Glossary
D
deferred taxes
The starting point for calculating the tax expenditure in the commercial balance sheet is the income statement for tax purposes. Allowance must also be made for deferred taxes if the taxable profit of the financial year diverges from the profit in the commercial income statement and the discrepancy is likely to be offset in subsequent financial years. If the net income in the commercial income statement is greater, a deferred tax liability must be shown on the liabilities side. The reporting of deferred taxes on the assets side, on the other hand, is optional under the German Commercial Code (HGB).
deposit accounting
An accounting method originating in US accounting principles for the recognition of short-term and multi-year insurance and reinsurance contracts with no significant underwriting risk transfer.
derivatives
These are financial products derived from underlying primary instruments such as equities, fixed-income securities and foreign exchange instruments, the price of which is determined on the basis of an underlying security or other reference asset. Notable types of derivatives include swaps, options and futures.
diversification
Orientation of business policy towards various lines of products and services in order to minimize the effects of economic fluctuations and stabilize the result.
due diligence audit
Auditing of a participating interest in the run-up to acquisition or merger. It encompasses, in particular, a systematic analysis of the strenghts and weaknesses of the proposition, analysis of the risks associated with the acquisition and a well-founded valuation of the item in question.
duration
Ratio in investment mathematics that is calculated as the sum total of the weighted payment dates of a financial instrument. The duration can thus also be considered as a yardstick for the interest rate risk associated with a financial instrument.
dynamic financial analysis (DFA)
Simulation technique based on integrated modeling used to analyze the entire financial and risk situation of an insurance enterprise over a defined period. DFA was developed in property/casualty insurance and is now also assuming growing importance for life insurers. It supports integrated corporate management by considering all risk factors (investments, underwriting side).
