Notes to the
consolidated
financial statements
continued
24 Provisions continued
51
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
31
Self-insurance program
Ahold Delhaize is self-insured for certain potential losses, mainly relating to general liability, vehicle liability, workers’ compensation and property
losses relating to its subsidiaries. The maximum self-insurance retention per occurrence, including defense costs, is $3 million (€3 million) for general
liability, $5 million (€5 million) for commercial vehicle liability, $5 million (€5 million) for workers’ compensation, and $17.5 million (€17 million) for
property losses. Ahold Delhaize purchased a stop-loss coverage of $50 million (€48 million) for property losses to limit the aggregate exposure for
named windstorms through June 1, 2017. A portion of this risk is reinsured to third parties, see Note 15.
Loyalty programs
This provision relates to a third-party customer loyalty program in the Netherlands and reflects the estimated cost of benefits to which customers
participating in the loyalty program are entitled.
Claims and legal disputes
The Company is a party to a number of legal proceedings arising out of its business operations. Such legal proceedings are subject to inherent
uncertainties. Management, supported by internal and external legal counsel, where appropriate, determines whether it is more likely than not
that an outflow of resources will be required to settle an obligation. If this is the case, the best estimate of the outflow of resources is recognized.
Severance and termination benefits
This provision relates to payments to employees whose employment with the Company has ended, either as part of a restructuring or a voluntary
separation plan. The current year additions to the provision relate mainly to benefits offered to employees affected by the anticipated exit of the
Richmond Virginia market and the reorganization of warehousing activities within Ahold USA, as well as the elimination of positions within the
Global Support Office as a result of the merger.
Onerous contracts
Onerous contract provisions relate to unfavorable contracts where the unavoidable costs of meeting the obligations under the contracts exceed
the benefits expected to be received.
Other
Other provisions include long-term incentives, jubilee payments, asset retirement obligations, provisions for environmental risks, and supplemental
medical benefits.
Measurement of the provision for the self-insurance program requires significant estimates. These estimates and assumptions include an estimate
of claims incurred but not yet reported, historical loss experience, projected loss development factors, estimated changes in claim reporting
patterns, claim settlement patterns, judicial decisions and legislation.
million
Amount due within one year
Amount due between one and five years
Amount due after five years
Total
Maturities of total provisions as of January 1, 2017, are as follows:
Self
insurance
program
261
419
205
885
Loyalty
programs
15
16
Onerous
contracts
32
67
47
146
Other
21
27
38
86
Total
383
606
325
1,314
Claims
and legal
disputes
3
48
30
81
Severance and
termination
benefits
29
5
85
