Annual Report 2010 DEVK€¦ · Prof. p.s.g. p.s.n. PublG RechVersV reg. assoc. resp. Ret. RPR 000s...

Annual Report 2010

DEVK Deutsche Eisenbahn VersicherungSach- und HUK-Versicherungsverein a.G.Betriebliche Sozialeinrichtung der Deutschen Bahn

DEVK Rückversicherungs- und Beteiligungs-Aktiengesellschaft

DEVK Allgemeine Versicherungs-Aktiengesellschaft

DEVK Deutsche Eisenbahn VersicherungSach- und HUK-Versicherungsverein a.G.Betriebliche Sozialeinrichtung der Deutschen Bahn Group

Year

1948/49

1954

1960

1965

1970

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Motor

–

–

24

196

293

509

568

625

669

699

715

710

720

740

760

782

810

845

883

923

959

1,269

1,333

1,437

1,518

1,635

1,775

1,872

1,940

1,971

1,978

2,013

2,060

2,107

2,193

2,235

2,282

2,293

2,465

2,617

2,741

Liability

–

242

532

651

752

913

937

947

912

926

937

954

961

969

972

992

1,009

1,019

1,033

1,049

1,115

1,183

1,259

1,314

1,353

1,388

1,439

1,467

1,498

1,514

1,530

1,535

1,544

1,554

1,572

1,584

1,604

1,616

1,634

1,658

1,689

Legal expenses

–

–

–

–

–

–

–

–

–

–

2

65

85

101

123

141

161

183

204

223

245

278

309

346

377

403

433

457

480

504

530

550

575

596

621

650

678

702

724

754

781

Accident1)

–

37

83

94

128

201

215

231

249

276

304

306

326

340

356

369

380

394

412

434

453

490

518

547

569

585

861

879

886

880

872

864

868

877

879

889

912

950

988

1,022

1,068

Health2)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

31

158

252

362

457

515

581

630

685

717

747

777

826

885

967

1,041

1,100

Non-life

283

450

558

629

700

819

852

882

912

948

1,003

1,052

1,084

1,135

1,182

1,227

1,292

1,370

1,476

1,569

1,632

1,740

1,880

1,988

2,072

2,155

2,228

2,289

2,333

2,370

2,406

2,435

2,480

2,527

2,562

2,586

2,612

2,636

2,673

2,730

2,784

Premiums(in € m)

0,6

1,7

7,3

23,6

47,0

130,8

151,5

182,3

203,6

233,6

244,6

262,0

277,2

298,6

321,7

351,7

371,0

404,7

449,4

488,6

517,2

592,9

663,7

753,2

877,7

953,3

981,9

1,019,3

1,041,9

1,065,1

1,111,6

1,158,2

1,222,1

1,273,1

1,329,6

1,349,1

1,363,5

1,383,6

1,394,2

1,566,2

1,594,9

in Sach-/HUKR- and health insurance division of DEVK Versicherungen

Portlio (in 000s.)

Business performance 1948/49 to 2010

1) as of 1996 incl. motor – accident2) No. of policyholders

DEVK

Deutsche Eisenbahn Versicherung Sach- und HUK-Versicherungsverein a.G.Betriebliche Sozialeinrichtung der Deutschen Bahn Group

Group management report 97Consolidated financial statements 115Cash flow statement 123Statement of shareholders’ equity 124Notes to the consolidated financial statements 125Independent auditor’s report 139Supervisory Board report 140

Addresses and management 90Organisational chart of DEVK Versicherungen 91

DEVK

Deutsche Eisenbahn Versicherung Sach- und HUK-Versicherungsverein a.G.Betriebliche Sozialeinrichtung der Deutschen Bahn

Company bodies 5Management report 8Financial statements 19Notes to the accounts 23Independent auditors’ report 37Supervisory Board report 38

Financial year 2010

DEVK

Rückversicherungs- und Beteiligungs-Aktiengesellschaft

DEVK

Allgemeine Versicherungs-Aktiengesellschaft



ABSAGAGGAktGAltZertGa.ment.ann.a.o.a.p.approx.a.s.i.BaFinBGHBilMoGBMFbncaCEODAVDAXDCFdefi n.DrDRSECBECJEDPEECe.g. EGHGBEStGetc.fem.f.o.a.GDVGmbHHGBIBNRi.c.w.IDWIf nec.incl.i.ret.KonTraGKWGLAGmm.max.mon.Mot. veh.mut.No.NRWn.v.OLGo.o.o.v.p.a.Para.Prof.p.s.g.p.s.n.PublGRechVersVreg. assoc.resp.Ret.RPR000sVAGVVaGVVGWpHGWSG

Asset-backed securitiesAktiengesellschaft (German public limited company)German Anti-Discrimination ActGerman Stock Corporations ActGerman Pension Contracts Certifi cation ActAbove-mentionedAnnuallyAmong othersAs perApproximatelyAs specifi ed inGerman Financial Supervisory AuthorityGerman Federal Court of JusticeGerman Act on Modernisation of Accounting RegulationsGerman Federal Finance MinistryBillion(s)CircaChief executive offi cerAssociation of German ActuariesGerman Share IndexDiscounted Cash FlowDefi nitiveDoctorGerman Accounting StandardsEuropean Central BankEuropean Court of JusticeElectronic data processing – ITEuropean Economic Community For example Introductory Act to the German Commercial CodeGerman Income Tax ActEt ceteraFemaleFor own account (net of reinsurance – cf. Council Directive 91/674/EEC (Richtlinie 91/674/EWG)German Insurance Association German private limited companyGerman Commercial CodeIncurred but not reportedIn conjunction withInstitute of German Public AccountantsIf necessaryIncludingIn retirementGerman Control and Transparency in Business ActGerman Banking ActGerman State Labour CourtMillion(s)MaleMaximumMonthlyMotor vehicleNew versionNumberNorth Rhine-WestphaliaMutualGerman Higher Regional Court/Court of AppealIn our opinionOld versionPer annumParagraphProfessorGerman Company Disclosure ActGerman Regulation on Accounting in the Insurance SectorPay-scale group(s)Pay-scale numberRegistered association (e.V.)RespectivelyRetired Reserve for premium refund (RfB) Thousand(s)German Insurance Undertakings Supervision ActMutual insurance companyGerman Insurance Contracts ActGerman Securities Trading ActGerman Act to Strengthen Competition in Statutory Health Insurance

Abbreviations

DEVK Deutsche Eisenbahn Versicherung Sach- und HUK-Versicherungsverein a.G. Betriebliche Sozialeinrichtung der Deutschen Bahn

Company bodies

Board of Members

Wolfgang AßheuerDortmund

Wilhelm BahndorfObernburg am Main(from 1 January 2011)

Heinz BodammerFriedrichshafen

Peter BolsingerLinden

Jörgen BoßeLoddin

Steffen BoseckerDresden

Jürgen BrügmannEssen

Holger ConradLeetza

Gabriele DenglerMainz

Helmut DienerMarktredwitz

Hans-Jürgen DorneauOerlinghausen

Gerhard EhrentrautThannhausen

Heinz FuhrmannNeu-Anspach

Johann GebhardtMarkt Erlbach

Franz-Josef GroßKindsbach

Claus-Dieter HaasEttlingen

Dieter HäfkeDuisburg

Rolf HellmannLustadt

Frank HelmsBad Salzungen

Jörg HenselHamm

Helmut HeutzErkelenz

Berthold HillebrandKassel

Jürgen HoffmannHerten

Ralf IngwersenHamburg

Jessica IrleFrankfurt am Main

Klaus JustForst (Lausitz)

Hans-Joachim KernchenBerlin(until 30 June 2010)

Axel KleichLeipzig

Heinrich KlumpeWallenhorst

Hanka KnocheIdstein

Dr Siegfried KrauseBerlin

Axel KrollLanggöns

Günter LeckelBad Endorf(from 1 June 2010)

Manfred LeuthelNuremberg

Bernd MadernerNiefern-Öschelbronn

Heidemarie MählerErfurt(from 1 November 2010)

Dr Ludwig MandelartzAachen(from 1 June 2010)

Uwe MatthiasBremervörde

Heinz-Werner MildeGronau

Hans-Joachim MöllerAschersleben

Dr Helmut MüllerMünster(until 28 May 2010)

Wolfgang MüllerGau-Bischofsheim

Marlies PellnyDüsseldorf

Dieter PielhopWietzen

Beate RacheNeu Wulmstorf

Christian RespondekMünster

Ernst RichardtRonshausen

Uwe RosenbergerHagen

Hartmut SchaeferLutherstadt Eisleben

Klaus-Peter SchölzkeGörlitz(from 1 November 2010)

Gerfried ScholtzFrankfurt am Main(until 31 December 2010)

Alfred SchumannBiebertal

Jens SchwarzChemnitz

Heino SeegerHausham

Albert SpieglEichenau

Winfried ThubauvilleLeichlingen(until 30 October 2010)

Peter TrögeEngstingen

Peter WeinzierlKolbermoor(until 30 June 2010)

Richard WeisserPuschendorf

Bernd WernsdörferWürzburg

Thorsten WeskeGermersheim

Torsten WestphalBerlin

Albert WiegandFulda

Otto WilhelmPenzberg

Joachim ZiekauDahlen

65

Friedrich Wilhelm GieselerBergisch GladbachChairman

Engelbert FaßbenderHürth

Michael KlassCologne

Gottfried RüßmannCologne

Hans-Otto UmlandtOesterdeichstrich(until 31 December 2010)

Bernd ZensKönigswinter

Robert EtmansEppsteinDeputy Board Member(from 1 January 2011)

Supervisory Board

Management Board

Alexander KirchnerRunkelChairmanChairman of the Eisenbahn- und Verkehrsgewerkschaft (EVG) (Railway and Transport Union)

Günter KirchheimEssenFirst Deputy ChairmanChairman of the Deutsche Bahn AG Group Works Council Chairman of the Deutsche Bahn AG European Works Council Chairman of the DB Netz AG General Works Council

Helmut Petermann *EssenSecond Deputy ChairmanChairman of the DEVK Versicherungen General Works Council

Dr Norbert BenselBerlin

Christian BormannWeimarChairman of the Works Council of DB Netz AG, Wahlbetrieb ErfurtMember of the DB Netz AG General Works Council

Udo Fels *WarendorfEmployee of DEVK Versicherungen i.ret.(until 31 January 2010)

Doris Fohrn *WesselingDeputy Chair of the General Works CouncilDEVK VersicherungenDeputy Chair of the Works Council, DEVK Versicherungen, Cologne Headquarters

Ralf Gajewski *BerlinDeputy Group Manager of KKC (Customer Service Centre) DEVK Versicherungen, Berlin Regional Management Unit

Dr Rüdiger GrubeGechingenCEO of Deutsche Bahn AGCEO of DB Mobility Logistics AG

Horst HartkornHamburgChairman of the Works Council, S-Bahn Hamburg GmbH

Klaus-Dieter HommelFrankfurt am MainDeputy Chairman of the Eisenbahn- und Verkehrsgewerkschaft (EVG) (Railway and Transport Union)

Jürgen PutschkunFellbachExecutive Offi cerMotor Vehicle Operations and Sach/HU Betrieb, Stuttgart Regional Management Unit(from 1 February 2010)

Dr Karl-Friedrich RauschWeiterstadtChairman of DB Mobility Logistics AG Transport and Logistics Unit

Thomas RennerKarlsruheCEO of the Management Board of Sparda-Bank Baden-Württemberg eG

Andrea Tesch *ZittowDeputy Group Manager of Sach/HU-Betrieb and Head of SHU Unit, DEVK Versicherungen, Schwerin Regional Management Unit

Ulrich WeberKrefeldDeutsche Bahn AG Personnel Director DB Mobility Logistics AG Personnel Director

* Employees’ representatives

Advisory Board

Rudi SchäferHeilbronn– Honorary Chairman –Former Chairman of the German Railway Workers Union

Kay Uwe ArneckeHamburgManagement Spokesman of S-Bahn Hamburg GmbH Managing Director of Autokraft GmbH

Werner BayreutherHeroldsbergLawyerManaging Director of German Employers’ Association of Mobility and Transport Service Providers (e.V.), Berlin

Gerd BechtBad HomburgDirector of Compliance, Data Protection and Legal Affairs at Deutsche Bahn AG and DB Mobility Logistics AG

Dr Jochen DobringMunichPresident of the German Automobile Club (ACV)

Volker HädrichErfurtDeutsche Bahn AG Group Authorised Representative for the Free State of Thuringia

Michael HartingBornheimHead of the Rural Transportation Department at the Federal Ministry of Transport, Building and Urban Development

Thomas HupfeldVellmarDeputy Regional Chairman of the German Train Drivers’ Union, Frankfurt Region

Dr Volker KeferErlangenDeutsche Bahn AG Director of Technology, System Network and ServicesDeutsche Bahn AG Director of Infrastructure

Bernhard KesselMunichChairman of Subgroup Works Council (Track) of Veolia Verkehr GmbH

Volker KöhlerNurembergCEO of the Management Board of Sparda-Bank Nürnberg eG

Volker KrombholzNeustrelitzDeputy Regional Chairman of the German Train Drivers’ Union, Northern Region

Armin LauerRödermarkManaging Director of Vermögensverwaltung GmbH of Eisenbahn- und Verkehrs-gewerkschaft (EVG)

Dr Kristian LorochBerlinDepartment Head at Eisenbahn- und Verkehrsgewerkschaft (EVG)

Rolf LutzkeBerlinHead of Policy and International Affairs at Eisenbahn- und Verkehrsgewerkschaft (EVG)

Reiner MetzNideggenLawyer Local Public Transport (ÖPNV) Director of the Association of German Transport Companies (VDV)

Heike MollMunichChairman of the General Works Council, DB Station & Service AG

Beate MüllerHeidelbergHead of the South-Western Offi ce of the Federal Offi ce for Railway Assets

Frank NachtigallFrankfurt an der OderRegional Chairman of the German Train Drivers’ Union, Berlin-Sachsen-Brandenburg Region

Ottmar NetzHohenahrPersonnel Director, DB Vertrieb GmbH

Günther von NiebelschützGroßen-LindenDivisional President of the Federal Offi ce for Railway Assets

Jürgen NiemannBerlinPersonnel Director, DB Dienstleistungen GmbH

Ragnar NordströmBerlinCEO of Veolia Verkehr GmbH

Ute PlambeckHamburgDeutsche Bahn AG Group Representative for the States of Hamburg and Schleswig-Holstein

Bernhard ReinhartMunichManaging Director of ebm eisenbahner baugenossenschaft münchen-Hauptbahnhof eG

Peter RotheKönigs Wusterhausen/NiederlehmeHead of Personnel Management, DB Netz AG, Neustrelitz/Schwerin

Wolfgang SchillingBonnDivisional President of the Federal Offi ce for Railway Assets

Dirk SchlömerHennefDepartment Head at Eisenbahn- und Verkehrsgewerkschaft (EVG)

Rolf StadiéBochumDirector, Knappschaft-Bahn-See

Klaus VögeleEttenheimChairman of the General Works Council, Schenker AG

Udo WagnerFöhrenDeutsche Bahn AG Group Representative for the States of Rhineland-Palatinate and Saarland


Company bodies

8

Management report

Commercial environment and general conditions

Overview

DEVK Sach- und HUK-Versicherungsverein a.G. is a self-help organisation for railway workers that is recognised as a company welfare scheme by Deutsche Bahn and the Federal Offi ce for Railway Assets (Bundeseisenbahnvermögen). It offers its members, who are predominantly railway workers and other transport sector employees, compre-hensive bespoke, economically priced insurance cover.

Provisional fi gures indicate that german market non-life and casualty insurance premiums grew by 0.7 % in 2010. Motor insurance was among the contributors to this growth, showing a slight rise in premiums for the fi rst time in six years. However, at 3.1 %, claims expenses out stripped premiums, a result chiefl y due to higher insurance payouts on motor vehicle and household insurance policies. The combined ratio, which measures income and expenses after claims settlement and the deduction of all administration costs, has grown since last year by one percentage point to 98 %. As a result the tech-nical profi t for the german property and casualty insurance market has fallen by over € 800 million to approx. € 1.4 billion.

2010 saw a worldwide economic recovery, and despite the eurozone crisis this had positive repercussions for Germany, particularly on the capital markets. On the bond markets, risk premiums on corporate bonds have narrowed further, while interest rates on government bonds and bank paper have recovered after previously hitting record lows. Due to the negative performance of Italy and Spain in connection with the euro-zone crisis, the European share index EuroStoxx50 suffered, falling 5.5 % to a year’s end fi gure of 2,804.6 points. In sharp contrast, the German DAX index rose 16.1 % during the course of the year to reach 6,914.2 by 31 December.

Against this backdrop, we are pleased to be able to report that DEVK Sach- und HUK-Versicherungsvereins a.G. registered satisfactory business results in 2010.

Ratings

The ratings, commissioned by Standard & Poor’s for the fi rst time in 2008, are updated each year. As in 2008 and 2009, in 2010 DEVK Sach- und HUK-Versicherungsverein a.G., DEVK Allgemeine Versicherungs-AG, DEVK Allgemeine Lebensversicherungs-AG and DEVK Rückversicherungs- und Beteiligungs-AG were all once again assigned ratings of A+, and Standard & Poor’s assesses our future outlook as “stable”, thus confi rming the very sound fi nancial position enjoyed by DEVK companies generally.

Meanwhile, the rating agency Fitch came to the same conclusion, with its initial 2010 rating of the fi nancial strength of DEVK’s core companies also coming in at A+. The individual companies rated were DEVK Sach- und HUK-Versicherungsverein a.G., DEVK Rückversicherungs- und Beteiligungs-AG, DEVK Allgemeine Versicherungs-AG, DEVK Rechtsschutz-Versicherungs-AG, DEVK Krankenversicherungs-AG and the two life assurance companies DEVK Lebensversicherungsverein a.G. and DEVK Allgemeine Lebensversicherungs-AG. In January 2011, these ratings were confi rmed, while our outlook continued to be adjudged “stable”.

7


Management report

The ASSEKURATA Assekuranz rating agency once again gave outstanding ratings to DEVK Sach- und HUK-Versicherungsverein a.G. and DEVK Allgemeine Versicherungs-AG in February 2011, with both companies for the 12th time receiving the top mark of A++ (excellent).

Customer satisfaction

DEVK achieves high levels of customer satisfaction, as confi rmed by a variety of studies. For instance, a survey conducted in 2010 by the Cologne fi rm MSR Consulting revealed an overall customer satisfaction rating of “outstanding”, while Assekurata Solutions GmbH’s survey of people with personal claims settlement experience found that DEVK customers were the ones most likely to recommend their insurance company to others.

Taken together, these external ratings attest to the great competitive strength of our business.

Social responsibility

DEVK is aware of its social responsibility as a successful insurer. For many years, we have taken on an above-average number of trainees by industry comparison, in both back-offi ce and sales/marketing roles. Furthermore, prior to possible professional training at DEVK, every year at our headquarters alone we offer some 60 school-age young people spells of work experience that assist them in deciding what their future career paths might be. This gives young people a positive start to their working lives and helps them to integrate well into society.

In 2010, DEVK was once again singled out for special praise by Cologne Chamber of Commerce and Industry as a certifi ed training company offering outstanding professional training performance.

Since 2005, DEVK has been involved at several locations in the Deutsche Bahn AG competition “Deutsche Bahn Trainees Against Hatred and Violence”. This initiative not only raises awareness of these issues among trainees but also brings them to wider public attention through a variety of specifi c activities.

DEVK’s active social commitment is also refl ected in a range of external assessments. For instance, alongside our good showing in the “Germany’s Best Employer” com-petition, of particular note is the Arbeit Plus seal of approval awarded to us by the Evangelical Church in Germany on several occasions now for our socially aware and employment-oriented personnel policies.

Personnel and sales staff numbers

Personnel are employed by DEVK Sach- und HUK-Versicherungsverein on the basis of joint contracts and service contracts whereby they also work for DEVK subsidiary companies. Where staff work for both DEVK Sach- und HUK-Versicherungsverein and DEVK Lebensversicherungsverein, this takes place within the ambit of dual employment contracts and, as such, no services are rendered between the two companies.

109

The company employed an average of 2,758 personnel internally, of whom 2,580 had their contracts of employment with DEVK Sach- und HUK-Versicherungsverein. These fi gures do not include any inactive work contracts, while part-time employees are recorded as full-time equivalents on the basis of their working hours.

At the end of 2010, 2,096 self-employed personnel worked for DEVK (2009: 2,037), on top of which 629 fi eld sales agents were directly employed by DEVK Sach- und HUK-Versicherungsverein (2009: 650). However, the entire fi eld sales force also operates on behalf of the various other DEVK companies in line with general agency agreements entered into by DEVK Sach- und HUK-Versicherungsverein with the other DEVK companies.

Overall business trends

Year on year, gross premiums rose 1.5 % to € 296.2 million. Earned premiums, net of reinsurance, totalled € 250.5 million (2009: € 246.7 million). Claims incurred, net of rein-surance, rose 9.1 % to € 191.4 million, as a result of which their share of net earned pre-miums increased to 76.4 % (2009: 71.1 %). The ratio of expenses on insurance business net of reinsurance to earned premiums net of reinsurance was 27.6 % (2009: 26.4 %).

At € 17.0 million, the sum withdrawn from the equalisation provision was signifi cantly higher than in 2009 (€ 9.6 million). Due to a disproportionate increase in net expenses on claims and operating costs as compared with net premiums, the underwriting result net of reinsurance fell to € 5.5 million (2009: € 9.3 million).

As expected, the investment result fell short of last year’s fi gures, chiefl y due to lower income from write-ups, but also affected by the fact that profi ts from disposals of capital assets and investment income were down on 2009.

Thanks to improved other comprehensive income, the profi t from normal business activities totalled € 44.1 million (2009: € 57.7 million).

In compliance with the new provisions of the German Act on Modernisation of Account-ing Regulations (BilMoG), the extraordinary result included net pension expenses of € 6.3 million.

After extraordinary items and taxes, the net profi t for the year amounted to € 28.3 million (2009: € 42.7 million).

Performance of the individual insurance classes

The insurance classes in which DEVK Sach und HUK-Versicherungsverein undertook direct insurance operations in 2010 are detailed in the notes to the management report. The following section outlines the performance of our individual insurance segments, classes and types.


Management report

Accident insurance

This item comprises both personal accident insurance and motor vehicle accident insur-ance. In 2010, the total number of accident insurance policies rose by 1.0 % to 260,749, while gross premiums fell by € 500,000 to € 36.5 million. After a € 100,000 allocation to the premium refunds provision (2009: € 2.5 million), the underwriting result improved to € 7.8 million (2009: € 1.3 million).

Liability insurance

At the end of 2010, our portfolio of liability insurance comprised 601,379 policies (2009: 601,856). This fi gure includes 91,418 employees’ liability insurance policies, including railway workers’ professional liability insurance. At € 34.4 million, gross premiums in 2010 were 1.2 % down on the 2009 fi gure. After a € 1.2 million allocation to the premium refunds provision (2009: € 2.7 million), the underwriting result net of reinsurance improved to € 11.3 million (2009: € 7.4 million).

Motor vehicle liability insurance

As of 31 December 2010, our portfolio of motor vehicle liability insurance comprised 542,743 policies (2009: 534,684) plus 10,205 moped policies. Gross premiums rose by 1.2 % to € 80.9 million. After a € 15.1 million withdrawal from the equalisation provision (2009: € 4.2 million) the underwriting result was € – 4.5 million (2009: € – 3.2 million).

Other motor vehicle insurance

Other motor vehicle insurance comprises our comprehensive and partial comprehensive motor insurance (third party, fi re and theft). The total number of risks covered at the end of the year was 447,475 (2009: 438,651), and we also managed 1,763 partial-coverage moped policies. Gross premium receipts rose 4.2 % to € 60.8 million. After a € 3.8 million withdrawal from the equalisation provision (2009: € 11.7 million), the underwriting result was € – 11.9 million (2009: € 900,000).

Fire and non-life insurance

At the end of 2010, our fi re and non-life-insurance portfolio comprised a total of 983,118 policies (2009: 982,074). Gross premiums rose 2.5 % to € 82.3 million, and the under-writing result came to € 3.2 million (2009: € 4.7 million).

In detail, our individual fi re and non-life segments performed as follows:

Our household contents insurance portfolio at the end of 2010 comprised 441,631 poli cies (2009: 445,300), while gross premium receipts rose 3.1 % to € 33.2 million. As we did not make any allocation to the premium refunds provision in 2010 (2009: € 2.5 million), the underwriting result improved to € 4.4 million (2009: € 3.5 million).

Our building insurance portfolio increased to a total of 171,707 policies (2009: 168,652). Thanks also to changes in the divisional structure, gross premiums rose by 7.6 % to € 33.5 million. After a € 600,000 allocation to the premium refunds provision (2009: € 2.1 million), the underwriting result net of reinsurance stood at € – 1.8 million, little changed from the 2009 fi gure of € – 1.4 million.

1211

In the other fi re and non-life-insurance classes, our end-of-year portfolio comprised 369,780 policies (2009: 368,122). Chiefl y due to the changed divisional structure, premi-um receipts fell to € 15.5 million (2009: € 16.9 million), while the underwriting result net of reinsurance came to € 600,000 (2009: € 2.6 million).

Other insurance policies

Other insurance policies primarily comprise the results of our cheque card, breakdown service and travel sickness insurance policies. Gross premiums fell by 1.0 % to € 1.3 mil-lion. After a withdrawal from the cheque card and breakdown service insurance equali-sation provision the underwriting result net of reinsurance came to € – 300,000 (2009: € – 100,000).

Outward reinsurance

Our reinsurance business was ceded to several external reinsurers and our group-internal reinsurer DEVK Rückversicherungs- und Beteiligungs-AG. Our choice of reinsurers took their ratings into account.

Investments and net investment income

In the year under review, our investment portfolio increased in value by 3.1 % to € 1,392.8 million (2009: € 1,350.9 million). There were no signifi cant material changes in the composition of the investment portfolio.

At € 55.7 million, investment income was down on the 2009 fi gure of € 66.2 million. As in 2009, the fi gure included a € 15.0 million dividend payment from DEVK Rückversiche-rungs- und Beteiligungs-AG. Also included was € 1.8 million in profi ts from disposals of investments (2009: € 3.9 million) as well as write-ups to a value of € 3.6 million (2009: € 9.8 million).

At € 10.4 million, investment expenses were slightly higher than in 2009 (€ 9.7 million). This was chiefl y due to higher write-down requirements (€ 8.1 million as against € 7.6 mil-lion in 2009) and a slight increase in losses from investment disposals (€ 500,000 as against € 300,000 in 2009.)

On balance, our net investment income was down on the previous year’s fi gure at € 45.3 million (2009: € 56.5 million).

Operating result and appropriation of retained earnings

The after-tax net profi t for the year of € 28.3 million (2009: € 42.7 million) was allocated to other retained earnings.


Management report

Affi liated companies and participating interests

DEVK Sach- und HUK-Versicherungsverein and DEVK Lebensversicherungsverein are not affi liated companies within the meaning of section 271 paragraph 2 of the German Commercial Code (HGB).

Details of our company’s direct and indirect shareholdings in affi liated companies and participating interests are given in the notes.

Delegation of functions and organisational cooperation

Under the existing general agency contracts with other DEVK insurance companies, our company has been assigned overall responsibility for all DEVK insurance brokerage operations and associated tasks.

The general operational areas of accountancy, collection, EDP, asset management, person nel, auditing and general administration are centrally organised for all DEVK companies. As regards the Group insurance companies, this also applies to the areas of portfolio management and claims management (excluding DEVK Rechtsschutz-Versicherungs-AG). However, each company has separate lease contracts and its own inventory and equipment based on its own needs.

Under the existing joint contracts and service contracts, we provide the necessary internal staff for the Group companies DEVK Rückversicherungs- und Beteiligungs-AG, DEVK Allgemeine Versicherungs-AG, DEVK Rechtsschutz-Versicherungs-AG, DEVK Krankenversicherungs- AG, DEVK Allgemeine Lebensversicherungs-AG, DEVK Pensions-fonds-AG, DEVK Vermögensvorsorge- und Beteiligungs-AG and DEVK Service GmbH, as well as various smaller group companies.

Opportunities and risks from future developments

In accordance with the German Control and Transparency in Business Act (KonTraG), and the minimum risk management requirements laid down in section 64a of the German Act on the Supervision of Insurance Companies (VAG), we are hereby reporting the opportunities and risks presented by future developments.

A risk management system is employed within the DEVK Group to identify and assess risks at an early stage. The system is based on a risk-bearing capacity model that guarantees adequate coverage of all signifi cant risks via the company’s own funds. To control risks, DEVK has put in place a consistent system of limits whereby the limit capacity is portrayed in the form of risk ratios. The risk ratios break down the risk limits set by the risk strategy according to DEVK’s most important organisational areas. On top of this, a comprehensive risk inventory is compiled every six months, in which risks are recorded and classifi ed according to type with the aid of a questionnaire. Wherever possible, risks are quantifi ed and the action necessary to manage the risks is recorded. This system enables us to react immediately and appropriately to developments that pose a risk to the Group. The system’s effectiveness and suitability are monitored by the Internal Auditing unit.

1413

DEVK’s risk management organisation is both centralised and decentralised at one and the same time. By decentralised risk management, we mean the risk responsibility borne by individual departments. Thus, departmental and process managers are in charge of and responsible for risk management within their specifi c operational areas. Meanwhile, central risk management is the task of the independent risk controlling function, which is responsible for dealing with the cross-departmental risks and for the development and maintenance of the company-wide risk management system. It coordinates the company’s risk management processes and supports those responsible for risk within individual departments.

The Risk Committee assesses the risk situation faced by individual the companies and by the Group as a whole on the basis of the risk reports it receives, taking into account all discernible signifi cant risks, as well as limit capacities and current risk drivers. Finally, a Management Board submission is prepared in which the results are reported to the Management Board members responsible for the various risk areas. The risk report and the risk control process (identifi cation, analysis, evaluation, management and monitoring) are updated on a quarterly basis. Reports are submitted both to the Risk Committee and members of the Management Board.

Technical risks

Principal among the technical risks are the premium/claims risk and the reserves risk.

In line with suitable assumption guidelines, as a rule we only underwrite straightforward, standardised business, while counteracting the risk of unusually high claims expenses attendant upon extraordinary loss events through a corresponding reinsurance policy.

Our planning and management instruments enable us to identify undesirable or hazard-ous operational, portfolio and claims trends at an early stage and take any necessary action to counteract them.

We ensure that we maintain adequate technical reserves through the prudent valuation of claims already fi led as well as establishing additional reserves to meet claims that are statistically likely but have not yet been fi led on the balance sheet date, as well as for claims that will have to be reopened after the balance sheet date. In addition, equalisa-tion reserves are established in accordance with the provisions of commercial law.

Investment risks

The risks stemming from investments comprise:– the risk of unfavourable interest rate, equity market or exchange rate movements

(market price risks),– counterparty risk (credit risk),– the risk of strongly correlated risks that in turn increase counterparty risk

(concentration risk),– liquidity risk, i.e. the risk of not always being able to meet payment obligations.


Management report

Our capital investments comply with the German Ordinance on the Investment of Restricted Assets of Insurance Undertakings (AnlV). We counteract exchange/market price risk and interest rate risk by maintaining a balanced mix of investment types. Active portfolio management allows us to exploit opportunities arising from market movements to improve our results, while we limit credit risk and concentration risk by imposing very stringent rating requirements and continually monitoring the issuers we select, thus avoiding any potentially ruinous dependence on individual debtors. We ensure a contin-uous infl ux of liquidity by maintaining a portfolio of interest-bearing investments with a balanced maturity structure. In light of the anticipated economic improvement, we have increased our ratio of equity investments as compared with the previous year. We have applied a value protection model to our equity investments in order to limit market risks. Should growing economic problems, such as sustained infl ation or a deepening of the eurozone crisis, lead to a signifi cant downturn, various courses of action are open to us.

The effects of the fi nancial crisis have remained largely manageable for us as we deliberately avoided structured products entailing credit risks, such as asset-backed securities, collateralised debt obligations and collateralised loan obligations issued in 2007 and 2008. The asset-backed securities in our direct portfolio are chiefl y European ones with top ratings, and our investments have focused on German issuers with similarly strong credit ratings. We have minimal investment exposure to the eurozone countries currently under the microscope, i.e. Portugal, Italy, Ireland, Greece and Spain. As regards issuer risks, as proportions of our total investments, 3.6 % of Sach-HUK-Versicherungsverein’s interest-bearing investments are in government bonds, 3.0 % in corporate bonds and 23.1 % in bank paper. The bulk of our investments in banks are either covered by various statutory and private deposit protection schemes or involve interest-bearing securities that are protected in law by special guarantee funds.

Our interest-bearing investments allocated to fi xed assets in accordance with section 341b of the German Commercial Code (HGB) show a positive valuation reserve of € 4.2 million, while fi xed-asset equities and equity funds show a positive valuation reserve of € 5.3 million, and contain no hidden liabilities.

BaFin Circular 1/2004 (VA) requires us to subject our investment portfolio to a stress test, which we carried out on the balance sheet date of 31 December 2010, using the BaFin-specifi ed modifi ed stress test model from the German Insurance Association (GDV). All of the scenarios contained therein were passed successfully. The stress test determines whether an insurance undertaking would be in a position to meet its obligations towards its policyholders even if the capital markets underwent a protracted crisis. The stress test simulates a short-term adverse change on the capital markets and examines the impact on the insurance undertaking’s balance sheet and accounts.

The target horizon is the next balance sheet date. The stress test assumes the following scenarios: 1) a downturn on the equity markets while the bond market remains stable, 2) a downturn on the bond market while the equity market remains stable, 3) a simulta-neous crash on the equity and bond markets and 4) a simultaneous crash on the equity and real-estate markets.

16

Operational opportunities and risks

Operational risks may stem from inadequate or failed operational processes, the break-down of technical systems, external variables, employee-related incidents and changes in the legal framework. However, the main focus of the half-yearly risk inventory is on operational risks.

DEVK’s operating procedures are based on internal guidelines. The risk of employee-related incidents is limited via regulations governing authorisation and powers of representation as well as wide-ranging automated backup for operating procedures, while the effi cacy and functionality of in-house controls are monitored by the Internal Auditing unit.

Comprehensive access controls and preventive measures are in place in the IT fi eld to ensure the security and integrity of programmes, data and ongoing operations, and links between internal and external networks are suitably protected by state-of-the-art systems.

Crisis management guidelines have been drawn up on the basis of a corporate emer-gency analysis. The guidelines set out goals and terms of reference for the prevention of emergencies and dealing with them should they arise.

Solvency

The premium index and claims index indicate that the company’s own funds, proof of which must be furnished pursuant to section 53c of the German Insurance Supervision Act (VAG) in order to demonstrate our long-term ability to meet policy liabilities, provide a very high level of excess cover.

Cash fl ow

In the current fi nancial year, the cash fl ow from investments, i.e. the funds required for the net investment volume, amounted to € 51.1 million. The necessary funds were gener-ated by the company’s ongoing operations.

Summary of our risk status

Currently there are no discernible developments that could lead to a signifi cant impair-ment of our company’s net assets, fi nancial position and results of operations.

Supplementary report

No occurrences or events took place after the reporting date that could signifi cantly affect the company’s future net assets, fi nancial position or results of operations.

Outlook

As in previous years, we will again be able to make a premium refund in 2011. All general casualty insurance policies held uncancelled throughout 2010 and remaining claim-free will receive a premium refund of 15 % provided the refund amount is € 5 or more.

15


Management report

During 2011, we expect total premium income to rise, but we also expect claims expenses to increase disproportionately to premiums, in view of which DEVK is likely to achieve a lower underwriting result net of reinsurance. However, we regard a stabilisation of the underwriting result in 2012 as a realistic possibility provided there is no intensifi cation of com petition in the motor vehicle insurance segment, with an attendant fall in prices.

During 2011 and 2012 we expect a continuation of the moderate worldwide economic recovery. The equity markets have already priced in the bulk of the anticipated economic upturn, but despite this we expect further upward movement provided the economy is spared exogenous shocks such as debt restructuring or sovereign defaults by individual eurozone countries and the consequences thereof. As yet, the economic impact of the natural disaster in Japan cannot be forecast.

On the fi xed-interest markets, after recent yield increases at the long end of the yield curve, we feel that further interest rate rises in Germany and the USA are possible during the course of the year, and in this respect we would not rule out overreaction phases founded on fears of infl ation. However, despite an initial interest rate rise by the European Central Bank in April 2011, our view is that, taking the long view, we remain in a low-interest environment.

As far as DEVK Sach- und HUK-Versicherungsverein’s capital investments are concerned, we expect the 2011 and 2012 results to remain at around the 2010 level, though this would change if any of the risks touched upon above were to come to fruition.

In other respects, our current assessment of the prospects for 2011 and 2012 is that no major pressures are to be expected that could have a signifi cant impact on the overall result.

All in all, we expect the net profi t for 2011 to come in somewhat lower than the 2010 fi gure, while in 2012 we should at least maintain the 2011 level.

Cologne, 21 April 2011

The Management Board

Gieseler Etmans Faßbender Klass Rüßmann Zens

1817

Notes to the management report

List of insurance classes covered during the

fi nancial year

Accident insurance

Personal accident insuranceMotor vehicle accident insurance

Liability insurance

Motor vehicle liability insurance

Other motor vehicle insurance

Fully comprehensive motor insurancePartial comprehensive motor insurance (third party, fi re and theft)

Fire and non-life insurance

Fire insuranceBurglary and theft insuranceWater damage insuranceGlass insuranceWindstorm insuranceHousehold contents insuranceHomeowners’ building insuranceEngineering insurance Universal caravan insurance Extended coverage insuranceTravel baggage insuranceInsurance against damage by natural forcesAll-risk insurance

Other insurance policies

Breakdown service insurance Cheque card insurance

Foreign travel sickness insurance

Balance sheet to 31 December 2010

Financial statements

Assets

€ € € (2009: € 000s)

10,771,231 (2,783)

242,798 (6,748)

11,014,029 (9,531)

16,146,979 (16,831)

569,827,324 (544,502) 6,318,371 (6,205) 576,145,695 (550,707)

305,260,513 (304,033) 86,741,214 (48,874) 74,709,991 (92,602) 315,817,459 (325,006) 17,968,542 (12,885) 800,497,719 (783,400) 1,392,790,393 (1,350,938) 2,000,936 (1,796) 24,346,258 (24,415) 26,347,194 (26,211)

5,116,085 (5,619) (3,856)

52,844,068 (120,926) 84,307,347 (152,756) (113,167)

9,445,571 (11,662)

21,094,131 (17,758)

1,457,364 (305) 31,997,066 (29,725) 7,257,730 (7,549)

4,326,165 (1,927) 11,583,895 (9,476)

1,531,692,730 (1,552.426)

A. Intangible assets I. Licences, industrial property rights and similar rights

and assets acquired for valuable consideration, as well as licences in such rights and assets

II. Payments on account

B. Investments I. Real estate and similar land rights,

including buildings on third-party land

II. Investments in affi liated companies and participating interests1. Shares in affi liated companies 2. Participating interests

III. Other fi nancial investments1. Equities, fund units and other variable-yield securities2. Bearer bonds and other fi xed-interest securities3. Mortgage loans and annuity claims4. Other loans 5. Other investments

C. Receivables I. Receivables arising out of direct insurance operations

1. Policyholders 2. Intermediaries

II. Receivables arising out of reinsurance operations of which: Affi liated companies: € 4.082.036

III. Other receivablesof which: Affi liated companies: € 42,834,817

D. Other assets I. Tangible assets and inventories

II. Cash at bank, cheques and cash in hand

III. Other assets

E. Prepayments and accrued income I. Accrued interest and rent

II. Other prepayments and accrued income

Total assets

I hereby confirm that the premium provision of € 7,345,001.89, recorded on the balance sheet under item B.III. of the liabilities and shareholders’ equity, has been calculated in compliance with sections 341f and 341g of the German Commercial Code (HGB) as well as the Regulation issued pursuant to section 65 paragraph 1 of the Insurance Supervision Act (VAG).

Cologne, 20 April 2011 The Actuary in Charge | Dr Siegberg

Pursuant to section 73 of the German Insurance Supervision Act (VAG), I hereby attest that the assets detailed in the list of coverage assets are properly invested and secured in accordance with statutory and supervisory authority requirements.

Cologne, 20 April 2011 The Trustee | Thommes


2019

Liabilities and shareholders’ equity

A. Capital and reserves

– Retained earnings 1. Loss reserve pursuant to section 37 of VAG 2. Other retained income

B. Technical provisions I. Provision for unearned premiums 1. Gross amount 2. Reinsurance amount

II. Premium reserve

III. Claims outstanding:1. Gross amount

2. Reinsurance amount

IV. Provision for bonuses and rebates

V. Equalisation provision and similar provisions

VI. Other technical provisions 1. Gross amount 2. Reinsurance amount

C. Provisions for other risks and charges I. Provisions for taxation

II. Other provisions

D. Deposits received from reinsurers

E. Liabilities I. Liabilities arising out of direct insurance operations

1. Policyholders 2. Intermediaries

II. Liabilities arising out of reinsurance operationsamount owed to Affi liated companies: € 175,628

III. Other liabilities of which:Tax: € 7,253,886 Social security: € 2,824 Affi liated companies: € 55,206,934

F. Accruals and deferred income

Total liabilities

€ € € (2009: € 000s)

151,521,407 (151,521) 726,909,234 (698,609) 878,430,641 (850,131)

106,390 (106) 6,201 (7) 100,189 (99)

13,239 (17)

450,760,624 (438,789) 135,410,943 (134,849) 315,349,681 (303,940)

21,013,968 (28,061)

24,962,224 (41,901)

1,762,380 (1,641) 170,366 (147) 1,592,014 (1,494) 363,031,315 (375,512)

23,567,105 (28,694)

32,602,218 (26,387) 56,169,323 (55,081)

62,525,655 (62,159)

20,855,143 (25,055) 69,840 (135) 20,924,983 (25,190)

480,763 (978) (198)

149,855,120 (183,073) 171,260,866 (209,241) (6,973) (3) (21,316)

274,930 (302)

1,531,692.730 (1,552,426)

Profi t and loss account for the period from 1 January to 31 December 2010

Items

I. Technical account

1. Earned premiums, net of reinsurance a) Gross premiums written b) Outward reinsurance premiums

c) Change in the gross provision for unearned premiums d) Change in the provision for unearned premiums,

reinsurers’ share

2. Allocated investment return transferred from the non-technical account, net of reinsurance

3. Other technical income, net of reinsurance

4. Claims incurred, net of reinsurance a) Claims paid aa) Gross amount bb) Reinsurers’ share

b) Change in the provision for claims aa) Gross amount bb) Reinsurers’ share

5. Changes in other technical provisions, net of reinsurance a) Premium reserve, net of reinsurance b) Other technical provisions, net of reinsurance

6. Bonuses and rebates, net of reinsurance

7. Net operating expenses a) Gross operating expenses b) of which: Reinsurance commissions and profi t participation

8. Other technical charges, net of reinsurance

9. Subtotal

10. Change in the equalisation provision and similar provisions

11. Underwriting result, net of reinsurance

Balance carried forward:

€ € € (2009: € 000s)

296,180,122 (291,703) 45,692,409 (44,909) 250,487,713 (246,794) – 659 (– 46)

– 274 (2) – 933 (– 44) 250,486,780 (246,750)

– 97,809 (– 165)

189,199 (125)

210,366,469 (196,244) 30,333,425 (29,226) 180,033,044 (167,018)

11,971,508 (4,578) – 561,626 (3,852) 11,409,882 (8,430) 191,442,926 (175,448)

3,992 (3) – 117,734 (– 260) – 113,742 (– 257)

174,698 (5,190)

78,483,700 (74,568)

9,445,810 (9,313) 69,037,890 (65,255)

1,212,630 (935)

– 11,403,716 (– 375)

16,938,123 (9,640)

5,534,407 (9,265)

5,534,407 (9,265)


Financial statements

2221

Items

Balance carried forward:

II. Non-technical account

1. Investment income a) Income from participating interests of which: from affi liated companies: € 15,425,000 b) Income from other investments

aa) Income from real estate, similar land rights and buildings, including buildings on third-party land

bb) Income from other investments

c) Write-ups on investments d) Gains on the realisation of investments

2. Investment charges a) Investment management charges, interest expenses and other charges on capital investments b) Write-downs on investments c) Losses on the realisation of investments

3. Allocated investment return transferred to the non-life insurance technical account

4. Other income

5. Other charges

6. Result from ordinary activities

7. Extraordinary income

8. Extraordinary charges

9. Extraordinary result

10. Taxes on extraordinary profi t or loss a) Own

b) Transferred share of cost

11. Other taxes

12. Net profi t for the year

13. Allocation to retained earnings– in other retained earnings

14. Net retained profi t

€ € € € (2009: € 000s)

5,534.407 (9,265)

15,819,158 (15,429) (15,320)

2,347,189 (2,347) 32,130,872 (34,777) 34,478,061 (37,124) 3,559,217 (9,778) 1,825,850 (3,916) 55,682,286 (66,247)

1,847,772 (1,871) 8,112,719 (7,557) 477,650 (308) 10,438,141 (9,737)

45,244,145 (56,510)

1,095,818 (1,090) 44,148,327 (55,420)

341,406,791 (315,102)

347,009,165 (322,086) – 5,602,374 (– 6,985)

44,080,360 (57,701)

12,154,374 (–)

18,417,790 (–)

– 6,263,416 (–)

8,796,874 (13,997) – (500) 8,796,874 (14,497)

720,070 (552) 9,516,944 (15,049)

28,300,000 (42,652)

28,300,000 (42,652)

– (–)

Notes to the accounts

Accounting and valuation methods

The provisions of the German Act on Modernisation of Accounting Regulations (BilMog) will be applied from 1 January 2010 onwards. Its consequences for the accounting and valuation methods will be discussed under the various headings.

Where BilMoG provides a choice concerning accounting methods we have proceeded as follows:– No use has been made of the option allowed under section 274 paragraph 1 sentence 2

HGB of recognising deferred tax assets in consequence of tax reliefs.– Pursuant to article 67 paragraph 8 sentence 2 of the German Act Introducing the

Commercial Code (EGHGB), earlier years’ fi gures have not been adjusted to the new BilMoG provisions.

– The option of retaining an “other provision” pursuant to article 67 paragraph 1 sen tence 4 in conjunction with sentence 2 EGHGB will be exercised.

– Pursuant to section 253 paragraph 2 sentence 2 HGB, pension provisions will be dis-counted at the average market rate given an assumed residual term of 15 years.

– The option provided for under article 67 paragraph 1 EGHGB of distributing the neces-sary allocation to the pension provisions over a maximum of 15 years has not been exercised. Instead, a one-off allocation of the entire amount was made in 2010.

Under a pension commitments assumption of debt agreement with DEVK Rückversicherungs- und Beteiligungs-AG dated 31 March 1998 and supplemented on 28 December 2010, the company showing the provision on its balance sheet is required not to exercise the option, in return for the refunding of the one-off adjustment expense.

The intangible assets (IT software) are recognised at their costs of acquisition and, with the exception of advance payments, subjected to scheduled depreciation. Low-value assets are assigned to a pool of such assets and either depreciated over a fi ve-year period, beginning from the year of acquisition, or recorded as operating expenses in their year of acquisition.

Land, land rights and buildings including buildings on third-party land are recorded

at their costs of acquisition or production and subjected to scheduled depreciation.

Shares in affiliated companies and participating interests are shown either at their costs of acquisition or at the lower of cost or market.

Shares, fund units and other variable-yield securities, bearer bonds and other fixed-

interest securities are shown at the lower of their costs of acquisition or market prices. Investments allocated pursuant to section 341b paragraph 2 HGB to the fi xed assets are valued according to the diluted lower value principle. Investments assigned to the current assets are valued according to the strict lower value principle. Where a write-down to a lower value took place in previous years, a corresponding write-up subsequently took place if this asset could then be assigned a higher value on the balance sheet date. Said write-ups were to the lower of cost or market.

The mortgage loans and annuity claims are recognised at their nominal values less individual value adjustments for potential default risks. The discount points are shown under accruals and deferred income and recognised as revenue over the mortgage term.


2423

Registered bonds, notes receivable and loans are recognised at their nominal values. Other loans are also recorded at their nominal values. Premium and discount points are distributed over the term of the loans via deferrals and accruals.Zero notes receivable are capitalised at their costs of acquisition plus the interest entitle-ment as determined on the basis of the capital volume and the interest agreement.

Other investments are recognised either at the lower of cost or market, or their nominal values.

Receivables from direct insurance operations are capitalised at their nominal values less individual value adjustments plus a general write-down to cover the potential default risk.

Receivables from reinsurance operations are based on the reinsurance contracts and are recognised at their nominal values.

Other receivables are shown at their nominal values.

Other assets not constituting operating or offi ce equipment are recognised at their nominal values. Operating or offi ce equipment is shown at its cost of acquisition or production as reduced by scheduled depreciation. Depreciation is calculated according to the straight-line method. Low-value assets are written off in the year of acquisition, unless they are assigned to a pool of such assets, in which case they are either depre-ciated over a fi ve-year period, beginning from the year of acquisition, or recorded as operating expenses in their year of acquisition.

Apart from advance payments for future periods, prepayments and accrued income chiefl y comprise interest claims not yet due, which are recorded at their nominal values.

Technical provisions are calculated by application of the following principles:For moped insurance, a provision for unearned premiums is calculated for January and February of the following year. The premium shares assignable to these two months are calculated, depending on the insurance policy terms, as unearned premium provisions from the premiums booked each month. When calculating the unearned premium provi-sions, we complied with the regulation laid down by the Finance Minister of North Rhine-Westphalia on 30 April 1974. Provisions for unearned premiums did not have to be set up with respect to other classes of insurance since the policy year and calendar year are identical in these cases.

The life assurance provision required for the child accident insurance was calculated individually according to the prospective method, taking implicit recognised costs duly into account, on the basis of the DAV 2006 HUR, 4 % mortality tables. An assumed rate of interest of 3.25 % was applied with respect to claims for which provisions fi rst had to be established during the period from 31 December 2000 to 31 December 2003, as against an assumed rate of 2.75 % with respect to claims for which provisions fi rst had to be established during the period from 31 December 2004 to 31 December 2006, and 2.25 % for all later claims.

The provision for claims outstanding is calculated individually for each claim. A provi-sion for IBNR losses is established according to general blanket criteria. The provision includes amounts designated for claims settlement.

The pensions life assurance provision was calculated in accordance with section 341f and 341g HGB on the basis of the DAV 2006 HUR mortality table, applying an assumed interest rate of 4.0 %. In the case of claims for which provisions fi rst had to be estab-lished during the period from 31 December 2000 to 31 December 2003, the assumed interest rate applied was 3.25 %, as against 2.75 % with respect to claims for which provisions fi rst had to be established during the period from 31 December 2004 to 31 December 2006, and 2.25 % for all later claims.The reinsurance amount was calculated in accordance with the contractual agreements in this respect.

The allocation to the provision for bonuses was made on the basis of Executive Board and Supervisory Board decisions that took tax regulations duly into account.

The provision for rebates was established on the basis of contractual agreements with policyholders.

The equalisation provision and other provisions were calculated in accordance with the annex to section 29 of the German Regulation on Accounting in the Insurance Sector (RechVersV).

The other technical provisions include unused amounts from dormant motor insurance policies, the provision for road traffi c victims ceded by Verkehrsopferhilfe e.V. (VOH) (the Road Accident Victims Aid Association), a cancellation provision for premium claims, a provision for premiums already received and for premium obligations, and also cancel la-tion provisions for reinsurance contracts. These provisions are either estimated or as far as possible calculated on the basis of mathematical models, where applicable based on past fi gures.

The other provisions are formed on the following basis:The tax provisions and other provisions (with the exception of the provision for partial retirement benefi t obligations) are calculated according to anticipated needs and set at the levels necessary to the best of our commercial judgement. Pursuant to section 253 paragraph 2 HGB, other provisions with a residual term of more than one year are discounted at an average market interest rate corresponding to their residual terms.

The provision for partial retirement benefit obligations is calculated according to the projected unit credit method. Biometric calculation principles were not applied. Dis-counting was done at the average market interest rate published by Deutsche Bundes-bank, as arrived at assuming a residual term of three years (cf. section 253 paragraph 2 sentence 1 HGB). The fi nancing age on expiry corresponds with the con tractual age on



2625

expiry. The rate of pay increase was set at 1.95 % per annum. On the transition to BilMoG, there was a coverage shortfall on 1 January 2010 as compared with 31 December 2009, and the sum required to make good this shortfall was recorded as extraordinary expenses.

The anniversary payments provision was also calculated according to the projected unit credit method, on the basis of Professor Klaus Heubeck’s 2005G actuarial tables. Discounting was done at the average market interest rate published by Deutsche Bundes-bank, as arrived at assuming a residual term of 15 years (cf. section 253 para graph 2 sentence 2 HGB). The fi nancing age on expiry corresponds with the age at which an anniversary payment becomes due. The rate of pay increase (including career trend) was set at 2.1 % p.a.

The deposits received from reinsurers result from a reinsurance agreement to cover claims and pensions provisions, valued at the compliance amounts.

Liabilities arising out of direct insurance operations and other creditors are valued at the compliance amounts.

Liabilities arising out of reinsurance operations result from the reinsurance contracts and are recognised at their compliance amounts.

Accruals and deferred income comprise the discount points on mortgage loans, annu-ity charge claims, registered bonds, notes receivable and loans as well as advance rent receipts.

Items in foreign currency are converted into euros on the balance sheet date at the median foreign currency exchange rate.

The allocated investment return for own account was set at 4.0 %, 3.25 %, 2.75 % or 2.25 % of the respective arithmetical means of the initial and fi nal amounts in the gross pension coverage provisions for casualty, liability, motor vehicle liability and motor vehicle accident insurance.



Changes to Asset Items A., B.I. to III. during the 2010 fi nancial year

Assets

Balance sheet Balance sheet value 2009 Additions Transfers Disposals Write-ups Write-downs 2010 € 000s € 000s € 000s € 000s € 000s € 000s € 000s

2,783 109 9,210 – – 1,331 10,771 6,748 2,705 – 9,210 – – – 243

9,531 2,814 – – – 1,331 11,014

16,831 – – – – 684 16,147

544,502 25,325 – – – – 569,827 6,205 171 – 58 – – 6,318

550,707 25,496 – 58 – – 576,145

304,033 24,394 – 18,917 3,075 7,324 305,261

48,874 38,581 – 714 – – 86,741

92,602 1,265 – 19,060 – 97 74,710

127,500 – – 25,000 – – 102,500

189,950 20,811 – 5,000 – – 205,761 7,556 – – – – – 7,556 12,885 4,600 – – 484 – 17,969

783,400 89,651 – 68,691 3,559 7,421 800,498

1,360,469 117,961 – 68,749 3,559 9,436 1,403,804

A. Intangible assets 1. Licences, industrial property

rights and similar rights and assets acquired for valuable consideration, as well as licences in such rights and assets

2. Payments on account 3. Total A.

B.I. Real estate and similar land rights, including buildings on third-party land

B.II. Investments in affi liated companies and participating interests

1. Shares in affi liated undertakings

2. Participating interests

3. Total B.II.

B.III. Other investments

1. Shares, investment fund units and other variable-yield securities

2. Bearer bonds and otherfi xed-interest securities

3. Mortgage loans and annuity claims

4. Other loans a) Registered bondsb) Notes receivable and loans c) Other loans

5. Other investments

6. Total B.III.

Overall total

27 28

Notes to the balance sheet

Re Assets B.

Investments

Pursuant to section 341b paragraph 2 HGB, we have assigned investments for long-term retention in the investment portfolio to the fi xed assets. As of 31 December 2010, our investments had the following book and current values:

The valuation reserves include hidden liabilities totalling € 17.46 million. These relate to real estate, mortgage loans, zero bonds, shares and securities capitalised at their nominal values pursuant to section 341c HGB.

Depending on the investment type, a variety of different methods were used to calculate the current values.

Real estate is valued according to the gross rental method. All real estate held on 31 December 2010 was revalued with effect from that date.

Book value€

16,146,979

569,827,3246,318,371

305,260,51386,741,21474,709,991

102,500,000205,761,000

7,556,45917,968,542

1,392,790,393

1,016,156,943

166,685,504

Current value€

28,240,000

1,407,263,4117,098,175

351,365,70893,599,61979,177,410

107,059,852202,187,012

5,931,17815,335,666

2,297,258,031

1,916,854,011

176,154,863

B.I. Real estate and similar land rights, including buildings on third-party land

B.II. Investments in affiliated companies and participating interests1. Shares in affiliated companies

2. Participating interests

B.III. Other investments 1. Shares, fund units and other variable-yield securities

2. Bearer bonds and other fixed-interest securities 3. Mortgage loans and annuity claims 4. Other loans

a) Registered bondsb) Notes receivable and loansc) Other loans

5. Other investments

Overall total

of which:Investments valued at costs of acquisition

of which: Investments in fixed assets pursuant to section 341b paragraph 2 HGB

Investments

The current value of shares in affi liated companies and participating interests are based either on the basis of gross rental values, at market prices or book value equals market value. Shares in DEVK Jupiter Vier GmbH, Ictus GmbH (formerly DEVK Sigma GmbH) and Echo Rückversicherungs-AG, for example, were recognised at their book values.

Lien on real estate was valued using the most up-to-date yield curve, while taking default and property risk duly into account.

Both dividend-bearing securities and fi xed-interest securities capitalised at their costs of acquisition are valued using the year’s end market prices. Pursuant to section 56 RechVersV, the current values of investments capitalised at nominal value (registered securities) and zero notes payable were calculated at normal market conditions on the basis of the yield curve. The current value of other investments was calculated on the basis of the year’s end prices reported by the respective issuing banks.

The current values of the other loans and silent participating interests within the meaning of the German Banking Act (KWG) (equity surrogates) were calculated on the basis of the discounted cash fl ow method on the basis of the current euro swap curve plus a risk premium, taking into account the anticipated future payment streams in light of debtor-specifi c assumptions.

The market values of investments denominated in foreign currencies were calculated on the basis of the year’s end exchange rates.



Fixed-asset securities

Other loans

Book value € 000s

1,793

23,894

Fair value € 000s

1,595

21,125

Details of fi nancial instruments within the meaning of section 285 paragraph 18 HGB that are capitalised at their fair value

We have refrained from making any write-downs in accordance with section 253 sen-tence 4 HGB as we either intend to hold various securities until maturity or we are assuming that any fall in value is only temporary.

3029

Re Assets B.I.

Real estate and similar land rights, including buildings on third-party land

Real estate to a book value of € 1,994,779 is predominantly used by DEVK Sach- und HUK-Versicherungsverein a.G. and other DEVK Group companies. The proportion of each property used by the DEVK Group in square metres is calculated by deducting the area used by third parties from the overall area.

Valuation methodsShort put options: European options Black-Scholes American options Barone-AdesiShort call options: European options Black-Scholes American options Barone-Adesi

Book value premium€ 000s

466

82

Nominal volume€ 000s

6,620

4,050

Type

Short put options

Short call options

Other liabilities

Other liabilities

Fair value of premium € 000s

253

367

Details of derivative fi nancial instruments and forward purchases in accordance with section 285 paragraph 19 HGB

Hidden reserves/hidden charges

€ 000s

17,567

–

37

590

Current value € 000s

145,313

55,062

10,218

70,083

Dividends€ 000s

3,090

2,374

313

3,456

Investment goal

Equity funds

Mixed funds

Bond funds

Real-estate funds

Limitation on daily redemption

once a month up to € 50,000 or on timely notification or only pro

rata with sales of real estate

Details of units or shareholdings in domestic investment funds in accordance with section 285 paragraph 26 HGB

Re Assets B.II.

DEVK Rückversicherungs- und Beteiligungs-AG, Cologne

DEVK Allgemeine Versicherungs-AG, Cologne

DEVK Rechtsschutz-Versicherungs-AG, Cologne

DEVK Krankenversicherungs-AG, Cologne

DEVK Allgemeine Lebensversicherungs-AG, Cologne

DEVK Pensionsfonds-AG, Cologne

DEVK Vermögensvorsorge- und Beteiligungs-AG, Cologne

DEVK Alpha GmbH, Cologne

DEVK Asset Management GmbH, Cologne

DEVK Beta GmbH, Cologne

DEVK Gamma GmbH, Cologne

DEVK Omega GmbH, Cologne

DEVK Private Equity GmbH, Cologne

DEVK Saturn GmbH, Cologne

DEVK Service GmbH, Cologne

DEVK Unterstützungskasse GmbH, Cologne

DEVK Versorgungskasse GmbH, Cologne (formerly DEVK Iota GmbH)

DEVK Web-GmbH, Cologne

DEVK Zeta GmbH, Cologne

DEVK Zeus Vermögensverwaltungs-AG, Cologne

Assistance Service GmbH, Schöneiche

Ceyoniq Consulting GmbH, Aachen (formerly Sales & Services)

Ceyoniq Technology GmbH, Bielefeld

eSlidez GmbH, Bielefeld

German Assistance Versicherung AG, Coesfeld

Hands on Media GmbH, Bielefeld

Hotelbetriebsgesellschaft SONNENHOF mbH, Bad Wörishofen

HYBIL B.V., Venlo

Ictus GmbH, Cologne (formerly DEVK Sigma GmbH)

JUPITER VIER GmbH, Cologne

KASSOS Beteiligungs- und Verwaltungs-GmbH, Cologne

Lieb’ Assur S.A.R.L., Nîmes

Monega Kapitalanlagegesellschaft mbH, Cologne

O. I. L. Vertriebs GmbH, Coesfeld

OUTCOME Unternehmensberatung GmbH, Aachen

Reisebüro Frenzen GmbH, Cologne

SADA Assurances S.A., Nîmes

ECHO Rückversicherungs-AG, Zurich

Investments in affi liated companies and participating interests

Results from previ-ous fi nancial year

€

50,000,000

–

–

–

–

120,000

–

– 98

–

– 37

1,219

– 86

1,059,384

– 242

–

396

– 776

–

–

89

838,460

– 256,911

760,725

3,394

– 4,619,719

37,469

–

3,888,660

– 6,207

142,088

11,074

– 110,321

1,458,560

– 105,667

– 2,026,280

149,122

– 3,201,606

CHF

–10,697,149

Equity€

931,788,436

312,170,794

29,563,459

8,980,291

61.880.301

8,713,766

113,000,000

26,124

750,000

34,229

26,729

24,260

125,829,860

24,104

3,110,379

24,848

23,570

25,000

305,652

50,566

– 542,133

– 172,109

1,827,649

44,387

– 691,941

63,981

356,023

49,202,642

4,993,140

3,571,760

36,074

265,675

6,658,560

– 629,953

– 2,014,397

404,699

8,313,835

CHF

65,586,161

*

.checked% share

100.00

100.00

100.00

100.00

51.00

51.00

51.00

51.00

100.00

100.00

100.00

100.00

57.65

100.00

74.00

100.00

51.00

100.00

51.00

100.00

100.00

59.61

59.61

32.30

100.00

57.94

51.00

85.10

65.20

100.00

100.00

100.00

45.00

100.00

100.00

52.00

100.00

100.00

.% share

100.00

100.00

100.00

100.00

100.00

100.00

51.00

100.00

100.00

100.00

100.00

100.00

65.00

100.00

74.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

66.67

55.00

100.00

66.67

100.00

90.00

75.00

100.00

100.00

100.00

45.00

100.00

100.00

52.00

100.00

100.00

Subscribedcapital

€

306,775,129

194,290,915

17,895,216

6,000,000

7,158,086

4,000,000

20,000,000

25,000

750,000

25,000

25,000

25,000

10,000,000

25,000

260,000

25,000

25,000

25,000

25,000

50,000

51,129

100,000

1,000,000

25,000

1,462,500

25,000

375,000

400,000

5,000,000

25,000

25,000

250,000

5,200,000

102,258

525,000

25,000

18,216,840

CHF

50,000,000



* Shortfall not covered by capital contribution

32

Re Assets B.III.

Other investments Other loans exclusively comprise registered participation certifi cates.Other investments comprise fund units, silent partnerships within the meaning of KWG and cooperative shares.

Re Assets E.II

Other prepayments and accrued income

Premium on notes receivable and loans, registered participation certifi cates, registered bondsand silent partnerships € 1,780,692 Advance payments for future services € 2,545,473 € 4,326,165

Re Liabilities A.–.

Retained earnings

2. Other retained earnings 31.12.2009 € 698,609,234 Allocation € 28,300,000 31.12.2010 € 726,909,234

31

Pursuant to section 285 paragraph 11 HGB, only investments in affi liated companies and participating interests involving holdings of at least 20.00 % have been included here.

Re Liabilities B.

Technical provisions

Figures in € 000s of which: Equalisation provision and

similar provisions

of which: Claims outstandingTotal gross

provision

Insurance class

Accident

Liability

Motor vehicle liability

Other motor vehicle

Fire and non-life

of which:

Fire

Household contents

Homeowners’ building

Other non-life

Other

Total

2009

–

4,822

20,757

3,805

12,308

632

–

6,508

5,168

208

41,900

2010

–

6,057

5,621

–

13,258

658

–

7,136

5,464

26

24,962

2009

63,272

47,927

298,078

11,244

18,101

1,225

5,253

8,124

3,499

167

438,789

2010

63,276

44,011

312,593

13,316

17,340

247

5,263

7,815

4,015

225

450,761

2009

68,286

54,671

319,981

24,148

43,052

1,857

17,740

14,751

8,704

376

510,514

2010

68,296

51,989

319,343

22,519

36,170

906

10,625

15,121

9,518

301

498,618

Re Liabilities B.IV.

Provision for bonuses and rebates

a) Bonuses 31.12.2009 € 27,855,674 Withdrawal € 7,125,914 Allocation € 30,063 31.12.2010 € 20,759,823

b) Rebates 31.12.2009 € 205,127 Withdrawal € 95,825 Release € 982 Allocation € 145,825 31.12.2010 € 254,145

Re Liabilities C.II.

Other provisions

Other provisions include excess cover of € 622,931 for the anniversary provision, giving rise to a retention option pursuant to article 67 paragraph 1 sentence 1 EGHGB.

Re Liabilities F.

Accruals and deferred income

Discount points on mortgage loans and annuityclaims, registered bonds, notes receivableand loans € 257,182 Advance rental receipts € 17,748 € 274,930



3433

Direct insurance operations

2010, € 000s Gross expenses on

Accident

Liability


Other motor vehicle

Fire and non-life

of which:

Fire

Household contents


Other non-life

Other

Total

Underwriting result, net of reinsurance

7,778

11,312

– 4,500

– 11,906

3,187

–369

4,393

– 1,835

998

– 337

5,534

Reinsurancebalance

– 2,605

–510

928

1,037

– 4,028

–690

–698

– 1,664

–976

–174

– 5,352

Insurance operations

12,069

14,053

12,329

10,704

28,989

492

12,726

9,837

5,934

340

78,484

Insuranceclaims

14,183

7,276

88,990

66,772

43,866

– 181

14,752

22,698

6,597

1,251

222,338

Net premiums

earned

28,416

33,443

73,516

44,438

69,666

336

32,485

23,725

13,120

1,008

250,487

Net premiums

gross

36,523

34,360

80,941

60,798

82,263

710

33,248

33,485

14,820

1,294

296,179

Notes to the profi t and loss account

Booked premiums

gross

36,523

34,360

80,944

60,796

82,263

710

33,248

33,485

14,820

1,294

296,180

2009, € 000s Gross expenses on

Accident

Liability


Other motor vehicle

Fire and non-life

of which:

Fire

Household contents


Other non-life

Other

Total

Underwriting result, net of reinsurance

1,269

7,395

– 3,168

– 882

4,703

– 254

3,510

– 1,376

2,823

– 52

9,265

Reinsurancebalance

– 924

– 1,792

– 2,505

394

– 5,191

– 205

– 483

– 2,944

– 1,559

– 202

– 10,220

Insurance operations

11,119

13,372

12,171

10,564

27,173

433

11,709

8,802

6,229

169

74,568

Insuranceclaims

21,293

9,540

72,360

60,419

36,377

147

13,536

18,286

4,408

833

200,822

Net premiums

earned

28,797

33,838

72,563

42,659

67,855

504

31,740

21,603

14,008

1,038

246,750

Net premiums

gross

37,007

34,776

79,978

58,316

80,272

709

32,241

31,109

16,213

1,307

291,656

Booked premiums

gross

37,007

34,776

80,018

58,323

80,272

709

32,241

31,109

16,213

1,307

291,703

The gross overall expenses on all insurance operations was as follows:Acquisition costs € 39,426,790 Administration costs € 39,056,910

Re Item II.7.

Extraordinary income

Pursuant to article 67 paragraphs 1 and 7 EGHGB, the cost refunds in relation to service contracts with subsidiaries arising from the revaluation of the pension provision during the course of the transition to BilMoG has been recorded at € 12,154,374.

Insurance agents’ commission and other remuneration, personnel expenses

1. Insurance agents’ commission of all types within the meaning of section 92 HGB for direct insurance operations

2. Other insurance agents’ remuneration within the meaning of section 92 HGB

3. Wages and salaries

4. Social-security contributions and social-insurance costs

5. Retirement pension costs

Total

2010, € 000s

24,038

1,261

185,310

24,700

13,364

248,673

2009, € 000s

22,179

1,378

173,114

27,721

13,465

237,857

The pension provision for DEVK Sach- und HUK-Versicherungs vereins a.G. employees is shown on the balance sheet of DEVK Rückversicherungs- und Beteiligungs-AG. The wages and salaries, social-security contributions and social-insurance costs and the allocation to the pension provision, with the exception of the interest allocation, are charged to DEVK Sach- und HUK-Versicherungsverein a.G. The personnel expenses for employees seconded to subsidiary companies under the Cooperative Agreement are allocated according to the costs-by-cause principle.

During the year under review, Management Board remuneration totalled € 912,100. The retirement pensions of former Management Board members and their surviving dependants totalled € 901,857. On 31 December 2010, DEVK Rückversicherungs- und Beteiligungs-AG capitalised a pension provision of € 10,623,887. The Supervisory Board remuneration totalled € 356,489 and Advisory Board remuneration to € 79,871.

Other information

Contingencies and other fi nancial obligations

At the end of the year, other financial obligations arising from real-estate holdings, fund units, shares in affiliated companies and participating interests totalled € 21.8 million. This includes obligations towards affiliated companies amounting to € 10.9 million.

On the balance sheet date, there were financial obligations totalling € 10.7 million from open short options and € 56.0 million from multi-tranche notes payable.

Under an assumption of debt agreement, the pension provisions for all employees in the DEVK Group have been assigned to DEVK Rückversicherungs- und Beteiligungs-AG in return for the transfer of corresponding investments, thereby bundling all of the DEVK



Re Item II.8.

Extraordinary Expenses

Pursuant to article 67 paragraphs 1 and 7 EGHGB, the revaluation of the pension provi-sion and the provision for partial retirement benefi t obligations during the course of the transition to BilMoG, expenses totalling € 18,417,790 have been recognised. In line with the existing assumption of debt agreement, this sum has been refunded to the company showing the provision on its balance sheet.

3635

General information

Lists of the members of the Management Board, Supervisory Board and Advisory Board are given prior to the management report.

During the year under review, the average number of employees, disregarding inactive employment contracts and after conversion of part-time employees to full-time equivalents, came to 3,209, made up of 71 executives and 3,138 salaried employees.

Pursuant to section 285 paragraph 17 HGB, details of the auditors’ fees are given in the consolidated notes.

As required by law the annual financial statements are published in Germany’s Electronic Federal Gazette.

The consolidated financial statements are published on the website of DEVK at www.devk.de, as well as in the Electronic Federal Gazette.

Cologne, 21 April 2011

The Management Board

Gieseler Etmans Faßbender Klass Rüßmann Zens

Group’s pension commitments with a single risk bearer and improving the protection in place for employees’ pension rights. The joint and several liability for the pension commitments capitalised on the DEVK Rückversicherungs- und Beteiligungs-AG balance sheet has given rise to benefit obligations totalling € 309.3 million.

Number of insurance contracts concluded directly by the Grou

Annual Report 2010 DEVK€¦ · Prof. p.s.g. p.s.n. PublG RechVersV reg. assoc. resp. Ret. RPR 000s...

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