Assets are tested at least on each balance sheet reporting date for indications of impairment. Intangible assets with an indefinite useful life (primarily goodwill) are tested even if there are no indications of impairment. Since the scheduled amortisation of goodwill resulting from mergers is not permitted according to IAS 36 (Impairment of assets), the Vienna Insurance Group conducts impairment tests at least once annually. For this purpose, the subsidiaries in a given country are consolidated into an economic unit. An impairment arises only if there is a need to write down the entire economic unit. The value in use of the economic units is calculated using the capitalised earnings method. The capitalised earnings value is calculated using budget projections for the next three years. Earnings following the three year period are extrapolated using an annual growth rate. Discount rates are calculated using a base rate equal to the average annual return on Austrian government bonds adjusted for sector and market risk. The discount rates used for the impairment test were between 8.60% and 11.10%.
Information on the impairment testing of financial assets is provided in the section entitled “General information on the accounting and valuation of capital assets”.
