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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The segment-level summary of the goodwill allocation is presented below:
(in EUR)
Non-life insurance
Financial
operations
Cinematography Other Group
Slovenia 22,849,770 53,952,108 890,682 465,791 78,158,351
Euro zone - 781,079 - 141,179 922,258
Other Countries - 3,578,705 - - 3,578,705
Total at 31 December 2007 22,849,770 58,311,892 890,682 606,970 82,659,314
Slovenia 22,849,770 53,952,108 696,595 490,882 77,989,355
Euro zone - 641,370 - - 641,370
Other Countries - 3,564,765 - - 3,564,765
Total at 31 December 2006 22,849,770 58,158,243 696,595 490,882 82,195,490
Goodwill is allocated mainly to non-life insurance
and to the financial operations segment, and is
annually assessed for impairment.
- unearned premium reserve projection is based on
the premium earning patterns applied to the gross
premium written amount for each calendar year
and line of business separately:
286
In 2007 for the purpose of exclusion of minority
interest an assumption was made in 2006 for the
non-life insurance segment by an independent
qualified expert. It was concluded that operational
results in 2007 and planned results in 2007 were
not substantially different and there is also no
substantial difference in equity.
Key assumptions used in 2006 and in 2007 for the
non-life insurance segment are:
- the Income Approach (discounted cash flows) and
Market Approach methods were used to calculate
a range of values for the non-life business;
- the best management projections and estimates
regarding the future written premium were used
for the period 2006-2011. For the following
years decreasing growth rates consistent with
market growth were used. The forecasted growth
of the Slovenian general insurance market is
approximately 7% annually;
- ceded premium assumptions range from 0% to
35% of the gross earned premium depending on
the line of business. Ceded claims assumptions
range from 0% to 50% of the gross claims
incurred depending on the line of business.
- ultimate loss ratio assumptions for future accident
years range from 35% to 110% depending on the
line on business;
- the risk discount rate 10.2% was derived based on
the CAPM (Capital Asset Pricing Model).
Based on the result of the valuation, which was
performed by an independent qualified expert, the
Group assessed that the goodwill related to the non-life
insurance segment does not need to be impaired.
No impairment charge of goodwill of the financial
segment in 2007 was recognised (impairment charge
in 2006 was EUR 1,569,005). The goodwill of the
financial segment was assessed by an independent