01 Gothaer Konzern_E_09_Umschl - Gothaer Allgemeine ...

Investments measured
at fair value through
profit or loss
Consolidated Financial Statements
These items are recognized at fair value. In the case of publicly traded financial instruments,
the trading price is taken as fair value. In the case of financial instruments that
are not publicly traded, fair value is determined with the help of yield curves, discounted
cash flow methods or prices obtained from outside valuation services. Because
of illiquid market conditions, a mark-to-model-based fair value established by the
discounted cash flow method is used for some publicly traded subordinate bearer bonds
issued by banks and insurance companies.
If appropriate, temporary changes in fair value are transferred directly to equity under
other reserves after any allocation to reserves for deferred premium refunds and
deduction of deferred taxes. In the case of likely permanent impairment, on the other
hand, the carrying amount is reduced to fair value and the loss shown in the statement
of income. In the case of equity instruments that have been amortized and the loss
recognized in the statement of income, any subsequent decrease in fair value is recognized
as impairment loss in the statement of income, even if the impairment is insignificant
or temporary. If the reasons for an impairment loss taken in the past no longer
apply, the value of equity instruments is increased directly in equity. In the case of fixedincome
securities, impairment losses are reversed in an amount of up to a maximum of
cost less accumulated amortization. Gains and losses on disposals are determined
based on the difference between the proceeds from the disposal and cost or, as the case
may be, cost less accumulated amortization and any impairment losses.
The net yield on investments available for sale includes current income, gains or losses
on disposals and any impairment losses or reversals. Current income contains dividend
payments from non-fixed-income investments and interest from fixed-income securities,
including amortization income or expense. Write-downs and write-ups also include translation
differences in the case of fixed-income securities denominated in foreign currencies
as well as impairment losses and reversals. Quantitative statements on net yields
are made in the Notes to the Consolidated Financial Statements on the investment result.
In addition to investments held for trading, this item also includes investments by
designation. In the trading portfolio exclusively derivative financial instruments are
recorded. If the components of hybrid financial instruments cannot be separated, such
instruments are assigned to the category by designation. Investments in the two subcategories
are recognized at fair value, which is obtained based on stock exchange
prices or other valuation (use of external prices or option price models) as of the
reporting date. Only financial instruments with a positive fair value are recognized on the
assets side of the statement of financial position. Financial instruments with a negative
fair value are recognized under liabilities on the equity and liabilities side of the
statement.
Gothaer Group Annual Report 2009 123