Changes in estimates during the reporting period

With effect from the third quarter of 2013, the calculation logic for amortising inflation-indexed government bonds was modified in order to level out seasonal deviations in the underlying inflation indexes. This involves changing an accounting-related estimate that, pursuant to IAS 8, is to be made prospectively in the reporting period without adjusting the comparable figures for previous years. In future, amortisation amounts will not be different as at the balance sheet date and at the end of each year, since adjustment of the parameters merely constitutes a levelling during the year that has an effect only at the end of the respective quarter.

With Hannover Rück SE, a change was made to the estimate of the portion of the equalisation reserve that is expected to be allotted to foreign commercial units to which the so-called exemption method in the sense of relevant double taxation conventions is to be applied. Since pursuant to § 341h of the German Commercial Code (HGB) and § 29 of the Regulation on Insurance Accounting (RechVersV) an exemption reserve is not to be recognised for tax purposes in accordance with local rules in these countries, this leads to a reduction of deferred tax liabilities in the consolidated financial statements. This adjustment has to do with a change in an accounting-related estimate, which, pursuant to IAS 8.32 et seqq., is to be recognised in income prospectively and in the current period. In all, deferred tax liabilities in the amount of EUR 89 million were eliminated from income. The allocation of the exemption reserve to the foreign commercial units for future financial years, and thus the effect of this adjustment on subsequent accounting periods, is made according to a parameter key per financial statement branch and cannot be feasibly estimated.

As at the fourth quarter of 2013, the renegotiation process was concluded concerning several contractual components in a reinsurance agreement that was concluded in previous years and is updated on an ongoing basis (Industrial Lines segment). Based on new information, the Group has revised its original estimate concerning the accounting depiction of this reinsurance relationship in the current period. The affected book values and items in the technical result – essentially corrected premium accounting and loss provisions – were determined in connection with the revision of an accounting-related estimate that is required by IAS 8 to be made prospectively in the reporting period and without adjustment of prior-year figures. During the year under review, the change in estimate resulted in an improved technical result in the after-tax amount of EUR 68 million. A depiction of this effect on future periods was not undertaken due to the unreasonable effort that would have been required to ascertain it.