2007 - April

2.0
Notes to the consolidated financial statements at December 31 st 2007
1.8. Underwriting expenses on insurance policies
1.11. Goodwill
1.12. Other intangible fixed assets
Underwriting expenses on insurance policies correspond to
commissions paid to business-getters, claims paid out to
policyholders, related costs and changes in underwriting
provisions gross of reinsurance (including changes for the
fair valuation of technical liabilities for investment policies).
Costs per destination for insurance companies are broken
down by category on the income statement in line with the
format retained by the APRIL GROUP.
1.9. Income or expenses net of reinsurance cessions
Income or expenses net of reinsurance cessions correspond
to the net balance of:
Premiums ceded, representing expenses,
Claims ceded, representing income,
Reinsurance commissions, representing income,
Change in provisions ceded, representing income (net
write-back) or expenses (net charge).
1.10. Other operating income and expenses
Other operating income and expenses comprise income and
expenses as defined by CNC recommendation 2004 R02:
Capital gains and losses on the disposal of non-current
tangible and intangible assets,
Depreciation of non-current tangible and intangible assets,
except for depreciation relative to goodwill,
Restructuring expenses,
Provisions relative to a major dispute.
Goodwill represents the difference between the acquisition
cost, plus related costs, of the securities of consolidated
companies and the Group share in the fair value of assets,
liabilities and contingent liabilities that may be identified
as acquired on the date on which the equity interest is
acquired.
Goodwill is recorded as an intangible fixed asset. In accordance
with IAS 36, it is subject to value tests as soon
as any signs of an impairment in value come to light and at
least once a year, based on the discounted cash-flow (DCF)
method.
For these tests, goodwill is broken down for each cash- flow
generating unit, which correspond to consistent groups
relative to the generation of cash-flow. In light of the
organization in place within the Group, cash-flow generating
units correspond either to subsidiaries or to groups of
subsidiaries with common characteristics.
The conditions for impairment tests on cash-flow generating
units are detailed in Section 1.16.2.
Negative goodwill is booked directly into earnings.
In the event of an impairment in the going value, a
depreciation charge is recorded in the consolidated financial
statements under “change in value of goodwill”.
The depreciation recorded is non-reversible and may
not be written back if the going value for the goodwill
in question climbs back above its book value again.
Other intangible fixed assets include intangible fixed
assets acquired separately such as software solutions or
policyholder portfolios.
Intangible fixed assets resulting from acquisitions are
recorded separately from goodwill when they can be
identified, controlled by the company and are likely to
generate future economic benefits.
The development costs of software for use in-house, for the
portion relative to internal and external costs, contributing
directly to the creation of an improvement in performance,
are recorded as assets provided that they will generate future
economic benefits and that they are clearly identified.
Other software development costs are immediately booked
as expenses.
Intangible fixed assets are broken down into two categories,
with assets with a definite lifespan and assets with an
indefinite lifespan:
Fixed assets with a definite lifespan are amortized over
their useful life, as defined below,
Fixed assets with an indefinite lifespan are not amortized.
Nevertheless, irrespective of their lifespan, fixed assets are
subject to an annual impairment test.
The amortization of intangible fixed assets with a definite
lifespan is calculated based on the acquisition or production
cost in line with the linear method and the asset’s useful life.
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