Valuation

Fixed-income securities

Differences in valuation: SST carries fixed-income securities at market value. In statutory reporting, fixed-income securities are valued at their amortised cost less necessary depreciation to address other-than-temporary market value decreases.

Loans

Differences in scope: In SST, reinsurance contracts on a funds withheld basis for corporate-owned life insurance are reported as policy loans (look-through approach). In statutory reporting, those assets are part of the funds held by ceding companies and other receivables from reinsurance.

Differences in valuation: In SST, policy loans and intra-group loans are valued by discounting future estimated cash flows at risk-free rates, while under statutory reporting those loans are carried at nominal value. Value adjustments are recorded where the expected recovery value is lower than the nominal value.

Other investments

Differences in scope: In SST, short-term investments are defined on the basis of the remaining duration at time of purchase. Statutory reporting classifies short-term investments between cash and cash equivalents and other investments on the basis of initial duration.

Cash and cash equivalents

Differences in scope: please see above difference in scope for other investments.

Funds held by ceding companies and other receivables from reinsurance

Differences in scope: In SST, reinsurance contracts on a funds withheld basis for corporate-owned life insurance are reported as policy loans (look-through approach). In statutory reporting, those assets are part of the funds held by ceding companies and other receivables from reinsurance.

Differences in valuation: In SST, funds held by ceding companies for which a fixed interest is credited are valued by discounting future estimated cash flows at risk-free rates. Under statutory reporting, funds held by ceding companies are generally measured at the consideration received or at market value of the underlying assets.

Other assets

Differences in scope: in SST, reinsurance recoverables are part of re/insurance liabilities, whereas they are disclosed in other assets in statutory reporting.

Differences in valuation: In SST, other assets are measured at fair value. In statutory reporting, other assets are generally carried at nominal value.

Re/insurance liabilities

Differences in scope: In SST, reinsurance recoverables and deferred acquisition costs are shown in re/insurance liabilities. In statutory reporting, reinsurance recoverables and deferred acquisition costs are disclosed within other assets.

Differences in valuation: SST uses best estimates to value the reinsurance liabilities without specific margin for prudence. Statutory reporting values reinsurance liabilities at best estimates and requires provisions for adverse deviations. Other valuation differences arise from the discounting of the liability cash flows. In SST all liabilities are generally discounted using current risk-free rates. Under statutory reporting, technical provisions are generally discounted at the yields of the backing assets for life and health.

Funds held under reinsurance treaties

Differences in valuation: In SST, the valuation is based on best estimates of the underlying cash flows. Under statutory reporting, funds held under reinsurance treaties are carried at consideration received or market value of the underlying assets.

Other liabilities

Differences in valuation: In SST, no specific provision is made for currency fluctuations. In statutory reporting, a provision for currency fluctuation comprises the net effect of foreign exchange gains and losses arising from the revaluation of the opening balance sheet and the translation adjustment of the income statement from average to closing exchange rates at year-end.