The Group KD Group and KD Group dd

The Group KD Group Annual Report 2009
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2009
Quantitative analysis of sensitivity test results
In order to assess the consequences of lowering the reinsurance protection, two sensitivity tests were carried out, measuring
the quantitative impact on the net profit or loss. In the sensitivity tests we used the most important reinsurance contracts
covering groups of insurance categories which may potentially have the greatest impact on the Group’s profit or loss due to
the portfolio size or potential for large-scale or mass losses.
Test of sensitivity of the profit or loss to a decrease in reinsurance protection for 2009
Change Change Change Effect of
(in EUR thousand)
Initial own
share
Increased
own share
in net
premium
in net
losses
in net
reserves
change to
profit
Total proportional reinsurance unchanged - - - -
Risk XL reinsurance of fires 600 900 77 - - 600
Risk XL technical reinsurance 120 200 - - - 120
Cat XL property reinsurance excl. vehicle insurance 1,000 1,500 29 415 - 1,000
Total fire and technical insurance 106 415 - 1,720
XL reinsurance of auto liability and green card 300 400 112 - 154 300
XL reinsurance of comprehensive auto insurance 150 150 - - - 150
Cat XL property reinsurance - vehicle insurance 600 1000 86 585 - 600
Total auto insurance 198 585 154 1,050
TOTAL 304 1,000 154 2,770
Test of sensitivity of the profit or loss to a decrease in reinsurance protection for 2008
Change
in net
premium
Change
in net
losses
Change
in net
reserves
Effect of
change to
profit
(in EUR thousand)
Initial own
share
Increased
own share
Total proportional reinsurance unchanged - - - -
Risk XL reinsurance of fires 600 900 68 - - 68
Risk XL technical reinsurance 120 120 - - - -
Cat XL property reinsurance excl. vehicle insurance 600 1000 105 461 129 (485)
Total fire and technical insurance 173 461 129 (417)
XL reinsurance of auto liability and green card 300 400 301 - 200 101
XL reinsurance of comprehensive auto insurance 150 150 - - - -
Cat XL property reinsurance - vehicle insurance 600 1000 377 339 271 (233)
Total auto insurance 678 339 471 (132)
TOTAL 851 800 600 (549)
We have illustrated in the tables the effect of the increase of the own share (own funding) on profit of the company when loss
events remained largely unchanged in the contract years 2008 and 2009. The lower volume of the reinsurance protection was
accompanied by the lower written reinsurance premium, as well as the lower volume of the written shares of the reinsurers in
claims, which in turn is reflected on the positive change in the net premium and the negative change in the net claim.
Despite the fact that the initial own shares in the contract year 2009 were slightly higher than those in the contract year 2008,
the impact of the lowering of the reinsurance protection on the change in claims and in outstanding claims provisions in both
years does not differ much.
The profit generated by the Group in both years was influenced by the change in net written premium. The base reinsurance
premium was in the contract year 2008 slightly higher as a consequence of lower own shares in comparison with 2009; hence
in the case of a decrease in the reinsurance protection in 2008, there would also be an increase in net written premium higher
than the increase in net written premium in the contract year 2009.
As a consequence of the developments described above, a comparable increase in the company’s own shares in both years
would result in a decrease in the company’s profit in the amount of 851 thousand euros in the contract year 2008 and 850
thousand euros in the contract year 2009.
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