This exceptional cumulation of uncertainties is impeding the global economy and causing great volatility in the capital markets. The situation on these markets is aggravated by the ongoing low-interest-rate policies of central banks, and the ensuing dearth of investment opportunities with a reasonable cost-benefit ratio. Against this background, Munich Re further diversified its portfolio in 2015 – for example, by investing in infrastructure and renewable energy facilities. In doing so, we increased our incurred risk moderately. However, our overall focus will still be to earn profits from insurance business, and not from risky investments. Therefore, so long as there is no across-the-board increase in interest rates, we will only be able to slow the progressive decreases in running yields, but not stop them entirely. For conservative investors like Munich Re, the massive interventions of leading central banks continue to pose a challenge, even if the recent rate increases in the USA signal a tentative exit from the low-interest-rate phase.
ERGO increases its share in the Indian joint venture HDFC ERGO to 48.7%. HDFC ERGO is India’s fourth-largest property insurer in the private sector. The purchase of additional shares was made possible by a change in legislation. ERGO is thus strengthening the Group’s presence on the Indian market and continuing its international expansion.
The full Supervisory Board also reviewed the financial statements and the combined management report, and the proposal of the Board of Management for appropriation of the net retained profits. On the basis of this examination and having heard the auditor’s report, the Supervisory Board raised no objections to the outcome of the external audit. It approved the Company and Group financial statements on 15 March 2016. The financial statements were thus adopted. Having carefully weighed all relevant aspects, the Supervisory Board followed the proposal of the Board of Management for appropriation of the net retained profits.
The Articles of Association and co-determination agreement can be viewed at www.munichre.com/cg-en
Macroeconomic and industry environment 068 Capital markets 068 Insurance industry 069
Munich Re combines primary insurance and reinsurance under one roof. This enables the Group to cover large stretches of the value chain in the risk market. At the same time, it leverages synergies in revenue and costs, whilst reducing the risk-based capital required through broad diversification. Almost all reinsurance units operate worldwide under the uniform brand of Munich Re. The ERGO Insurance Group (ERGO) is active in nearly all lines of life, health and property-casualty insurance. Our international health reinsurance business and health primary insurance outside Germany are combined under the Munich Health brand. Munich Re’s investments worldwide are managed by MEAG, which also offers its expertise to private and institutional investors outside the Group.
Munich Health operates on a global basis in reinsurance. In the field of health primary insurance outside Germany, it is active in selected growth markets such as the Gulf region and India, and in established European markets.
Dr. jur. Nikolaus von Bomhard (Chairman of the Board of Management) (Chairman of the Group Committee) Group Development1
Dr. rer. pol. Ludger Arnoldussen Germany, Asia Pacific and Africa Central Procurement Services
Prof. Dr. rer. nat. Peter Gruss Member since 22 April 2009, last re-elected 30 April 2014 Chairman of Siemens Technology & Innovation Council
Ina Hosenfelder Member since 30 April 2014 Employee of ERGO Versicherungsgruppe AG Deputy Chair of the Union Council of the Neue-Assekuranz-Gewerkschaft (NAG)
Angelika Wirtz Member since 30 April 2014 Employee of Munich Reinsurance Company
Wolfgang Mayrhuber Infineon Technologies AG Heico Corporation, USA (Chair) Deutsche Lufthansa AG (Chair)
Occupational pension Board members appointed before 1 April 2012 are entitled to an occupational pension on retiring from active service with the Company after reaching the age of 60 or, at the latest, at the end of the calendar year in which they turn 65.
Board of management remuneration under DRS 17 Under DRS 17, remuneration for annual performance 2015 is shown as the provisions set aside for that purpose taking into account the relevant additional/reduced expenditure for the previous year, since the performance on which the remuneration is based has been completed as at the balance sheet date and the requisite Board resolution is already foreseeable. Under DRS 17, remuneration for multi-year performance 2012–2014 is recognised in the year of payment, i.e. in 2015.
Remuneration in kind/fringe benefits 29,884 29,884 29,884 17,086 182,311 182,311 182,311 34,293
MEAG MUNICH ERGO AssetManagement GmbH (MEAG) is the asset manager of Munich Re. MEAG MUNICH ERGO Kapitalanlagegesellschaft mbh also offers its expertise to private and institutional clients. The volume of assets under management rose by €0.2bn to €14.1bn.
Detailed information on the business performance of our segments can be found on page 74 ff.
At our subsidiary Munich Reinsurance Company of Australasia Ltd., which writes our life reinsurance business in Australia and New Zealand, premium income decreased to €658m (727m), mainly due to the termination of several large treaties. Following the negative impact of disability business in the past two years, we posted a balanced technical result again in 2015. It was thus generally in line with our current expectations.
— Gross premiums written up by 5.7% to €17.7bn due to currency translation effects — Very good combined ratio of 89.7% — Investment result climbs to €2,046m — Very good consolidated result of €2,915m
Intense competition again characterised the renewals in 2015, as most market players were able to further improve their capital position thanks to good results. This suppressed demand for reinsurance cover on the primary insurance side, whilst there continued to be an oversupply of reinsurance capacity on the reinsurance side. This situation was exacerbated in the US market by the ongoing availability of alternative capital. Pension funds and hedge funds continue to regard reinsurance as an attractive investment alternative for diversifying risks and meeting return requirements in the present lowinterest -rate environment. This difficult overall market situation led to unchanged strong pressure on prices, terms and conditions, and to further significant price falls in the area of non-proportional natural catastrophe covers.
This division writes business in Germany, the Asia-Pacific region and Africa. In terms of the division’s premium income, approximately 30% is written in Australia/New Zealand and Japan combined, around 30% in Greater China and approximately 10% in Africa/ MENA. Whilst the focus of our activities in Australia/New Zealand and Japan is on natural hazards cover, the Greater China portfolio is largely made up of motor business.
The Europe and Latin America Division writes business in Europe (except Germany), the Caribbean, and Central and South America. Approximately 75% of the division’s premium income derives from Europe. While the focus in the Caribbean and in Central and South America is on property business, particularly in the area of natural hazards covers, European business is strongly weighted in favour of UK motor business.
Our strategy of combining insurance and reinsurance activities remains on a successful track that we will continue to pursue in the future.
Key figures 2015 Prev. year Change % Gross premiums written €m 3,976 2,988 33.1
The technical result was above the level of the previous year. The increase is mainly attributable to the fact that the preceding year had been impacted by higher benefits due to the participation of our policyholders in an anticipated tax refund. The investment result of €1,320m decreased slightly compared with the previous year (€1,392m). Negative contributing factors included write-downs on equities and on our investments in HETA Asset Resolution AG, Klagenfurt (HETA). Overall, our operating result improved significantly.
The decline in premium volume was mainly attributable to the drop in single premiums in life insurance. In accordance with the low capital-market interest rates, we too lowered the interest rates for our MaxiZins capitalisation product and thus realised €15m less premium than in 2014. Adjusted for premiums from MaxiZins, however, overall premium income would have been slightly up by 0.2% on the previous year. Gross premiums written increased moderately by 0.2%.
Covered bonds 24% (27%) Corporate bonds 10% (10%) Cash positions/other 4% (4%) Structured products (credit structures) 2% (3%) Bank bonds 3% (3%) Policy and mortgage loans 3% (3%)
Covered bonds make up 24% of our fixed-interest securities. The emphasis remained on German pfandbriefs, at around 34%.
Corporate bonds account for 10% of our interest-bearing investments. Our credit exposure is increased by a further percentage point through derivatives.
Reinsurance business accounts for approximately 33% of technical provisions, around 66% comes from primary insurance and about 1% is from Munich Health. In contrast to liabilities under loans and securities issued, we cannot foresee with certainty how high our liabilities from underwriting business will be, and when they will arise. This is especially true of reinsurance. Whereas in property insurance a major portion of the provisions is generally paid out within two to three years, in life or liability insurance substantial amounts may still be due decades after the contracts were concluded. The currency distribution of our provisions reflects the global orientation of our Group. Besides the euro, our main currencies are the US dollar, the British pound sterling and the Canadian dollar.
Through active capital management, we ensure that Munich Re’s capital is always maintained at an appropriate level, and does not unnecessarily exceed required levels. Our eligible own funds must cover the capital requirements determined using our certified internal risk model. In addition, more far-reaching requirements by regulatory authorities, rating agencies and our key insurance markets must be met. Furthermore, our financial strength should open up profitable growth opportunities, not be significantly impacted by normal fluctuations in capital market conditions and remain in place even after large claims events or substantial share price losses. At the same time, we also define an appropriate level of Group eligible own funds as one which does not lastingly exceed that which is required. In practice, we come up against limits because German Commercial Code (HGB) regulations force our parent, Munich Reinsurance Company, to maintain the claims equalisation provision in local GAAP accounting at a level that exceeds the economic requirements. This restricts the revenue reserves and profit distribution possibilities. In principle, however, needs-based, risk-commensurate capitalisation is our guiding maxim, as it plays a decisive role in ensuring our discipline in all business processes. Excess capital is returned to our shareholders via attractive dividends and share buy-backs. A total of €19.7bn was distributed in this way from
— The Annual General Meeting of 23 April 2015 authorised the Board of Management to issue, with the consent of the Supervisory Board, in one or more issues up to 22 April 2020, convertible bonds, bonds with warrants, profit participation rights, profit participation certificates or combinations of such instruments (hereinafter collectively referred to as “bonds”) for a maximum nominal amount of €3bn with or without a limited term to maturity. Shareholders are generally entitled to a subscription right in respect of these bonds, but the Board of Management is authorised, with the consent of the Supervisory Board, to exclude this subscription right in the cases specified in the authorisation. The holders of such bonds may be granted conversion or option rights or conversion obligations in respect of shares issued by the Company up to a maximum amount of €117m of the share capital, in accordance with the respective bond or warrant conditions. As a precautionary measure, capital of €117m was conditionally authorised under Article 4 (3) of the Articles of Association (Contingent Capital 2015).
For Munich Re, dialogue with clients, brokers, shareholders, investors, staff members and the society within which we operate as an enterprise is a crucial requirement for identifying new challenges and changes at an early stage and for developing appropriate solutions.
Munich Re has different client bases in reinsurance and primary insurance. In reinsurance, we do business with over 4,000 corporate clients from more than 160 countries. ERGO serves over 35 million (mainly private) clients in over 30 countries, with the focus on Europe and Asia. The Munich Health field of business has over six million clients in primary insurance and 400 in reinsurance. In Germany, our asset manager MEAG offers its competence not only to well over 100,000 private investors, but also to over 50 institutional investors outside the Group, e.g. insurers, utilities, pension funds, church organisations, foundations, local authorities and industrial enterprises.
Rotation of managers and staff members within the Group supports the accumulation of expertise and the transfer of knowledge. To promote this permeability between fields of business, the framework conditions were optimised over the last year and set out in corresponding guidelines.
1 Percentage of share capital. Status: 31 December 2015. Source: Munich Re share register
— We will rigorously and sustainably promote and support environmentally conscious behaviour amongst our staff members
Risk analysis and assessment are carried out at the highest level in IRM on the basis of a consolidated Group view. They are partly based on the analyses prepared by the fields of business. In this case, IRM is responsible for checking and validating the analyses of upstream units, working closely with numerous areas and specialists to this end. Overall, IRM ensures that a quantitative and qualitative assessment of all risks at consolidated Group level is provided that considers possible interactions between risks.
Throughout the entire period under review, the risk situation was manageable and under control
The diagrams show our estimated exposure to the peak scenarios for a return period of 200 years.
Interest-rate risks In the reinsurance field of business, the market value of interest-sensitive investments as at 31 December 2015 was €76.9bn (72.3bn). Measured in terms of modified duration, the interest-rate sensitivity of those investments was 5.4 (5.6), while that of the liabilities was 4.8 (4.6). The change in the freely available financial resources in the event of a decrease in interest rates of one basis point would be approximately –€2.9m (0.4m). This means that the interest-rate sensitivity of the liabilities is largely hedged by investments.
On the basis of defined stress scenarios relating to further developments in the eurozone sovereign debt crisis, our experts forecast potential consequences for the financial markets, the market values of our investments, and the present values of our under- writing liabilities. At Group level, we counter any negative effects with the high degree of diversification in both our investments and our liability structure, and with our active Group-wide asset-liability management.
Risks arising out of environmental, social responsibility and governance issues are also systematically captu red
Work is still in progress at a global level on additional supervisory requirements for systemically important financial institutions (SIFIs). Systemic importance is determined not by the fundamental significance of a sector for the economy, but by the impact the insolvency of a company could have on global financial markets and the real economy. The insurance industry believes that the core business of primary insurers and reinsurers does not give rise to systemic risk. In fact, during the financial crisis insurers contrib- uted towards increased stability. Nonetheless, the Financial Stability Board (FSB) has published a list of nine globally operating primary insurance companies that it classifies as systemically important – the “G-SIIs” (global systemically important insurers). A review of the potential systemic importance of reinsurers has been repeatedly postponed by the FSB and is now expected to be undertaken in 2016. It is possible that the global debate will be followed by a national one. In addition, certain legal consequences could have an indirect effect on companies that are not classified as systemically important. Classification of Munich Re as a systemically important institution would be very likely to result in considerably higher regulatory requirements.
Another example of our innovations is the new product line “renewable energy insurance” designed by our subsidiary Hartford Steam Boiler for developers, operators and investors of projects in the fields of wind energy, solar technology, photovoltaics, biofuels, biomass, water power and geothermal systems. We have experts present in all centres of the highly innovative start-up scene, including Silicon Valley, Berlin, London and Tel Aviv, and are engaged in an active exchange with many interesting young companies and research institutions specialised in FinTech and other areas relevant for the insurance industry. These are generating many novel cooperation and business ideas that are gradually expanding our reinsurance business model and opening up avenues in the digital world.
We also see growth potential in the coverage of longevity risk, although we are adopting a very prudent and selective approach here, given the difficulties involved in robust trend estimates.
The prolonged period of low interest rates is a challenge for our asset management
It is not only the obvious fluctuations in the incidence of major losses that make an accurate forecast of IFRS results impossible. The pronounced volatility of the capital markets and exchange rates as well as the special features of IFRS accounting also make this difficult. Thus, there may be significant fluctuations in the investment result, currency result and consolidated result, despite the fact that our assets are geared to the characteristics of our liabilities.
At €50.4bn, gross premiums significantly surpassed our target corridor of €47–49bn due to positive currency translation effects.
Economic earnings stood at €5.3bn, and so we significantly surpassed our target in line with the expected IFRS result of €2.5–3bn.
The renewals at 1 April 2016 (mainly Japan) and 1 July 2016 (parts of the portfolio in the USA, Australia and Latin America) will involve the renegotiation of a premium volume of around €3bn of reinsurance treaty business. Munich Re is proceeding on the assumption that the market environment will not change significantly in these renewal rounds, unless extraordinary loss events occur or there are other major market upheavals.
In 2016, gross premiums written for direct business in Germany should decrease somewhat year on year to around €1bn. Decreases in life insurance and in propertycasualty business will probably not be compensated for in the ongoing year by renewed growth in health insurance.
Provided that major-loss experience from now onwards is in line with expectations, our assumption for 2016 is that Munich Re will post a technical result that is lower than last year at almost €3bn.
In property-casualty reinsurance, we posted an increase in premium income of 11.7% to €12,646m (11,321m) in 2015. Besides positive currency translation effects, a largevolume, intra-Group reinsurance agreement taken out by Munich Re China Branch via Munich Re America with Munich Reinsurance Company also had a favourable impact on premium. In net terms, the treaty concluded in this financial year had only a limited effect on the result. If currency exchange rates had remained unchanged, the increase would have amounted to only 0.5%. Renewal negotiations for reinsurance treaties continued to take place under extremely competitive market conditions, and were characterised by an oversupply of reinsurance capacity and good capitalisation of most market players. We deliberately reduced portfolios in those areas in which riskadequate prices, terms and conditions could no longer be realised. However, our longterm client relationships and comprehensive expertise enabled organic growth with major business partners.
Condensed income statement for Munich Reinsurance Company 2015 Previous year Change €k €k % Earned premiums for own account 21,172,217 20,979,607 0.9 Interest on technical provisions for own account 447,521 418,644 6.9 Other underwriting income for own account 5,005 5,030 –0.5 Claims incurred for own account –14,086,362 –14,782,442 4.7 Change in other net technical provisions –599,993 –590,178 –1.7 Expenses for premium refunds for own account –4,198 –7,211 41.8 Operating expenses for own account –5,747,566 –5,414,897 –6.1 Other underwriting expenses for own account 7,739 –1,716 –
Marine 2015 Prev. year Change % Gross premium written €m 471 506 –6.9 Combined ratio % 65.5 84.8 Underwriting result before claims equalisation provision and similar provisions €m 143 75 90.7
The profit of €2,578m for 2015 is €572m higher than that of 2014 (€2,006m), mainly on account of the increased technical result. The investment result was significantly impacted by the negative balance from reversals of impairments and write-downs.
The claims equalisation provision is established for individual classes of property- casualty business. It serves to smooth significant fluctuations in loss experience in individual classes of business over a number of years. Its recognition and measurement are largely governed by legal provisions.
The balance sheet item “Claims equalisation provision and similar provisions” increased by €677m to €10,254m (9,577m) in the 2015 financial year. Owing to the positive results, we were able to strengthen the claims equalisation provisions by significant amounts in some classes of business – especially in liability, where the allocation amounted to €348m (471m) and in fire to €210m (838m). The amounts concerned in other areas were €105m (–129m) for aviation, €94m (3m) for other classes, €53m (–6m) for engineering, and €37m (–28m) for personal accident.
Further information on the reinsurance life and reinsurance property-casualty segments can be found on page 143 ff.
Group statement of changes in equity for the financial year 2015
Our presentation currency is the euro (€). Amounts are rounded to million euros, with figures in brackets referring to the previous year. Due to rounding, there may be minor deviations in summations and in the calculation of percentages. Figures in brackets refer to the previous year.
The amendments of IFRS 11 (05/2014), Accounting for Acquisitions of Interests in Joint Operations, clarify the accounting for acquisitions of interests in joint operations when the operation constitutes a business. The acquirer of interests is required to apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs, with the exception of those principles that conflict with the guidance in IFRS 11. This amendment is unlikely to have any material effects on Munich Re.
As part of the Disclosure Initiative, in December 2014 the IASB published Disclosure Initiative, Amendments to IAS 1 (12/2014), which is designed to eradicate uncertainties in the exercise of discretion when drawing up financial statements. It makes clear which considerations need to be taken into account with respect to materiality, the line items in the financial statements, and the order of the notes. Munich Re will analyse if these amendments have any effect on our reporting requirements.
Investment funds – Securiti- Securiti- Investment Investments sation sation funds – for unit- vehicles – vehicles – Munich Re linked life Debt Underwriting investments insurance securities risks Total €m Prev. year Prev. year Prev. year Prev. year Prev. year Other securities
In the case of Level 1, valuation is based on unadjusted quoted prices in active markets for identical financial assets which Munich Re can refer to at the balance sheet date. A market is deemed active if transactions take place with sufficient frequency and in sufficient quantity for price information to be available on an ongoing basis. Since a quoted price in an active market is the most reliable indicator of fair value, this should always be used if available. The financial instruments we have allocated to this level mainly comprise equities and equity funds for which either a stock market price is available or prices are provided by a price quoter on the basis of actual market transactions. We have also allocated derivatives and exchange-traded subordinated bonds to Level 1.
For assets allocated to Level 3, we use valuation techniques not based on inputs observable in the market. This is only permissible insofar as no observable market data is available. The inputs used reflect Munich Re’s assumptions regarding the factors which market players would consider in their pricing. We use the best available information for this, including internal company data. The financial instruments allocated to this level of the fair value hierarchy largely comprise land and buildings, real-estate funds, funds that mainly invest in theoretically valued instruments, investments in private equity, certain credit structures, and investments in subsidiaries, associates and joint ventures measured at fair value. Insurance-linked derivatives are also allocated to Level 3.
D. Ceded share of technical provisions 1,489 1,129 2,031 1,966 19 8 103 76 522 1,940 164 209 4,327 5,328
Carrying amount at 31 Dec. financial year 1,270 1,140 489 442 Accumulated impairment losses at 31 Dec. financial year 0 0 –51 –51 Gross carrying amount at 31 Dec. financial year 1,270 1,140 540 493
ERGO Reinsurance Property- Various property- casualty cash casualty Germany generating €m segment segment units
Cost-of-equity rates derived using the Capital Asset Pricing Model (CAPM) were used as discount rates. Calculations are based on distributable target results after consideration of normalised taxes. In the above table, for disclosure purposes, a corresponding discount rate before tax is given in each case. Sensitivity analyses were performed for the discount rates, growth rates and distributable target results. The recoverable amount for the segment ERGO Property-casualty Germany is €306m above its carrying amount. With unchanged distributable target results, raising the discount rate by 50 basis points would lead to value in use equalling the segment’s carrying amount. Insofar as the increase in the discount rate is based on a rise in interest rates, it should be considered that the positive effects of higher interest rates on the investment result are not included in this sensitivity.
The impairment losses were mainly attributable to the life cycle of property having been exceeded and to the acquisition of leasing property at more than market price.
Carrying amount at 31 Dec. financial year 4,317 3,732 Accumulated depreciation and accumulated impairment losses at 31 Dec. financial year –1,220 –1,197 Gross carrying amount at 31 Dec. financial year 5,538 4,929
At Munich Re, the valuation of variable annuities is performed on a fully market- consistent basis. The inputs requiring consideration in this valuation are derived either directly from market data – in particular volatilities, interest-rate curves and currency spot rates – or from actuarial data, especially biometric data and lapse rates. The lapse rates used are modelled dynamically and range between 0.5% and 20%, depending on the specific insurance product and current situation of the capital markets. A 10% increase or decrease in the lapse rates would lead to a change of –/+1% in the fair value of the portfolio. The assumptions with regard to mortality are based on published mortality tables, which are adjusted with a view to the target markets and the actuaries’ expectations. The impact of these and other non-observable assumptions is not material. The dependency between different capital market inputs is modelled by correlation matrices. Since inputs not observable on the market were also used in valuation, we allocate these products to Level 3 of the fair value hierarchy.
Transfer out of Level 3 –2 –21 –43 –5 Changes in the market value of derivatives –1 0 0 0 Carrying amount at 31 Dec. financial year 2,160 2,547 2,803 2,395 Gains (losses) recognised in the income statement that are attributable to investments shown at the end of the financial year –4 11 –11 –5
Gains (losses) recognised in the income statement 58 78 45 86 Gains (losses) recognised in equity 11 5 315 346
Securities at fair value through profit or loss comprise securities of €2,193m (1,964m) held for trading and securities of €357m (205m) designated as at fair value through profit or loss.
Total weather risks Fair values –81 0 0 0 0 0 –81 –40
The miscellaneous receivables contain cash collateral of €390m (244m), mainly for derivative transactions.
As at 31 December 2015, our accounts receivable on ceded reinsurance business were split between the following ratings (based on those of Standard & Poor’s): Of all our receivables on underwriting business at the balance sheet date, €298m (255m) was outstanding for more than 90 days. The average defaults of the last three years amount to €225m (202m).
Amortisation –457 –477 –140 –150 –263 –286 Impairment losses –68 –105 0 0 –43 –2
The excess of deferred tax liabilities over deferred tax assets amounts to €2,136m (2,170m). The change of €34m (–977m) was recognised as follows: €456m (–837m) without impact on profit or loss and –€416m (–166m) in earnings. The remaining change is due to obtaining or losing control, and to currency translation.
Off balance sheet Loss carry-forwards and tax credits 942 0 886 0
The reallocations include property, plant and equipment of the disposal group totalling €17m.
16 Non-current assets and disposal groups held for sale and sold during the reporting period
Composition of contingent capital €m 31.12.2015 Contingent Capital Increase 2015 (until 22 April 2020) 117 Total 117
Income and expense recognised directly in equity –617 467 –150 4,532 –931 3,601
The provision for future policy benefits was increased as a result of these adjustments. Further information on the underwriting risks can be found in the risk report in the section “Significant risks”.
In the ERGO International segment, the income from technical interest for life primary insurance companies corresponds to the risk-free interest on the provision for future policy benefits at the relevant national interest rate, the gains and losses from unit-linked life insurance, and profit sharing where there are types of contract providing for this. The income from technical interest for property-casualty primary insurance companies is calculated analogously to the procedure in the property-casualty reinsurance segment.
Other technical result –46 –36 0 –1 Expenses for claims and benefits – Ceded share 332 239 341 233
Net Claims and benefits paid –9,530 –9,563 –1,800 –1,809 –2,489 –2,106 Change in technical provisions
Deposits retained on assumed reinsurance, and other investments 268 287 37 59 Expenses for the management of investments, other expenses –48 –44 –186 –166
Munich Health Total €m 2015 Prev. year 2015 Prev. year Write-downs of non-derivative investments –2 –15 –848 –366 Losses on the disposal of non-derivative investments –16 –1 –955 –341 Write-downs and losses on the disposal of derivatives –2 –2 –3,382 –3,794 Management expenses, interest charges and other expenses –5 –6 –550 –530
Net finance costs include all interest income, interest expenses and other expenses directly attributable to strategic debt. They also include income and expenses from intra-Group financing that cancel each other out. Debt has a strategic character for us if it does not have an original, direct link with our operative business.
Combined ratio in reinsurance for the last ten years1 1 In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year have been adjusted accordingly. Comparability with the years up to and including 2010 is thus limited.
Decrease of 10% –0.616 –0.603 –1.481 –0.341 –0.708 –1.268 Decrease of 30% –2.177 –1.502 –4.468 –1.650 –1.499 –3.806 Market values 15.134 14.410 1 Gross before tax and policyholder participation in surplus.
All other disclosures on the remuneration and structure of the remuneration system for the Board of Management can be found in the remuneration report on page 49. Information on share trading and shares held by members of the Board of Management and the Supervisory Board is provided in the corporate governance report on page 28.
Contingent liabilities and other financial commitments in respect of associates and joint ventures are presented in the Notes to the consolidated balance sheet – Assets (5) Investments in affiliated companies, associates and joint ventures. These are included in the figures set out here.
Munich Holdings of Australasia Pty. Ltd., Sydney 100.0000 Munich Life Management Corporation Ltd., Toronto, Ontario 100.0000 Munich Mauritius Reinsurance Co. Ltd., Port Louis 100.0000 Munich Re America Corporation, Wilmington, Delaware 100.0000 Munich Re America Services Inc., Wilmington, Delaware 100.0000 Munich Re Automation Solutions Limited, Dublin 100.0000 Munich Re Capital Limited, London 100.0000 Munich Re do Brasil Resseguradora S.A., São Paulo 100.0000 Munich Re Holding Company (UK) Ltd., London 100.0000 Munich Re of Malta Holding Limited, Ta´ Xbiex 99.9999 Munich Re of Malta p.l.c., Ta´ Xbiex 99.9999 Munich Re Reserve Risk Financing, Inc., Dover 100.0000 Munich Re Stop Loss, Inc., Wilmington, Delaware 100.0000 Munich Re Trading LLC, Wilmington, Delaware 100.0000 Munich Re UK Services Limited, London 100.0000 Munich Re Syndicate Limited, London 100.0000 Munich Re Weather & Commodity Risk Holding, Inc., Wilmington, Delaware 100.0000 Munich Reinsurance America, Inc., Wilmington, Delaware 100.0000 Munich Reinsurance Company of Africa Ltd, Johannesburg 100.0000 Munich Reinsurance Company of Australasia Ltd, Sydney 100.0000 Munich Reinsurance Company of Canada, Toronto, Ontario 100.0000 MunichFinancialGroup GmbH, Munich 100.0000 Munichre General Services Limited i.L., London 100.0000 Munichre New Zealand Service Ltd., Auckland 100.0000 N.M.U. (Holdings) Limited, Leeds 100.0000 Neckermann Versicherung AG, Nuremberg 100.0000 New Reinsurance Company Ltd., Zurich 100.0000 Nightingale Legal Services Ltd., Bristol 100.0000 NMU Group Limited, London 100.0000 Northern Marine Underwriters Limited, Leeds 100.0000 OIK Mediclin, Wiesbaden4 66.6672 P.A.N. GmbH & Co. KG, Grünwald2 99.0000 Pan Estates LLC, Wilmington 100.0000 Princeton Eagle Holding (Bermuda) Limited, Hamilton, Bermuda 100.0000 Princeton Eagle Insurance Company Limited, Hamilton, Bermuda 100.0000 Princeton Eagle West (Holding) Inc., Wilmington, Delaware 100.0000 Princeton Eagle West Insurance Company Ltd., Hamilton, Bermuda 100.0000 Private Aktiengesellschaft “Europäische Reiseversicherung ”, Kiev 99.9999 Renaissance Hotel Realbesitz GmbH, Vienna 60.0000 Roanoke Group Inc., Schaumburg, Illinois 100.0000 Roanoke Insurance Group Inc., Schaumburg, Illinois 100.0000 Roanoke International Brokers Limited, London 100.0000 Scout Moor Group Limited, London 100.0000 Scout Moor Holdings (No. 1) Limited, London 100.0000 Scout Moor Holdings (No. 2) Limited, London 100.0000 Scout Moor Wind Farm (No. 2) Limited, London 100.0000 Scout Moor Wind Farm Limited, London 100.0000 Seminaris Hotel- und Kongreßstätten-Betriebsgesellschaft mbH, Lüneburg 100.0000 Silvanus Vermögensverwaltungsges. mbH, Munich 100.0000 Solarpark Fusion 3 GmbH, Düsseldorf 100.0000 Solomon Associates Limited, Farnborough 100.0000
Protektor Lebensversicherungs-AG, Berlin 10.7597 Saudi Enaya Cooperative Insurance Company, Jeddah 15.0000 Swaziland Royal Insurance Corporation, Mbabane 16.0000 Wataniya Cooperative Insurance Company, Jeddah 10.0000 1 The market capitalisation (MC) of this company as at 31 December 2015 is €xxm.
(equity: €147,773k; result for year: €13,450k) 39.0800 Green Acre LLC, Wilmington8
Major loss Loss which is of particular significance to insurers or reinsurers because its amount or other criteria are exceptional in relation to historical loss experience. A distinction is typically made between man-made major losses and those caused by natural catastrophes.
Solvency capital requirement Amount of eligible own funds that Munich Re needs to have available, with a given risk appetite, to cover unexpected losses in the following year. To determine the solvency capital requirement, we use the economic profit and loss distribution across all fields of business. The solvency capital requirement corresponds to the value at risk of this distribution over a one-year time horizon with a confidence level of 99.5 %.
Canada Munich Reinsurance Company of Canada Munich Re Centre 390 Bay Street, Suite 2200 Toronto, Ontario M5H 2Y2 www.mroc.com
Thereof: Income from associates accounted for using the equity method 375 0 248 87 40 7. Insurance-related investment result 140 210 –322 –326 579 9. Other operating expenses –941 –275 –228 –210 –228 10. Deduction of income from technical interest –6,803 –1,829 –1,463 –1,244 –2,267 13. Other non-operating result –532 –8 –97 –432 6 14. Impairment losses of goodwill –452 –452 0 0 0 15. Net finance costs –238 –60 –58 –60 –60 16. Taxes on income –476 –175 101 –250 –151