17 Intangible Assets including Intangible Insurance Assets

In CHF million 
  31.12.200931.12.2008
Intangible insurance assets
  2 3382 446
Other intangible assets
  2 2382 205
Total intangible assets
  4 5764 651


Intangible insurance assets
In CHF million 
  Present value of future profits from acquired insurance portfolios (PVP) Deferred acquisition costs (DAC) Deferred origination costs (DOC) Total
  20092008200920082009200820092008
Balance as at 1 January
  21242 4172 612882 4462 644
Additions
  481534183499537
Amortisation
  –1–1–533–425–7–2–541–428
Effect of shadow accounting
  00–59–151–59–151
Classification as assets held for sale and other disposals
  –1–1
Foreign currency translation differences
  0–2–6–1530–1–6–156
Balance as at end of period
  20212 2992 4171982 3382 446


Present value of future profits (PVP) — The present value of future profits relates to portfolios of insurance contracts and investment contracts with discretionary participation acquired in a business combination or transfer of portfolios. These amounts, representing the present value of future profits amortised in proportion to gross profits over the effective life of the acquired insurance and investment contracts, relate to contracts acquired in Germany and France.

Deferred acquisition costs (DAC) — Certain acqui sition costs relating to new and renewed insurance contracts and investment contracts with discretionary participation are deferred.

Deferred origination costs (DOC) — These costs are recoverable and are directly attributable to securing the right for investment management services within investment contract policies. They relate to contracts in Luxembourg.

Other intangible assets
In CHF million 
  GoodwillCustomer relationshipsBrands and otherTotal
  20092008200920082009200820092008
 
Cost
 
Balance as at 1 January
  1 890599368602531342 511793
Additions
  6014107410
Additions from business combinations
  111 38243340139151 855
Classification as assets held for sale and other disposals
  –6–4–7–10–7
Foreign currency translation differences
  –8–91–2–26–2–23–12–140
Balance as at end of period
  1 9471 8903703682612532 5782 511
 
Accumulated amortisation and impairment
 
Balance as at 1 January
  –163–163–29–2–114–121–306–286
Amortisation
  –35–27–10–13–45–40
Impairment losses
  00
Classification as assets held for sale and other disposals
  646106
Foreign currency translation differences
  10014114
Balance as at end of period
  –157–163–63–29–120–114–340–306
 
Total other intangible assets as at end of period
  1 7901 7273073391411392 2382 205


Goodwill — Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of identifiable assets, liabilities and contingent liabilities, if applicable, at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on associates is included in the carrying amount of the investment.

In November 2009, the squeeze-out of the remaining AWD Holding shareholders representing 3.3% of the shares was completed. The purchase price of the shares amounted to CHF 58 million and led to additional goodwill of CHF 55 million.

Goodwill of CHF 11 million was recognised in 2009 on the acquisition of a financial advisory business in France.

Also in 2009, the remaining 49.4% of the non-controlling interests of Cegema, France, were acquired, which led to additional goodwill of CHF 5 million.

Goodwill totalling CHF 79 million was recognised on the acquisition of Deutsche Proventus AG, Bremen, in 2008.

Goodwill totalling CHF 1303 million on the acquisition of AWD Holding AG, Hanover, was recognised in 2008. The cost that led to the recognition of goodwill concerns the anticipated future business of AWD.

Goodwill relating to Lloyd Continental and goodwill relating to “Other” have been allocated to the “Insurance France” segment. Goodwill relating to CapitalLeben has been allocated to the “Insurance Other” segment.

The calculations relating to the recoverable amounts, which have been determined on a value-in-use basis, use cash flow projections based on financial budgets approved by management. The projection covers a four-year period for Lloyd Continental. Due to the duration of the insurance and investment contracts a six-year period was used for CapitalLeben. The calculations for Lloyd Continental and CapitalLeben are based on present values that traditionally use a single set of estimated cash flows and a single discount rate.

The key assumptions used for the impairment testing on the carrying amount of goodwill were as follows:

In CHF million 
  Lloyd ContinentalCapitalLebenOther
  31.12.200931.12.200831.12.200931.12.200831.12.200931.12.2008
Net carrying amount of goodwill
  28728714914915
 
Key assumptions used for impairment tests
 
Growth rate
  1.0%1.0%11.5%1.5%1.0%
Discount rate
  9.0%8.0%10.5%12.8%9.0%
1 1% in 2012 and 2011 respectively, reduced by 0.25% in each subsequent year


Goodwill relating to the acquisitions of AWD Holding AG and Deutsche Proventus AG has been allocated to the “Insurance Switzerland”, “Insurance Germany” and “AWD” segments.

The calculations relating to the recoverable amounts which have been determined on a value-in-use basis use cash flow projections based on financial budgets approved by management. The projection covers a three-year period for Insurance Switzerland and Insurance Germany and a five-year period for AWD. The calculations are based on present values that traditionally use a single set of estimated cash flows and a single discount rate. The key assumptions used for the impairment testing on the carrying amount of goodwill relating to AWD were as follows:

In CHF million 
  Insurance SwitzerlandInsurance GermanyAWD
  31.12.200931.12.200831.12.200931.12.200831.12.200931.12.2008
Net carrying amount of goodwill
  8181314316944894
 
Key assumptions used for impairment tests
 
Growth rate
  1.0%1.0%1.0%1.0%1.0%1.0%
Discount rate
  10.5%10.9%12.0%12.2%12.0%12.2%


No impairment losses were recognised in 2009 and 2008. A reasonably possible change in the key assumptions would not cause an impairment loss of the goodwill allocated to the “AWD” segment.

Customer relationships — A customer relationship asset of CHF 4 million was recognised on the acquisition of a financial advisory business in France in 2009.

In 2008, the following acquisitions led to the recognition of customer relationship assets: On the acquisition of Deutsche Proventus AG, a customer relationship asset of CHF 8 million was recognised. On the acquisition of Fonds de Commerce Arpège, a customer relationship asset of CHF 9 million was recognised. The acquisition of AWD Holding AG, led to the recognition of a customer relationship asset of CHF 312 million. The acquisition of Placement Direct, France, led to a customer relationship asset amounting to CHF 5 million.

Brands and other — Consists of brands, trademarks, computer software and other intangible assets.

In 2008, the following acquisitions led to the recognition of brands and other intangible assets: On the acquisition of Deutsche Proventus AG, the brand name “Proventus” was recognised at CHF 6 million. The acquisition of AWD Holding AG led to the recognition of the brand name “AWD” at CHF 120 million, which has an indefinite useful life, as well as of computer software of CHF 13 million. The brand names of “Proventus” and “AWD” are expected to generate cash inflows without legal or similar limits on an indefinite basis.

 
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