liability adequacy tests are performed for each insurance portfolio on the basis of 599153

Allianz SE (2008)

Notes to the consolidated financial statements [extract]

Note 2 Summary of significant accounting policies [extract]

Reserves for insurance and investment contracts and financial liabilities for unit-linked contracts [extract]

Liability adequacy tests are performed for each insurance portfolio on the basis of estimates of future claims, costs, premiums earned and proportionate investment income. For short duration contracts, a premium deficiency is recognised if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs, and maintenance expenses exceeds related unearned premiums while considering anticipated investment income. For long duration contracts, if actual experience regarding investment yields, mortality, morbidity, terminations or expense indicate that existing contract liabilities, along with the present value of future gross premiums, will not be sufficient to cover the present value of future benefits and to recover deferred policy acquisition costs, then a premium deficiency is recognised.