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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Quantitative analysis of sensitivity test results
used the most important reinsurance contracts
covering groups of insurance categories which
In order to assess the consequences of lowering
the reinsurance protection, both sensitivity tests
were carried out, measuring the quantitative impact
may potentially have the greatest impact on the
Group's corporate income due to the portfolio size or
potential for large-scale or mass losses.
on net profit or loss. In the sensitivity tests we
Test of sensitivity of profit or loss to a decrease in reinsurance protection for 2007
Contract year 2007
Initial own
share
Increased
own share
Change in
net
premium
Change in
net losses
(in thousand EUR)
Change
in net
reserves
Effect of
change to
profit
Total proportional reinsurance unchanged - - - -
Risk XL reinsurance of fires 300 900 408 575 - (167)
Risk XL technical reinsurance 120 120 - - - -
Cat XL property reinsurance excl. vehicle insurance 300 1,000 306 581 - (275)
Total Fire and technical insurance - - 714 1,156 - (442)
XL reinsurance of auto liability and green card 250 300 204 - 100 104
XL reinsurance of comprehensive auto insurance 150 150 - - - -
Cat XL property reinsurance - vehicle insurance 300 1,000 362 119 - 243
Total auto insurance - - 566 119 100 347
251
Test of sensitivity of the profit or loss to the decrease in reinsurance protection for 2006
Contract year 2006
Initial own
share
Increased
own share
Change
in net
premium
Change in
net losses
(in thousand EUR)
Change
in net
reserves
Effect of
change to
profit
Total proportional reinsurance unchanged - - - -
Risk XL reinsurance of fires 300 900 127 - - 127
Risk XL technical reinsurance 120 120 - - - -
Cat XL property reinsurance excl. vehicle insurance 300 1,000 201 303 - (102)
Total Fire and technical insurance - - 328 303 - 25
XL reinsurance of auto liability and green card 250 300 203 - 50 153
XL reinsurance of comprehensive auto insurance 150 150 - - - -
Cat XL property reinsurance - vehicle insurance 300 1,000 427 397 - 30
Total auto insurance - - 630 397 50 183
A decrease of reinsurance protection in 2006 would
affect the amount of the reinsurance premium,
and also may have an impact on decreasing the
reinsurer’s share in claims. In the given year there
was no disproportional reinsurance (XL) used,
which is intended for huge claims and significant
quantities, so the decrease of the reinsurance
premium would be higher compared with the and
decrease of claims, there would be a positive effect
on profit.