173 GLOSSARY FURTHER INFORMATION Chap. 4 C Cash flow Flow of cash from operating, investing and financing activities created by the company during a specific period (source and application of funds). Cash-flow hedge This is a type of hedge accounting. A cash-flow hedge reduces the risk of the fluctuation of future cash flows. Other types of hedge accounting are fair-value hedges and hedges of a net investment in a business operation abroad. Under a fair-value hedge, assets or liabilities are hedged against the risk of value changes. Cash-flow hedge reserve The cash-flow hedge reserve is part of the revaluation reserve. It comprises the effective part of the hedging transaction. Cessionaire Reinsurer of the primary insurer Claims and benefits, net Expenditure (net of reinsurers' shares) for insurance claims, for premium refunds and for the change of the provision for future policy benefits and/or of underwriting provisions. Combined ratio Total ratio of claims and expenses Contingent liabilities Liabilities that do not have to be recognized in the balance sheet and where the probability of materialization appears to be uncertain (e.g. contin- gent liabilities under guarantee commitments). Corridor method Actuarial gains and losses of pension provisions can be identified by the so-called corridor method. A corridor of values is determined and actuarial gains and losses are not recognized in the balance sheet and, in particular, in income if they remain within that corridor. Credit-linked notes Bonds whose redemption amount depends on spe- cific, contractually agreed credit events. They are part of credit derivatives and allow the transfer of credit risks from the seller to the purchaser. The credit risks may be combined at discretion. A Affiliated enterprises Affiliated enterprises are the parent and all its subsidi- aries. Subsidiaries are companies in which the parent may exercise a controlling influence on the business policy. This is the case, for instance, if the parent directly or indirectly holds the majority of voting rights, has the right to appoint or withdraw members of the managing board, of the supervisory board or of other controlling bodies of the subsidiary or if domination agreements have been concluded. Agio Amount by which the price exceeds the nominal value of a security of the par value of a foreign currency. In most cases the agio is expressed as a percentage of the nominal value. Allocation Declaration that obligations of building societies have become due for payment. It refers both to the deposit under a building-society contract (accumulated sav- ings) and to the building loan. Amortized cost The original cost is reduced by durable depreciation. Assets under management All assets managed by the Group under its responsi- bility. They are recognized at fair value. They include all investments owned by the Group, investments under unit-linked life insurance and receivables under banking and building-society business. Associated enterprises These are participating interests consolidated at equi- ty, i.e. they are measured in the consolidated financial statements with the corresponding share in the equity. The major criterion for doing so is the Group's ability to exercise a decisive influence on the operation and financial policy of the associated enterprise, regard- less of whether the Group actually makes use of that influence. B Binomial model Model for modelling the price development of securi- ties and shares in order to determine a fair option price. Glossary