41 Underwriting expenditure
Underwriting expenditure
| 2007 | 2006 | 2005 | |
|---|---|---|---|
| Gross underwriting expenditure | 51,818 | 53,065 | 54,594 |
| Investment income for risk of policyholders | –1,079 | –2,702 | –5,074 |
| Reinsurance recoveries | –1,906 | –2,175 | –2,400 |
| Underwriting expenditure | 48,833 | 48,188 | 47,120 |
Underwriting expenditure by class
| 2007 | 2006 | 2005 | |
|---|---|---|---|
| Expenditure from life underwriting | |||
| Reinsurance and retrocession premiums | 1,968 | 2,004 | 2,031 |
| Gross benefits | 28,877 | 26,234 | 22,129 |
| Reinsurance recoveries | –1,749 | –1,705 | –1,625 |
| Change in life insurance provisions for risk of company | 11,979 | 13,420 | 14,650 |
| Costs of acquiring insurance business | 1,098 | 1,083 | 1,060 |
| Other underwriting expenditure | 457 | 439 | 364 |
| Profit sharing and rebates | 424 | 801 | 2,214 |
| 43,054 | 42,276 | 40,823 | |
| Expenditure from non-life underwriting | |||
| Reinsurance and retrocession premiums | 306 | 339 | 526 |
| Gross claims | 3,589 | 3,848 | 4,343 |
| Reinsurance recoveries | –157 | –470 | –775 |
| Change in provision for unearned premiums | 79 | 65 | –46 |
| Change in claims provision | 13 | –209 | –49 |
| Costs of acquiring insurance business | 979 | 1,043 | 1,012 |
| Other underwriting expenditure | –50 | –71 | –52 |
| 4,759 | 4,545 | 4,959 | |
| Expenditure from investment contracts | |||
| Costs of acquiring investment contracts | 19 | 31 | 53 |
| Profit sharing and rebates | 16 | 64 | 17 |
| Other changes in investment contract liabilities | 985 | 1,272 | 1,268 |
| 1,020 | 1,367 | 1,338 | |
| 48,833 | 48,188 | 47,120 |
Profit sharing and rebates
| 2007 | 2006 | 2005 | |
|---|---|---|---|
| Distributions on account of interest or underwriting results | –133 | 458 | 1,824 |
| Bonuses added to policies | 411 | 369 | 379 |
| Deferred profit sharing expense | 146 | –26 | 11 |
| 424 | 801 | 2,214 |
Underwriting expenditure includes an amount of EUR 4,275 million in 2007 (2006: EUR 4,141 million; 2005: EUR 3,956 million) in respect of commission paid and payable with regard to the insurance operations. Amortisation of deferred acquisition costs amounted to EUR 1,552 million in 2007 (2006: EUR 1,444 million; 2005: EUR 1,475 million).
Expenditure from Life underwriting includes an amount of EUR 110 million in 2007 (2006: EUR 181 million; 2005: EUR 220 million) in relation to reserve strengthening for Insurance Asia/Pacific as further described under Segment reporting.
The investment income and valuation results regarding investments for risk of policyholders of EUR 1,079 million (2006: EUR 2,702 million; 2005: EUR 5,074 million) has not been recognised in Investment income and valuation results on assets and liabilities designated at fair value through profit and loss but is recognised in Underwriting expenditure together with the equal amount of change in insurance provisions for risk of policyholders.
ING transferred part of their life insurance business to Scottish Re in 2004 by means of a co-insurance contract. A loss amounting to EUR 160 million was recognised in Underwriting expenditure in 2004 on this transaction. This loss represented the reduction of the related deferred acquisition costs. In addition, an amount of EUR 240 million is being amortised over the life of the underlying business, starting in 2005 and gradually decreasing in subsequent years as the business tails off. The amount amortised in 2007 was EUR 15 million (2006: EUR 32 million; 2005: EUR 34 million). The cumulative amortisation as at 31 December 2007 was EUR 81 million (2006: EUR 66 million; 2005: EUR 34 million).
