Analytical Profit and Loss Account of Insurance Entities

Royal Decree 1317/2008 (amended by Royal Decree 1736/2010) approves the Sectoral Accounting Plan for insurance entities adapted to the International Financial Reporting Standards applicable in the European Union. These changes are reflected in the declaration form.

The Analytical Profit and Loss account of insurance entities is structured into three blocks, which are as follows:

Result of the Non-Life Insurance Technical Account
Result of the Life Insurance Technical Account
Result of the Non-Technical Account that presents the income and expenses that do not fit in the previous technical accounts.

The structure of the two blocks corresponding to the technical accounts is similar, with the differentiating element that each account is associated with a different line of business, but which for purely illustrative purposes can be summarized in the following concepts:

The imputed premiums for the year net of reinsurance They include the accrued premiums of direct insurance and accepted reinsurance adjusted by the variation in the provision for outstanding premiums, reduced by the premiums of ceded reinsurance net of the variation in the provisions for unearned premiums and for ongoing risks of direct insurance, accepted reinsurance and ceded reinsurance.
Income from tangible fixed assets and investments which include income from financial and material investments, profits from the disposal of investments and the application of value adjustments to investments
Income from investments allocated to insurance in which the policyholder assumes the investment risk (Life insurance branch)
Other technical income They include profits from intangible fixed assets and those from previous years.
Loss ratio for the year net of reinsurance It consists of the benefits paid from direct insurance and accepted reinsurance, reduced by those from ceded reinsurance, net of changes in provisions for benefits; It also includes expenses attributable to benefits, including commissions, external services, taxes, personnel expenses and amortization provisions.
Variation in other net technical provisions for reinsurance It includes the technical provisions applied to their purpose at the end of the financial year, net of the allocations to them.
Profit sharing and returns It is the amount of benefits paid to policyholders or insured to the extent that they represent a distribution of the profit from the activity as a whole; refunds refer to the total restitution of premiums.
Net operating expenses which includes three expense concepts: acquisition, administration, and commissions and participations paid to other insurance entities for their intermediation in the ceded and retroceded insurance. Expenses attributable to acquisition and administration include commissions, external services, taxes, personnel expenses, and depreciation.
Other technical expenses consisting of changes in provisions for insolvencies, depreciation of fixed assets and others.
Expenses for tangible fixed assets and investments which, together with the expenses attributable to investments, accounts for various financial expenses.
Investment expenses affected by insurance in which the policyholder assumes the investment risk (Life Insurance branch).

In the third block of information, the Non-Technical Account records income and expenses from investments, other income and other expenses not attributable to technical branches, and income and expenses from pension fund management, along with other extraordinary items.

Each block of the profit and loss account yields a subtotal that constitutes the result of each of the accounts.

Earnings before taxes integrates the results of the three accounts.
Result from continuing operations corresponds to the result before taxes net of profit tax
Result of the exercise It is obtained by adding the result from continued operations with that from discontinued operations net of taxes.