GoodwillIn the case of sustained impairment, the entire goodwill is written off at
its fair value. The valuation is performed at least once a year by applying
a valuation model (impairment test). No ordinary amortisation of goodwill
is performed. Intangible assetsAccording to IFRS, self-developed intangible assets have to be capitalised,
whereas they cannot be capitalised under the Austrian Business Code. Land and buildingsLand and buildings, including buildings on third-party land, are valued
according to IAS 16 and also, if so chosen, according to IAS 40 at book
value minus scheduled amortisation. These are based on the actual duration
of use; in accordance with Austrian Business Code, they are mostly
also influenced by tax regulations. Shares in affiliated and associated companiesAffiliated and associated companies that are not consolidated fully or at
equity due to their minor significance are recognised at fair value.
As a general rule, participating interests are valued at equity insofar as
the company has the opportunity to exercise considerable influence. This
is assumed, as a matter of principle, for shares between 20% and 50%.
The actual exercising of considerable influence has no bearing on these
figures. Financial assetsAccording to IAS 39, a different classification system is applicable to financial
assets. It classifies other securities into the following categories: held
to maturity, available for sale, fair value through profit or loss (FVTPL) and
trading portfolio (derivative financial instruments). The main valuation difference
that applies to the other securities available for sale, which account
for the majority of financial assets, as well as the other securities recorded
with effect on income is that these are stated at fair value on the balance
sheet date. According to the Austrian Business Code, the acquisition costs
constitute the maximum valuation limit.
With regard to the other securities available for sale, the difference between
book value and fair value is treated within the shareholders funds without
affecting income, whereas in the case of the other securities at fair value
through profit or loss, the difference fully affects income. In contrast, when
applying the strict lower-of-cost-or-market principle in statements according
to the Austrian Business Code, depreciation always affects income even
in the case of a temporary reduction in value and appreciation in line with
the requirement to reinstate original values. In the case of the mitigated
lower-of-cost-or-market principle, the impairment is not obligatory if the
depreciation is only temporary. Expected permanent impairments, posted
as depreciation, affect income according to both the IFRS and the Austrian
Business Code.
ReinsuranceThe shares of reinsurers in actuarial provisions are shown on the assets page
of the balance sheet in accordance with IFRS 4. Acquisition costsCommissions as well as other variable costs that are directly related to the
acquisition or extension of existing policies are capitalised and distributed
over the insurance contract terms and/or the premium payment period.
The capitalised acquisition costs also replace the administrative expense
deductions allowed under the Insurance Supervisory Act for premiums
brought forward in property and casualty insurance. Actuarial provisionFor the calculation of the actuarial provisions in life and health insurance,
regulations deviating from Austrian law apply, which affect valuation variances
as well as the allocation between actuarial provisions and provisions
for premium refund. In particular, this refers to the non-application of the
zillmerisation of acquisition costs as well as the integration of the revalued
unearned premiums and real final bonus in the life insurance line.
Health insurance is mainly affected by the deviating interest rate as well as
the application of the most recent parameters including safety margins.
Provision for premium refunds and profit sharingDue to the difference in valuation of the assets and liabilities in the area
of life insurance, a provision has to be made for deferred profit sharing
which complies with the national legal or contractually regulated profit
sharing and is assessed in favour of the policyholder. The change of the
provision for deferred premium refunds compensates to a large extent
for the effects of revaluation on the income statement and thus on the
results for the year. Provisions for outstanding claimsIn accordance with US-GAAP, provisions for outstanding claims in the property
insurance line are basically no longer established using the principle of
caution and on a single-loss basis but rather using mathematical procedures
based on probable future compliance amounts. Provisions for claims equalisation and catastrophesThe establishment of provisions for claims equalisation and catastrophes
is not permitted under IFRS or US-GAAP regulations as it does not represent
any current obligations to third parties on the balance sheet date.
Accordingly, transfers or releases do not influence the results for the year. Pension commitmentsThe accounting principles used to calculate the pension provision under
IFRS are different from those of the Austrian Business Code. These are listed
in detail in IAS 19. Overall, the individual differences result in greater detail
than under the Austrian Business Code. This is most notably the result of
the use of the project-unit-credit method and of the anticipation of future
demographic and economic developments. Deferred taxesDeferred tax assets and liabilities are to be created according to IAS 12
for temporary differences arising from the comparison of a stated asset
or an obligation using the respective taxable value. This results in anticipated
future tax burdens or relief on taxes on income (temporary differences),
which are to be reported regardless of the date of their liquidation.
According to Austrian business law, deferred taxation is only permissible as
a result of a temporary difference between the commercial balance sheet
profit and the income calculated according to the tax regulations.
Moreover, according to IAS, deferred taxes for accumulated losses brought
forward and not yet used are to be capitalised to the extent that they can
be used in the future with adequate probability.
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