Summary of major accounting policies

Assets

Intangible assets and property, plant and equipment

Intangible assets and property, plant and equipment – with the exception of goodwill and insurance-related intangible assets – are recognized at amortized costs less accumulated scheduled straight-line depreciation and impairment losses. A useful life was established for all intangible assets with the exception of goodwill.

The following useful lives were taken as a basis:

 
Write-downs of intangible assets in connection with insurance portfolios are spread over the period of the corresponding insurance portfolios.

Goodwill

The goodwill arising out of corporate acquisitions is the difference between the cost of acquisition and the pro-rata fair value of identified assets, liabilities and contingent liabilities. In accordance with IFRS 3 "Business Combinations" scheduled depreciation is not taken on goodwill; instead, goodwill is tested for impairment at least annually and an impairment loss is taken where necessary.

For the purposes of the impairment test, goodwill is allocated pursuant to IAS 36 "Impairment of Assets" to so-called "cash generating units" (CGUs).

In order to determine a possible impairment the recoverable amount – defined as the higher of the value in use or the fair value less costs to sell – of a CGU is established and compared with its carrying value in the Group before capital consolidation including goodwill. If the carrying value including allocated goodwill exceeds the recoverable amount, an impairment expense is recognized. The amount of the impairment loss is netted, first, with goodwill allocated to the CGU and then pro rata with the relevant carrying amounts of the other assets of the CGU subject to IAS 36. Goodwill impairments are not reversed in the event of a subsequent revaluation uplift.

The recoverable amount of the Property/Casualty Primary Insurance and Financial Services segments, which each represent one CGU, is determined on the basis of the value in use (VIU) using the calculation of the present value of future cash flows. The point of departure for establishing the value in use consists of the financial budgets of the individual companies, which are aggregated to arrive at a consolidated overall budget on the segment level. The planning figures (after factoring out special effects where appropriate) for the two financial years subsequent to the year under review are used. The third planning period, which in the calculation assumes the function of a result that is presumed to be sustainably recoverable, constitutes the mean of five (as envisaged according to IAS 36) planning years.