Producto

Notes to the consolidated income statement

Other non-operating result 2013 2012 1

€ million € million

Foreign currency exchange gains 736.9 731.9

Miscellaneous 138.5 99.1

Other non-operating income 875.4 831.0

Foreign currency exchange losses 763.0 775.2

Miscellaneous 398.1 553.0

Other non-operating expenses 1,161.0 1,328.3

Total − 285.6 − 497.3

1 Previous year’s figures adjusted pursuant to IAS 8, see chapter “Changes in accounting policies”

Other operating result 2013 2012 1

€ million € million

Income from services rendered and from broking funds and insurance policies 155.8 172.9 Income from owner-occupied property 29.1 43.8 Interest from other than investments 12.0 23.0 Income from releases from other non-technical provisions 51.0 56.2

Miscellaneous 54.2 52.5

Other operating income 302.2 348.4

Expenses for services rendered and for broking funds and insurance policies 135.4 138.6 Expenses for owner-occupied property 13.1 14.0 Interest charges and similar expenses 87.8 85.9

Other write-downs 22.2 26.6

Allocation to other non-technical provisions 6.7 15.8

Miscellaneous 154.4 154.5

Other operating expenses 419.7 435.5

Total − 117.5 − 87.0

1 Previous year’s figures adjusted pursuant to IAS 8, see chapter “Changes in accounting policies”

[29] Other operating result

[30] Other non-operating result

Other non-operating expenses (‘Miscellaneous’) include sums for restructuring measures in conjunction with our strategic plan of action and amount to € 105.6 million (−).

Furthermore, amounts have been put aside totalling € 7.9 million (258.1 m) for restructuring measures in order to reorganise our sales forces in Germany.

[31] Impairment losses of goodwill

In accordance with IFRS 3, there is no longer a scheduled amortisation of goodwill stated in the balance sheet. An impairment test was carried out at the balance sheet date.

There were non-scheduled write-downs on goodwill amounting to € 33.1 million (−) which were accounted for by the cash-generating unit ERGO Previdenza in the year under review.

[32] Finance costs

Finance costs include all expenditure spent on interest and other expenses which are directly related to strategic debt, i. e. debt without an original and direct link to operative insurance business. Costs totalling € 76.2 million (81.8 m)

stem primarily from liabilities of ERGO Versicherungs- gruppe AG due to Munich Re companies. The loans serve to strengthen the liquidity basis and to finance strategic assets.

Taxes on income 2013 2012 1

€ million € million

Current tax for financial year 222.4 179.9 Current tax for other periods − 240.8 − 15.7 Deferred tax resulting from the occurrence or reversal of temporary differences − 37.6 − 43.8 Deferred tax resulting from the occurrence or utilisation of loss carry-forwards and write-downs − 39.3 − 24.9 Valuation allowances for other deferred taxes − − Deferred tax for other periods − 3.5 − 7.0

Total − 98.8 88.6

1 Previous year’s figures adjusted pursuant to IAS 8, see chapter “Changes in accounting policies”

Reconciliation to effective tax expenses 2013 2012 1

€ million € million

Result before taxes on income (after other tax) 337.2 378.9 x Group tax rate 32% (32%)

= Expected taxes on income 107.9 121.2

Tax effect of:

Non-deductible expenses 76.9 52.7

Tax-free income − 43.6 − 60.0

Tax rate differences − 10.7 − 2.1 Tax for prior years − 244.3 − 22.6 Amortisation of goodwill or PVFP 10.9 −

Miscellaneous 4.1 − 0.6

Taxes on income shown − 98.8 88.6

1 Previous year’s figures adjusted pursuant to IAS 8, see chapter “Changes in accounting policies”

[33] Taxes on income [33a]

Taxes on income expenditure or earnings shown on the income statement are made up of the amount which actually has to be paid as well as changes to deferred taxes. Actual tax expenditure in a financial year is offset by actual tax income from tax rebates which have taken place in a different period and deferred tax income from a change in deferred tax assets due to revaluations. Tax

rebates from a different period result in the release of reserves for taxes or activation of tax refund claims follow- ing the end of company audits concerning several German companies. All in all, we can expect to receive money back from taxes on income.

[33b]

The Group tax rate corresponds to the average fiscal charges for all domestic Group companies. This amount is made up of German corporate tax amounting to 15% (15%) plus a 5.5% (5.5%) solidarity surcharge.

Together with the domestic trade tax the uniform Group tax rate is thus 32% (32%). Based on a net operating result after finance costs, the following table shows the recon- ciliation between the expected taxes on income and the taxes on income actually shown:

ERGO Insurance Group

Annual Report 2013

122

ERGO’s reporting is based on various legal regulations governing risks it is exposed to as a result of its business operations:

IFRS 4 prescribes disclosures on the type and extent of risks from insurance contracts. Under IFRS 7, analogous disclosures on risks from financial instruments are required. Besides this, Section 315, para. 2, item 2 of the German Commercial Code prescribes disclosures in the management report on risk management objectives and methods, hedging and risks in connection with financial instruments. These requirements are specified in more detail in the German Accounting Standard (DRS) No. 20 for management reports.

Risk reporting concerns not only accounting but also the activities of ERGO’s integrated risk management (IRM). To take both perspectives into account, information on risks is provided in the Risk report within the management report, in the disclosures on risks from insurance contracts and financial instruments as well as in the disclosures on finan- cial instruments in the Notes to the financial statements. The disclosures in the Risk report largely adopt a purely economic view. This report provides a detailed account of

the organisation of risk management and of ERGO’s risk strategy, and briefly outlines the main risks we are exposed to.

The Notes to the financial statements deal in detail with the various risks from insurance contracts and describe uncertainties in measuring them. In accordance with the requirements of IFRS 4, the effects of a change in the assumptions underlying the measurement of insurance contracts and in the market environment are also quanti- fied. For risks from financial instruments, IFRS 7 stipulates that the disclosures must comprise information on maxi- mum credit risk exposure, the remaining terms, the rating, and a sensitivity analysis regarding the market risk. This information is also relevant for assessing the risk.

To obtain a complete overview of the risks to which ERGO is exposed, the reader needs to refer to both the risk report and the disclosures on risks from insurance contracts and financial instruments in the Notes to the financial state- ments, along with further information on individual items. Where necessary, we refer to the relevant information in the risk report or in the Notes.

Consolidated Financial Statements

[34a] Risks from life and health insurance business

Of primary importance for insurance contracts in life and health insurance are biometric risks, interest-rate risks and lapse risks. The measurement of technical provisions and deferred acquisition costs is based on biometric calculation tables, i. e. on assumptions with regard to mortality, disa- blement and morbidity, and on the respective contract- or tariff-specific discount rates and actuarial interest rates.

Besides this, measurement includes assumptions regard- ing the lapse rate and profit participation. In addition, other market risks from unitlinked policies and risks from embedded derivatives, as well as the liquidity risk, have to be taken into account.

Disclosures on risks from insurance