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annual accounts
76
Investments and technical provision for
the account and risk of policyholders
and savings funds investments These
investments consist of three groups:
unit-linked investments, segregated
funds and savings funds investments.
The unit-linked investments and savings
funds investments shall be valued at
current value, as provided by Section
2:402 of the Dutch Civil Code. As far as
the savings fund investments concerns,
this provision is not in keeping with the
Rules about the valuation of the investments
in the guilder investment fund.
In order to provide an insight into the
current value of these investments, this
value is included in the explanatory
notes. For the valuation of the segregated
pools, the same principles are used, in
principle, as those for the valuation of
the investments made at the company’s
own risk. When the valuation deviates
from our principles, this is taken into
account in the calculation of the
insurance liabilities in question.
Other assets This item includes tangible
fixed assets, cash and other assets.
Tangible fixed assets Data processing
equipment is valued at the historical
cost price less accumulated depreciation.
Depreciation is made on a straight-line
basis over the useful life.
Other tangible fixed assets are also
valued at the historical cost price less
accumulated depreciation. Depreciation
is made on a straight-line basis over 3 to
10 years. Account is taken of expected
durable depreciations.
Other assets This includes projects
developed for resale. These are valued at
invested amount plus notional interest
or lower market value, less instalments
paid by buyers.
Prepayments and accrued income This
includes accrued interest, current rent
and deferred acquisition cost. Acquisition
cost is the cost incurred in effecting
insurances. For insurances with annual
premium payment, the cost incurred in
respect of varying business volume, are
capitalised and amortised. Amortisation
is generally spread over the period of
insurance.
The deferred acquisition cost in the
General insurance operations include a
provision for unearned premiums to the
risk instalments not yet lapsed.
The deferred acquisition cost in the Life
operations include the commission to
intermediaries and own sales force.
Amortisation is spread over the term of
premium payment of the assurance
(taking account of the availability of the
cover from the premium), with a maximum
of ten years.
Reserves The participation reserve
includes movements in the retained
profits of the participations in so far as
necessary for the maintenance of the
desired level of solvency, and the legal
reserve for retained profits. At the same
time, the movements on the negative
goodwill account are included in this
reserve, if not accounted for in the profit
and loss account.
The revaluation reserve includes realised
and unrealised results on investments,
realised and unrealised results on
movements in currency exchange rates,
as well as the taxes related to these
movements. The profit and loss account
includes the structural return on investment
in shares and land and buildings.
This return consists of the direct return
(dividends and rents) and an amount for
indirect return. The return is calculated
by determining the average of the
%-return over the past 30 years and by
multiplying this average by the average
value of these investments over the past
7 years, recalculated for purchases and
sales. The indirect return of these investments
is then calculated as the difference
between the return and the realised
direct return. The indirect return is
withdrawn from the revaluation reserve
to the extent that the balance of this
reserve is positive. In addition at a
minimum the legally required reserve
needs to be maintained. This reserve
concerns the unrealised difference
between the balance sheet value and the
cost price of the equity type investments.
In addition, the revaluation reserve
includes under corporate annual accounts
all movements in the net asset value of
the subsidiaries if not accounted for
under participation reserve.
Perpetual subordinated convertible loan
The perpetual subordinated convertible
loan is valued at market value at the
moment of issue.