Nature of risks associated with insurance contracts and financial instruments

Classes of financial instruments

IFRS 7 “Financial Instruments: Disclosures” sets out all the disclosures required for financial instruments. Some disclosure duties are to be met by establishing classes of financial instruments. The grouping made in this context must facilitate a minimum distinction between financial instruments measured at fair value and those measured at amortized cost. The establishment of classes need not necessarily be identical to the categorization of financial instruments pursuant to IAS 39.6 or IAS 39.45–46 for purposes of subsequent measurement. The classes established for our financial instruments were guided by the needs of our portfolio and our balance sheet structure; the degree of detail of the stated classes may vary as permitted according to the required disclosure.

Essentially, the following classes of financial instruments were established:

  • Financial instruments from insurance contracts

    • Accounts receivable on insurance business
    • Reinsurance recoverables on technical provisions
    • Funds held by ceding companies
    • Funds held under reinsurance treaties

  • Financial instruments from investments

    • Investments in affiliated companies and participating interests
    • Loans and receivables
    • Financial assets held to maturity
    • Financial assets available for sale

      • Fixed-income securities
      • Variable-yield securities

    • Financial assets at fair value through profit or loss

      • Financial assets classified at fair value through profit or loss
      • Financial assets held for trading

    • Other invested assets

  • Other financial instruments

    • Other assets – derivative financial instruments that satisfy the criteria for hedge accounting (hedging instruments)
    • Subordinated liabilities
    • Notes payable and loans
    • Other liabilities – derivative financial instruments (trading portfolios with a negative fair value) as well as derivative financial instruments that satisfy the criteria for hedge accounting (hedging instruments with a negative fair value)

The focus of the Talanx Group’s business activities is on the sale and administration of insurance products in all standard lines of property/casualty and life insurance in both primary and reinsurance business.