Tax rate 25%

Change in value
T=1 vs. T=2 Case 1: Impairment on local Level
T=1 T=2
Asset Liability Property -80 Asset Liability
local GAAP Property 100 90 Equity Equities 0 Property 20 10 Equity
Insurance Insurance Insurance
Equities 200 210 Liabilities Liabilities 0 Equities 200 210 Liabilities

Property 50 Property 0
Equities 50 Equities 50
Revaluation
Insurance Insurance
Liabilities -90 Liabilities -90

Change in value SII

T=1 vs. T=2
T=1 T=2
Asset Liability Property -130 Asset Liability
SII
Property 150 232.5 Equity Equities 0 Property 20 115 Equity
Insurance Insurance Insurance
Equities 250 120 Liabilities Liabilities 0 Equities 250 120 Liabilities
47.5 DTL 35 DTL

50.00 Property to Equity 37.50 50.00 Equities to Equity 37.50

DTL 12.50 DTL 12.50

50.00 Equities to Equity 37.50 90.00 Ins. Liab. to Equity 67.50

DTL 12.50 DTL 22.50

90.00 Ins. Liab. to Equity 67.50

DTL 22.50

T=1
Due to market consistent economic valuation assets rise in value (in comparison to local GAAP/Tax GAAP) and technical provisions are reduced due to the best
estimate calculation. The value increases/decreases trigger temporary differences in between SII/Tax GAAP. Therefore from the 190 CU of Value Increase only
142,5 CU run directly into an increase of equity, whereas 25 % (tax rate) run into the building of a deferred tax liability amounting to 47,5 CU.
T=2 (Case 1)
Property shows an extreme decrease in value, which results both in local GAAP and in SII in a necessary impairment. Therefore the temporary difference
triggering (for property) the building of a DTL amounting to 12,5 CU in T=1 falls away and less DTL is necessary. So the value decrease in SII from T=1 to T=2
amounts to 130 CU whereas equity is just reduced by 117,5. The DTL works as loss absorbing.