## Expense ratio 

Underwriting costs (including change in deferred acquisition costs) as a percentage of premiums earned. 

## Fair value 

The amount for which an asset could be exchanged between knowl- edgeable, willing parties in an arm’s length transaction. 

## FAS 

U.S. Financial Accounting Standards on which the details of U.S. GAAP (Generally Accepted Accounting Principles) are based. 

## Forwards 

The parties to this type of transaction agree to buy or sell at a spec- ified future date. The price of the underlying assets is fixed when the deal is struck. 

## Funds held by/for others under reinsurance contracts 

Funds held by others are funds to which the reinsurer is entitled but which the ceding insurer retains as collateral for future obligations of the reinsurer. The ceding insurer shows these amounts as “funds held under reinsurance business ceded.” 

## Futures 

Standardized contracts for delivery on a future date, traded on an exchange. Normally, rather than actually delivering the underlying asset on that date, the difference between closing market value and the exercise price is paid. 

## Goodwill 

Difference between the purchase price of a subsidiary and the rele- vant proportion of its net assets valued at the current value of all as- sets and liabilities at the time of acquisition. Minority interests are al- ways valued at carried-forward historical cost. Goodwill is amortized over its useful life. 

## Gross/Net 

In insurance terminology the terms gross and net mean before and after deduction of reinsurance respectively. (Net is also referred to as “for own account”). In connection with income from interests in affiliated enterprises, joint ventures and associated enterprises, the term “net” is used where the relevant expenses (e.g. depreciations and losses on the disposal of assets) have already been deducted. In the context of investments the term “net” is used where the relevant expenses (e.g. for investment management or valuation write- downs) have already been deducted from the income. This means that investment income (net) from investments in affiliated enter- prises, joint ventures and associated enterprises signifies the net re- sult from these investments. 

## Hedging 

The use of special financial contracts, especially derivative financial instruments, to reduce losses which may arise as a result of unfavor- able movements in rates or prices. 

## IAS 

International Accounting Standards. 

## IFRS 

International Financial Reporting Standards. Since 2002, the desig- nation IFRS applies to the overall framework of all standards ap- proved by the International Accounting Standards Board. Already ap- proved standards will continue to be cited as International Account- ing Standards (IAS). 

## IFRS Framework 

The framework for International Financial Reporting Standards (IFRS) which sets out the concepts that underlie the preparation and presentation of financial statements for external users. 

## Investments held on account and at risk of life insur- ance policyholders 

Mainly investments funding variable annuities plus investments to cover obligations under policies where the benefits are index-linked. Policyholders are entitled to the gains recorded on these invest- ments, but also have to carry any losses. 

## Issued capital and capital reserve 

This heading comprises the capital stock, the premium received on the issue of shares, and amounts allocated when option rights are exercised. 

## Joint venture 

An enterprise which is managed jointly by an enterprise in the Group and one or more enterprises not included in the consolida- tion. The extent of joint management control is more than the sig- nificant influence exercised over associated enterprises and less than the control exercised over affiliated enterprises. 

## Loss frequency 

Number of losses in relation to the number of insured risks. 

## Loss ratio 

Loss and loss adjustment expenses as a percentage of premiums earned. 

## Market value 

The amount obtainable from the sale of an investment in an active market. 

