24 Annual Report 2020 Notes to the financial statements 1 Accounting principles The company s accounting principles are in line with those prescribed by the Swiss Code of Obligations OR and the Insur ance Supervisory Ordinance AVO They are consistent with those applied in the previous year The accounting and valuation principles applied for the main balance sheet items are as follows Investments Third party use real estate is valued at the lower of original acquisition cost including capitalised cost for improve ments less amortisation or market value Amortisation is at a rate of 2 on a straight line basis Equity investments and investment funds are valued at the lower of cost or market value Fixed income securities are valued at am ortised cost less required impairments The annual amortisation amount is recog nised within the investment result Receivables and liabilities arising out of derivative financial instruments Derivative assets and liabilities are ac counted for at fair value Tangible assets Own use real estate and all other tangible assets are amortised on a straight line basis Deferred acquisition costs Acquisition costs paid in respect of financ ing type Life reinsurance contracts are capitalised and amortised in proportion to the gross profit amounts expected to be realised over the duration of the Life con tract Acquisition costs that are directly attribut able to reinsurance contracts are capital ised and amortised over the lifetime of the contract in proportion to the premium in come earned These costs are regularly tested for impairment using a liability adequacy test Receivables Receivables are booked at nominal values and adjusted if there is a risk of them not being fully recoverable The adjustment is calculated on the basis of individual expo sures and a general allowance based on analysis of the receivables Other assets and liabilities These are shown at their nominal value Claims expenses and claims reserves Case reserves are created for the amounts reported by cedants At year end closing most statements of account received for recent underwriting years are incomplete and are subject to estimates The claims reserves are valued at the expected ulti mate cost including reserves for incurred but not reported claims either reported by cedants or estimated by underwriters and the actuarial department less claims paid Premiums Premiums are earned on a pro rata tem poris basis over the period of the risk or in proportion to the cover provided Other income from reinsurance business and Other underwriting expenses These items include technical income and expenses from reinsurance business Other income from reinsurance business primarily comprises structuring and recap ture fees Other income and expenses A large component of other income and expenses is foreign exchange gains and losses which are partially offset by cur rency hedges The offsetting gains and losses from currency hedge transactions are recorded as part of the results from derivative financial instruments 2 Transactions conducted in foreign currencies All balance sheet items are translated from their original currency into CHF using the year end exchange rate The company books a provision for net unrealised foreign exchange gains NewRe AnnualReport 2020 indd 24 28 04 21 19 06

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