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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
(AAA-rated euro area central government bonds)
based on the mortality tables used at the time when
the product was issued on the market. Therefore for,
2. Investment return
In the calculation a 5.5% rate of return was used
for the first 10 years and 5.16% years for the
subsequent years, with a 7% rate of return for
products involving investment risk.
the LAT calculation, 55% of the probability included
in the moratlity tables was used.
For annuities contracts, the Group used the Austrian
annuity tables from 1996, which, based on the
opinion of the Management, shows the actual life
expectancyof the population.
3. Inflation
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The expected inflation rates were considered in the
estimate of expected costs.
Year
Annual Rate
2008 2.60%
2009 2.45%
2010 2.30%
2011 2.15%
≥2012 2.00%
4. Costs
Costs of operations (administration, administration,
costs of payout of damages ...) were calculated on
the basis of estimates contained in the technical
bases of the product, multiplied by a factor which
represents an estimate of expected realised costs
compared to those calculated into the products,
under the assumption that one-half of the costs is
not subject to inflation. Other costs are increased at
the inflation rates listed in the above table.
Management believes that the use of different tables
presents the best estimation of the liabilities related to
life insurance contracts with DPF.
6. Redemption rates
Based on an analysis of redemptions of life insurance
policies and investment risk insurance policies, the
following rates of redemption are used:
Year after agreement
Rate of buy-out
Life
Unit Link
insurances
0 12.80% 7.37%
1 7.60% 5.20%
≥2 3.00% 3.00%
7. Damage from extra accident insurance contracts
Based on historical data the future damage from
extra accident insurance is estimated at 40% of the
extra accident insurance premium.
5. Mortality
Within the calculation of the liabilitity adequacy test
for life insurance contracts with DPF, mortality rates
were used based on the last 10 years’ experience.
This shows that the acutal probability of the insured
population is only 55% of the probability which is
Result of the adequacy test
The present value of future cash flows from life
insurance contracts is compared to the amount of
liabilities from life insurance, which includes the
calculation of mathematical provisions, provisions
for damages and unearned premium reserve.