item "Minority interest in profit or loss".

All intra-group receivables and liabilities as well as income, expenses, and profits and losses resulting from intra-group transactions were eliminated within the scope of the debt and earnings consolidation.

Associated companies are included in the consolidated financial statement at equity. If a company recognized at equity applies different accounting policies, appropriate adjustments to comply with the Group’s IFRS requirements are made in an auxiliary calculation. Income from shares in associated companies is recognized separately in the consolidated statement of income in accordance with IAS 1.81 (c).

Shares in subsidiaries not included in the consolidated financial statement because of their subordinate importance are recognized at fair value or, if this cannot be reliably established, at amortized cost under the investments.

Consolidation of special purpose entities

Investments

Within the scope of asset management activities our subsidiary Hannover Re has participated in numerous special purpose entities since 1988, which for their part transact certain types of equity and debt capital investments. On the basis of our analysis of the relations with these entities we concluded that the Group does not bear the majority of the economic benefits or risks arising out of this activity and a consolidation requirement therefore does not exist.