Gothaer Allgemeine Versicherung AG Group Annual Report for ...

Gothaer Allgemeine Group 

Annual Report 2011

Operating results 

Key Figures 

(consolidated in accordance with IFRS) 

Five-year summary of key figures 

€ million 

Financial Year 

2011 2010 2009 2008 

2007 

Gross premiums written 1,496.1 1,456.9 1,448.8 1,458.3 1,433.6 

Net premiums earned 1,256.4 1,222.2 1,197.2 1,192.7 1,171.5 

Policyholder benefits (net) 858.5 821.6 790.5 724.1 781.0 

Underwriting expenses (net) 372.5 388.2 354.0 394.7 396.2 

Profit for the year before transfer of profit 50.7 90.1 102.9 99.4 181.5 

Investments 2,983.9 2,907.8 2,898.1 2,702.9 2,744.8 

Investment result 105.8 104.1 95.2 81.1 182.4 

Underwriting reserves (net) 1,673.3 1,625.6 1,618.8 1,571.3 1,569.5 

Group equity 969.8 1,008.8 957.5 952.0 868.1 

Employees (average number) 2,929 3,025 3,328 3,391 3,423

Gothaer Allgemeine Versicherung AG 

Group Annual Report for 2011 in accordance with 

International Financial Reporting Standards (IFRS) 

Report for the Financial Year as of 

1 January to 31 December 2011 

Registered Office of the Company 

Gothaer Allee 1 

50969 Cologne

Table of Contents 

Table of Contents 

Management Report 

General Economic Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Situation in the Insurance Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Group Management Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 

Segmental Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 

Non-Financial Performance Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 

Risk Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 

Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 

Consolidated Financial Statements 

Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 

Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 

Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 

Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 

Segmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 

Notes to the Consolidated Financial Statements 

Group Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 

Principles of Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 

Scope of Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 

Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 

Notes to the Consolidated Statement of Financial Position – Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 

Notes to the Consolidated Statement of Financial Position – Equity and Liabilities . . . . . . . . . . . . . . . . . . . . . . 95 

Notes to the Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 

Corporate Governing Bodies 

– Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 

– Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 

– Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 

Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 

Report of the Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 

Gothaer Allgemeine Group Annual Report 2011 3


4 Gothaer Allgemeine Group Annual Report 2011



General Economic Situation 

General economic developments in 2011 

Except in the first three months, general economic developments in the year under 

review were shaped by waning global economic dynamism and mounting uncertainty 

over growth prospects in the aftermath of the natural and nuclear disaster in Japan as 

well the debt crisis on both sides of the Atlantic, which worsened during the course of 

the year. After growing by 4.3 % in 2010, economic activity worldwide increased by 2.9 % 

according to provisional estimates. While the United States and the eurozone registered 

growth rates of 1.7 % and 1.6 % respectively – both of which were below the long-term 

average – real GDP in the Germany economy grew by an above-average 3.0 %. 

After the events in Japan, cyclical commodities largely lost their initial gains, which in 

some cases had amounted to over 30 %. The year-end price of copper was actually lower 

than the price registered at the beginning of the year. Gold kept its gains through to 

August but then also fell sharply in price. 

Capital market developments in 2011 

Despite flagging economic dynamism and falling commodity prices during the year, inflationary 

pressure intensified through to the third quarter of the year. In the emerging 

economies, in particular, price indices climbed sharply. But inflation rates also rose in 

the United States and eurozone, surging by 3.9 % and 3.0 % respectively. At year end, 

however, general inflation showed signs of slowing down. 

Capital market developments were essentially shaped by increasing uncertainty over 

global economic growth, fears of recession and concern about the debt crisis, which 

worsened during the course of the year. The fluctuating but generally very pronounced 

risk aversion observed during the year led to a flight to liquid government bonds in what 

are perceived to be safe-haven countries, whereas Greek, Portuguese, Spanish, Italian 

and later in the year even French and Austrian bonds came under mounting selling pressure. 

Initially, in the months to April, the yield of German federal bonds (Bunds) with a residual 

term of ten years rose from 2.9 % to 3.5 %. But the yield fell back again when Japan 

was struck by the natural and nuclear catastrophe. Concern about a US recession in the 

summer and a significant worsening of the debt crisis then pushed the yield in September 

to a historic low of less than 1.7 %. From then until the end of the year, the yield 

hovered within a relatively wide band between 1.7 % and 2.3 %. 



The stock markets also proved highly volatile in 2011 and ended the year on different 

notes. After the price falls in March due to the reactor accident at Fukushima and the 

recovery that followed, stocks largely moved sideways through to the end of July. From 

the middle of the year onwards, the global sovereign debt crisis was the principal focus 

of attention. Discussion of private-sector involvement put additional pressure on the 

market, especially for financial stocks. The stock markets thus saw sharp price fluctuations 

and price falls in the second half of the year. While the German DAX Index failed to 

make a sustained recovery from those losses, registering an annual performance of 

–14.7 %, the American S&P500 Total Return Index closed 2.1 % firmer than in the prior 

year. So despite the European debt crisis and fears of recession, the US stock market 

managed to end the year with a positive performance. 



Situation in the Insurance Industry 

Developments in the insurance industry 

The German insurance industry is heavily dependant on the economic situation of private 

households in Germany. The economic recovery that started in 2010 weakened significantly 

in the year under review – not just as a result of the euro debt crisis – which depresses 

demand for insurance products. Against this backdrop, the German insurance 

industry nevertheless performed well. 

According to information furnished by the German Insurance Association (GDV), premium 

income from property/casualty insurance is expected to grow by 2.7 %, which is 

the steepest rise since 2003. In private health insurance, the forecast upturn is even 

sharper, at 4.9 %. In life insurance, although the recessive trend in premiums was halted, 

total premium revenues decreased by 5.7 % as a result of single premium business 

returning to normal, as anticipated. 

In the financial year 2011, premium income across the industry is expected to fall by 

1.2 % after allowance for this special effect; without it, premium volume is forecast to 

grow by 1.8 %. The conclusion to be drawn is that confidence in the insurance industry's 

promise to pay benefits has not suffered. 

Developments in property/casualty insurance 

Business in property/casualty insurance has been characterized for years by intense 

price competition. What is more, the market for many lines is highly saturated and new 

business potential is thus low. In principle, however, property/casualty insurance plays 

a vital role in the coverage of private, commercial and industrial risks. The upward trend 

of the prior year, which raised premium revenues by 0.9 %, continued and intensified in 

theyearunderreview.Premiumvolumeisexpectedtoincreaseby2.7%to€ 56.7 billion 

in 2011. Set against this premium growth is a parallel rise in claims expenses (+2.6 % to 

€ 44.4 billion). This is due, amongst other things, to a large number of regional natural 

events and the long frost period at the beginning of the year. Overall, the market-wide 

combined ratio is forecast to be 99 % (PY: 98.2 %). 

It is also fair to speak of a trend reversal in motor insurance. After a 0.5 % rise in premium 

revenues in 2010, the current year is expected to produce an upturn of 3.5 % to 

€ 20.9 billion. After the ruinous price competition of recent years, premium adjustments 

and other factors are likely to maintain the momentum of this development. Claims 

expenses will rise on balance to € 20.1 billion, which is 2.5 % more than in the prior year. 

Owing to the long period of icy roads in January as well as the golden October, there 

were significantly more motor liability incidents than in 2010. While the loss ratio for the 

financial year will improve from 99.6 % to 98 %, the combined ratio after run-off is expected 

to rise from 107.4 % to 108 %. Motor insurers as a whole thus anticipate another 

negative underwriting result in the financial year 2011. 



In the property insurance lines, premium revenues are expected to grow by 1.8 % to 

€ 15.4 billion. With claims expenses likely to rise by 4.1 % to € 11.6 billion, the combined 

ratio after run-off is set to move up to 101 %. On the claims side, private property insurance 

in particular was affected by the long period of frost as well as various regional 

natural events. 

In general liability insurance, premium revenues rose by 2.5 % to around € 7.0 billion. 

With claims expenses virtually unchanged, the combined ratio is expected to stand at 

90 % and a significant underwriting profit is thus again anticipated. 

In personal accident insurance, both premiums (+1.0 % to € 6.5 billion) and claims 

expenses (+2.5 % to € 3.1 billion) are expected to rise in the financial year 2011. Claims 

expenses continue to reflect the consequences of the wave of accidents due to icy roads. 

The combined ratio is expected to climb from 80.3 % to 81 %. 

In marine insurance, the impacts of an improved economic environment will shape the 

figures for the financial year 2011. Premium revenues are expected to rise sharply, climbing 

by 7.0 % to € 1.9 billion. At the same time, claims expenses for the financial year are 

forecast to increase by 9.0 % to € 1.2 billion. The combined ratio after run-off is thus 

likely to move up to 97 % (PY: 95.8 %). 

Owing to the improved economic situation, premium revenues for credit, surety and 

fidelity insurers rose again in 2011, by 3.5 % to € 1.6 billion. Increased major losses – 

especially in Q4 – are likely to raise claims expenses to € 0.8 billion. The combined ratio 

after run-off is expected to move up from 56.9 % to 61 %. 



Group Management Report 

Business developments and position of the Group 

Premiums 

Despite an environment made difficult by factors such as the hotly contested 

property/casualty insurance market and sustained tension in the capital markets – the 

Gothaer Allgemeine Group ended the financial year 2011 with a very satisfactory result. 

Premium income rose by 2.7 % and our operating result improved by more than 10 %. 

This is a consequence of a systematic underwriting policy geared to profit coupled with 

cost discipline. 

The gross premiums written in the Gothaer Allgemeine Group increased by 2.7 % to € 1.50 

billion in the financial year 2011. This growth stemmed from premium income upturns in 

both primary insurance business (€ +31.4 million) and reinsurance business assumed 

(€ +7.7 million). Once again, a conscious decision was taken not to engage in the sometimes 

ruinous competition on prices – especially in motor insurance – but to focus 

instead on profitable growth. Premium volume increases were achieved particularly in 

general liability and other motor insurance. 

Our reinsurance programme was largely retained. Including reinsurance premiums and 

the change in net unearned premiums, net earned premiums rose by 2.8 % to € 1.26 

billion. 

Gross premiums written 

Breakdown by line of insurance 

€ million 

2011 2010 

Automotive Liability 197.8 195.7 

Comprehensive Homeowners 122.0 118.5 

Comprehensive Householders 89.4 90.8 

Fire 64.4 65.9 

General Liability 320.7 306.9 

Health insurance modelled on property/casualty insurance 1.9 0.1 

Marine 42.4 40.4 

Other Automotive 117.7 111.1 

Other Lines of Property Insurance 174.4 174.4 

Other Lines of Insurance 114.4 110.3 

Personal Accident 159.8 159.3 

Gross premiums written in primary business 1,404.9 1,373.5 

Gross premiums written in assumed business 91.2 83.5 

Gross premiums written 1,496.1 1,456.9 



Gross premiums written 

Breakdown by region 

€ million 

2011 2010 

Domestic 1,387.6 1,346.6 

Foreign 17.4 26.9 

Gross premiums written in primary business 1,404.9 1,373.5 

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 largely to countries in the European Economic Area. 

Investments 

The investment policy of the Gothaer Allgemeine Group is primarily geared to generating 

a robust and sustainable return in a competitive environment. This is ensured by the 

systematic use of risk-adjusted performance management aimed at optimizing the 

return/risk ratio of the investment portfolio while taking account of our risk-bearing 

capacity. Another significant investment strategy constraint is presented by the tougher 

capitalization rules taking shape under Solvency II. Investment strategy is embedded in 

an asset liability management system and takes account of the underwriting requirements 

that need to be met by investment income, liquidity and security. 

In 2011, we remained systematically committed to a stable investment policy based 

largely on current income. The two priorities of this strategy are to generate attractive 

returns in the existing market environment and to ensure that risks are reduced overall 

by being spread as broadly as possible over the different types of investment. The financial 

markets were highly volatile during the course of the year and had varying impacts 

on profits. From the middle of the year onwards, developments were shaped chiefly by 

the sovereign debt crisis. Discussion of private sector involvement in the rescheduling 

of Greece's debts resulted in additional pressure, especially for financial stocks. As a 

consequence, marked fluctuations and falls in prices ensued in the capital markets during 

the second half of the year. The German DAX Index ended the year with a performance 

of –14.7 %. After rising from 2.9 % to 3.5 % in the months to April, the yield of German 

Federal Bonds (Bunds) with a residual term of ten years remained consistently below 

3.0 % from the middle of the year onwards. In September, a historic low was reached 

with a yield of less than 1.7 %. While this fall in rates had positive effects on the market 

value of the fixed-interest securities in the portfolio, the increase in the spreads of 

government bonds issued in the so-called PIIGS (Portugal, Ireland, Italy, Greece, Spain) 

made for recessive prices. Bank exposure to PIIGS coupled with discussion of higher 

capital requirements under Basel III and in the wake of the European Banking Authority 

(EBA) capital stress test had an intensifying procyclical effect on the banking crisis and 

led to sharp falls in the market value of investments in the banking sector, especially 

subordinated securities. 



The investment volume of the Gothaer Allgemeine Group totalled € 2.98 billion (PY: 

€ 2.91 billion) in the financial year 2011. Available-for-sale financial instruments, at € 1.78 

billion (PY: € 1.45 billion) again accounted for the largest share of total investments in 

terms of carrying value. They also include shares in non-consolidated affiliated and associated 

companies, which, due to lack of influence, need to be recognized at fair value. 

In the year under review, a strategic decision was taken to increase our fungible portfolio 

investments. As a result, a substantial amount of held-to-maturity securities were 

sold. In line with the tainting rule, the remaining portfolio needed to be reclassified as 

available for sale. 

The carrying value of loans increased by € 80.3 million to € 891.4 million while that of 

other investments fell by € 27.3 million and amounted to € 207.9 million at the end of 

the year. Investments carried at fair value through profit or loss, which were again held 

to only a limited extent, included hedging transactions as well as embedded derivatives 

resulting from the separation of host and embedded components of hybrid securities. 

Investment activities produced a profit of € 105.8 million in the last financial year, which 

was € 1.7 million more than in the prior year. The yield on investment remained at the 

prior-year level of 3.6 %. In line with our investment strategy, with its focus on stable 

current earnings, current income remained high in the year under review, at € 125.0 

million (PY: € 118.4 million). 



Composition of the 

investment portfolio 

Financial year 2011 

59.7 % Available for sale 

29.6 % Loans 

9.9 % Other investments 

0.5 % At fair value through profit or loss 


49.9 % Available for sale 

27.9 % Loans 

11.0 % Other investments 

10.8 % Held to maturity 

0.4 % At fair value through profit or loss 

Policyholder benefits 

The net policyholder benefits of € 858.5 million (PY: € 821.6 million) reported in the 

financial year include all expenses incurred for insureds and other claimants by the 

insurance companies of the Gothaer Allgemeine Group. In addition to claims paid, this 

includes the change in the loss reserve. 

Gross policyholder benefits increased by € 51.1 million to € 1.0 billion in the financial 

year 2011 (PY: € 952.0 million). The upturn was due to expansion of insurance business. 

Our reinsurance programme remained largely unchanged. However, high-frequency 

losses in short-tail business were specially hedged in the year under review, so claims 

expenses net of reinsurance were again relieved by a moderate increase in the share of 

claims expenses for reinsurers. We thus registered a significantly more modest upturn 

to € 858.2 million (PY: € 821.6 million). The claims expenditure included in benefits rose 

to € 853.7 million (PY: € 810.2 million) in the net account, notably as a result of increased 

reserving. With premium income rising and claims expenses up, the net loss ratio stood 

at 68.0 % (PY: 66.3 %), thus remaining at a very good level. This is the result of the 

ongoing measures taken to stabilize underwriting results. 



Underwriting expenses 

Gross underwriting expenses, which include all HR and material expenses incurred for 

the acquisition and management of insurance policies, fell to € 434.1 million from 

€ 449.0 million in the prior year. Brokerage fees in the year under review were recognized 

for the first time as acquisition costs rather than administrative costs. 

Consolidated profit 

Reinsurers' share of underwriting expenses increased from € 60.8 million to € 61.5 million 

in the financial year 2011. Total net underwriting expenses thus decreased by 4.1 % 

to € 372.5 million (PY: € 388.2 million). This is evidence of the successful implementation 

of our programmes to heighten cost efficiency. 

Despite a still-difficult environment, the Gothaer Allgemeine Group achieved an outstanding 

operating result of € 101.7 million (PY: € 92.2 million). This is also reflected in 

the gross combined ratio, which is below 100 %, and a further reduced net combined 

ratio of 97.6 % (PY: 98.1 %). After the deduction of virtually unchanged financing costs of 

€ 17.7 million and a renormalized tax expense of € 33.2 million (PY: tax income of € 15.7 

million), the net profit for the year totalled € 50.7 million (PY: € 90.1 million) prior to 

transfer of profit. Contributory factors here were increased premium income and a 

stable investment result, which nevertheless failed to offset an upturn in policyholder 

benefits. The profit transfer agreement between Gothaer Allgemeine Versicherung AG 

and Gothaer Finanzholding AG resulted in a profit transfer expense of € 80.0 million for 

the Group in 2011 (PY: € 57.1 million). This left a net loss for the year of € 29.3 million 

(PY: net profit for the year of € 33.1 million) after transfer of profit, € 2.6 million of which 

related to minority interests (PY: € 2.4 million). 



Capital management 

Capitalization 

For insurance groups, capitalization is a key variable or parameter for the assessment of 

risk-bearing capacity and thus an important performance indicator. Capital management 

by our parent group headed by Gothaer Versicherungsbank VVaG ensures that adequate 

capital is always available to meet the operational needs of the Group's companies and 

capital is optimally used and harnessed 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 Group are risk-oriented 

controls and asset liability management (ALM). 

The equity of the Gothaer Allgemeine Group totalled € 1.00 billion (PY: € 1.04 billion) at 

the end of the financial year. Group equity includes the subscribed capital and capital 

reserves of the group parent entity Gothaer Allgemeine Versicherung AG as well as 

revenue reserves. Revenue reserves include both the revenue reserves of Gothaer Allgemeine 

Versicherung AG and the earnings generated by our consolidated companies after 

initial consolidation. Also taken into account in the equity of the Gothaer Allgemeine 

Group are the unrealized gains and losses on investments available for sale. Changes in 

equity are shown on page 47. 

As well as equity, capital management also covered subordinated liabilities of € 252.5 

million (PY: € 250.0 million). Management of debt financing in the form of bonds and 

loans also forms part of capital management. As of 31 December 2011, Gothaer Allgemeine 

Group bonds and loans totalled an unchanged € 65.1 million. 

The debt ratio of the Group (defined as debt capital, i.e. bonds and loans including noneligible 

hybrid capital as a percentage of Group equity plus eligible hybrid capital) was 

25.3 % (PY: 24.3 %). Eligible hybrid capital was taken into account here on a very conservative 

basis at the amount permitted by section 53c (Solvency Regulation) of the German 

Insurance Supervision Act (VAG). The debt ratio is thus a maximum figure. 

Capitalization 

Breakdown by type of capital 

€ million 

2011 2010 

Equity 1,004.4 1,039.4 

Subordinate liabilities 252.5 250.0 

Bonds and loans 65.1 65.1 

Total 1,322.0 1,354.5 



Solvency 

Gothaer Allgemeine Versicherung AG is taken into account in the adjusted solvency of the 

parent group headed by Gothaer Versicherungsbank VVaG. Group parent Gothaer Allgemeine 

Versicherung AG is not required to carry out an adjusted group solvency calculation. 

The parent group has a solvency ratio of 155.4 %. As a German insurance company, 

Gothaer Allgemeine Versicherung AG needs to show the Federal Financial Supervisory 

Authority (BaFin) that its solvency is adequate for its insurance activities (Solvency I). 

This must be calculated on the basis of its financial statements according to HGB. The 

available own funds of € 333.0 million exceed the solvency margin required by € 112.2 

million. This represents a solvency ratio of 150.8 %. 

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 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 is 

successfully achieved. The international rating agency Standard & Poor’s gives Gothaer 

Allgemeine Versicherung AG an A- rating. The company's financial stability is therefore 

rated “very good”. Gothaer Allgemeine Versicherung AG was also given an A rating by the 

rating agency FitchRatings, which means a “strong” rating for financial strength. 

Risk-oriented control 

Gothaer 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 hand, we focus on continually improving our capital base in 

order to increase our risk-bearing capacity. We strive 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 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 is supported by various ALM techniques (ALM analyses, Black- 

Litterman models, risk budgets) and vetted by the relevant bodies (Investment Committee, 

Management, Supervisory Board). 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. 



Segmental Performance 

Insurance segment 

Gothaer Allgemeine Group activities are divided into Insurance and Non-Insurance segments 

reflecting the Group's organizational and reporting structures. Business developments 

in these segments are described below. 

The Insurance segment includes the two property insurance companies of the Group, 

the group parent entity Gothaer Allgemeine Versicherung AG and Janitos Versicherung 

AG. Gothaer Allgemeine Versicherung AG is engaged in all major lines of property/ 

casualty business, insuring both private and commercial clients. Clients are served by 

Gothaer Versicherungsbank VVaG’s exclusive organization, brokers and cooperation partners. 

Janitos Versicherung AG addresses the core target group of high-end private clients 

for property insurance. 

Performance in the 

Insurance segment 

The two property insurance carriers account for the core business and also a large part 

of all the assets and liabilities, income and expenses of the Gothaer Allgemeine Group 

in the Insurance segment. So the development of business in the Insurance segment 

mirrors that for the Group as a whole. 

At € 1.26 billion (PY: € 1.23 billion), net earned premiums in the Insurance segment 

showed a satisfying rise. Despite the tense situation in the capital markets, the investment 

result increased to € 98.7 million (PY: € 93.1 million). While policyholder benefits 

rose by € 36.9 million, this upturn was partially offset by targeted cost-cutting which 

lowered net underwriting expenses by € 15.8 million. As a result, a marked increase was 

registered in the operating result in the Insurance segment – from € 74.3 million in 

theprioryearto€ 93.3 million in the financial year 2011. Financing expenses, at € 13.8 

million, were on a par with the prior year. With a tax expense of € 30.8 million (PY: tax 

income of € 18.6 million), the statement of income showed a net profit for the year of 

€ 48.7 million (PY: € 79.1 million) prior to transfer of profit. 



Non-Insurance segment 

The Non-Insurance segment includes all subsidiaries that do not engage in insurance 

business. These are the IT service provider of the Gothaer Group – Gothaer Systems 

GmbH – and Munich Carlyle Productions GmbH & Co. KG (Munich Carlyle), which is 

involved in the development, production, utilization and distribution of cinema and TV 

productions. Also grouped in this segment are GG-Grundfonds Vermittlungs GmbH, a 

service provider in the property sector, and Gothaer Risk-Management GmbH, which is 

the company through which we offer clients an end-to-end risk counselling service. 

Gothaer Sechste Kapitalbeteiligungsgesellschaft mbH is also recognized in this segment. 

Performance in the 

Non-Insurance segment 

Investment income in the Non-Insurance segment increased from € 5.4 million to € 7.6 

million. With other income moderately recessive, an operating result of € 10.8 million 

was achieved (PY: € 12.3 million). Financing expenses for the film activities of Munich 

Carlyle remained virtually unchanged in comparison to the prior year, at € 3.9 million. A 

tax expense of € 2.7 million (PY: € 1.3 million) was incurred in the financial year 2011. 

Overall, the net profit for the year in the Non-Insurance segment totalled € 4.2 million 

(PY: € 6.9 million). 



Non-financial Performance Indicators 

Employees 

Qualified, motivated employees are crucially important for corporate success at Gothaer. 

That success is ensured by employees with high competence, intense motivation and 

exceptional commitment. 

Hence the absolute priority assigned to personnel recruitment, promotion and retention 

in our HR operations. As well as commercially viable financial performance incentives, 

we rely here on targeted development and further training programmes. Demographic 

management, company health management and promotion of women are also naturally 

elements of our multi-award winning human resource management. 

The resulting investment in human resources ensures that Gothaer has a pool of adequately 

skilled personnel for the medium and long term. Our present efforts are particularly 

geared to preparing Gothaer for demographic change, maintaining staff performance 

and heightening job satisfaction. 



Risk Report 

Risk management principles 

Risk-oriented 

management concept 

The core business of our 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, Group governance is geared to the “safety first” principle and the 

principles of value-oriented management. The framework of acceptable risks that can 

be consciously assumed is delineated in our risk strategy. Risk tolerance, i.e. our maximum 

permissible risk exposure, is defined by taking account of three requirements: 

• 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 (financial strength rating), 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. 

A minimum security level of 99.5 % (one-year value at risk based on our own risk model) 

is set for internal management purposes. 

Risk management 

organization 

Risk management at the individual companies is part of the risk management system of 

the parent group (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. Responsibility for independent risk controlling is 

assumed by the actuarial departments of the companies, supported by the Middle/Back 

Office of Gothaer Asset Management AG and the central controlling unit at Gothaer 

Finanzholding AG. 

Gothaer Allgemeine Versicherung AG – the parent company of the Gothaer Allgemeine 

Group – 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 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 operates 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. The risk management system also includes an internal monitoring 

system (IMS). Its purpose is to prevent or reveal damage to assets and to ensure proper, 

reliable business activity and financial reporting. The IMS comprises both organizational 

security measures such as access authorizations, use of the four-eyes principle or proxy 

arrangements and process-integrated and cross-company controls. The compliance 

function is decentralized, performed by various operative and Group units. Regular risk 

reporting and ad hoc reports on specific developments make for a transparent risk 

situation and provide pointers for targeted risk management. 

The efficacy of the risk management system, the checks and balances and the management 

and monitoring processes is regularly assessed by the Group internal auditing unit. 

A review of the risk early-warning system is also part of the audit of the financial statements 

performed by our auditors. 

Gothaer continued to work in the year under review to ensure that it meets the risk management 

requirements set out in Section 64a of the German Insurance Supervision Act 

(VAG). In doing so, we took due account of the stipulations of BaFin Circular 3/2009 

(MaRisk VA) setting out the minimum requirements for risk management in insurance 

companies. We also monitored the development of the new Solvency II supervisory 

regime. The Pillar 1-3 requirements are being analyzed as part of a Group-wide project. 

Implementation status reports are prepared on a regular basis. 

Underwriting risks 

As a general rule, we counter underwriting risks with rates and reserves based on actuarial 

principles and with underwriting guidelines commensurate with risk. Compliance 

is systematically monitored through the use of controlling instruments and early-warning 

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. 



General risk situation 

Underwriting risks 

Our operations are divided by target group into private and corporate client business. At 

the same time, risks that could have a major or even existential impact on the Company's 

net assets, financial position and earnings are rated on the basis of scale of loss and 

probability of occurrence. Risk positions identified in the process are analyzed in detail, 

continuously monitored and actively managed (e.g. by portfolio refurbishment). Risk 

reports prepared by Risk Management several times a year keep executives and the 

Supervisory Board informed of the current risk situation, changes in its makeup and any 

new or newly detected major risks. 

We attach paramount importance to regular reviews of risk experience in the individual 

lines of insurance and of the individual and overall contribution margins of relationships 

as well as to the adequacy of underwriting provisions as tools of underwriting risk 

management. Acceptance of underwriting risks is governed by a policy of risk-commensurate 

underwriting that is documented in our underwriting guidelines. Compliance with 

these guidelines is systematically monitored by the use of controlling instruments that 

identify trends and negative developments in good time as well as by random sampling. 

The adequacy of loss reserves is subject to annual actuarial verification. We are thus 

able to guarantee the long-term fulfilment of our obligations. 

We also pursue an active reinsurance policy that limits the risk of major and accumulation 

losses by ensuring reinsurance agreements commensurate with risks. Owing to the 

use of various planning and management tools, we are in a position to identify unscheduled 

or hazardous portfolio and claims developments at an early stage and to address 

them with appropriate measures. 

Our risk portfolio in the private client segment is homogeneous. Nevertheless, we still 

model the impacts of different loss scenarios (e.g. accumulation losses from windstorm 

events) within the framework of our internal risk model. Externally, our private client segment 

is exposed to very high pressure of competition, which manifests itself in sustained 

pressure on prices, high attrition rates, abundant supply and market saturation. We 

address this market trend with multi-stage product solutions that offer good value for 

money while still geared to underwriting profit. 

Our corporate client portfolio is characterized by widely differing insured values and 

risks and is thus appreciably more volatile than our portfolio in the private client segment. 

To enable us to manage the associated risks, we have strict underwriting guidelines 

in place as well as authorization and competency rules that are finely tuned to the 

requirements of the individual lines of insurance. In the case of special and particularly 

large risks, we involve other insurers as risk partners or conclude risk-specific facultative 

reinsurance treaties. 



Developments in the corporate client market are increasingly identical to those in the private 

client segment, particularly in terms of the high competitive pressure on premiums 

and conditions. We meet this competition, having adjusted at an early stage by introducing 

a profit-geared cyclical management system, responsible underwriting and premiums 

calculated to be commensurate with risks. Professional supervision is provided to 

keep a regular check on the relevance and observance of underwriting guidelines. 

As in previous years, natural events resulting from climate change are expected to play 

a significant role in shaping underwriting risk in the future. We counter the risk of 

natural hazards by making systematic use of ZÜRS, the zoning classification system developed 

by the GDV to identify exposure to natural hazards, as well as by arranging for 

each individual underwriting risk to be separately assessed by Gothaer Risk-Management 

GmbH. Protection for the insured community is guaranteed by active portfolio 

management, which also enables unprofitable risks to be terminated. 

Reinsurance 

As announced last year, a particularly extensive Dynamic Financial Analysis-based 

stochastic optimization analysis was conducted in 2011 to assess the structure of our 

reinsurance operation and at the same time review our exposure to natural catastrophes. 

Possible impacts on balance sheet and liquidity were also explored. First of all, 

various optimization criteria were applied – e.g. net result, risk capital relief and costbenefit 

analysis – to assess the impact of a reduction of proportional reinsurance (especially 

for storm risks) in favour of an increase in non-proportional reinsurance. As a 

result, the reinsurance structure in place on 1 January 2012 was largely retained. On the 

whole, the renewal of reinsurance treaties was influenced by the fact that natural catastrophe 

losses of around US$100 billion made 2011 the second-most expensive year in 

the history of insurance. Around half of the burden was shouldered by reinsurers. Largely 

because of a positive development in reinsurance cessions, however, Gothaer Allgemeine 

Versicherung AG secured better conditions overall and again placed all contracts 

in full. Diversification was again optimal for security requirements. Once again, an external 

stochastic tool was used to monitor default risk. 

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 incidence of natural catastrophes, our risk exposure 

would significantly increase. 



As regards the concentration of insurance risks, we make a distinction between various 

scenarios: 

• Low frequency loss events involving major losses 

This loss category reports major losses in the area of motor 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 originally excluded 

and the risk assumed by EXTREMUS Versicherungs-AG 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 motor 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 loss of receivables risks) 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 over the past 10 years across all fields of business and net of 

reinsurance on the basis of IFRS. 

Developments as % 

Loss ratio after run-off 

Run-off results of 

initial reserves 

2002 76.9 1.3 

2003 63.8 2.5 

2004 59.3 5.4 

2005 64.3 –2.3 

2006 59.8 4.5 

2007 66.9 0.9 

2008 59.5 10.0 

2009 65.6 3.3 

2010 66.8 6.4 

2011 68.4 1.8 

A detailed year-by-year review of the run-off of our gross primary business by year of 

occurrence, without allowance for annuity reserves, is provided in the notes to the 

consolidated financial statements. 

Risks arising from 

reinsurance assumed 

Risk management 

methods 

Gothaer Allgemeine Versicherung AG acts as a reinsurer for a number of Group companies 

and other cooperation partners. This activity predominantly involves small business 

and private client lines. Terms are negotiated annually and are in line with current 

market conditions. 

• 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. To enable the 

appropriateness of the IFRS reserve 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 are largely mitigated 

by the structure of Gothaer reinsurance. Apart from this, other measures are taken 

to keep the impacts on the gross side as low as possible. Rates are thus set as far as 

possible on the basis of actuarial methods. In addition, underwriting policy provides for 

targeted use of instruments such as self-insurance, sublimit and coverage limitation 

agreements. 

• 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. The 

risk 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 not currently discounted – with 

the exception of annuity reserves, which are of minor importance – this risk is irrelevant 

in the Property/casualty segment. 

Against this backdrop, reserving policy can be described as adequate and appropriate. 



Loss of receivables risks 

Accounts receivable from policyholders and insurance agents in connection with primary 

insurance business at Gothaer Allgemeine Versicherung AG totalled € 101.1 million at 

balance sheet date. This figure includes value adjustments 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. 

Outstanding receivables 

Outstanding for more than 

€ million 

90 days 82.5 

180 days 61.5 

360 days 31.0 

The average collection loss (unsuccessful court orders) in the last three years was € 1.4 

million, which represented an average of 1.0 ‰ of gross premiums written. 

We cede reinsurance only to first-class reinsurers. 61 % of our business is placed with 

reinsurers with a rating of AA- or better. Accounts receivable in connection with reinsurance 

business totalled € 50.4 million at balance sheet date. Accounts receivable in connection 

with reinsurance ceded amounted to € 44.2 million. The structure of receivables 

from reinsurers by rating class was as follows: 

Receivables on assumed 

reinsurance business 

Breakdown by rating category 

€ million 

AA 27.4 

A 7.4 

BBB 12.1 

As a result of our security policy, loss of receivables in past years has been insignificant. 



Investment risks 

The investment portfolio is designed to meet all of the Gothaer Allgemeine 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 our risk/earnings ratio, 

we attach 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 asset liability management (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 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 show, among other things, net and market value 

yield, hidden asset-side net reserves and the own funds ratio. Regularly defined individual 

scenarios are also examined. The basis 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. 

Stochastic indicator-based risk measurements are also used to establish probabilities 

of failure to achieve investment result 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. In addition to risk restrictions required by the supervisory 

authority, special investment guidelines (compliance) are applied to monitor internal 

risk limits. 



The following three types of risk are monitored and managed within the investment 

management system described. 

Market change risks 

Market change risk is the risk of financial loss due to changes in market prices. Market 

change risk can be influenced, for example, by changes in prices, spreads, volatilities, 

correlations or even illiquidity in the market. Market change risk management is 

supported by regular computations based on the use of stochastic and deterministic 

models. Sensitivity analyses are developed to measure risk potential. The investment 

portfolio, which is particularly susceptible to market change risk, is also subjected to 

stress scenarios. The results of the individual sensitivity analyses are shown in the Stress 

Scenario Impacts on Equity table. 

• Interest change risk 

Interest change risk is the risk of a change in the risk-free interest rate and any consequent 

negative impacts on the market value of interest-bearing instruments. As a result 

of systematic gearing to asset liability management, market value is ensured by the fact 

that interest change risks for the Group are primarily viewed against the backdrop of the 

life of liability-side obligations. The resulting asset-side curb on the interest change limit 

is reflected in the internal (target) limits for duration. Another tool used is tactical duration 

management, which allows portfolio management – within a defined context – to 

exploit short-term opportunities arising from changes in interest rates. Interest change 

risk is measured, reported and managed by Risk Controlling in the form of modified 

duration calculations performed on portfolios and individual securities within the framework 

of internal duration reporting. 

• Reinvestment 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 asset liability management and 

duration analyses. In ALM analyses, reinvestment risk is taken into account in the 

stochastic models. Possible impacts can be identified in the attainment probabilities of 

the target variables (e.g. net yield, solvency). Gothaer counters reinvestment risk by 

active portfolio management. The primary focus here is on careful selection of the 

maturity structure of the bond portfolio, which is managed by taking into account derivatives, 

interest structures and quantitative approaches (e.g. trend-following models). 

• Price risk 

Price risk is the risk of market value being lost as a result of adverse changes in share, 

stake, hedge fund and property prices. Price risk management involves, amongst other 

things, continuous intensive observation of concentrations at industry, regional and 

issuer level. It also involves limiting and monitoring exposure in the individual asset 

classes on the basis of internal (target) limits which reflect the results of the annual 

ALM analyses and which, when observed, guarantee the risk-bearing capacity of the 

Company. Asset classes exposed to a heightened price risk are not only subjected to 

sensitivity analysis; they are also monitored in stress tests. 



For unexpected developments, individual company hedging concepts (e.g. share options) 

can be implemented to ensure a risk-adequate response to short-term fluctuations and, 

in extreme cases, limitation of the losses that occur. These hedging concepts are constantly 

reviewed in the light of market developments and adjusted as required. 

Because of the minimal volume of the share portfolio, share price risk was negligible in 

the Gothaer Allgemeine Group at balance sheet date. 

In the property sector, market values continued to recover moderately in the period under 

review. Accordingly, net asset values were seen to move increasingly in line with the 

model values produced by discounted cash flow analysis in relation to the portfolio as 

a whole. This scenario is expected to be repeated during the next reporting period. Given 

the generally positive prospects for market development, however, individual value adjustments 

are possible. Especially in view of long terms, relatively low marketability and 

capital calls on existing commitments, our engagement in this asset class is long-term. 

• Exchange rate risk 

Exchange rate risk is the risk presented by adverse changes in currency exchange rates. 

The existing exchange rate risk is almost entirely hedged at company level by foreign 

exchange forward contracts. Hedging is performed in a rolling programme for each 

currency. The following chart shows exposure per currency in euros and the relevant 

market value in foreign currency at the end of the year. Set against the latter but not 

shown in the table are more or less equal volumes of foreign exchange forward contracts 

concluded as hedges. 

Breakdown by foreign currency 

€ million 

Market values in € 

Market values in 

nominal currency 

2011 2010 2011 2010 

US-Dollar 171.3 153.0 222.1 204.5 

Pound sterling 32.6 30.9 27.2 26.5 

Other currencies 27.9 25.9 diverse diverse 

Considering the hedges in place, a change of 1 % in the individual exchange rates would 

thus result in only insignificant changes in the market values of the aggregate foreign 

currency positions. 



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. In addition to regulatory 

monitoring, counterparty default risk is limited and monitored by reference to internal 

investment ceilings. 

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. Internal ratings 

are used only where no rating has been issued by an external agency. Credit risks are 

broadly spread to avoid concentration risks. All investments are constantly monitored in 

this regard on the basis of regulatory requirements. 

The interest-bearing financial instruments held by the insurance carriers in the Gothaer 

Allgemeine Group are divided into three categories for risk management purposes: interest 

rate instruments, credit instruments and cash/cash equivalent. 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 entails 

no or only a minimal default risk, it is assigned to the interest rate instrument category. 

This is the case, for example, with German government bonds (Bunds) and senior secured 

covered bonds (Pfandbriefe). The balance sheet book values of our interest-bearing 

financial instruments can be regarded as an equivalent for the maximum default risk. The 

table below shows the market value of interest-bearing financial instruments 

assigned to the interest rate instrument, credit instrument and cash/cash equivalent 

categories by rating class, as managed and monitored in the Gothaer Allgemeine Group. 

Retail funds are not included. 

Interest-bearing 

financial instruments 

Breakdown by rating category Share in % 

2011 2010 

AAA 36.7 34.2 

AA+ 9.2 8.6 

AA 1.8 1.1 

AA– 7.3 8.1 

A+ 2.6 6.8 

A 6.1 4.2 

A– 6.2 8.8 

BBB+ 6.3 4.9 

BBB 15.3 12.5 

BBB– 2.2 2.2 

Speculative Grade (BB+ to D) 3.9 5.4 

Non-Rated 2.5 3.3 



The diagram below shows the market value of the financial instruments assigned to the 

interest rate instrument, credit instrument and cash/cash equivalent categories. 

Interest-bearing 



Breakdown by liquidity 

and credit 

53.6 % Interest rate instruments 

38.9 % Credit instruments 

7.5 % Cash/Cashequivalent 


46.8 % Interest rate instruments 

42.8 % Credit instruments 

10.4 % Cash/Cashequivalent 

Fixed-interest securities accounted for 77 % of the market value of the investment portfolio 

at the end of the year. In the area of bearer bonds, without taking account of retail 

funds, financials (unsecured/subordinated bonds issued by banks, insurers or financial 

service providers) accounted for around 11 % of total investment and corporates (unsecured/subordinated 

bonds issued by companies) for around 6 %. 

As a result of highly diverse developments in the interest rate and credit markets, unrealized 

gains and losses in the fixed-interest portfolio presented a moderately worse 

picture overall in comparison to the prior year. At year-end, credit risk in the portfolio 

managed by the Company itself stemmed primarily from subordinated bank bonds as 

well as government bonds from the PIIGS countries (Portugal, Ireland, Italy, Greece, 

Spain), from which the bulk of unrealized losses resulted. The aggregate market value of 

subordinated bank bonds totalled around € 84.6 million, while that of PIGGS government 

bonds amounted to around € 177.6 million. The breakdown of PIIGS government 

bond investment by country was as follows: Greece 1.4 %, Portugal 12.6 %, Spain 21.1 %, 

Ireland 15.4 % and Italy 49.5 %. Other credit risks existed for externally managed highyield 

and emerging market mandates. In the course of the credit process, all critical 

names are monitored in both the Front and Middle Office of Gothaer Asset Management 



AG. Regular credit analyses are also performed by Front Office to verify the value of 

investments that come under pressure during the course of the year in the wake of downgrades 

or market evaluations. Where these analyses show permanent impairment, 

depreciation is applied at individual bond level. In the year under review, this needed to 

be done in the case of Greek government bonds and individual critical subordinated 

bank bonds. 

In view of the still smouldering financial crisis, it is expected that interest will remain 

unpaid on certain subordinated bank bonds in the coming financial year. The unpaid 

amounts are anticipated in the model price calculations and were recognized in income 

in the financial year under review. 

Risk concentrations 

Gothaer manages concentration risks in line with BaFin Circular 4/2011 by ensuring a 

broad mix and spread of investment. Alongside supervisory regulation, concentration 

risk is additionally limited by our internal limit system, which ensures that concentrations 

at issuer level cannot occur on a significant scale. The tables below show the financial 

risk concentrations in the form in which they are monitored and managed in the 

Gothaer Allgemeine Group. Distinctions are made between rating class (see table under 

Counterparty default risk), sector, country and issuer concentrations. In aggregating risk 

concentrations, we adopt the same segmentation practices as independent data 

providers such as iBoxx. 

Shares 

Breakdown by sector Share in % 

2011 2010 

Household goods 0.0 13.6 

Insurance 7.0 86.4 

Motor industry 0.5 0.0 

No sectoral assignment 92.5 0.0 

Breakdown by country Share in % 

2011 2010 

Germany 100.0 100.0 



Liquidity risk 

Liquidity risk is the risk of the company being unable to fulfil its financial obligations 

entirely or on time for lack of adequate funds. Comprehensive liquidity management at 

risk carrier level 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 high percentage of government bonds 

with the highest liquidity as well as the broad spread of investments in our portfolio 

ensure adequate long-term liquidity. This means we can meet our liability-side obligations 

at any time with asset-side liquid and liquidable funds. No liquidity bottlenecks 

occurred during 2011. 

Substantive payment obligations from real estate commitments totalling around € 24.5 

million have been included in liquidity planning for the financial year 2012. In line with 

prior-year developments, a liquidity surplus is anticipated over the year as a whole. 

The residual terms of liabilities are shown at number 20 in the Notes to the Consolidated 

Financial Statements. 

Scenario analysis 

and stress scenarios 

• Stress scenarios 

The Gothaer Allgemeine Group companies satisfy all four variants of the stress test 

prescribed by the Federal Financial Supervisory Authority (BaFin). 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 Allgemeine Group insurance companies. 

• Scenario analysis 

In scenario analysis, the risks defined above are quantified and aggregated on the basis 

of the year-end value of the portfolio. Sensitivity analysis pursuant to the German 

accounting standard DRS 5-20 produced the following figures for the Gothaer Allgemeine 

Group. An increase of 100 basis points in the interest curve and a modified duration of 

4.07 reduced the market value of fixed-income securities by € 81.66 million in comparison 

to the year-end value of the portfolio. An isolated parallel 100-basis-point rise in the 

spread curve reduced the market value of the bond portfolio susceptible to credit risk by 

€ 23.79 million. Taking into account hedging measures, a decrease of 20 % in trading 

prices resulted in a fall in market value of € 93.7 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 Allgemeine Group represents € 28.6 million. The 

following table shows the possible change in equity assuming the above sensitivities. 

For an assessment of the impact on equity, please refer to the section on accounting 

policies, especially the rules on impairment testing. 



Scenario analysis 

Impact on equity 

€ million 

Decrease 

in market value 

Change in equity 

not recognized in 

statement of income 

Change in equity 

recognized in 

statement of income 

2011 2010 2011 2010 2011 2010 

Fixed-income securities 

(interest change risk) 81.7 92.5 32.8 31.1 0.0 0.0 


susceptible to credit risk 

(counterparty default risk) 23.8 41.1 11.7 9.8 0.0 0.0 

Shares and other 

non-fixed-income financial 

instruments (price risk) 93.7 81.0 0.0 0.0 93.7 81.0 

Property (price risk) 28.6 27.3 16.9 15.7 0.0 0.0 

Total 227.8 241.9 61.4 56.6 93.7 81.0 



Operational and other risks 

Information and communication technology (ICT) 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. Owing to growing dependence 

on ICT, security mechanisms have been systematically improved and stabilized in 

recent years. We also guarantee compliance with the provisions of the German Federal 

Data Protection Act (Bundesdatenschutzgesetz) and protect business-critical applications 

by using a business continuity management process that not only ensures technological 

integrity but also safeguards critical business processes. Targeted checks in Data 

Loss Prevention systems are used to counter the risk of unintentional data loss. 

Accounting controls have been set up and other organizational arrangements made to 

guarantee the regulatory compliance of financial statements. Among the organizational 

arrangements, special mention should be made of our accounting policies. Uniform 

recognition, valuation and reporting rules for all items in the consolidated balance sheet 

and consolidated statement of income are documented in an IFRS accounting manual. 

This is regularly updated and circularized within the Group. Any changes in the guidelines 

are made in accordance with a clearly defined procedure. The organizational arrangements 

also include clear assignment of responsibilities for accounting systems and data 

interfaces. Moreover, closing dates are planned and monitored in detail. Financial statements 

are compiled at the Group's headquarters in Cologne using a centralized system. 

IFRS underwriting and non-underwriting transactions are recorded as a matter of principle 

at the companies included in the consolidated financial statements. Most of the 

companies use a standard ledger with harmonized master files and uniform processes 

for this task. The data from the individual company are forwarded to the Group Accounts 

Department via an automated interface. The Group databases – like all other databases 

– are regularly backed up. 

General observance of the “four-eyes” principle is one of the key elements of the internal 

monitoring system. In addition, system checks and content scans are performed during 

the preparation of the consolidated financial statements, for example when data are 

transmitted by reporting units, where intra-group transactions are eliminated and at 

other stages. Errors identified here are analyzed and eliminated. Other elements of the 

internal monitoring system are clear regulation and verification of authority as well as 

clear assignment of responsibility for bookkeeping systems. Accounting system access 

is regulated by authorization rules. Consolidated financial accounting processes are also 

documented and made available to the auditor during the audit. 



The units involved in the reporting process continue to be integrated in the Gothaer 

Group risk management system. Verification of the various elements is performed by the 

Internal Auditing unit. The challenges presented by changes in accounting rules are also 

met by constant further development and training of employees. 

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. 

Foreseeable changes in population demographics and the consequences of the financial 

market crisis present significant human resource risks. HR activity is already influenced 

by 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. 

Summary of the risk situation 

Internal guidelines and checks are in place to prevent refund-of-premium accident 

insurance being used to launder money or finance terrorism. 

Gothaer Allgemeine Versicherung AG has own funds totalling € 333.0 million, which 

exceeds the amount needed to meet solvency requirements by € 112.0 million. Adjusted 

solvency does not need to be separately calculated for the Gothaer Allgemeine Group 

under Section 15 of the Solvency Adjustment Ordinance (SolBerV) because the insurance 

companies of the Gothaer Allgemeine Group are included in the adjusted solvency 

calculation of the superordinate Gothaer Group headed by Gothaer Versicherungsbank 

VVaG. 

In 2011 two independent rating agencies issued positive financial stability ratings for 

Gothaer Allgemeine Versicherung AG. Standard & Poor’s and FitchRatings announced 

A- (very good) and A (strong) ratings respectively, confirming the ratings they had 

previously awarded. 

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 jeopardize the fulfilment of commitments 

assumed under insurance contracts. 



Outlook 

General economic outlook for 2012 

The global economic environment is expected to remain difficult in 2012. Economic 

growth in the industrialized world is likely to be below the long-term average. Consequently, 

a further increase in capacity utilization across the economy as a whole is not 

anticipated and employment growth – if registered at all – will probably be less dynamic 

While Germany is presumed to have no reason to fear a fall in macroeconomic activity, 

the eurozone as a whole faces the prospect of a downturn over at least two quarters in 

succession, i.e. it is likely to slip into recession in 2012. The main risk for the eurozone 

economy – and for the German economy as well – continues to be the euro debt crisis. 

Apart from the consolidation measures taken by the countries directly hampering growth, 

the ongoing mood of uncertainty may curb private demand and thus have an indirect 

negative impact on eurozone economic performance. 

Inflation is likely to slow in 2012 as a result of generally flagging economic dynamism, 

ongoing under-utilization of production capacities and a more difficult labour market 

environment offering little scope for significant pay rises. Against this backdrop, 2012 is 

expected to bring no change in the monetary policy of the central banks and thus no rise 

in key lending rates. 

Because of the weaker macroeconomic environment anticipated, there is no direct 

prospect of an increase in interest rates, so bond markets are likely to operate at current 

price levels. If capital market participants become more confident that the euro debt 

crisis will be solved during 2012 and if they become less risk-averse as a result, the yields 

of core eurozone countries' bonds are likely to rise and spreads for periphery countries 

decrease. In our basic scenario, German federal government bonds (Bunds) with a residual 

term of 10 years could have a year-end yield of close to 3.0 % in this environment. 

The stock markets, in particular, would also profit from a reduction of risk aversion. 

Because most market participants anticipate an economic downturn, which is thus 

already largely reflected by share prices, stock market activity in 2012 will again be 

politically defined, being significantly shaped by further developments surrounding the 

euro debt crisis. Against this backdrop, stock market actors are very likely to take their 

cue from bond market developments and government refinancing efforts. 



Developments in the insurance industry 

The German insurance industry did very robust business in a still unstable macroeconomic 

environment in the financial year 2011 and thus strengthened its competitive 

position in spite of the financial and economic crisis. This positive development is expected 

to continue through 2012. As far as business prospects are concerned, the vast 

majority of companies believe that business will remain constant, if not more favourable. 

Only 3 % of companies expect business to deteriorate. 

Gothaer Allgemeine Group 

(NB: Market statements are based on the appraisal published by the Gesamtverband 

der Deutschen Versicherungswirtschaft e.V. in “GDV Volkswirtschaft, Analyse zu den 

Geschäftsaussichten der Versicherungswirtschaft 12/2011” as well as ifo Geschäftsklima 

Versicherungswirtschaft 11/2011). 

Environment 

The development of premium revenues from property and casualty insurance business 

is shaped by the general economic environment, demand and prices. Private client business 

is profiting from the stable economic position of private households. Corporate 

client business is boosted by the recovery of the Germany economy as a whole, although 

buoyancy is less pronounced here owing to uncertainty about future economic developments. 

With market penetration high and vigorous upturns in claims only sporadic, there 

are no major demand-side stimuli for premium growth. At the same time, opportunities 

for growth are curbed in many lines of insurance by ruinous price competition – dating 

back years in some areas – and customer price sensitivity. In motor insurance, the need 

for price adjustments still exists, particularly since the increase in new registrations is 

slow. However, with the price-cutting cycle now over and significant premium adjustments 

already made in portfolio and new business in 2011, the recovery of average premiums 

remains the defining element in motor insurance with premium growth ranging 

up to 3 %. In general liability insurance, there is evident scope for premium adjustments. 

Premiums in that area of business are expected to rise by 1 %. Premium upturns are also 

anticipated in the other property insurance lines, where growth will probably range from 

0.5 % to 2 %, depending on the line of insurance. For property and casualty insurance as 

a whole, the forecast for the individual insurance lines shows 2 % more premium growth 

in 2012 than in the prior year. 



Outlook 

Internal business field management makes a distinction between client groups, so the 

strategic thrust of operations is different for private and corporate clients. In the coming 

years, the focus will continue to be on profitable growth in the middle and upper private 

client segment as well as in the corporate client sector. Active portfolio optimization 

management efforts are being redoubled to facilitate implementation and steadily 

improve earnings. In the private client segment, the very good market positioning of 

motor, property, liability and accident products in terms of cover and price provides a 

platform for successful market development. In the corporate client segment, we 

continue to adhere to our successful medium- and long-term strategy of combining 

stable regional underwriting policy with expansion in growth areas such as renewable 

energies and multi-risk business as well as increased engagement in international insurance 

programme underwriting. 

According to current projections, premium income from both client segments is expected 

to increase in 2012 and 2013, with corporate client business significantly more dynamic 

than private client business. 

Corporate client business is forecast to remain on a steady growth path through 2012 and 

2013, with all insurance lines contributing positive figures. The main dynamos of growth 

will be industrial property, engineering and liability insurance. The result achieved in 

engineering insurance will be largely influenced by the development of the renewable 

energy market. We intend to further improve our already strong competitive position in 

this field of business. In liability insurance – the biggest single line of insurance in the 

corporate client segment – action is being taken to develop the Company's own D&O 

(directors and officers liability) insurance operation in place of business previously 

conducted in a coinsurance community. 

In the private client segment business, premium growth in the coming years is projected 

in motor, property, liability and accident insurance, even though the competitive environment 

will be shaped by market pressure and market saturation. The increases in 

premium income are anticipated because of our very good market positioning, successful 

adherence to our present dual product and price strategy and implementation of 

targeted sales promotion activities. 

Building on our product and price strategy as well as on risk-sensitive acquisition and 

market-oriented underwriting, our efforts are geared to achieving a steady improvement 

in underwriting performance in 2012 and 2013 and we expect the net combined ratio to 

remain below 100 %. Our projections for the coming years also show a moderate increase 

in the investment result even if the financial market environment remains difficult. 



General 

No events of special significance occurred after the conclusion of the financial year 2011. 

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, capital market developments, unanticipated major and accumulation 

losses, changes in the legal and tax environment as well as changes in the competitive 

situation of the Company may cause the parameters underlying the forecasts to develop 

differently. 





Consolidated Statement of Financial Position 

Assets 

€ million 

Notes 2011 2010 Opening 

balance 

sheet 

2010 

A. Intangible assets 

I. Goodwill [1] 14.5 14.5 14.5 

II. Other intangible assets [2] 77.9 76.5 71.0 

Total A. 92.5 91.0 85.5 

B. Tangible assets [3] 14.6 15.9 22.0 

C. Investments 

I. Investment property [4] 0.1 0.2 0.3 

II. Shares in associated companies 

– carried at equity [5] 85.5 83.5 74.1 

III. Investments held to maturity [6] 0.0 314.7 336.6 

IV. Loans [7] 891.4 811.0 842.1 

V. Investments available for sale [8] 1,785.7 1,453.7 1,324.5 

VI. Investments measured at fair value through profit 

or loss [9] 

1. Held for trading 5.8 7.3 9.0 

2. By designation 7.4 2.2 0.0 

Total VI. 13.3 9.5 9.0 

VII.Other investments [10] 207.9 235.2 304.9 

Total C. 2,983.9 2,907.8 2,891.5 

D. Receivables 

I. Receivables from primary insurance business 

1. from policyholders 42.8 35.6 41.0 

2. from intermediaries 60.4 72.5 71.9 

Total I. 103.2 108.1 112.9 

II. Other receivables 271.0 266.3 249.9 

Total D. [11] 374.3 374.4 362.8 

E. Cash and cash equivalents 32.9 55.7 51.7 

F. Reinsurers’ share of underwriting reserves 

I. Unearned premiums 20.6 25.7 28.9 

II. Policy reserves 0.0 0.0 0.0 

III. Reserves for unpaid claims 426.9 414.1 428.9 

IV. Other underwriting reserves –4.9 –4.1 –8.6 

Total F. 442.7 435.7 449.2 

G. Deferred acquisition costs 

I. Gross 49.6 36.1 35.6 

II. Reinsurers’ share 1.4 0.7 1.0 

Total G. [12] 48.1 35.4 34.6 

H. Tax assets 

I. from current taxation 1.2 2.3 19.5 

II. from deferred taxes 151.1 147.7 194.1 

Total H. [13] 152.2 150.0 213.6 

I. Other assets [14] 0.6 0.6 0.8 

Total assets 4,141.8 4,066.5 4,111.6 



Equity and liabilities 

€ million 

Notes 2011 2010 Opening 

balance 

sheet 

2010 

A. Equity 

I. Subscribed capital and capital reserves 325.6 307.6 307.6 

II. Revenue reserves 628.8 598.9 557.8 

III. Other reserves [15] 47.3 71.6 43.8 

IV. Consolidated profit for the year attributable to 

shareholders of the parent company –31.9 30.7 41.6 

Total I.–IV. (Group equity) 969.8 1,008.8 950.8 

V. Minority interests [16] 34.6 30.7 21.8 

Total A. 1,004.4 1,039.5 972.6 

B. Gross underwriting reserves 

II. Unearned premiums 284.1 280.7 272.7 

II. Policy reserves 50.2 50.9 51.4 

III. Reserves for unpaid claims 1,766.0 1,708.1 1,727.8 

IV. Other underwriting reserves 15.6 21.6 16.1 

Total B. [17] 2,116.0 2,061.3 2,068.0 

C. Other accruals 

I. Provisions for pension benefits and similar obligations [18] 92.3 86.9 81.9 

II. Other accruals [19] 57.1 59.8 58.1 

Total C. 149.4 146.7 140.0 

D. Liabilities 

I. Long-term borrowings –1.1 –0.2 –0.1 

II. Subordinate liabilities 252.5 250.0 250.0 

III. Bonds and loans 65.1 65.1 65.1 

IV. Liabilities from primary insurance business 

1. towards policyholders 67.6 62.1 61.8 

2. towards intermediaries 11.4 13.4 18.8 

Total IV. 79.0 75.5 80.6 

V. Other liabilities 229.4 165.4 187.7 

Total D. [20] 624.9 555.8 583.3 

E. Tax debts 

I. for current taxation 24.2 23.3 30.2 

II. for deferred taxes 222.9 239.9 317.5 

Total E. [21] 247.1 263.2 347.7 

Total equity and liabilities 4,141.8 4,066.5 4,111.6 



Consolidated Statement of Comprehensive Income 

€ million 

Notes 2011 2010 

I. Statement of income (recognized through profit or loss) 

1. Premiums written 

a) Gross 1,496.1 1,456.9 

b) Reinsurers’ share 231.3 223.4 

[22] 1,264.8 1,233.5 

2. Change in unearned premiums 

a) Gross –3.3 –8.1 


[22] –8.4 –11.3 

3. Net premiums earned [22] 1,256.4 1,222.2 

4. Investment result [23] 105.8 104.1 

of which: income from associated companies 4.6 7.3 

5. Other income [24] 180.2 189.0 

Total income 1,542.4 1,515.3 

6. Policyholder benefits 

a) Gross 1,003.1 952.0 


[25] 858.5 821.6 

7. Underwriting expenses 

a) Gross 434.1 449.0 


[26] 372.5 388.2 

8. Other expenses [27] 210.0 213.3 

Total expenses 1,441.0 1,423.1 

9. Operating result 101.4 92.2 

10. Financing expenses 17.7 17.8 

11. Expense arising from interest on long-term borrowings –0.3 0.0 

12. Taxes on income [28] 33.2 –15.7 

13. Profit for the year before transfer of profit 50.7 90.1 

14. Expense from transfer of profit 80.0 57.1 

15. Result for the year after transfer of profit –29.3 33.1 

of which attributable to shareholders of the parent company –31.9 30.7 

of which attributable to minority interests 2.6 2.4 

II. Other comprehensive income (recognized directly in equity) 

16. Unrealized gains and losses on investments [29] –21.5 35.6 

17. Change in valuation at equity –0.8 –0.5 

III. Comprehensive income –51.5 68.2 

of which attributable to shareholders of the parent company –57.0 57.9 

of which attributable to minority interests 5.5 10.3 



Statements of Changes in Equity 

€ million 

Group equity 

Minority 

interests 

Total 

Subscribed 

capital and 

capital 

reserves 

Revenue 

reserves 

Other 

reserves 

Consolidated 

profit for 

the year 

Balance as of 

1 January 2010 307.6 557.8 43.8 41.6 21.8 972.6 

Allocation to revenue 

reserves 0.0 41.6 0.0 –41.6 0.0 0.0 

Comprehensive income 0.0 –0.5 27.8 30.7 10.3 68.3 

of which profit for the year 0.0 0.0 0.0 30.7 2.4 33.1 

of which other 

comprehensive income 0.0 –0.5 27.8 0.0 7.9 35.2 

Dividend 0.0 0.0 0.0 0.0 –1.4 –1.4 

Other 0.0 0.0 0.0 0.0 0.0 0.0 

Balance as of 

31 December 2010 307.6 598.9 71.6 30.7 30.7 1,039.5 

Allocation to revenue 

reserves 0.0 30.7 0.0 –30.7 0.0 0.0 

Increase in capital 

reserves 18.0 0.0 0.0 0.0 0.0 18.0 

Comprehensive income 0.0 –0.8 –24.3 –31.9 5.4 –51.5 

of which profit for the year 0.0 0.0 0.0 –31.9 2.6 –29.3 

of which other 

comprehensive income 0.0 –0.8 –24.3 0.0 2.8 –22.2 

Dividend 0.0 0.0 0.0 0.0 –1.5 –1.5 

Other 0.0 0.0 0.0 0.0 0.0 0.0 

Balance as of 

31 December 2011 325.6 628.8 47.3 –31.9 34.6 1,004.4 

* See also the table 15 Other reserves 

The subscribed capital and capital reserves of the Group parent, Gothaer Allgemeine 

Versicherung AG, come to a total of € 325.6 million (PY: € 307.6 million).The subscribed 

capital in the amount of € 153.4 million consists of 300,000 no par value shares with an 

arithmetical participation in the share capital of € 511.3. Of the 300,000 shares 39,999 

shares were paid in with 50 %. To meet solvency requirements we increased our capital 

reserves by € 18.0 million. The capital reserves in the amount of € 182.4 million 

(PY: € 164.4 million) consist exclusively of share premiums. 

In 2011, consolidated loss for the year after transfer of result came to € –31.9 million 

(PY: € 30.7 million). Earnings per share are determined by dividing Group net profit for 

the year by the average number of common shares issued during the period. Earnings per 

share came to € –106.5 (PY: € 102.2). 



Statement of Cash Flows 

€ million 

2011 2010* 

Result for the year after transfer of profit ** –29.3 33.1 

Change in underwriting reserves 47.7 6.8 

Change in deferred acquisition costs –12.7 –0.7 

Change in deposits retained on assumed business/received 

from reinsurers and receivables/liabilities in connection 

with reinsurance business –9.1 10.9 

Change in investments measured at fair value through profit or loss –6.7 –59.3 

Change in other receivables and other liabilities 14.5 –29.1 

Change in deferred tax assets and deferred tax liabilities –12.1 –29.8 

Change in other balance sheet items –0.9 –8.8 

Realized gains and losses on tangible assets and investments –16.9 –9.2 

Correction for investment result and expenses without 

cash inflows/outflows 23.4 2.4 

Correction for other income and expenses without cash inflows/outflows 

and other correction of result for the year 163.2 110.8 

Cash flow from operating activities 161.1 27.1 

Cash outflows for the acquisition of other investments –970.9 –1,695.5 

Cash inflows from the disposal of other investments 866.1 1,776.7 

Other cash inflows 0.8 3.9 

Other cash outflows –23.1 –27.2 

Cash flow from investing activities –127.1 57.9 

Cash inflows from increase of capital 18.0 0.0 

Dividend –1.5 –1.5 

Cash outflows from profit transfer agreements –57.1 –61.8 

Change in participation certificates and subordinate liabilities 2.5 0.0 

Change from other financing activities –18.7 –17.8 

Cash flow from financing activities –56.8 –81.1 

Change in cash and cash equivalents with cash inflows/outflows –22.8 3.9 

Cash and cash equivalents at the beginning of financial year 55.7 51.7 

Cash and cash equivalents at the end of financial year 32.9 55.7 

* Comparatives after restatement 

** Including minority interests 



Other information on statement of cash flows 

€ million 

2011 2010 

Operating activities 

Taxes on income paid (net) –16.2 –34.9 

Interest paid –5.9 –5.8 

Interest received 82.5 79.5 

Dividend received 33.6 27.9 

Financing activities 

Interest paid –17.7 –17.8 

Dividend paid –58.5 –63.3 

Acquisitions and 

disposals of subsidiaries 

No subsidiaries were acquired or sold in the financial and previous year. 



Segmental Report 

The Segmental Report is part of the Notes to the Consolidated Financial Statements and 

is prepared in line with IFRS 8 “Operating Segments”. Internal valuation is IFRS-compliant. 

Segment assets 

Insurance 

2011 2010 

A. II. Other intangible assets 66.5 62.7 

B. Self-occupied property and tangible assets 4.6 5.0 


I. Investment property 0.0 0.0 

II. 

Shares in associated companies 

– carried at equity* 137.4 124.3 

III. Investments held to maturity 0.0 314.7 

IV. Loans 891.4 809.6 

V. Investments available for sale 1,732.9 1,415.8 

VI. Investments measured at fair value through profit or loss 

1. Held for trading 5.8 7.3 

2. By designation 7.4 2.2 

Total VI. 13.3 9.5 

VII. Other investments 183.6 232.8 

Total C. 2,958.5 2,906.6 

D. Reinsurers’ share of underwriting reserves 442.7 435.7 

E. Deferred acquisition costs 48.1 35.4 

F. Other segment assets 488.5 490.2 

Total segment assets 4,009.9 3,935.5 

* This figure includes all consolidated companies. 



in Mio. EUR 

Non-Insurance Consolidation Total 

2011 2010 2011 2010 2011 2010 

11.4 13.7 0.0 0.0 77.9 76.5 

10.0 10.9 0.0 0.0 14.6 15.9 

0.1 0.2 0.0 0.0 0.1 0.2 

70.7 69.2 –122.7 –110.0 85.5 83.5 

0.0 0.0 0.0 0.0 0.0 314.7 

0.0 1.4 0.0 0.0 891.4 811.0 

0.0 0.0 52.8 37.9 1,785.7 1,453.7 

0.0 0.0 0.0 0.0 5.8 7.3 

0.0 0.0 0.0 0.0 7.4 2.2 

0.0 0.0 0.0 0.0 13.3 9.5 

24.4 2.4 0.0 0.0 207.9 235.2 

95.3 73.2 –69.8 –72.2 2,983.9 2,907.8 

0.0 0.0 0.0 0.0 442.7 435.7 

0.0 0.0 0.0 0.0 48.1 35.4 

86.5 108.1 –15.0 –17.6 560.0 580.6 

203.1 206.0 –84.8 –89.7 4,127.2 4,051.8 



Segment liabilities 

Insurance 

2011 2010 

A. Gross underwriting reserves 

I. Unearned premiums 284.1 280.7 

II. Policy reserves 50.2 50.9 

III. Reserves for unpaid claims 1,766.0 1,708.1 

IV. Other gross underwriting reserves 15.6 21.6 

Total A. 2,116.0 2,061.3 

B. Other accruals 129.0 126.1 

C. Other segment liabilities 773.3 721.8 

Total segment liabilities 3,018.3 2,909.2 



€ million 


2011 2010 2011 2010 2011 2010 

0.0 0.0 0.0 0.0 284.1 280.7 

0.0 0.0 0.0 0.0 50.2 50.9 

0.0 0.0 0.0 0.0 1,766.0 1,708.1 

0.0 0.0 0.0 0.0 15.6 21.6 

0.0 0.0 0.0 0.0 2,116.0 2,061.3 

41.0 41.1 –20.6 –20.6 149.4 146.7 

108.2 108.1 –9.5 –10.9 872.0 819.0 

149.2 149.2 –30.1 –31.5 3,137.3 3,027.0 



Segment statement 

of income 

Insurance 

2011 2010 

1. Gross premiums written from insurance business 

with non-related third parties 1,496.1 1,456.9 

2. Net premiums earned 1,256.4 1,222.2 

3. Investment result 98.7 93.1 

of which: income from associated companies 0.0 0.0 

4. Other income 75.0 79.0 

Total income 1,430.1 1,394.3 

5. Policyholder benefits (net) 858.5 821.6 

6. Underwriting expenses (net) 372.5 388.2 

7. Other expenses 105.8 110.1 

Total expenses 1,336.8 1,319.9 

8. Operating result 93.3 74.3 

9. Financing expenses 13.8 13.8 

10. Expense arising from interest on long-term borrowings 0.0 0.0 

11. Taxes on income 30.8 –18.6 

12. Profit for the year before transfer of profit 48.7 79.1 

13. Expense from transfer of profit 

14. Result for the year after transfer of profit 

15. Minority interests 

16. Consolidated result for the year attributable to 

shareholders of the parent company* 

* The consolidated result for the year is shown only for the Group as a whole. Segmentation would 

result in an inaccurate presentation due to interlocking intersegmental arrangements. 



€ million 


2011 2010 2011 2010 2011 2010 

0.0 0.0 0.0 0.0 1,496.1 1,456.9 

0.0 0.0 0.0 0.0 1,256.4 1,222.2 

7.6 5.4 –0.5 5.5 105.8 104.1 

0.0 0.0 4.6 7.3 4.6 7.3 

155.3 162.3 –50.1 –52.3 180.2 189.0 

162.9 167.8 –50.6 –46.7 1,542.4 1,515.3 

0.0 0.0 0.0 0.0 858.5 821.6 

0.0 0.0 0.0 0.0 372.5 388.2 

152.1 155.5 –47.9 –52.3 210.0 213.3 

152.1 155.5 –47.9 –52.3 1,441.0 1,423.1 

10.8 12.3 –2.7 5.6 101.4 92.2 

3.9 4.0 0.0 0.0 17.7 17.8 

0.0 0.0 –0.3 0.0 –0.3 0.0 

2.7 1.3 –0.3 1.6 33.2 –15.7 

4.2 6.9 –2.1 4.1 50.7 90.1 

80.0 57.1 

–29.3 33.1 

2.6 2.4 

–31.9 30.7 



Other information on the segmental reports 

€ million 

Insurance 

Non-Insurance 

2011 2010 2011 2010 

Interest income 87.9 85.3 0.2 0.1 

Interest expense 17.9 17.7 5.8 5.9 

Scheduled depreciation and 

amortization 10.7 10.5 11.4 13.4 

Substantive income (+) 

and expenses (–) without 

cash inflows/outflows* –102.9 44.1 –2.0 0.7 

* Excluding scheduled depreciation and amortization 

In the Insurance segment, the figures stated for scheduled depreciation and amortization 

as well as substantive income and expenses without cash inflows/outflows do not 

include depreciation or write-ups on intangible assets or fixed assets. In the case of 

insurance companies, these expenses and income are spread over investment expenses, 

policyholder benefits and underwriting expenses within the framework of cost unit 

accounting. 



Notes to the Consolidated Financial Statements 

Group Accounting Policies 

Gothaer Allgemeine Versicherung AG is the parent of the Gothaer Allgemeine Group. 

Gothaer Allgemeine Versicherung AG issued a hybrid bond on the Luxembourg stock 

exchange in the financial year 2006. As a capital market-oriented company within the 

meaning of section 2 of the Securities Trading Act (WpHG), Gothaer Allgemeine 

Versicherung AG must prepare consolidated financial statements and a Group management 

report pursuant to sections 341i, 341j and 290 et seq. of the German Commercial 

Code (HGB). The financial statements were prepared in accordance with the International 

Financial Reporting Standards (IFRS) as allowed by section 315(1) HGB in conjunction 

with Article 4 of the Regulation (EC) No.1606/2002 of the European Parliament and the 

Councilof19July2002. 

All the International Financial Reporting Standards adopted by the European Union as 

well as all the relevant regulations in the HGB are observed in the preparation of the 

financial statements and report. The IFRS consolidated financial statements are thus as 

informative as HGB consolidated financial statements. 

Since 2003, the accounting standards developed by the International Accounting 

Standards Board (IASB) have been called International Financial Reporting Standards; 

the earlier standards continue to be known as International Accounting Standards (IAS). 

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 

valuation of insurance transactions in 2011. Consistent with the framework of IFRS and 

IAS 1/IFRS 4, the US Generally Accepted Accounting Principles (US GAAP) were therefore 

applied, in particular Topic 944 Financial Services – Insurance (formerly SFAS 60). 

The consolidated financial statements are denominated in euros and amounts are shown 

in millions of euros. The consolidated financial statements consist of the consolidated 

statement of financial position and consolidated statement of comprehensive income, 

the statement of changes in equity, the statement of cash flows and the notes to the 

consolidated financial statements including the segmental report. 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 reporting structure of the Gothaer Allgemeine Group, a 

distinction is made between the segments Insurance and Non-Insurance. At the same 

time, the segments reflect the core areas of business of the Group. The segment Insurance 

includes the insurance companies of the Group that engage in all major lines and 

types of property/casualty insurance. All other companies are grouped in the segment 

Non-Insurance. 



The presentation of the segments includes consolidation of intrasegmental transactions, 

but not, however, intersegmental transactions. Intersegmental consolidation is shown 

separately. Transactions between Group companies are effected on market terms as a 

matter of principle. 

The statement of cash flows shows the change in cash and cash equivalents for the 

financial year. Cash and cash equivalents include current credit balances with financial 

institutions, cheques and cash on hand. 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 

profit 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 as well as in 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 group companies are recorded. Essentially, inflows and 

outflows of funds in connection with acquisitions/disposals of investments 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, cheques 

and cash on hand. 



Principles of Consolidation 

All companies whose accounts are included in the consolidated financial statements 

prepared financial statements as of 31 December 2011 which consistently reflect the 

application of Group accounting policies. As a general rule, the financial year is the 

calendar year. Interim financial statements were prepared for special funds with a 

31 January 2011 closing date. 

Subsidiaries and special funds are consolidated if they are controlled directly or indirectly 

by the Gothaer Allgemeine Group. The day on which the Gothaer Allgemeine 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 

recognizing the assets, liabilities and contingent liabilities of the acquired undertaking 

at fair value (complete revaluation) and offsetting them against the parent company's 

share of the equity of the subsidiary. A positive difference is allocated to goodwill which 

is tested for impairment at least once a year. Negative differences are recorded under the 

same headings as positive differences and reversed with recognition in profit or loss 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 statement of financial position under equity. 

Intragroup receivables and payables, expenses and income, as well as intragroup profits 

are eliminated unless they are of insignificant importance for presentation of the net 

assets, financial position and results of operation of the Group. Transactions between 

Group companies are effected on market terms as a matter of principle. 



Scope of Consolidation 

The determination of the scope of consolidation is subject to materiality, which is 

assessed for each company on the basis of equity. In addition, a threshold is applied to 

the total equity of the companies judged immaterial. Where the threshold is exceeded, 

the company is considered to see whether its consolidation increases the validity of the 

consolidated financial statements. If the threshold fails to be reached after first-time 

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 Allgemeine Group insurance companies are consolidated 

as a matter of principle. 

Accordingly, the consolidated financial statements include the accounts of six subsidiaries 

pursuant to IAS 27, as was the case a year earlier. These include one insurance 

company and five other companies. In addition, eight special funds (PY: six) were 

consolidated pursuant to SIC 12. Two special funds were issued. 

Seven companies (PY: seven) in which a significant influence can be exerted were 

recognized in the consolidated financial statements as associates and evaluated by 

the equity method according to IAS 28. These companies are not listed. Two of these 

companies were recognized at equity despite an interest in excess of 50 % although the 

Company controls only 50 % of the voting rights. As allowed by IAS 31, proportionate 

consolidation was not used for these entities. 

All the consolidated companies of the Gothaer Allgemeine Group in 2011 (including the 

special purpose vehicles) are shown below. A list of holdings pursuant to section 313 (4) 

of the German Commercial Code (HGB), which includes subsidiaries and associated companies 

that are not consolidated, is also provided. 



1. Affiliated companies included in the consolidated financial statements 

(section 313 (2) No. 1 of the HGB) – fully consolidated pursuant to IAS 27 

€ thousand 

Location 

Interest* 

as % 

Financial 

year** 

Equity 

Profit 

or loss 

GG-Grundfonds Vermittlungs GmbH Cologne 100.0 2011 –16,468.9 –292.1 

Gothaer Risk-Management GmbH Cologne 100.0 2011 674.2 218.6 

Gothaer Sechste Kapitalbeteiligungsgesellschaft 

mbH Cologne 66.7 2011 75,067.1 6,327.3 

Gothaer Systems GmbH Cologne 74.9 2011 4,695.0 295.6 

Janitos Versicherung AG Heidelberg 100.0 2011 29,617.2 –1,475.8 

Munich Carlyle Productions 

GmbH & Co. KG Grünwald 93.9 2011 –62,676.6 2,188.6 

* In the case of interests that are partially held indirectly, economic interests are calculated. 

** Financial year for a data source 

2. Affiliated companies not included in the consolidated financial statements 

(section 313 (2) No. 4 of the HGB) 

€ thousand 

Location 

Interest* 

as % 

Financial 

year** 

Equity 

Profit 

or loss 

A&O Vertriebs AG Oldenburg 100.0 2011 0.0 344.3 

PE Feeder GmbH Cologne 100.0 2011 0.0 –3.4 



3. Special-purpose companies included in the consolidated financial statements (section 313 (2) 

No. 1 of the HGB) – fully consolidated pursuant to IAS 27 in conjuncton with SIC 12 

as % 

Interest* 

LBB-GA1-Fonds 100.00 

LBB-GVBK-Fonds 100.00 

MI-FONDS F63/MI-DMB 100.00 

MI-FONDS F73/GA 100.00 

MI-FONDS 399/GA 1 100.00 

MI-FONDS 405/GA 2 100.00 

MI-FONDS 396/HZ 100.00 




4. Associated companies included in the consolidated financial statements 

(section 313 (2) No. 2 of the HGB) – consolidated at equity pursuant to IAS 28 

as % 

Location 

Interest* 

Gothaer Zweite Beteiligungsgesellschaft Niederlande mbH Cologne 28.6 

Gothaer Zweite Kapitalbeteiligungsgesellschaft mbH Cologne 40.0 

Gotham City Residential Partners I GmbH & Co. KG Frankfurt a.M. 50.0 

KILOS Beteiligungs GmbH & Co. Vermietungs-KG Pöcking 93.1 

PE Holding USD GmbH Cologne 40.0 

RE Brockton Capital Fund II Feeder GmbH & Co. KG Cologne 24.9 

TRIFORUM Verwaltung GmbH & Co. Objekt IKS Köln KG Pöcking 88.1 


5. Associated companies not included in the consolidated financial statements 

(section 313 (2) No. 4 of the HGB) 

€ thousand 

Location 

Interest* 

as % 

Financial 

year** 

Equity 

Profit 

or loss 

Classen Finanz GmbH & Co. KG Kaisersesch 

35.7 2010 0.5 –17.6 

NYLCAP 2010 Co-Invest L. P. New York. 

USA 40.0 2010 $6,897.8 $453.4 

VOV Verwaltungsorganisation für 

Vermögensschadenhaftpflicht- 

Versicherungen für Mitglieder von 

Organen juristischer Personen GmbH Cologne 30.0 2010 1,114.8 –2,042.3 

Zippel Netmarket GmbH Elsdorf- 25.9 2010 –6,832.8 –46.1 

Heppendorf 





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 the recognition of 

financial assets. At that date, acquisition costs correspond to fair values. The respective 

companies are taken as cash-generating units within the meaning of IAS 36 for purposes 

of recognition and valuation of impairment losses. 

The application of accounting policies requires estimates and assumptions to be made 

which impact on balance sheet positions, the consolidated statement of comprehensive 

income as well as contingent assets and liabilities. Estimates and assumptions are 

used, in particular, for mathematical and statistical methods of valuing reserves such as 

policy reserves, reserves for unpaid claims or provisions for pension benefits and similar 

obligations. However, they are also required for establishing the fair value of financial 

instruments and assessing deferred taxes. In the case of bandwidths and interpretative 

matters, judgments are made on the basis of Management's best knowledge at reporting 

date. As a matter of principle, estimates for future projections are made on the on 

the basis of reasonable, annually updated assumptions and experience. Estimates are 

made on the on the basis of reasonable, appropriate assumptions that are verified on a 

yearly basis. Because estimates naturally involve a degree of uncertainty, actual values 

may differ from the estimates. Estimates may thus increase or decrease net profit for 

the year. Further information is found in the descriptions of accounting policies for the 

individual balance sheet positions. 

New International Financial Reporting Standards 

As a matter of principle, accounting policies are applied subject to the need for consistency. 

The following standards were applied in the financial year for the first time. 

Annual Improvements 

Projects 2010 

IAS 24 – 

Related Party 

Disclosures 

In the course of the 2010 Annual Improvements Project, minor amendments were made 

to various IFRS standards as well as to IFRIC Interpretation 13 to eliminate inconsistencies 

and clarify formulations. The changes have no major implications for the Gothaer 

Group. 

The revision of IAS 24 clarifies the definition of a related party. The amendments have 

no effect on the disclosures of the Group. 



IFRIC 14 – 

The Limit on a Defined 

Benefit Asset, Minimum 

Funding Requirements 

and their Interaction 

IFRIC Interpretation 14 contains accounting rules for defined benefit pension plans in 

cases where existing plan assets exceed pension commitments. The amendment allows 

entities to recognize voluntary prepayments for mandatory minimum funding contributions 

as an asset. The changes do not affect the Gothaer Group. 

The following standards, which are not mandatory for the reporting period, were not 

applied ahead of schedule by the Gothaer Group. Unless stated otherwise, the impacts 

on the Gothaer Consolidated Financial Statements are currently being verified. 

IAS 1 – 

Presentation of Financial 

Statements 

Owing to the adaptation of IAS 1, there is a change in the way other comprehensive income 

is presented in the Statement of Comprehensive Income. In future, items of other 

comprehensive income that are later reclassified in the income statement (recycled) 

need to be presented separately from items of other comprehensive income that are not 

recycled. The application of the amendment is mandatory for financial years beginning 

on or after 1 July 2011. The changes have no impact on the Gothaer Group because 

Gothaer currently has no items that are recycled. 

IFRS 7 – 

Financial Instruments: 

Disclosures 

IFRS 9 – 

Financial Instruments 

The amendments to IFRS 7 relate to disclosures required on the transfer of financial 

assets. The aim of the changes is to make the relationships between transferred financial 

assets and the corresponding financial liabilities more transparent and permit 

better assessment of the nature and extent of the risk of sustained engagement after 

financial assets are written off. The application of the amended IFRS 7 is mandatory for 

financial years beginning on or after 1 July 2011. The changes have no major implications 

for the disclosures of the Gothaer Group. 

In approving IFRS 9, the IASB took the first step towards replacing IAS 39 Financial Instruments: 

Recognition and Measurement. The IASB’s aim hereby is to simplify the accounting 

regulations regarding financial instruments. IFRS 9 starts by classifying valuation 

models. According to IFRS rules, the basis for the subsequent valuation of financial 

instruments will in future need to be either fair value or amortized cost. Valuation at 

amortized cost is permissible only for debt capital instruments that are held as part of a 

business model geared to holding financial instruments as a source of contractual cash 

flows and are based on contractual terms that result exclusively in predefined periodic 

cash flows from redemption and interest payments on outstanding capital amounts. As 

a matter of principle, all debt capital instruments that do not meet these requirements 

as well as all equity instruments need to be recognized at fair value in the statement of 

income. An exception to the rule of recognition at fair value in the statement of income 

is made in the case of equity instruments that are not held for trading. The application 

of IFRS 9 is mandatory for financial years beginning after 1 January 2015; earlier application 

is permissible. 



For the application of IFRS 9, all financial instruments need to be studied and classified 

according to the new valuation models. This will have a major impact on the Gothaer 

consolidated statement of financial position – for one thing because recognition at fair 

value directly in equity is no longer admissible under IFRS 9, for another because financial 

instruments that are currently carried at amortized cost will in future need to be 

recognized at fair value in the statement of income. 

In separate phases, the IASB is also currently revising the requirements relating to the 

recognition of impairment and hedge accounting. After the discussions are completed, 

the amended rules will be integrated into IFRS 9. In January 2012, the IASB and the 

American standard setter FASB announced their intention to reduce the differences in the 

way financial investments are classified and valued in the two sets of rules. 

IFRS 10 – 

Consolidated Financial 

Statements 

and IAS 27 – 

Consolidated and 

Separate Financial 

Statements 

IFRS 10 comprehensively redefines the principle of “control”. According to the new 

definition, control exists if a potential parent company has power over a potential 

subsidiary by virtue of voting or other rights, if it shares in positive and negative variable 

returns from the subsidiary and can affect those returns by exercising its power over the 

subsidiary. Where a company controls another company, the parent company needs 

to consolidate the subsidiary. This new standard may have implications for specialpurposes 

entities and others with regard to scope of consolidation. 

With the adoption of IFRS 10, the rules relating to the principle of control and the requirements 

that need to be met in the preparation of consolidated financial statements were 

transferred from IAS 27 and conclusively dealt with in IFRS 10. As a result, IAS 27 in 

future will contain only the rules for accounting for investments in subsidiaries, joint 

ventures and associated companies in separate IFRS financial statements. 

The application of the new IFRS 10 and the adapted IAS 27 is mandatory for financial 

years beginning on or after 1 January 2013. If the initial application of IFRS 10 affects an 

investment's qualification as a controlled subsidiary, the rules of IFRS 10 need to be 

applied retrospectively. Earlier application is permissible only if IFRS 11, IFRS 12 and the 

IAS 27 und IAS 28 standards amended in 2011 are also applied. The changes have no 

major implications for the Gothaer Group. 

IFRS 11 – 

Joint Arrangements 

and IAS 28 – 

Investments in 

Associates 

IFRS 11 revises the regulations on accounting for activities conducted under joint control 

(joint arrangements). The new concept makes a distinction between joint operations and 

joint ventures. A joint operation exists where the parties that have joint control have 

direct rights to the assets and obligations for the liabilities of the arrangement. The 

individual rights and obligations are recognized in the Consolidated Statement of 

Comprehensive Income on a pro rata basis. In a joint venture, the parties that have joint 

control have rights to the net assets of the arrangement. That right is recognized in the 

consolidated financial statements using the equity method; proportional recognition of 

joint ventures in the consolidated financial statements is not an option. 



The adoption of IFRS 11 coincides with amendments to IAS 28. IAS 28 still regulates the 

use of the equity method, as in the past. However, the adoption of IFRS 11 considerably 

extends the scope of its application because the equity method is required to be used 

in future not only for investments in associated companies but also for joint ventures. 

The new IFRS 11 and the amended IAS 28 are mandatory for financial years beginning on 

or after 1 January 2013. Special transitional regulations exist for the transition from e.g. 

proportional consolidation to the equity method. Earlier application is permissible only 

if IFRS 10, IFRS 12 and the IAS 27 und IAS 28 standards amended in 2011 are also applied. 

Because the Gothaer Group currently recognizes joint ventures in the consolidated 

financial statements on a proportional basis, the application of IFRS 11 in conjunction 

with the amended IAS 28. essentially results in changes affecting both the Consolidated 

Statement of Financial Position and the Statement of Comprehensive Income. In future, 

joint ventures will be recognized in the consolidated financial statements on the basis 

of their pro rata equity capital, whereas in the past they appeared in the consolidated 

financial statements based on their prorated balance sheet and income statement items. 

According to current assessment, there will be no impact on comprehensive income. 

IFRS 12 – 

Disclosure of Interests 

in Other Entities 

IAS 12 – 

Income Taxes 

IFRS 13 – 

Fair Value Measurement 

IFRS 12 sets out rules for the disclosure of interests in other entities. The disclosures 

required are considerably more extensive than those stipulated in IAS 27, IAS 28 and 

IAS 31. The application of the new standard is mandatory for financial years beginning 

on or after 1 January 2013. 

The amendment of IAS 12 makes it clear that, in principle, temporary tax differences on 

real estate held as an investment are reversed on the sale of the asset. The application 

of the amended IFRS 12 is mandatory for financial years beginning on or after 1 July 2012. 

IFRS 13 sets out standard rules for establishing fair value in IFRS financial statements. All 

assets that are required by other standards to be recognized at fair value must be valued 

in future in line with IFRS 13. Only IAS 17 and IFRS 2 will continue to have their own rules. 

Fair value is defined in IFRS 13 as an “exit price”, i.e. the price that would be received 

to sell an asset or paid to transfer a liability. As currently seen in the case of fair value 

measurement for financial instruments, a three-tier hierarchy is being introduced to rate 

valuation techniques according to their dependence on observable market prices. These 

changes have no major implications for the Gothaer Allgemeine Group. 

IAS 19 – 

Employee Benefits 

IAS 19 at present offers an option for the recognition of unexpected fluctuations in pension 

commitments – so-called underwriting gains and losses – in financial statements. 

They can either be recognized in profit or loss in the income statement, in other comprehensive 

income or, after a delay, by the “corridor” method. The revision of IAS 19 will 

eliminate that option for the sake of more transparent and more comparable reporting. 

Direct recognition in other comprehensive income will be the only admissible option. 



Income anticipated from plan assets is also currently being established on the basis of 

Management's subjective expectations of the development of the investment portfolio's 

value. In future, it will only be permissible to apply interest to plan assets at the current 

discount rate for pension commitments. Extensive disclosure requirements will also 

need to be met for employees benefits. The changes are mandatory in financial years 

beginning on or after 1 January 2013. 

Gothaer Allgemeine Group currently uses the corridor method. The changes in the 

treatment of underwriting gains and losses have no major implications for the Gothaer 

Allgemeine Group. 

IAS 32 – 


Presentation 

IFRS 7 – 


Disclosures 

This amendment to IAS 32 clarifies the requirements for offsetting financial instruments. 

It explains both the significance of the current right to offset such instruments and the 

process of settling gross as net that is recognized by the standard. In the wake of this 

clarification, the rules on disclosures in IFRS 7 were also upgraded. 

Application of the amended IAS 32 is mandatory for financial years beginning on or after 

1 January 2014; use of the amended IFRS 7 is required in financial years beginning on or 

after 1 January 2013. 

Whereas IFRS 7 (Transfers of Financial Assets) has been adopted by the EU and incorporated 

into European law by endorsement, the same does not yet apply to IAS 1, IFRS 9, 

IFRS 10, IAS 27, IFRS 11, IAS 28, IFRS 12, IAS 12, IFRS 13, IAS 19, IAS 32 and IFRS 7 

(Offsetting Financial Assets and Liabilities). 

Changes in accounting policies as well as accounting errors and reclassification 

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 2010 financial statements, 

procedural errors occurred in the calculation of deferred taxes in commercial partnerships. 

In addition, errors were eliminated in the valuation of shares in associated 

companies and in available-for-sale financial investments. For reasons of accounting 

clarity, reclassifications were made in the balance sheet. Investments in affiliated 

companies, which are carried as available-for-sale investments because no significant 

influence can be exercised or the stake held is less than 20 %, are no longer recognized 

separately under balance sheet item C.ll but as part of the investments available for sale 

reported at C. V.. Furthermore, reclassifications were made between other receivables 

and other assets. The alterations were implemented as indicated below. 



Consolidated statement 

of financial position 

Assets 

€ million 

31 Dec 2010 Adjustment 31 Dec 2010 

IAS 8 

Annual 

Report 2010 




II. Shares in associated companies 

– carried at equity 498.1 –414.6 83.5 

V. Investments available for sale 1,045.1 408.6 1,453.7 

D. Receivables 

II. Other receivables 225.4 40.9 266.3 

I. Other assets 41.5 –40.9 0.6 

J. Tax assets 

II. from deferred taxes 149.2 –1.5 147.7 

Equity and Liabilities 

€ million 


IAS 8 





A. Equity 

II. Revenue reserves 605.6 –6.7 598.9 

III. Other reserves 72.4 –0.8 71.6 

Consolidated statement 

of comprehensive income 

Statement of Income 

€ million 


IAS 8 





5. Investment result 102.7 1.5 104.2 

13. Taxes on income –17.2 1.5 –15.7 



Accounting policies of different items 

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. 

Allocations are made per company because Gothaer, as a cash-generating unit within the 

meaning of IAS 36, defines a company. An asset is not impaired where the recoverable 

amount, i.e. the higher of value in use or fair value less costs to sell, is more than the 

carrying amount. 

The recoverable amount is the higher of value in use and fair value less costs to sell. If 

no direct market prices can be observed, valuation is normally by the capitalized earnings 

value method. Recoverable value is calculated by suitable valuation methods on 

the basis of assumptions made. In particular, the assumptions include anticipated 

future business results as well as the choice of planning horizons, discount rates and 

capitalization requirements. Because of the difficulty of predicting business results that 

lie far in the future, the long-term, sustainable earnings of the unit need to be estimated. 

Because estimates of amounts that have not yet been generated are fraught with 

uncertainty, additional plausibility tests are performed. Here, sensitivity analyses are 

conducted on discount rates or the main value drivers of the business plan, thus establishing 

which assumptions are appropriate in which areas. A check is also run on 

market-based transaction-related multiples, if the latter are available. 

Where impairment is established, i.e. where book value is not classed as recoverable, 

depreciation is effected on goodwill. The write-down is recognized under other expenses. 

Negative goodwill is accounted for in the same item as positive goodwill. In the year of 

acquisition, it is released with direct recognition through profit or loss. Appreciation is 

recognized under other income. 



Tangible assets 

Other intangible assets include purchased as well as internally generated software. 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 (3 to 10 

years) by the straight-line method. Other intangible assets are also regularly tested for 

impairment in line with IAS 36 and impairment losses are recorded if necessary. Writedowns 

are reported in the statement of income and, in the case of an insurance company, 

spread over investment expenses, policyholder benefits and underwriting expenses. 

Where write-downs result from a non-insurance company, they are reported in other 

expenses. 

Tangible assets include operating and office equipment as well as technical equipment 

and machinery. These assets are carried at amortized cost with straight-line depreciation 

over a useful life of three to thirteen 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. Where 

reasons leading to an impairment loss in the past no longer apply, the carrying amount 

of the asset is increased to a maximum of amortized cost. 

Investments 

Scheduled depreciation and write-downs are also recognized in the statement of income 

as are write-ups. In the case of an insurance company, they are spread over investment 

expenses, policyholder benefits and underwriting expenses. Where they relate to a noninsurance 

company, depreciation and write-downs are reported in other expenses and 

write-ups in other income. 

Investment property 

Shares in associated 

companies – 

carried at equity 

Investment property includes only one piece of land. This asset is valued at amortized 

cost in accordance with IAS 40. In the event of sustained impairment, extraordinary 

depreciation is recognized to the recoverable amount, which is the fair value less costs 

to sell. The fair value of the property is disclosed in the notes to the consolidated financial 

statements. Fair values are established by external evaluators in accordance with 

the Valuation Ordinance (WertV) and Valuation Guidelines (WertR). 

Shares in associated companies are recognized in the consolidated financial statements 

at equity, i.e. at the proportionate share of equity. IAS 28 defines associates as basically 

any entity that is not a subsidiary or joint venture and where there is a possibility of a significant 

influence being exercised on business and company policy. Income resulting 

from increases or expense resulting from decreases in the proportionate share of equity 

is then shown under investment result. 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. 



Current income includes income from the consolidation of associated companies 

consolidated at equity. Quantitative statements on net yields are made in the notes to 

the consolidated financial statements on the investment result. 

Investments held to 

maturity 

In the financial year 2011, a strategic decision was taken to increase our fungible portfolio 

investments, which resulted in the sale of a substantial amount of our held-tomaturity 

securities. According to IAS 39.52, this falls under the tainting rule, which 

prohibits financial investments to be carried as held-to-maturity investments over the 

next two years. 

The securities carried to mid-2011 in the held-to-maturity category included bearer bonds 

and other loans that the Company intends and is able 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. If it is established that permanent impairment is likely, the carrying 

amount is reduced to the present value of expected future cash flows. Where impairment 

from the past is reduced, the carrying amount is increased to a maximum of amortized 

cost. Both impairment losses and reversals are shown in the statement of comprehensive 

income under investment result. The fair values of Investments held to maturity 

are shown in the notes to the consolidated financial statements on the assets side of the 

consolidated statement of financial position. 

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. 

The net yield on investments held to maturity includes current income, any gains or 

losses on disposals and, where applicable, impairment losses or reversals. Current income 

contains amortization income or expense as well as interest income. Write-downs 

and write-ups include translation differences in the case of securities denominated in 

foreign currencies as well as impairment losses and reversals. Quantitative statements 

on net yields are made in the notes to the consolidated financial statements on the investment 

result. In 2009, the fair value of subordinate bank and insurance company 

bearer bonds for which there was no longer an active market in the wake of the financial 

crisis was ascertained by the use of an internal valuation model. When markets returned 

to normal, the model pricing system ceased to be used. Now, fair value is determined for 

all subordinate bearer bonds exclusively on the basis of market prices at balance sheet 

date, which are supplied by corresponding market information systems. 



Loans 

Investments available 

for sale 

Loans include not only mortgage loans, policy loans and other loans but also fixedincome 

securities that are not listed on an active market. An active market is present 

where prices are constantly available and confirmed by regular transactions. As in the 

case of investments held to maturity, loans are recognized at amortized cost calculated 

by the effective interest method. Impairment tests are also carried out at each reporting 

date. The treatment of impairment losses and reversals is the same as that used for 

investments held to maturity. The fair value of loans is also disclosed in the notes to the 

consolidated financial statements. Fair values are established by the same methods 

used for investments held to maturity. The components of the net yield on loans also 

correspond to those of the net yield on investments held to maturity. 

Investments available for sale include non-consolidated affiliated and associated companies. 

In most cases, the entities in question are property investment companies in 

which Gothaer has a stake of less than 20%. They are carried at fair value in the available-for-sale 

category. If the case of listed shares, fair value is taken to be the trading 

prices at reporting date. In other cases, third-party valuations are used or carrying 

amounts are determined using the capitalized earnings value approach. Calculation of 

the capitalized earnings value is based on the latest financial projections approved by 

Management, which normally have a planning horizon of three to five 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 based 

on growth assumptions appropriate for the market. For parts of the property holding 

companies, carrying amounts are also determined based on the net asset value. 

Investments available for sale also include stocks, investment fund certificates, other 

non-fixed-income securities and other shares. In addition, bearer bonds, other fixedincome 

securities, registered bonds and receivables due in connection with promissory 

notes and loans that are not carried as loans or investments held to maturity are 

disclosed under this heading. 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. 

Changes in fair value are recognized in equity as unrealized gains or losses through other 

reserves after deduction of any deferred taxes. In the event of permanent impairment, 

however, the carrying amount is reduced to fair value and the loss recognized in income. 

After an equity instrument is written down, any further decrease in fair value – even if 

impairment is insignificant or temporary – is recorded as impairment loss in the statement 

of income. If the reasons for earlier impairment no longer exist, the recovery in 

value of an equity instrument is recognized directly in equity. In the case of a debt instrument, 

the regained value is written up and recognized in income to a maximum of its 

amortized cost. Gains and losses on disposal are calculated from the difference between 

the proceeds of the disposal and the cost or amortized cost of the asset. 



The net yield on investments available for sale includes current income, gains or losses 

on disposals and any impairment losses or reversals. Current income contains dividend 

payments from non-fixed-income investments and interest from fixed-income securities, 

including amortization income or expense. Write-downs and write-ups also include translation 

differences recognized through profit or loss in the case of fixed-income securities 

denominated in foreign currencies as well as impairment losses and reversals. Quantitative 

statements on net yields are made in the notes to the consolidated financial statements 

on the investment result. 

Investments measured 

at fair value through 

profit or loss 

In addition to investments held for trading, this item includes investments by designation. 

Investments may be classed for recognition at fair value through profit or loss only 

at the time of acquisition. The trading portfolios are reserved exclusively for derivative 

financial instruments. In line with IFRIC 10, the by-designation category includes a private 

equity vehicle assigned because the expense associated with consolidation does not 

justify the additional benefit of the information it provides. In 2011, the portfolio was 

also reduced by an index certificate that was formerly assigned to this category by 

designation. Investments in the two subcategories are recognized at fair value, which is 

obtained based on stock exchange prices or other valuation (use of external prices or 

option price models) as of the reporting date. Only financial instruments with a positive 

fair value are recognized on the assets side of the statement of financial position. Financial 

instruments with a negative fair value are recognized under liabilities on the equity 

and liabilities side of the statement. 

Changes in the fair value of financial instruments – both those with a positive value and 

those with a negative one – are recognized in the statement of income as investment 

result. Gains and losses on disposals are determined based on the difference between 

the proceeds from the disposal and the fair value at the last balance sheet 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 shows mainly interest on income of fixed-income securities. Changes in 

fair value are reflected in impairment losses or reversals. Quantitative statements on 

net yields are made in the notes to the consolidated financial statements on the investment 

result. 

Other investments 

Other investments include deposits with financial institutions and deposits with ceding 

undertakings. Pursuant to IAS 39 they are recognized as loans at (amortized) cost or at 

nominal value. The fair value of other investments normally corresponds to the carrying 

amount. The net yield on other investments includes current income, any gains or losses 

on disposal and, where applicable, any impairment losses or reversals. 



Impairment 

At every balance sheet date, a check is run to verify whether there are substantial objective 

indications of impairment of financial instruments or groups of financial instruments. 

In the Gothaer Allgemeine Group, shares and participations that are classed as investments 

available for sale are regarded as impaired where fair value has been significantly 

below cost or below it for an uninterrupted period of nine months up to the balance 

sheet date. In the case of fixed-income securities, which are recognized as investments 

held to maturity, loans or investments available for sale, permanent impairment is 

assumed in the event of significant changes in creditworthiness. This could occur in the 

wake of a significant deterioration of rating or a sharp drop in fair value below cost. 

Impairment is recognized directly in the positions affected, without the use of value 

adjustment accounts. 

Receivables 

Cash and cash equivalents 

Deferred acquisition costs 

Receivables include receivables from primary insurance business, accounts receivable 

in connection with reinsurance business, deferred interest and rent and receivables from 

affiliated and associated companies. Receivables are recognized pursuant to IAS 39 as 

loans at amortized cost less any necessary write-offs. The fair value of receivables 

generally corresponds to the carrying amount. 

Cash and cash equivalents are recognized pursuant to IAS 39 as loans at amortized cost. 

The fair value is generally the carrying amount. 

Topic 944 (formerly SFAS 60) defines acquisition costs as all variable costs that are directly 

incurred in connection with the acquisition or renewal of insurance contracts. Such 

costs also include commissions for intermediaries. Acquisition costs are capitalized and 

amortized on a straight-line basis over the legal term of the underlying contracts of up 

to three years. In the financial year 2011, the assumptions made for estimating deferred 

acquisition costs were modified. This affected the pro rata consideration of brokers' fees. 

The adjustment was applied prospectively and had a € 7.5 million impact on results in 

the year under review. The effect this change may have in subsequent years cannot be 

quantified because future production results are unknown. 

Deferred acquisition costs are assessed for impairment as of each reporting date by 

testing for recoverability. 



Taxes 

Tax assets or tax debts that need to be recognized under national tax laws are included 

in the current taxes. 

In deferred taxes 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 an offset with future 

taxable profit is probable. The recoverability of deferred tax assets is reviewed as of each 

reporting date pursuant to IAS 12.56. The tax rate is determined based on the respective 

tax situation of individual items or that of the Group companies. In the financial year 

2011, a change was made in the way the treatment of dividends from the tax deposit 

accounts of non-personal insurance companies is assessed. The tax adjustment item 

created for the purpose does not produce a future tax liability. The change in assessment 

was applied prospectively. In the year under review it had an impact of € 2.7 

million on results; in the future, no further deferred tax expense or income will need to 

be recognized. 

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 with an impact on profit or loss result in 

recognition of deferred taxes in the statement of income, and transactions with no 

impact on profit or loss result in recognition of deferred taxes directly in equity. 

Other assets 

All other assets are shown at cost less accumulated depreciation or at nominal value 

less any necessary impairment losses. 

Equity 

Equity consists of subscribed capital and capital reserves, revenue reserves, other reserves, 

consolidated profit for the year and minority interests. Other reserves essentially 

include unrealized gains and losses on investments available for sale, if applicable, after 

adjustment for deferred taxes and consolidation effects. Minority interests include the 

prorated equity of subsidiaries that do not directly or indirectly belong 100 % to the 

Gothaer Allgemeine Group. 



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 

treaties. Reinsurers’ shares are also recognized separately in the statement of income. 

Unearned premiums 

Policy reserves 

Unearned premiums are calculated on an individual and day-by-day basis. No expenses 

are deducted (reduction in unearned premiums as a function of a specific expense ratio 

for commissions and administrative expense) since unearned premiums and deferred 

acquisition costs are recognized simultaneously. Unearned premiums in connection with 

reinsurance assumed are consistently taken from information from the cedents. 

Policy reserves are underwriting reserves for guaranteed claims of policyholders. They 

concern essentially refund-of-premium accident insurance and annuity policy reserves. 

Policy reserves are calculated on an individual basis using the prospective method for 

long-term life insurance contracts carried pursuant to Topic 944 (formerly SFAS 60). 

Accounting assumptions are made on the basis of expected investment yields, mortality 

and lapse frequencies as well as loss adjustment expenses, taking into account 

adequate safety margins. In the event a loss recognition test shows a premium deficit, 

assumptions are revised and used as the basis for future adjustment of the policy 

reserves. Policy reserves include surpluses already allocated to policyholders. 

Reserves for unpaid 

claims 

Other underwriting 

reserves 

Reserves for unpaid claims include liabilities in connection with insurance policies of 

uncertain amount or timing. Pursuant to Topic 944 (formerly SFAS 60), the future development 

of claims is estimated on the basis of past claims experience using recognized 

statistical methods and taking into account current or anticipated parameters and the 

ultimate cost of settlement is calculated per year along with the cost of claims settlement. 

This provides the basis for determination of the required loss reserves. For reasons 

of materiality, a reserve requirement in line with the commercial balance sheet was 

assumed for individual lines of property/casualty insurance. With the exception of 

reserves for annuities loss reserves are not discounted. For technical reasons, estimated 

liabilities may differ from actual expenses. 

Other underwriting reserves essentially include reserves for premium refunds. 

Reserves for profit-related premium refunds involve primarily refund-of-premium accident 

insurance and take into account all amounts to be used for payment of bonuses to 

policyholders on the basis of policy conditions. Reserves for premium refunds comply 

with the definition of discretionary participation features pursuant to IFRS 4. Reserves 

for non-performance-related premium refunds in the Marine area are based on policy 

conditions. 



Provisions for contingent losses are established for some insurance portfolios following 

the premium deficiency test. Equalization reserves established pursuant to the provisions 

of the German Commercial Code (HGB) are not considered liabilities and are therefore 

not permissible under IAS 37. 

Adequacy of 

underwriting reserves 

Application of IFRS 4 requires regular assessment of the adequacy of insurance liabilities 

(liability adequacy test). Therefore, a so-called premium deficiency test is conducted 

pursuant to Topic 944 (formerly SFAS 60) to establish whether future premiums and the 

corresponding investment result of the relevant insurance portfolio is expected to cover 

the anticipated claims and costs. If it emerges that future income will not cover the 

anticipated expenses, the reversal of deferred acquisition costs needs to be followed 

by the establishment of a provision for contingent losses calculated at the level of the 

line of insurance. 

Provisions for pension benefits and similar obligations 

Other accruals 

Liabilities 

Group companies for the most part use defined-benefit plans to provide pension benefits. 

Defined-benefit pension plans are accounted for using the projected unit credit 

method pursuant to IAS 19, taking into account actuarial parameters. Calculation is 

based on the use of current mortality tables, disability and fluctuation probabilities, 

assumptions on increases in remuneration and annuities, and a realistic discount rate. 

Actuarial gains and losses result from differences between actual obligations and 

benefits paid and obligations and benefits anticipated based on 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. 

Other accruals and provisions are capitalized for current legal or de facto obligations 

towards third parties arising from past events. Assigned values are based on the best 

estimate of payments needed to meet the relevant obligation. Long-term accruals and 

provisions are discounted if the interest effect is significant. 

In addition to long-term borrowings, this item includes subordinate liabilities, bonds 

and loans, deposits received from reinsurers and other liabilities. These liabilities are all 

recognized at repayable amounts or amortized cost. Investments held for trading with a 

negative fair value are also shown under this item. 



Premiums 

Currency translation 

Earned premiums do not contain those components of premiums that may be recognized 

in the statement of income only after the reporting date. Premiums are essentially 

booked as income on a day-by-day basis over the term of the insurance contract. 

Unearned premiums are calculated and deferred for each individual contract. Premium 

income from short-term accident insurance contracts is recorded on a pro rata basis over 

the term of each contract. In long-term accident insurance contracts, premiums are 

booked as earned when due. At the same time, reserves for anticipated benefits are 

formed to spread profits over the term of the contracts. In addition, a deduction is made 

from premiums to allow for a collective valuation allowance. This takes account of 

payment default risk based on past experience. 

The consolidated financial statements of the Gothaer Allgemeine 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 

activities are concentrated in Germany, currency translation is of insignificant importance. 

Monetary items in foreign currencies are translated at the exchange rates prevailing as 

of the reporting date. Non-monetary items in foreign currencies that are carried at 

historical cost are translated at the exchange rates prevailing at the time of acquisition. 

Non-monetary items in foreign currencies that are carried at fair value are translated at 

the exchange rates prevailing at the time of valuation. Underwriting liabilities involving 

payment in foreign currencies are covered by funds in the same currency (congruent 

coverage) to the extent possible due to the difficulty of estimating such uncertain 

liabilities. 

Leasing agreements 

Differences in connection with monetary financial instruments that result from translation 

of items 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 statement of income. 

Operating leases are used essentially for tangible fixed assets. In the case of such 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. In addition, 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. Classification for the presentation 

of information required in IFRS 7 is based on the accounting categories contained in 

IAS 39. The information on capital management required by IAS 1.134f is provided in a 

separate section of the Management Report. 



Notes to the Consolidated Statement of Financial Position – Assets 

[1] 

Goodwill 

The gross book value of goodwill stood at € 19.9 million as in the previous year and 

accumulated amortization at € 5.4 million. As in the previous year, the impairment tests 

pursuant to IAS 36 showed no need for a write-down in the financial year. The book value 

related exclusively to Gothaer Systems GmbH. 

Impairment test method 

Model factors 

Assumptions 

Management approach 

Planning horizon 

Future cash flows for detail planning 

Extrapolation growth rates 0.5 % 

Discount rate 

mainly capitalized earnings value approach 

Detail planning over 3–5 years 

Extrapolation of past experience by detailed analysis 

moderately rising revenues, depending on field of business 

moderately rising stock markets 

slow rise of interest rates 

Cost of equity capital determined by capital asset pricing model 

Use of a peer group of international primary insurance 

companies 

7.8 % 

[2] 

Intangible assets 

Developments in the financial year 

€ million 

Internally 

generated 

Purchased 

Total 

2011 

2010 2011 2010 2011 2010 

Gross as of 1 Jan. 136.4 131.1 144.6 133.9 281.0 265.0 

Accumulated amortization 

as of 1 Jan. 101.3 94.2 103.2 99.8 204.5 194.0 

Balance as of 1 Jan. 35.1 36.9 41.4 34.1 76.5 71.0 

Additions 5.4 5.4 12.4 17.8 17.8 23.2 

Scheduled amortization 7.9 7.2 8.4 10.5 16.3 17.7 

Balance as of 31 Dec. 32.5 35.1 45.4 41.4 77.9 76.5 

Accumulated amortization 

as of 31 Dec. 109.3 101.3 111.6 103.2 220.8 204.5 

Gross as of 31 Dec. 141.8 136.4 157.0 144.6 298.7 281.0 



[3] 

Tangible assets 


€ million 

2011 2010 

Gross as of 1 Jan. 152.2 165.8 

Accumulated depreciation as of 1 Jan. 136.3 143.8 

Balance as of 1 Jan. 15.9 22.0 

Additions 5.3 4.0 

Disposals 0.8 3.9 

Scheduled amortization 5.8 6.2 

Balance as of 31 Dec. 14.6 15.9 

Accumulated depreciation as of 31 Dec. 103.1 136.3 

Gross as of 31 Dec. 117.7 152.2 

The balance consists exclusively of operating and office equipment. 

[4] 

Investment property 

[5] 


companies – 

carried at equity 

Investment property includes a property with historical costs of € 0.3 million and a book 

value of € 0.1 million (PY: € 0.2 million). Because the fair value of the property decreased 

to € 0.1 million (PY: € 0.2 million), extraordinary depreciation of € 0.1 million was 

effected. 

Seven (PY: five) associated companies were consolidated at equity in the amount of 

€ 85.5 million (PY: € 83.5 million). Any negative consolidation differences are amortized 

directly in the financial year in which they occur. In the financial year 2011, negative 

consolidation differences totalling € 0.1million (PY: € 0.1 million) occurred The fair value 

of the associated companies consolidated at equity totalled € 94.7 million (PY: € 86.3 

million). 

Financial information* 

€ million 

Assets 

Liabilities 

Sales revenues 

Profit 

2011 

2010** 2011 2010 2011 2010 2011 2010 

Consolidated 99.6 97.7 19.2 19.4 8.4 7.6 4.7 8.7 

* The most recent financial statements acc. to IFRS 

** Comparatives after restatement 



[6] 

Investments held 

to maturity 

Breakdown by type of investment 

Amortized cost 

Unrealized gains 

Unrealized losses 

Fair value 

€ million 

2011 

2010 2011 2010 2011 2010 2011 2010 

Bearer bonds 0.0 313.7 0.0 9.3 0.0 10.7 0.0 312.4 

Other loans 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.9 

Total 0.0 314.7 0.0 9.3 0.0 10.7 0.0 313.3 

In the financial year 2011, a strategic decision was taken to increase our fungible portfolio 

investments. In the wake of that decision, held-to-maturity securities with a carrying 

value of € 255.8 million were reclassified as available for sale. At the end of the financial 

year, the fair value of those securities was € 225.0 million. 

Breakdown by residual term 

€ million 


Fair value 

2011 

2010 2011 2010 

Up to 1 year 0.0 65.0 0.0 65.6 

1 to 2 years 0.0 23.1 0.0 24.0 

2 to 3 years 0.0 74.1 0.0 76.6 

3 to 4 years 0.0 28.1 0.0 27.2 

4 to 5 years 0.0 72.2 0.0 69.6 

5 to 10 years 0.0 41.2 0.0 40.0 

After 10 years 0.0 11.0 0.0 10.3 

Total 0.0 314.7 0.0 313.3 



Investments held 

to maturity 


€ million 


Fair value 

2011 

2010 2011 2010 

AAA 0.0 0.0 0.0 0.0 

AA 0.0 36.0 0.0 36.8 

A 0.0 189.5 0.0 192.8 

BBB 0.0 67.2 0.0 63.8 

BB 0.0 21.1 0.0 19.0 

B 0.0 0.0 0.0 0.0 

CCC and lower 0.0 0.0 0.0 0.0 

Non-rated 0.0 0.9 0.0 0.9 

Total 0.0 314.7 0.0 313.3 

[7] 

Loans 


€ million 


Unrealized gains 

Unrealized losses 

Fair value 

2011 

2010 2011 2010 2011 2010 2011 2010 

Mortgage loans 3.6 4.3 0.3 0.3 0.0 0.0 3.9 4.6 

Loans and 

advance payments 

on insurance 

policies 0.1 0.1 0.0 0.0 0.0 0.0 0.2 0.1 

Loans to affiliated 

companies 226.7 226.7 0.0 0.0 0.0 0.0 226.7 226.7 

Loans to associated 

companies 23.7 29.9 0.0 0.0 0.0 0.0 23.7 29.9 

Other loans 3.5 3.9 0.0 0.0 0.0 0.0 3.5 3.9 

Bearer bonds 60.7 69.2 0.1 0.6 16.0 4.6 44.8 65.2 

Registered bonds 141.5 101.6 6.0 0.9 1.6 1.6 146.0 100.9 

Promissory notes 431.5 375.3 12.7 5.3 7.6 13.3 436.6 367.3 

Total 891.4 811.0 19.2 7.0 25.1 19.5 885.4 798.6 



Loans 


€ million 


Fair value 

2011 

2010 2011 2010 

Up to 1 year 57.3 71.1 57.7 71.4 

1 to 2 years 37.7 57.5 37.1 58.9 

2 to 3 years 35.8 22.6 33.1 22.8 

3 to 4 years 94.9 21.2 90.9 21.3 

4 to 5 years 307.1 71.2 306.7 72.4 

5 to 10 years 149.4 119.5 154.3 115.3 

After 10 years 209.1 447.9 205.5 436.5 

Total 891.4 811.0 885.4 798.6 


€ million 


Fair value 

2011 

2010 2011 2010 

AAA 212.5 158.1 220.1 157.4 

AA 209.5 140.9 216.5 142.2 

A 46.1 176.3 43.9 171.7 

BBB 368.1 280.8 358.1 273.9 

BB 17.5 7.1 13.9 6.3 

B 4.9 3.9 2.6 3.8 

CCC and lower 3.7 3.7 1.3 2.8 

Non-rated 29.2 40.2 29.2 40.5 

Total 891.4 811.0 885.4 798.6 

Impairment 

€ million 

2011 2010 

Amortized cost before impairment 2.3 10.6 

Impairment 

Due to significant change in creditworthiness 0.0 0.9 

Due to significant decrease in fair value 0.1 0.0 

Amortized cost after impairment 2.2 9.7 



Reclassification 

in accordance with 

IAS 39.50 

In 2008 financial instruments available for sale with a fair value of € 72.6 billion were 

reclassified as loans. These financial instruments had a carrying value, i.e. amortized 

costs of € 60.7 million (PY: € 67.6 million) at the end of the financial year and a fair value 

of € 44.8 million (PY: € 65.2 million), and income and expenses totalling € 2.3 million 

(PY: € 3.1 million) was recorded in the statement of comprehensive income. 

Reclassification 

in accordance with 

IAS 39.50 

Change in fair value of reclassified investments 

€ million 

2011 2010* 

Without reclassification (shadow accounting) 

Unrealized gains and losses –13.5 –2.4 

Realized gains and losses 0.0 2.8 


The effective interest rates of the reclassified financial instruments were between 0.07 % 

and 0.13 %. 

Anticipated cash flows 

Payment times 

€ million 

2011 2010* 

Up to 1 year 3.3 3.8 

1 to 2 years 3.3 3.8 

2 to 3 years 2.2 10.6 

3 to 4 years 3.2 3.4 

4 to 5 years 7.9 8.0 

5 to 10 years 64.4 67.4 

Total 84.3 97.0 




[8] 




2011 

€ million 

Amortized 

cost 

Unrealized 

gains 

Unrealized 

losses 

Fair value 

Non-fixed-income securities 

Investmentfund 247.6 103.9 0.0 351.5 

Shares in affiliated and associated 

companies 233.6 4.3 16.2 221.7 

Other 71.6 3.3 0.0 74.9 

Total 552.8 111.4 16.2 648.1 


Bearer bonds 1,114.1 12.7 62.4 1,064.5 

Promissory notes 72.5 0.0 0.0 72.6 

Other loans 0.7 0.0 0.0 0.7 

Total 1,187.3 12.7 62.4 1,137.7 

Total 1,740.1 124.2 78.6 1,785.7 


€ million 

2010 

Amortized 

cost 

Unrealized 

gains 

Unrealized 

losses 

Fair value 




companies 226.4 10.0 17.5 218.9 

Other 6.8 0.7 0.0 7.5 

Total 535.7 116.8 17.6 634.9 


Bearer bonds 787.6 8.1 25.3 770.4 


Total 836.0 8.1 25.3 818.8 

Total 1,371.7 124.9 42.9 1,453.7 






€ million 

2009 

Amortized 

cost 

Unrealized 

gains 

Unrealized 

losses 

Fair value 




companies 293.8 65.1 0.7 358.2 

Other 7.3 0.6 0.0 7.9 

Total 561.1 73.9 28.7 606.3 


Bearer bonds 669.1 5.9 4.9 670.1 


Total 717.2 5.9 4.9 718.2 

Total 1,278.3 79.8 33.6 1,324.5 

Financial information* 

€ million 

Assets 

Liabilities 

Sales revenues 

Profit 

2011 

2010** 2011 2010** 2011 2010** 2011 2010** 

Shares in 

associated 

companies 5.7 5.9 13.3 13.7 0.9 –0.6 0.0 0.8 

* The most recent financial statements acc. to HGB 

** Comparatives after restatement 




€ million 



Fair value 

2011 

2010 2009 2011 2010 2009 

Up to 1 year 132.9 100.6 185.2 129.0 100.6 184.7 

1 to 2 years 149.4 71.6 42.1 149.3 72.4 42.4 

2 to 3 years 66.0 6.2 50.5 63.5 6.2 51.4 

3 to 4 years 143.2 9.6 12.9 137.0 9.9 13.0 

4 to 5 years 119.2 102.6 52.1 120.2 103.4 51.1 

5 to 10 years 453.3 401.8 295.1 424.5 385.4 296.1 

After 10 years 123.5 143.6 79.3 114.3 140.9 79.5 

Total 1,187.3 836.0 717.2 1,137.7 818.8 718.2 






€ million 



Fair value 

2011 

2010 2009 2011 2010 2009 

AAA 320.4 378.2 444.6 323.0 379.9 443.8 

AA 229.7 248.4 96.7 229.3 243.6 98.3 

A 288.3 61.3 1.6 276.2 54.1 1.6 

BBB 148.0 75.9 44.5 132.7 70.4 44.8 

BB 82.8 30.7 20.1 62.0 28.7 21.1 

B 15.6 10.7 6.2 13.5 11.0 6.4 

CCC and lower 4.5 0.0 0.0 3.3 0.0 0.0 

Non-rated 98.0 30.8 103.5 97.8 31.1 102.2 

Total 1,187.3 836.0 717.2 1,137.7 818.8 718.2 

Concentration of default risks is avoided through strict limits across all fixed-income 

securities imposed by the supervisory bodies of the Gothaer Allgemeine 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 7.87 %. 

All valuation categories include financial instruments with variable coupons that are 

dependent upon market conditions or specific corporate events. 



Impairment 

€ million 

2011 2010 

Amortized cost before impairment 159.5 60.3 

Impairment 

Due to significant change in creditworthiness 0.2 0.0 

Due to significant decrease in fair value 10.1 0.5 

Due to permanent negative fair value reserve 0.0 2.5 

Due to repeated impairment of impaired investments 11.7 5.5 

Amortized cost after impairment 137.5 51.8 



[9] 






Fair value 

€ million 

2011 

2010 2011 2010 

Held for trading 

Non-fixed-income 0.0 0.0 5.8 7.3 

Fixed-income 0.0 0.0 0.1 0.0 

0.0 0.0 5.8 7.3 

By designation 


Fixed-income 0.0 0.0 0.1 0.0 

6.7 2.2 7.4 2.2 

Total 6.7 2.2 13.3 9.5 

The fixed-income investments have terms of up to 1 year and no rating. 

The Gothaer Allgemeine Group does not use hedge accounting within the meaning 

of IAS 39. All derivative financial instruments are therefore shown under investments 

measured at fair value through profit or loss. 

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 Allgemeine 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 


Valuation models 

Derivate Pricing method Parameters Pricing model 

Listed share options Quoted price — — 

Total return swaps Theoretical price Market value of reference Cash value 

instrument 

method 

Yield curve 

Yield swaps Theoretical price Swap curve Cash value 

Money market yield curve method 

Forward exchange Theoretical price Spot rate Cash value 

transactions Money market yield curve method 

Credit default swaps Theoretical price Credit spreads Cash value 

Recovery rates 

method 

Yield curve 



Embedded derivatives are separated from the host contracts and shown under investments 

measured at fair value through profit or loss. Hybrid financial instruments are 

generally fixed-income securities that have been combined with a derivative. All hybrid 

instruments 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 those 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 investments available for 

sale. 

Separation of derivatives from underlyings involves three categories of securities. The 

first 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 or loss at total return swap level. The second 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. In the third category are hybrid 

bonds consisting of a plain vanilla bond for retirement at call date and a short put. In line 

with IFRIC 10, the by-designation category includes a private equity vehicle assigned 

because the expense associated with consolidation does not justify the additional 

benefit of the information it provides. 

Derivative financial instruments normally have no cost. Derivative financial instruments 

with a negative fair value are shown in equity and liabilities under the heading D. V. other 

liabilities. 






Valuation hierarchy 

Level 1 

Quoted prices 

Level 2 

Valuation 

based on 

observed 

market data 

Level 3 

Valuation 

based on 

individual 

parameters 

€ million 

Total 

2011 

2011 2011 2011 

Investments measured at fair value 

and recognized directly in equity 


Fixed-income 639.0 498.7 0.0 1,137.7 


through profit or loss 

Held for trading 0.0 –6.3 0.0 –6.3 

By designation 0.0 7.4 0.0 7.4 

Total 709.4 985.8 91.7 1,786.8 

Valuation hierarchy 

€ million 

Level 1 

Quoted prices 

Level 2 

Valuation 

based on 

observed 

market data 

Level 3 

Valuation 

based on 

individual 

parameters 

Total 

2010 

2010 2010 2010 


and recognized directly in equity 


Fixed-income 665.2 153.6 0.0 818.8 


through profit or loss 

Held for trading 0.1 –3.0 0.0 –2.9 

By designation 0.0 2.2 0.0 2.2 

Total 728.0 625.6 99.3 1,452.9 



Investments measured at fair value and recognized directly in equity include non-consolidated 

shares in affiliated and associated companies as well as investments available 

for sale. 

The valuation hierarchy also shows the investments measured at fair value through profit 

or loss, which have a negative fair value and are recognized accordingly under liabilities 

on the equity and liabilities side of the statement of financial position. 

Reconciliation of 

level 3 investments 


€ million 

2011 2010 

Value as of 1 Jan. 99.3 95.1 

Change in value recognized through profit or loss –2.0 –5.8 

Change in value recognized in equity 2.3 2.8 

Acquisitions 24.9 16.7 

Sales 16.6 6.2 

Transfer in Level 3 0.4 0.0 

Transfer out Level 3 16.6 3.3 

Value as of 31 Dec. 91.7 99.3 

Level-3 investments produced a net profit of € –0.7 million (PY: € 0.9 million). 

In 2011, investments with a fair value of € 153.7 million (PY: € 0.0 million) were reclassified 

from Level 1 to Level 2 because of the absence of quoted prices for the securities. 

Non-fixed-income investments categorized as available for sale were reclassified from 

Level 3 to Level 2 because the return of a liquid market was observed in the financial 

year. One reclassification to Level 3 was made on the grounds that a liquid market no 

longer existed for a number of securities. 



[10] 

Other investments 


€ million 

2011 2010 

Deposits with ceding undertakings 28.1 28.5 

Bank deposits 179.8 206.7 

Total 207.9 235.2 


€ million 

Deposits with ceding 

undertakings 

Bank deposits 

2011 

2010 2011 2010 

Up to 1 year 28.1 28.5 179.8 206.7 

1 to 5 years 0.0 0.0 0.0 0.0 

After 5 years 0.0 0.0 0.0 0.0 

Total 28.1 28.5 179.8 206.7 

In addition to the receivables shown under item D. in the statement of financial position, 

other receivables include the tax refunds due from current taxes in the amount of € 2.3 

million (PY: € 19.5 million) that are shown under item H.I. of the statement of financial 

position. 

[11] 

Receivables 

Breakdown by type of receivable 

€ million 

2011 2010 

Receivables from primary insurance business 

from policyholders 42.8 35.6 

from intermediaries 60.4 72.5 

Accounts receivable in connection with reinsurance business 52.7 38.9 

Accounts receivable from affiliated and associated companies 16.7 13.1 

Deferred interest and rent 37.7 33.9 

Receivables in connection with assumption of debt 43.1 40.9 

Miscellaneous other 120.8 139.5 

Total 374.3 374.4 



The fair value of receivables almost equals the fair value. No prepayments were made. 

There were no receivables from related parties. 


€ million 

2011 2010 

Up to 1 year 255.5 216.4 

1 to 5 years 24.2 64.2 

After 5 years 95.7 96.2 

Total 375.4 376.7 

[12] 

Deferred acquisition 

costs (net) 


€ million 

2011 2010 

Balance as of 1 Jan. 

Gross 36.1 35.6 

Reinsurers’ share 0.7 0.9 

Net 35.4 34.7 

New deferred acquisiton cost 

Gross 41.9 29.5 


Net 40.3 28.7 

Amortization 

Gross 28.4 29.0 


Net 27.6 28.0 

Balance as of 31 Dec. 

Gross 49.6 36.1 


Net 48.1 35.4 

[13] 

Tax assets 

Deferred tax assets are based essentially on lower carrying amounts for investments 

under IFRS and higher carrying amounts for underwriting provisions than under the tax 

balance sheet. 

In the current financial year, corporate income tax loss carry-forwards in the amount of 

€ 24.8 million (PY: € 23.7 million) and trade tax loss carry-forwards in the amount of 

€ 22.2 million (PY: € 19.2 million) were considered not utilizable so that no deferred tax 

assets were recognized. They can be used without time limitation. 

[14] 

Other assets 

Other assets mainly consist of miscellaneous assets of € 0.5 million (PY: € 0.6 million). 



Notes to the Consolidated Statement of Financial Position – 

Equity and Liabilities 

[15] 

Other reserves 

Breakdown by reserve item 

€ million 

2011 2010 Opening balance 

sheet 2010 

Unrealized gains and losses 

on investments available for sale 52.2 78.0 52.4 

resulting from reclassification 

of investments –4.9 –6.4 –8.6 

Total 47.3 71.6 43.8 

Unrealized gains and losses on reclassified investments are recognized as a special reserve 

under other reserves. In the event of the disposal or impairment of an investment, the 

reserve is reversed in full. If the investment remains unchanged in the portfolio, the reserve 

is reversed by amortization over the residual term of the asset. Due to the application of 

the revised version of IAS 39 in 2005, investments in the available-for-sale category were 

reassigned to the valuation categories for investments held to maturity and loans. In the 

financial year 2011, all financial instruments in the held-to-maturity category were sold 

or reclassified as instruments available for sale. As a result, the reserve recognized for 

these securities was reversed. In 2008, the new option in IAS 39.50 was used to reclassify 

other available-for-sale investments as loans. For information on capital management, 

please refer to the separate chapter in the Management Report. 

Unrealized gains and 

losses on investments 

available for sale 

Reconciliation 

€ million 

2011 2010 Opening balance 

sheet 2010 

Gross amount 45.6 77.5 46.4 

Less: 

Deferred taxes –17.3 –8.4 –6.0 

Effects of consolidation 10.7 7.9 0.0 

Total 52.2 78.0 52.4 

Effects of consolidation relate to minority interests in the unrealized profits of Gothaer 

Sechste Kapitalbeteiligungsgesellschaft mbH. Unrealized gains and losses include exchange 

rate differences of € 0.6 million (PY: € 0.9 million) resulting from the recognition 

of securities quoted in foreign currencies. 



[16] 

Minority interests 

Breakdown by equity item 

€ million 

2011 2010 

Subscribed capital and capital reserves 21.3 23.1 

Other reserves 10.7 5.2 

Profit for the year 2.6 2.4 

Total 34.6 30.7 

[17] 

Underwriting reserves 

Breakdown by type of underwriting reserve 

€ million 

2011 

Gross Re Net 

Unearned premiums 284.1 20.6 263.4 

Policy reserves 50.2 0.0 50.2 

Reserves for unpaid claims 1,766.0 426.9 1,339.1 

Other underwriting reserves 

Reserves for premium refunds 11.3 0.1 11.2 

Miscellaneous other underwriting reserves 4.3 –5.0 9.3 

Total 2,116.0 442.7 1,673.3 

Breakdown by type of underwriting reserve 

€ million 

2010 

Gross Re Net 

Unearned premiums 280.7 25.7 255.0 

Policy reserves 50.9 0.0 50.9 

Reserves for unpaid claims 1,708.1 414.1 1,294.1 


Reserves for premium refund 11.9 0.2 11.7 

Miscellaneous other underwriting reserves 9.7 –4.3 13.9 

Total 2,061.3 435.7 1,625.6 



Underwriting 

reserves – gross 

Maturities 

€ million 

2011 

up to 1 

year 

1 to 5 

years 

More 

than 5 

years 

Without 

a fixed 

term 

Total 

Unearned premiums 284.1 0.0 0.0 0.0 284.1 

Policy reserves 4.9 17.9 27.5 0.0 50.2 

Reserves for unpaid claims 523.1 474.5 673.4 95.0 1,766.0 


Reserves for premium refunds 11.3 0.0 0.0 0.0 11.3 

Miscellaneous other underwriting reserves 4.3 0.0 0.0 0.0 4.3 

Total 827.7 492.4 700.8 95.0 2,116.0 

Maturities 

€ million 

2010 

up to 1 

year 

1 to 5 

years 

More 

than 5 

years 

Without 

a fixed 

term 

Total 



Reserves for unpaid claims 560.3 439.5 628.2 80.1 1,708.1 



Miscellaneous other underwriting reserves 9.7 0.0 0.0 0.0 9.7 

Total 866.9 456.6 657.7 80.1 2,061.3 



Underwriting reserves – 

reinsurers’ share 

Maturities 

€ million 

2011 

up to 1 

year 

1 to 5 

years 

More 

than 5 

years 

Without 

a fixed 

term 

Total 



Reserves for unpaid claims 123.1 110.5 177.0 16.3 426.9 



Miscellaneous other underwriting reserves –5.0 0.0 0.0 0.0 –5.0 

Total 138.9 110.5 177.0 16.3 442.7 

Maturities 

€ million 

2010 

up to 1 

year 

1 to 5 

years 

More 

than 5 

years 

Without 

a fixed 

term 

Total 



Reserves for unpaid claims 151.1 98.6 154.7 9.7 414.1 



Miscellaneous other underwriting reserves –4.3 0.0 0.0 0.0 –4.3 

Total 172.7 98.6 154.7 9.7 435.7 



Reserves for 

unpaid claims 


€ million 

2011 2010 

Balance as of 1 Jan. 

Gross 1,708.1 1,727.8 


Net 1,294.1 1,298.9 

Plus losses incurred (net) 

Financial year 877.7 900.5 

Previous year –23.9 –90.3 

Total 853.7 810.2 

Less claims paid (net) 

Financial year 465.8 445.1 

Previous year 350.6 374.9 

Total 816.4 820.0 

Other changes 7.7 5.0 

Balance as of 31 Dec. 

Net 1,339.1 1,294.1 


Gross 1,766.0 1,708.1 



Gross reserves 

for unpaid claims of 

Gothaer Allgemeine 

Versicherung AG 

(primary business) 


Run-off 

Financial year 

2002 

€ million 

2003 2004 2005 2006 2007 2008 2009 2010 2011 

2002 

Reserves 1 Jan. — 498.0 199.1 129.7 109.0 87.3 85.1 72.1 63.7 58.2 

Payments 568.5 256.7 62.7 30.4 18.2 13.9 10.9 8.6 8.4 4.7 

Reserves 31 Dec. 498.0 199.1 129.7 109.0 87.3 76.9 72.1 63.7 58.2 47.2 

Run-off — 42.2 6.7 -9.7 3.4 -3.5 2.1 -0.1 -2.9 6.3 

2003 

Reserves 1 Jan. — — 407.4 171.3 122.3 92.7 81.7 67.0 54.7 47.1 

Payments — 449.5 204.0 58.3 23.9 13.3 7.5 13.0 7.1 9.2 

Reserves 31 Dec. — 407.4 171.3 122.3 92.7 80.6 67.0 54.7 47.1 43.5 

Run-off — — 32.0 -9.3 5.7 -1.2 7.2 -0.6 0.4 -5.5 

2004 

Reserves 1 Jan. — — — 399.9 170.8 116.0 93.0 79.3 66.2 59.5 

Payments — — 433.5 196.5 52.8 24.0 13.5 10.2 11.0 10.2 

Reserves 31 Dec. — — 399.9 170.8 116.0 93.0 79.3 66.2 59.5 53.6 

Run-off — — — 32.6 2.0 -0.9 0.2 2.9 -4.2 -4.3 

2005 

Reserves 1 Jan. — — — — 385.1 171.2 128.7 84.9 70.8 57.5 

Payments — — — 403.9 209.8 53.6 24.0 10.3 10.5 6.5 

Reserves 31 Dec. — — — 385.1 171.2 128.7 84.9 70.8 57.5 51.5 

Run-off — — — — 4.1 -11.1 19.8 3.8 2.7 -0.5 

2006 

Reserves 1 Jan. — — — — — 406.4 168.5 125.7 95.7 76.0 

Payments — — — — 396.8 218.5 58.6 25.6 20.1 11.1 

Reserves31 Dec. — — — — 406.4 168.5 125.7 95.7 76.0 66.5 

Run-off — — — — — 19.3 -15.8 4.4 -0.4 -1.5 

2007 

Reserves 1 Jan. — — — — — — 421.1 188.1 118.5 86.2 

Payments — — — — — 469.1 206.8 56.7 29.1 13.8 

Reserves31 Dec. — — — — — 421.1 188.1 118.5 86.2 72.7 

Run-off — — — — — — 26.3 12.8 3.2 -0.2 

2008 

Reserves 1 Jan. — — — — — — — 447.1 198.3 121.7 

Payments — — — — — — 431.3 215.2 58.9 25.0 

Reserves31 Dec. — — — — — — 447.1 198.3 121.7 95.3 

Run-off — — — — — — — 33.6 17.7 1.3 

2009 

Reserves 1 Jan. — — — — — — — — 440.0 181.2 

Payments — — — — — — — 402.1 221.2 61.2 

Reserves31 Dec. — — — — — — — 440.0 181.2 126.5 

Run-off — — — — — — — — 37.6 -6.5 

2010 

Reserves 1 Jan. — — — — — — — — — 461.2 

Payments — — — — — — — — 430.7 240.9 

Reserves31 Dec. — — — — — — — — 461.2 198.4 

Run-off — — — — — — — — — 21.9 

2011 

Reserves 1 Jan. — — — — — — — — — — 

Payments — — — — — — — — — 411.5 

Reserves31 Dec. — — — — — — — — — 457.4 

Run-off — — — — — — — — — — 



Reserve for 

premium refunds 


€ million 

2011 2010 

Amounts transferred pursuant to national requirements (gross) 

Balance as of 1 Jan. 11.9 12.2 

Allocations 1.6 2.4 

Amount used 1.2 1.4 

Reversals 1.0 1.3 

Balance as of 31 Dec. 11.3 11.9 

Gross 11.3 11.9 


Net 11.2 11.7 

Reserves for premium refunds (bonus reserve) include those amounts credited to policyholders 

from performance-related or non-performance-related payment of profit in 

compliance with contractual conditions. 

[18] 

Provisions for pension 

benefits and similar 

obligations 

The companies of the Gothaer Allgemeine 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 € 92.3 

million in the financial year (PY: € 86.9million). 

Gothaer Finanzholding AG has assumed liability for pension benefits in the amount of 

€ 43.1 million (PY: € 40.9 million). Both these pension benefits and a corresponding 

claim against Gothaer Finanzholding AG (under heading I. other assets) are recognized 

in the present consolidated financial statements. 

Defined benefit plans 

In case of defined benefit plans, beneficiaries are promised specific benefits by 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 

essentially employees of domestic establishments. 

Defined benefit plans are based on the use of actuarial estimates and assumptions. 

Actuarial assumptions 

The basic biometric values for both years are based on the Prof. Dr. Heubeck RT 2005 G 

Mortality Tables. Anticipated yields are mostly at the level of anticipated bonuses for 

Gothaer Lebensversicherung AG’s life insurance policies. 



Actuarial assumptions 

Parameters 

2011 2010 

Discount rate 4.90 % 4.90 % 

Expected rate of return on plan assets 4.00 % 4.50 % 

Expected salary increase 2.50 % 2.50 % 

Expected increase of pensions 1.90 % 1.90 % 

Expected average remaining working lifetime (in years) 8–11 9–12 

Fluctuation probability 6.00 % to age 35 6.00 % to age 35 

3.00 % to age 45 3.00 % to age 45 

The present value of provisions for pension benefits as of 31 December 2011 represents 

total estimated obligations as of that time less plan assets and unrecognized actuarial 

gains or losses. The individual steps involved in calculation are presented below in 

tabular form. 

Defined benefit 

obligations (DBO) 


€ million 

2011 2010 

Present value of defined benefit obligations as of 1 Jan. 360.5 338.9 

Current service cost including interest 5.7 5.3 

Interest cost 17.3 17.6 

New actuarial gains/losses on liabilities –8.1 13.1 

Pension benefits paid from plan assets –12.4 –12.2 

Pension benefits paid by employer –1.6 –1.5 

Transfers in 1.8 0.0 

Transfers out –80.9 –0.5 

Present value of defined benefit obligations as of 31 Dec. 282.2 360.5 

Capital cover comes to 72.8 % (PY: 77.1 %). 

Plan assets 


€ million 

2011 2010 

Plan assets as of 1 Jan. 278.1 269.8 

Adjustments 0.0 –0.1 

Expected return on plan assets 12.3 12.0 

Actuarial gains/losses on plan assets 2.9 4.7 

Employer contributions to plan assets 4.2 4.0 

Pension benefits paid from plan assets –12.4 –12.2 

Transfers in/out –79.7 0.0 

Plan assets as of 31 Dec. 205.4 278.1 



Reinsurance and direct insurance account for 2.6 % (PY: 1.9 %), of plan assets and assets 

of the pension funds for 97.4 % (PY: 98.1 %). 

Actuarial gains/losses 


€ million 

2011 2010 

Unrecognized gains (–)/losses as of 1 Jan. –4.4 –12.8 

Actuarial gains (–)/losses on liabilities as of 31 Dec. –8.1 13.1 

Actuarial gains/losses (–) on plan assets as of 31 Dec. –2.9 –4.7 

Amortization of actuarial gains/losses (–) 0.0 0.0 

Effect of other economic effects 0.0 0.0 

Unrecognized gains (–)/losses as of 31 Dec. –15.5 –4.4 

Provisions for 

pension benefits 


€ million 

2011 2010 


Plan assets as of 31 Dec. –205.4 –278.1 

Net obligations as of 31 Dec. 76.8 82.4 

Unrecognized actuarial gains/losses (–) as of 31 Dec. 15.5 4.4 

Unrecognized past service costs as of 31 Dec. 0.0 0.0 

Provisions for pension benefits as of 31 Dec. 92.3 86.9 

Expected defined benefit 

obligations (DBO) 


€ million 

2011 2010 

Present value of defined benefit obligations as of 1 Jan. 360.5 338.9 



Transfers in 1.8 0.0 

Transfers out –80.9 –0.5 

Pension benefits paid –15.4 –14.7 

Expected defined benefit obligations as of 31 Dec. 289.0 346.5 




on liabilities 


€ million 

2011 2010 


Expected defined benefit obligations as of 31 Dec. 289.0 346.5 

Actual payments of pension benefits –14.0 –13.7 

Expected payments of pension benefits –15.4 –14.7 

Actuarial gains (–)/losses on liabilities as of 31 Dec. –8.1 13.1 

Expected plan assets 


€ million 

2011 2010 

Plan assets as of 1 Jan. 278.1 269.7 

Expected return on plan assets 12.3 12.0 

Expected employer contributions to plan assets 4.5 4.9 

Expected pension benefits paid from plan assets –13.0 –12.6 

Transfers in/out –79.7 0.0 

Expected plan assets as of 31 Dec. 202.2 274.0 


on plan assets 


€ million 

2011 2010 


Expected plan assets as of 31 Dec. 202.2 274.0 

Actual employer contributions to plan assets –4.2 –4.0 

Actual pension benefits paid from plan assets 12.4 12.2 

Expected employer contributions to plan assets –4.5 –4.9 

Expected pension benefits paid from plan assets 13.0 12.6 

Actuarial gains/losses (–) on plan assets as of 31 Dec. 2.9 4.7 



Pension costs 

Breakdown by type of expense 

€ million 

2011 2010 



Expected return on plan assets –12.3 –12.0 

Amortization of actuarial gains (–)/losses 0.0 0.0 

Amortization of past service cost of plan amendments 

For vested benefits 0.0 0.0 

For non-vested benefits 0.0 0.0 

Pension costs 10.6 10.9 

Provisions for pension 

benefits 


€ million 

2011 2010 

Provisions for pension benefits as of 1 Jan. 86.9 81.9 

Pension cost for financial year 10.6 10.9 

Transfers in/out DBO –79.1 –0.5 

Transfers in/out assets 79.7 0.0 

Adjustments 0.0 0.1 

Actual pension benefits paid by employer –1.6 –1.5 

Actual employer contributions to plan assets –4.2 –4.0 


Expected income from plan assets came to € 12.3 million (PY: € 12.0 million) and actual 

income from plan assets to € 15.2 million (PY: € 16.6 million). Plan assets are invested 

exclusively in fixed-income securities. 

Amortization amount 

Information 

€ million 

2011 2010 



Unrecognized cost of plan amendments for financial year 0.0 0.0 


Unrecognized gains (–)/losses as of 31 Dec. –15.5 –4.4 

Corridor pursuant to IAS 19.92 28.4 36.1 

Gains (–)/losses outside of corridor –0.1 0.0 

Amortization for subsequent years 0.0 0.0 

Amortization period in years 8–11 9–12 



The estimate of provisions for pension benefits as of 31 December 2012 which is required 

for compliance with IAS 19 is based on the following assumptions about the volume of 

anticipated pension costs as well as the future amortization payable. 

Expected pension costs 


€ million 

2012 2011 



Expected return on plan assets –8.1 –12.3 

Amortization of actuarial gains (–)/losses 0.0 0.0 

Expected pension costs 10.4 10.6 

Expected provisions 

for pensions benefits 

Developments 

€ million 

2012 2011 

Provisions for pension benefits as of 1 Jan. 92.3 86.9 

Expected pension cost 10.4 10.6 

Expected pension benefits paid by employer –2.5 –2.3 

Expected employer contributions to plan assets –3.0 –4.5 

Expected provisions for pension benefits as of 31 Dec. 97.2 90.6 

Defined contribution 

pension plans 

Breakdown by type of plan 

€ million 

2011 2010 

Pension benefit plans by the use of deferred compensation 0.3 0.3 

Direct insurance paid by employers 0.0 0.0 

Direct insurance paid by employees 0.0 0.0 

Lump-sum taxes 0.0 0.0 

Total 0.3 0.3 

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. 



Defined benefit 

obligations, 

plan assets and 

experience-based 

adjustments in 

chronological 

comparison 

Other information 

€ million 

2011 2010 2009 2008 2007 2006 

Present value of defined benefit obligation 

as of 31 Dec. 282.2 360.5 338.9 319.6 320.3 336.2 

Fair value of plan assets as of 31 Dec. 205.4 278.1 269.8 265.0 256.4 250.8 

Net obligations as of 31 Dec. 76.8 82.4 69.1 54.6 63.9 85.4 

Experience adjustments of 

plan liabilities based on 

inventory change 6.8 8.7 1.2 –8.2 1.0 2.6 

assumption change 0.0 –22.7 –11.8 17.7 23.5 10.4 

Plan assets 3.2 4.1 0.8 5.5 4.7 –13.5 

[19] 



€ million 

Accruals for 

2011 

Jubilee 

obligations 

Social plan 

Litigation 

Part-time 

preretirement 

Miscellaneous 

others 

Balance as of 1 Jan. 13.0 27.8 1.8 13.3 3.9 

Amount used 0.3 0.0 0.2 1.8 2.1 

Reversals 0.2 0.0 0.7 1.8 1.0 

Allocations 0.3 0.9 0.1 2.4 1.6 

Balance as of 31 Dec. 12.9 28.8 1.0 12.1 2.3 

Developments in the previous year 

€ million 

Accruals for 

2010 

Jubilee 

obligations 

Social plan 

Litigation 

Part-time 

preretirement 

Miscellaneous 

others 

Balance as of 1 Jan. 13.7 30.9 2.4 9.8 1.3 

Amount used 0.0 0.0 0.1 0.0 0.6 

Reversals 1.3 3.6 0.5 1.1 0.2 

Allocations 0.6 0.5 0.0 4.6 3.4 

Balance as of 31 Dec. 13.0 27.8 1.8 13.3 3.9 




Breakdown by type of reserve and maturity 

€ million 

2011 

Up to 1 year 1 to 5 years After 5 years Total 

Jubilee obligations 1.0 4.3 7.6 12.9 

Part-time pre-retirement 1.2 18.9 8.7 28.8 

Social plan 0.0 1.0 0.0 1.0 

Litigation 12.1 0.0 0.0 12.1 

Miscellaneous others 1.0 1.2 0.1 2.3 

Total 15.3 25.5 16.4 57.1 

Breakdown by type of reserve and maturity 

€ million 

2010 

Up to 1 year 1 to 5 years After 5 years Total 

Jubilee obligations 1.4 3.6 8.0 13.0 

Part-time pre-retirement 1.3 18.6 7.9 27.8 

Social plan 0.0 1.8 0.0 1.8 

Litigation 4.0 9.3 0.0 13.3 

Miscellaneous others 3.3 0.3 0.3 3.9 

Total 10.0 33.6 16.2 59.8 

The interest expense for discounted reserves totalled € 1.1 million (PY: € 0.0 million). 

While uncertainty about both the extent and maturity of the anticipated obligation is 

relatively low in the case of accruals for jubilee obligations, the remaining accruals 

are marked by a higher degree of uncertainty. 



[20] 

Liabilities 

Breakdown by type of liability 

€ million 

2011 2010 

Long-term borrowings –1.1 –0.2 

Subordinate liabilities 252.5 250.0 

Bonds and loans 65.1 65.1 

Other liabilities 

Deposits received from reinsurers 36.7 33.0 

Liabilities in connection with primary insurance business 

towards policyholders 67.6 62.1 

towards intermediaries 11.4 13.4 

Liabilities in connection with reinsurance business 15.3 14.7 

Liabilities toward affiliated and associated companies 113.3 60.6 

Sundry 64.1 57.1 

Total 624.9 555.8 

Long-term borrowings include minority interests in Munich Carlyle Productions GmbH & 

Co. KG. Due to the right to termination contained in the German Civil Code (BGB), minority 

interests must be recognized as long-term borrowings according to IAS 32. Minority 

interests in the annual results of Munich Carlyle Productions GmbH & Co. KG are shown 

in the Group statement of comprehensive income as interest on long-term borrowings. 

Aside from derivative financial instruments with negative fair value, sundry liabilities 

include social security liabilities, trade payables and miscellaneous other liabilities. 

The interest payable on subordinate liabilities as well as bonds and loans is recognized 

separately in the Group statement of income as financing expenses and amounted to 

€ 17.7 million in the financial year (PY: € 17.8 million). 

Subordinate liabilities had a fair value of € 207.6 million (PY: € 238.3 million). The fair 

value of the remaining liabilities was nearly equal to the balance sheet value. 



Liabilities 


€ million 

2011 

Up to 1 

year 

1 to 5 

years 

After 5 

years 

Without 

a fixed 

term 

Total 

Long-term borrowings 0.0 0.0 –1.1 0.0 –1.1 

Subordinate liabilities 0.0 0.0 252.5 0.0 252.5 

Bonds and loans 0.1 0.0 65.0 0.0 65.1 

Derivatives with negative fair value 0.0 0.0 0.0 12.1 12.2 

Miscellaneous other liabilities 312.3 0.5 0.3 0.0 313.0 

Total 312.5 0.5 316.6 12.1 641.7 


€ million 

2010 

Up to 1 

year 

1 to 5 

years 

After 5 

years 

Without 

a fixed 

term 

Total 

Long-term borrowings 0.0 0.0 0.0 –0.1 –0.2 

Subordinate liabilities 0.0 0.0 250.0 0.0 250.0 

Bonds and loans 0.1 0.0 65.0 0.0 65.1 

Derivatives with negative fair value 0.1 0.0 0.0 10.1 10.2 

Miscellaneous other liabilities 174.9 2.4 70.2 0.0 247.5 

Total 175.1 2.4 385.2 10.0 572.6 

The presentation of miscellaneous other liabilities according to maturities includes tax 

liabilities in the amount of € 16.8 million (PY: € 16.8 million) that are shown on line E.I. 

on the face of the statement of financial position. 

The derivative financial instruments with negative fair values included in other liabilities 

are shown separately here. Derivative financial instruments are generally non-rated and 

have no cost. 

[21] 

Tax debts 

Current tax debts consist of accruals for taxes of € 7.4 million (PY: € 6.5 million) and current 

tax liabilities of € 16.8 million (PY: € 16.8 million). 

Deferred tax liabilities are essentially 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 Statement of Comprehensive Income 

[22] 

Premiums 

€ million 

2011 2010 

Premiums written 

Gross 1,496.1 1,456.9 


Net 1,264.8 1,233.5 

Change in unearned premiums 

Gross –3.3 –8.1 


Net –8.4 –11.3 

Net premiums earned 1,256.4 1,222.2 

Gross premiums in the amount of € 1,404.9 million (PY: € 1,373.5 million) were written in 

direct written insurance business in the financial year. Reinsurance assumed accounted 

for gross premiums in the amount of € 91.2 million (PY: € 83.5 million). 

[23] 

Investment result 

Breakdown of net profit by type of investment 

€ million 

2011 

Income Expenses Net 

profit 

Current 

income 

Gains on 

disposals 

Writeups 

Writedowns 

Losses on 

disposals 

Investment property 0.0 0.0 0.0 0.0 0.0 0.0 

Shares in affiliated and 

associated companies 29.9 0.2 2.0 8.6 0.2 23.4 

Investments held to maturity 6.6 0.0 0.7 0.0 0.0 7.3 

Loans 39.9 0.0 4.7 0.1 0.1 44.3 

Investments available for sale 

Non-fixed-income 8.5 0.0 5.1 9.4 1.6 2.5 

Fixed-income 38.0 6.4 10.8 10.2 1.9 43.1 

Investments measured at 

fair value through profit or loss 

Held for trading 0.0 0.5 26.0 8.1 28.6 –10.2 

By designation 0.0 1.2 0.0 0.0 0.0 1.2 

Other investments 2.1 0.0 0.0 0.0 0.0 2.1 

Total 125.0 8.3 49.3 36.5 32.3 113.7 



Investment result 

Breakdown of net profit by type of investment 

€ million 

2010 

Income Expenses Net 

profit 

Current 

income 

Gains on 

disposals 

Writeups* 

Writedowns* 

Losses on 

disposals 

Investment property 0.0 0.0 0.0 0.1 0.0 –0.1 

Shares in affiliated and 

associated companies 28.3 1.1 0.8 6.6 0.2 23.4 

Investments held to maturity 15.6 0.6 0.6 0.0 0.0 16.8 

Loans 41.3 0.0 6.9 1.6 0.9 45.7 

Investments available for sale 

Non-fixed-income 6.8 0.0 50.1 4.1 0.5 52.3 

Fixed-income 25.3 1.9 13.8 0.3 3.2 37.5 

Investments measured at 

fair value through profit or loss 

Held for trading 0.0 3.1 33.2 1.7 91.3 –56.7 

By designation 0.0 0.0 0.0 0.0 0.0 0.0 

Other investments 0.9 0.0 0.0 0.0 0.0 0.9 

Total 118.2 6.7 105.4 14.4 96.1 119.8 


Portfolio management expenses (current expenses) came to € 7.9 million (PY: € 15.7 

million). 

The result from investments includes an expense of € 5.7 million (PY: € 4.6 million) 

resulting from exchange rate differences recognized in the statement of income. Fees 

pursuant to IFRS 7.20(c) were not paid. 

Current income includes interest income from impaired fixed-interest securities of € 0.6 

million (PY: € 0.7 million) and amortization income of € 2.2 million (PY: € 0.8 million). 

Expenses and income in connection with shares in associated companies are shown 

below. 




companies 

Expense and income 

€ million 

2011 2010 

Write-ups 5.0 8.7 

Write-downs 0.4 1.4 

Total 4.6 7.3 

[24] 

Other income 

Breakdown by type of income 

€ million 

2011 2010 

Income from commissions and services 53.6 62.1 

Interest and similar income 0.7 1.4 

Sales revenues from non-consolidated companies 102.7 103.9 

Foreign currency gains 0.6 0.7 


Total 180.2 189.0 

[25] 

Policyholder benefits 

(net) 

Breakdown by type of benefit 

2011 2010 

€ million 

Gross Re Net Gross Re 

Net 

Claims paid 946.2 129.8 816.4 958.6 138.7 819.9 

Changes in reserves for unpaid 

claims 49.8 12.5 37.3 –24.8 –15.0 –9.8 

Changes in policy reserves and 

other underwriting reserves –6.0 –0.7 –5.3 4.8 4.2 0.6 

Premium refunds 2.8 0.0 2.8 3.9 0.3 3.6 

Other underwriting income (–)/ 

expenses (+) 10.2 2.9 7.3 9.5 2.2 7.3 

Total 1,003.1 144.6 858.5 952.0 130.4 821.6 



[26] 

Underwriting expenses 

(net) 


€ million 

2011 2010 

Acquisition costs (gross) 

Payments 207.0 92.3 

Change in deferred acquisition cost –13.4 –0.5 

193.6 91.8 

Administrative expenses (gross) 240.5 357.2 

Underwriting expenses (gross) 434.1 449.0 

Commissions and profit sharing received on reinsurance 

business ceded 

Payments 62.3 60.5 

Change in deferred acquisition cost –0.7 0.3 

61.5 60.8 

Underwriting expenses (net) 372.5 388.2 

Overall, reinsurance produced an expense of € 30.2 million (PY: € 35.5 million) comprised 

of reinsurers' shares of premiums, policyholder benefits and underwriting expenses as 

well as commissions and profit sharing received on reinsurance business ceded. 

[27] 

Other expenses 


€ million 

2011 2010 

Expenses for commissions and services 51.3 57.6 

Interest and similar expense 7.0 5.8 

Personnel expenses 55.5 54.4 

Other amortization and depreciation 11.4 13.4 

Foreign currency losses 0.6 0.9 


Total 210.0 213.3 

Personnel expenses do not comprise expenses of the insurance companies. Those costs 

are distributed to investment expenses, policyholder benefits and underwriting expenses 

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 contain amortization 

and depreciation of the insurance companies. As in the case of personnel expenses, 

the latter are allocated to functional areas. 



[28] 

Taxation 

Taxes on income 

€ million 

2011 2010* 

Current tax expenses for the financial year 43.4 18.0 

Current tax expenses for other periods 1.9 –3.8 

Deferred taxes as a result of the occurrence or reversal of 

temporary differences –12.0 –27.5 

Deferred taxes as a result of the occurrence or use of tax loss 

carryforwards 0.1 –0.5 

Deferred taxes as a result of the write-down of a deferred 

tax claim 0.4 0.0 

Deferred taxes as a result of the write-up of a deferred tax claim –0.6 –0.4 

Deferred taxes as a reuslt of tax rate changes 0.0 –1.5 

Total 33.2 –15.7 


The taxes shown in the statement of income also include changes in deferred taxes as 

well as the current taxes to be paid by the individual Group companies. The current taxes 

to be paid in the financial year essentially resulted from the profit posted by Gothaer 

Allgemeine Versicherung AG. In 2009, a tax-effective profit/loss transfer agreement 

existed between Gothaer Allgemeine Versicherung AG with its parent company Gothaer 

Finanzholding AG. Thus € 42.7 million (PY: € 12.9 million) were transferred to the parent 

company as a tax allocation in the financial year. 

Deferred taxes take account of the deferred taxation for temporary and quasi permanent 

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 the statement of income, deferred tax receivables of € 7.7 million (PY: € 1.4 million) 

were recognized directly in equity in the financial year. 

The application of company-specific tax rates instead of an average trade tax rate resulted 

in deferred tax income from tax rate changes of € 1.5 million. 

The anticipated tax expense was calculated on the basis of the German income tax rate. 

This was an unchanged 32.0 % and took account of 15.0 % corporation tax, the solidarity 

surcharge of 5.5 % of the corporation tax payable and an average trade tax rate. 



Taxation 

Reconciliation of taxes on income 

€ million 

2011 2010* 

Profit for the year before transfer of profit and taxes 83.9 74.4 

x Expected tax rate 32.0 % 32.0 % 

= Expected tax expenses 26.9 23.8 

Adjusted to correct for: 

Tax-exempt income/expense –5.2 –39.1 

Other tax attributions or deductions 14.2 4.0 

Effects of tax losses –0.3 –0.2 

Differences in tax rates –3.5 0.4 

Taxes for other periods 1.9 –3.8 

Change in tax rates 0.0 –1.5 

Other effects –0.8 0.7 

= Taxes on income 33.2 –15.7 


[29] 

Other comprehensive 

income (recognized 

directly in equity) 

Reconciliation 

€ million 

2011 2010 

Unrealized gains and losses on investments 

available for sale 

Recognized in equity –30.3 81.5 

Transferred to the statement of income 0.6 –47.3 

–29.7 34.2 

Less: 

Provision for premium refund 0.0 0.0 

Deferred tax –8.2 –1.4 

–8.2 –1.4 

Total –21.5 35.6 

The unrealized gains and losses transferred to the statement of income resulted partly 

from the disposal of securities and realization of the related reserves or losses and partly 

from the reversal of the “hidden” losses shown as write-downs in the statement of 

income in the event of impairment. In the financial year, an expense of € 7.8 million (PY: 

€ 11.0 million) was incurred due to impairment losses. In addition, the separate reserves 

resulting from reclassification of securities were amortized. 

The unrealized gains and losses recognized in the statement of comprehensive income 

result from investments available for sale that remained in the Group portfolio. 



Supervisory Board 

Dr. Roland Schulz 

Chairman 

Peter-Josef 

Schützeichel *) 

Vice Chairman 

Urs Berger 

Dieter Bick 

Diethelm Garvelmann *) 

Carl Graf von Hardenberg 

Srecko Jagarinec *) 

Judith Kerschbaumer *) 

Dr. Dirk Niedermeyer 

Jürgen Oberbusch *) 

Harald Ommer *) 

Edgar Schoenen *) 

Dr. Gerd G. Weiland 

Former Managing Partner, Düsseldorf 

Employee, Chairman of Central Works Council 

Gothaer Allgemeine Versicherung AG, Kornwestheim 

Administrative Board President of Schweizerische Mobiliar Holding GmbH, Therwil 

Diplom-Betriebswirt, Management Consultancy, Cologne 

Employee, Gleichen 

up to 11 Mai 2010 

Chairman of the Supervisory Board of Hardenberg-Wilthen AG, Nörten-Hardenberg 

Employee, Stuttgart 

as of 11 Mai 2010 

Trade Union Secretary of ver.di, Lawyer, Berlin 

Kammerdirektor of Fürst zu Bentheimsche Domänenkammer, Steinfurt 

Employee, Cologne 

Head of Sales Office Düsseldorf, Overath 

Employee, Cologne 

Lawyer, Hamburg 

*) elected by employees 



Management 

Thomas Leicht 

Chairman 

Dr. Werner Görg 

Dr. Helmut Hofmeier 

Michael Kurtenbach 

Director of Human 

Resources 

Jürgen Meisch 

Dr. Hartmut 

Nickel-Waninger 

Oliver Schoeller 

Cologne 

Cologne 

Bergisch Gladbach 

Bornheim 

Cologne 

Cologne 

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). 



Advisory Board Gothaer Allgemeine Versicherung AG 

Wilm-Hendric 

Cronenberg 

Werner Dacol 

Prof. Dr. Klaus Goder 

Knut Kreuch 

Uwe von Padberg 

Jürgen Scheel 

Prof. Dr. jur. 

Jürgen Vocke 

Axel F. Waschmann 

Managing Partner of Julius Cronenberg o. H., Arnsberg 

Managing Director of Aachener Siedlungs- und Wohnungsgesellschaft mbH, Cologne 

Specialist in General Medicine, Neuss 

Mayor of the City of Gotha, Günthersleben-Wechmar 

Diplom-Kaufmann, President of Vereine Creditreform e. V., Creditreform Köln 

v. Padberg KG, Cologne 

Chairman of the Board of Kieler Rückversicherungsverein a. G., Mühbrook 

Judge (Retd), Member of the Landtag of Bavaria, 

President of Landesjagdverband Bayern e. V., Ebersberg 

Member of the Management Board (Retd) of EWE Aktiengesellschaft Oldenburg 



Other Information 

Personnel expenses 


€ million 

2011 2010 

Wages and salaries 159.1 167.3 

Social security contributions and employee benefits 27.5 28.5 

Expenses for employees’ pensions 7.7 2.1 

Total 194.3 197.9 

Number of employees (average for the year) 

Breakdown by group of employee 

2011 2010 

In house 2,306 2,396 

Field 494 500 

2,800 2,896 

Apprentices 129 129 

Total 2,929 3,025 

Remuneration of members of the Supervisory Board and Management 

Remuneration of 

members of the 

Management 

Remuneration of 

members of the 

Supervisory Board 

Loans 

In the financial year, Management of our parent company received remuneration in the 

amount of € 0.7 million (PY: € 0.6 million). Remuneration paid to former members of 

Management came to € 0.4 million as in the previous year. Retirement and survivors’ 

benefits for former members of Management came to an unchanged € 0.3 million as in 

the previous year. Further accruals in the amount of € 17.9 million (PY: € 14.8 million) 

exist for current pensions and pension entitlements for this group of individuals. 

Remuneration paid to the Supervisory Board for Supervisory Board activities was unchanged 

at € 0.5 million and other remuneration totalled € 0.4 million. No amounts were 

paid to former members of the Supervisory Board and the Advisory Board or deferred. 

No loans were granted to members of the Management or the Supervisory Board in the 

financial year. 



Auditors’ fees 

Provisions and contingent liabilities 

In the financial year, auditing fees of € 0.4 million (PY: € 0.4 million) were paid to our 

auditors. 

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 Allgemeine Group, information is disclosed pursuant to 

sections 251 and 285 No. 3 HGB. 

Other financial commitments 

The Group has contingent liabilities in the amount of € 27.1 million (PY: € 27.7 million). 

This amount is accounted for virtually completely by surety insurance of the former 

Gothaer Credit Versicherung AG. 

The Group has liabilities in the amount of € 62.9 million (PY: € 42.4 million) arising from 

commitments to make payments in connection with investments. 

Related party disclosures 

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 

motor and liability insurance in the year before the past calendar year. Gothaer 

Allgemeine Versicherung AG is also a member of a pharmaceutical and nuclear energy 

pool. In addition, the Group holds an interest in EXTREMUS Versicherungs-AG. 

In the claims settlement department of Gothaer Allgemeine AG, a framework agreement 

exists for handling legal proceedings relating to motor processes and liability events 

involving a company in which a party related to the Group is a shareholder. Remuneration 

was based at most on the statutory provisions of the German Lawyers’ Remuneration 

Act. Fees of € 0.5 million (PY: € 0.3 million) were paid in the year under review. 

The Group parent Gothaer Allgemeine Versicherung AG is 100 % owned by Gothaer 

Finanzholding AG, which is itself wholly owned by Gothaer Versicherungsbank VVaG. 

Both Gothaer Finanzholding AG and Gothaer Versicherungsbank VVaG as well as all other 

subsidiaries of the parent Group headed by Gothaer Versicherungsbank VVaG are parties 

related to the Gothaer Allgemeine Group. A cost-sharing arrangement also exists with 



Gothaer Finanzholdung AG – which is treated as an integrated company for tax purposes 

– as well as an agreement for the payment of tax arrears. Furthermore, Gothaer 

Finanzholding AG assumed joint liability for the pension obligations of Gothaer Allgemeine 

AG. 

Transfer-of-functions and service agreements relating to shared use of HR capacities and 

equipment exist between Gothaer Allgemeine Versicherung AG and the major companies 

of the parent Group. They are in place, for example, in the area of property/casualty 

insurance brokerage as well as in claims and benefit administration. The subsidiary company 

Gothaer Systems GmbH is the central IT service provider of the Gothaer Group and 

thus renders extensive services in the areas of information processing, information 

system management, network and software operation including applications development. 

Gothaer Finanzholding AG has also issued a comfort letter for Gothaer Systems 

GmbH. The prices for services rendered under the agreements are fixed on the full-cost 

principle. 

There is also a general agency agreement in place with Gothaer Versicherungsbank VVaG. 

Total expenses and income accruing in the financial year are as follows: 

Related party 

disclosures 

Breakdown by type of income and expense 

€ million 

Parent company 

2011 

Jointly managed 

companies 

2010 2011 2010 

Income from services rendered 33.1 37.5 13.2 15.9 

Expenses for services received 16.5 13.0 52.5 62.2 

Commission expenses for brokered 

insurance business 131.1 134.9 0.4 0.4 

Gothaer Allgemeine Versicherung AG assumed investments totalling € 87.8 million (PY: 

€ 380.7 million) from related parties in the financial year. No investments were sold to 

related parties in the year under review (PY: € 219.4 million). In the prior year, a profit of 

€ 18.6 million was realized on disposals. Gothaer Allgemeine Versicherung AG also 

granted loans of € 259.2 million (PY: € 259.2 million) to related companies as part of 

financial relations. These transactions were executed at arm’s length. 

In addition, reinsurance relations exist between Gothaer Allgemeine Versicherung AG 

and a related company. Premiums of € 1.6 million (PY: € 1.6 million) were received for 

reinsurance cover provided. Reinsurance agreements were signed at arm’s length. 



Leasing 

Operating leases are used mainly for DP software and hardware. The lease contracts 

were concluded at arm’s length. Total future minimum lease payments in connection 

with operating leases come to € 36.9 million (PY: € 29.9 million). This amount is shown 

below according to residual terms. 

Minimum lease 

payments 

Operating leases 

€ million 

2011 2010 

Up to 1 year 26.6 22.3 

1 to 2 years 5.2 5.9 

2 to 3 years 2.6 1.4 

3 to 4 years 2.3 0.3 

4 to 5 years 0.3 0.0 

5 to 10 years 0.0 0.0 

After 10 years 0.0 0.0 

Total 36.9 29.9 



Post-balance sheet events 

We refer to our statement in the outlook. No events occurred after the reporting date 

that would require separate disclosure. 

The Management of Gothaer Allgemeine Versicherung AG approved the consolidated 

financial statements for submission to the Supervisory Board on 19 April 2012. 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, 19 April 2012 

The Management 

Thomas Leicht Dr. Werner Görg Dr. Helmut Hofmeier 

Michael Kurtenbach Jürgen Meisch Dr. Hartmut Nickel-Waninger 

Oliver Schoeller 


Auditor’s Report 

We audited the consolidated financial statements prepared by Gothaer Allgemeine Versicherung 

AG, Cologne – consisting of the statement of financial position, statement of 

comprehensive income, statement of changes in equity, statement of cash flows and 

notes to the consolidated financial statements – and the Group management report for 

the financial year from 1 January to 31 December 2011. In accordance with the International 

Financial Reporting Standards (IFRS) as applied in the EU and the complementary 

provisions of commercial law pursuant to Section 315a(1) of the German Commercial 

Code (HGB), Management of the parent company is responsible for the preparation of the 

consolidated financial statements and the Group management report. Our responsibility 

is to provide an opinion on the consolidated financial statements and the Group 

management report 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 Group management report 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 Group management report. 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 Group management report. 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 315a(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 Group management report 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, 24 April 2012 

KPMG AG 

Wirtschaftsprüfungsgesellschaft 

(Dr. Dahl) 

Wirtschaftsprüfer 

(Offizier) 

Wirtschaftsprüfer 


Report of the Supervisory Board 

The Supervisory Board monitored the conduct of business by Management in the course 

of the financial year in fulfillment 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 to the Board and reported orally at three meetings. 

The committees of the Board were also involved in informational and oversight activities. 

The Investment Committee, the Audit Committee and the Executive Committee each met 

three times. It was not necessary to convene the committee established pursuant to 

section 27(3) of the Co-Determination Act (MitbestG). 

The issues addressed regularly included developments as regards the Company’s 

premiums, losses incurred and underwriting costs as well as investment policy and the 

effect thereof on the financial statements. In addition, Management regularly reported 

to the Supervisory Board on the basic issues involved in corporate planning, the 

Company’s risk strategy and exposure and the results of benchmarking comparisons 

with similarly structured companies. 

Management submitted regular reports to the Supervisory Board on the status of all 

major strategic programmes and projects. The GoBest project proceeded on schedule. 

In addition, the Audit Committee established by the Supervisory Board in line with 

section 107(3) AktG not only monitored the accounting process and verified the effectiveness 

of the internal control system, risk management system and internal auditing 

system but also discussed in detail the valuation of investments in the prepared balance 

sheet with Management and the auditors of the financial statements. There were no 

objections. The Audit Committee therefore proposed to the Supervisory Board that the 

financial statements for the financial year 2011 should be formally adopted in accordance 

with section 172 AktG. 

Management's investment planning and policy were regularly a subject of Investment 

Committee meetings. Management reported extensively to the Board on developments 

in the capital markets and the resulting impacts on Group companies' investments and 

investment income and discussed the possible general economic consequences of the 

financial market crisis as well as the implications for the insurance industry. Discussion 

particularly focused on developments in PIIGS, their impact on the government bonds 

in the portfolio and the write-down deal on Greek debt. 

The Supervisory Board also paid special attention to the development of new business. 

Gothaer Allgemeine is very successful in competition, particularly in the corporate client 

segment. Largely as a result of systematic adherence to a policy of profit-oriented growth 

but also because of an economic environment significantly better than anticipated, the 

Company achieved a marked improvement on the prior-year results in both gross and net 

production. In the corporate client segment, it successfully tuned its business policy 

to current market developments. In the growth areas of renewable energies, multi-risk 

products and international products, it succeeded in consolidating its market position. 

A profit-oriented underwriting policy continues to be systematically pursued in all 


segments. This played a significant role in helping ensure that the Company lost none 

of its profitability and retained its financial strength with a good investment result – an 

achievement reflected in rating results. The performance of Gothaer Allgemeine Versicherung 

AG was again confirmed by the ratings of Standard & Poor’s (A-) and Fitch (A). 

The Supervisory Board discharged its statutory duty to examine HR issues relating to 

Management, especially issues of pay. Management also informed the Board about the 

pay systems in place. 

The financial statements for the financial year 2011 and associated management report 

as well as the 2011 consolidated financial statements prepared in accordance with internationally 

accepted accounting standards (IFRS) and the associated management report 

were audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Cologne, the auditor 

appointed in compliance with section 341k HGB, in each case including an assessment 

of the risk early-warning system. 

The auditors fully certified the reports presented. 

The auditors and the appointed actuary attended the relevant Supervisory Board 

meetings and reported on the key results of the audits. 

The Supervisory Board received the audit reports presented and endorses the outcome 

of the audits. After examining the submitted financial statements and management 

report for the financial year 2011 as well as the consolidated financial statements and the 

associated management report for the financial year 2011, the Supervisory Board has 

no objections to raise. 

The Board approves the financial statements and consolidated financial statements for 

the financial year 2011. The financial statements are thus formally adopted pursuant to 

section 172 AktG. 

The Supervisory Board thanks Management and all employees for their work in an 

extremely difficult environment last year. 

Cologne, 8 Mai 2012 

The Supervisory Board 

Dr. Roland Schulz 

Chairman 


Gothaer 

Allgemeine Versicherung AG 

Gothaer Allee 1 

50969 Cologne 

Tel. 0221 308-00 

Fax 0221 308-103 

www.gothaer.de

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