Summary of major accounting policies

Changes in accounting policies

In the 2008 financial year we adjusted the previous year’s figures with respect to the following circumstances retrospectively and directly in equity in accordance with the requirements of IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”:

a) In the second quarter of 2008 we correctly recognized an investment in the Group segment of Property/Casualty Primary Insurance previously classified as such on the basis of IAS 39 as an associated company due to the existence of a significant influence pursuant to IAS 28.7. The previous year’s figures for 2006 were adjusted directly in equity in an amount of EUR 18 million. Shareholders’ equity in the comparative period consequently increased by EUR 3 million as at 31 December 2007.

b) A total amount of EUR 50 million was reclassified from shareholders’ equity excluding minorities to minority interests with implications for previous years. This booking is connected with the sale of interests in E+S Rückversicherung AG by HDI V.a.G. to Hannover Re in 1995. In the subsequent year Hannover Re was included in the predecessor company of Talanx AG. The consolidated financial statements of the subsequent Talanx AG were not drawn up as subgroup accounts (accounts of entities under common control). The reallocation within shareholders’ equity brings uniformity to the principles used in preparing the accounts of all entities under the common control of the parent company HDI V.a.G.

c) In the second quarter of 2008 we modified the recognition of internal loan receivables and liabilities within the Group. In the previous year we had eliminated intra-group loans to other Group segments from the segment reporting pursuant to IAS 14.16. Contrary to this approach, from the second quarter of 2008 onwards we are no longer eliminating these loans, but are instead consolidating them. The current approach also reflects the requirements of IFRS 8, which are to be applied with effect from 1 January 2009 onwards. The effects of this change are only visible in the segmental balance sheet as at the balance sheet date; we have adjusted the comparative figures as at 31 December 2007.

d) With effect from 31 December 2008 we have recognized all interest expenses for other capital borrowed for financing purposes separately from the operating profit (EBIT) – previously only the interest on hybrid capital had been separated. This did not have any effects on the balance sheet or Group net income. In our assessment, the modified presentation represents the operating profit (EBIT) more accurately.