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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Structure of the amount of annual annuities
(in thousand EUR)
Annual annuity per insured on the final
TOTAL ANNUAL ANNUITIES 2007 TOTAL ANNUAL ANNUITIES 2006
date of the year
amount % amount %
0 – 999 EUR 822 14.95 875 15.44
1,000 –1,999 EUR 1,946 35.38 2.027 35.74
2,000 – 2,999 EUR 1,133 20.61 1.145 20.20
3,000 – 3,999 EUR 664 12.06 681 12.00
More than 4,000 EUR 935 17.00 943 16.63
Total: 5,500 100.00 5.671 100.00
5.1.3 Non-life and health insurance contracts - assumptions
and changes of assumptions
balance sheet date (IBNR)
IBNR liabilities are established on the level of
a) procedure of establishing assumptions
insurance categories using a triangle (chain ladder)
method or statistical method.
The main assumptions which affect disclosure of
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liabilities stemming from property insurance contracts
relate to establishing liabilities for damage claims. The
procedure for assessing liabilities varies depending
on the nature of incidence of loss and takes place
on the insurance categories level. The calculation of
provisions for damage claims is divided into two parts,
considering the nature of individual damage:
balance sheet date
On the basis of a review of all damages reported but not
yet paid out as at the balance sheet date, an assessment
is made on expected liabilities stemming from future
payouts of individual damage claims. Larger cases of
material damage are appraised by in-house appraisers,
and non-material damages (e.g. liability claims) and
claims in legal proceedings are assessed by in-house
legal experts (lawyers). Liabilities from damages which
are paid out in the form of annuities are assessed by the
Group as the present value of future payouts, where a
2.6% discount factor is applied.
The Chain Ladder method can be based on recognised
or accrued damages with monthly or annual
development factors, depending on the characteristics
of the incidence of loss and procedures for resolving
damage claims. The damages are arranged in a
triangle, where the rows represent the year the
damage was incurred, and the columns represent
the number of years from the time the damage was
incurred to recognising or accrual of the damage.
Prediction of final damages is based on the calculation
of average annual development factors.
The statistical method is based on reviewing past
damage claims. The IBNR calculation is made on
the level of individual insurance category as the
mathematical product of the estimated number of
IBNR damages and the estimated value of IBNR
damages. The estimated number of IBNR damages
reported after 1 January 2007 is calculated by