Key figures (IFRS)1, 2 Munich Re at a glance 2020 2019 2018 2017 2016 Gross premiums written €m 54,890 51,457 49,064 49,115 48,851 Net earned premiums €m 51,223 48,280 45,735 47,164 47,118 Net expenses for claims and benefits €m –43,077 –39,685 –35,116 –41,645 –38,498 Net operating expenses €m –12,815 –13,056 –12,587 –12,186 –12,295 Operating result €m 1,986 3,430 3,725 1,241 4,025 Taxes on income €m –269 –483 –576 298 –760 Consolidated result €m 1,211 2,707 2,275 392 2,581
Return on equity (RoE) % 8.8 7.4 1 You will find this information as a downloadable Excel file in the financial supplement under www.munichre.com/results-reports. 2 Previous year’s figures adjusted owing to IAS 1. For details, please see the section “Recognition and measurement – Changes in accounting policies and other adjustments” in the Notes to the consolidated financial statements. 3 We have changed the calculation of RoE and adjusted the previous year’s figure accordingly. Further information on this indicator can be found in the combined management report under Tools of corporate management and strategic financial objectives, and in the Notes to the consolidated financial statements, in the section entitled Segment reporting, Notes on determining the return on equity (RoE). Comparability with the years up to and including 2018 is limited.
These targets are science-based, concrete, binding, quantifiable, and compatible with the Paris Agreement on climate change. Based on our pledge to achieve net-zero CO2 emissions in all categories no later than 2050, we have defined straightforward interim targets. In five-year time frames, we will gradually and verifiably reduce our emissions. We will conduct our first interim assessment in 2025.
Outside of Supervisory Board meetings, the Board of Management informed us promptly and extensively about important events in the Group, such as the planned dividend payment for the 2019 financial year and the prospects regarding the overall result for the year 2020 and the profit guidance for 2021. The shareholder representatives and the employee representatives met regularly with the Chairman of the Board of Management for separate discussions in preparation for the meetings.
On 8 December, the Board of Management informed us about the Munich Re “Strategy and Ambition 2025”. As well as evaluating the Ambition 2025, presented by the Group Chief Risk Officer, we discussed the Group’s risk strategy and approved the financial planning for 2021.
Attendance of Supervisory Board Members at meetings of the Supervisory Board of Munich Reinsurance Company and its committees in 2020
The Board of Management The Supervisory Board 1 The Statement on Corporate Governance is part of the combined management report and was not audited.
The documents required by law for the Annual General Meeting and the agenda will be available on the Munich Re website with effect from the day the AGM is called.
Further information about compliance and the key features of the CMS can be found at www.munichre.com/en/compliance.
The work of these subcommittees is governed by their own written rules of procedure. Both the Group Risk Committee and the Global Underwriting and Risk Committee deal with risk management issues, albeit with different emphases. The Board Committee IT Investments is responsible for IT investments.
Dr. Nikolaus von Bomhard Deutsche Post AG (Chair)4 Athora Holding Ltd., Bermuda (Chair)6 (Chairman) Chairman of the Supervisory Board of Munich Reinsurance Company Member since 30 April 2019
The rules of procedure for the Supervisory Board and for the Audit Committee are available on the Munich Re website under www.munichre.com/supervisory-board.
This Committee prepares decisions on the appointment of the external auditor, carries out the selection process, and makes recommendations in this regard to the full
Diversity concept for the Supervisory Board/ Objectives of the Supervisory Board concerning its composition, competence profile and sets of criteria The composition of the Supervisory Board also follows a concept of diversity with regard to its members’ professional and educational background, internationality, age, and gender. Gender diversity is described in the section on Equal participation of men and women in management positions. The aim of the diversity concept is to bring a pluralistic wealth of experience to the Supervisory Board through the interaction of members that have different professional and educational backgrounds and are diverse in terms of internationality, age and gender, thereby enhancing the Board’s efficiency for the benefit of the Company.
The average age of members of the Supervisory Board at the end of the 2020 financial year was 60; the youngest member was 50, and the oldest was 72. There is therefore a sufficient age mix on the Supervisory Board. In the case of Supervisory Board member Benita Ferrero-Waldner, the Supervisory Board has made use of the flexible approach to the target age limit on the basis of her expertise and after careful consideration of the circumstances in this specific instance.
Taking into account the ownership structure, the shareholder representatives are of the opinion that all ten shareholder representatives meet the independence criteria of the German Corporate Governance Code. In their assessment, they took into particular account whether the member of the Supervisory Board or a close relative of the member of the Supervisory Board (i) is related to a member of the Board of Management, (ii) was a member of the Board of Management of the Company in the two years preceding the appointment to the Supervisory Board, (iii) may derive benefits that are influenceable by the Board of Management as a consequence of their membership on the Supervisory Board (for instance through a consultancy contract), (iv) represents in particular a specific group that pursues individual or special interests, (v) holds a major direct or indirect stake in the company or represents a shareholder/ group that holds such a stake or its interests, (vi) held a board or consultancy function in the year preceding the appointment, in particular for competitors, clients, suppliers or creditors of the Company or for an entity dependent on these which might lead to a relevant, i.e. material and not only temporary, conflict of interest in their view or in the view of the Company, (vii) has been a partner or employee of the auditors during the past three years and/or (viii) has been a member of the Supervisory Board for more than 12 years.
Macroeconomic and industry environment 56 Capital markets 56 Insurance industry 56
Opportunities report 99 Business environment 99 Digital transformation 100 Social trends 100 Climate change and natural catastrophes 100 Expanding the limits of insurability 100
The specialist travel insurer ERGO Reiseversicherung AG is a market leader internationally as well as in Germany.
ERGO Technology & Services Management AG is a dedicated arm of ERGO Group AG in charge of managing the provision of digital platforms, solutions and services. It has a global remit and supports ERGO in designing optimum insurance products and fostering the most effective customer channels. It consists of ITERGO GmbH in Germany and ERGO Technology & Services S.A. in Poland. The latter was established in January 2021 by integrating ERGO Digital IT GmbH and Atena S.A., thus combining the strengths and capabilities of both organisations in a single entity.
0% = lowest TSR value in the peer group comparison 200% = highest TSR value in the peer group comparison
Thereof for Munich Reinsurance Company 25.50 40,319 –12 255,000 2019 25.14 92,977 2,272,93813 779,250 Thereof for Munich Reinsurance Company 25.50 33,351 –12 216,750
Combined non-financial statement In accordance with the provisions of the European NonFinancial Reporting Directive (NFRD) and the corresponding requirements of German commercial law pursuant to Sections 289b and 315b of the German Commercial Code (HGB), Munich Re is publishing a combined non-financial statement. This statement combines the consolidated nonfinancial statement of the Munich Re Group and the nonfinancial statement of Munich Reinsurance Company. All content contained in the statement applies both to the Group and to Munich Reinsurance Company, unless otherwise noted.
At ERGO, too, an anti-corruption agreement or clause must be concluded with every supplier and service provider, regardless of the contract value.
− Consequently, business activities are assessed not only according to their earnings potential, but also relative to the extent of the risks assumed. Only the risk-return relationship reveals how beneficial an activity is from the point of view of our shareholders.
The carrying amount of our equity portfolio decreased as a result of the sale of equities and the overall negative market development. Our equity-backing ratio (before taking derivatives into account, and including investments in affiliated companies, associates and joint ventures at fair value) came to 6.4% (7.1%) at the end of the year. The equity-backing ratio including derivatives was 6.0% (6.4%). Besides this, we protect ourselves against accelerated inflation in an environment of continuing low interest rates by holding inflation-linked bonds with a fair value of €8.5bn (8.6bn). Real and financial assets such as shares, real estate, commodities, and investments in infrastructure, renewable energies and new technologies also serve to guard against inflation. Additionally, our investments in real and financial assets have a positive diversification effect on the entire portfolio. The increase in our real estate portfolio is largely explained by the acquisition of a highrise office building in New York City in Q1 2020.
The return on equities was adversely affected by impairment losses and the impact of the fall in valuation reserves in Q1. The return on our equity portfolio including equity derivatives decreased to –6.8% (13.0%).
1 The average reinvestment yield is shown as an annual rate of return. All reinvestments that are transacted in a specific reporting period and have remaining terms to maturity of more than one year are recognised at the rates of return applicable at the relevant trade dates; for securities with terms to maturity of up to one year the proportionate term to maturity is taken into account. Investments whose return cannot be calculated (e.g. equities, debt securities with variable rates, inflation-linked bonds, derivatives, real estate) or which do not have the characteristics of investments (e.g. cash at banks) are not included. Hedging costs for securities in foreign currency are not considered.
The technical result of only −€78m (365m) was significantly below our original expectations for the year, mainly owing to claims expenditure resulting from the COVID-19 pandemic.
By contrast, we achieved a good result overall in Europe. Despite a high individual loss in mortality business, in Asia too we posted an overall result that was within our expectations, primarily owing to a high result contribution from our health business. Adjusted for COVID-19, the performance of our Australian business was somewhat better than expected; among other things, we benefited from price adjustments granted retroactively as well as from fewer lapses than anticipated in 2019. By contrast, claims expenditure was above our expectations.
The investment result was down €252m on the previous year; the decline is mainly attributable to lower gains on the disposal of fixed-interest securities.
Key figures 2020 Prev. year Change % Total premium income1 €m 9,687 10,232 –5.3 Gross premiums written €m 9,030 9,238 –2.3 Share of gross premiums written by ERGO % 51.4 52.3 Technical result €m 353 287 22.9 Investment result €m 3,605 3,916 –7.9 Operating result €m 448 389 15.2 Consolidated result €m 130 187 –30.2 1 Total premium income includes not only gross premiums written, but also savings premiums for unit-linked life insurance and capitalisation products in accordance with the applicable statutory accounting guidelines.
Premium income grew by 2.8% in supplementary health insurance and by 1.3% in comprehensive health insurance. The increase in comprehensive cover was mainly due to a premium adjustment in private long-term care insurance. The growth in supplementary insurance was attributable to business not similar to life insurance, which increased by 9.7%. Premium growth in the Health Germany division was offset by a substantial fall in premium income from travel insurance, where gross premiums written dropped by 41.1% to €386m (655m) compared with the previous year. Travel business was hit particularly hard by the coronavirus pandemic due to travel restrictions and mass cancellations of leisure and business travel.
Key figures 2020 Prev. year Change % Total premium income1 €m 5,083 5,148 –1.3 Gross premiums written €m 4,861 4,912 –1.0 Share of gross premiums written by ERGO % 27.7 27.8 Loss ratio % 62.7 63.7 Expense ratio % 30.0 30.6 Combined ratio % 92.7 94.3 Technical result €m 202 171 18.2 Investment result €m 425 430 –1.2 Operating result €m 298 217 37.9 Consolidated result €m 230 105 118.1 1 Total premium income includes not only gross premiums written but also savings premiums for unit-linked life insurance and capitalisation products in accordance with the applicable statutory accounting guidelines.
The listed registered shares are subject to transfer restrictions. The issuing of restrictedly transferable registered shares by Munich Reinsurance Company dates back to the Company’s foundation in 1880. Restricted transferability means that these shares may be transferred to another holder only with the Company’s consent, which, according to Article 3(2) of Munich Reinsurance Company’s Articles of Association, is granted at the Company’s discretion. Since the share-trading processes have been made very efficient, the consent requirement does not lead to any delays in entry in the register. In recent decades, it has been granted without exception. Contractual agreements are in place with the members of the Board of Management providing for two or four-year minimum holding periods for the shares of the Company they have to purchase as part of share-based remuneration programmes under the remuneration system applicable prior to 2018.
− Pursuant to Article 4(2) of the Articles of Association, a contingent increase in the share capital by up to €117m, consisting of new registered no-par-value shares (Contingent Capital 2020), has been authorised. The purpose of this contingent capital increase is to permit shares to be granted to the holders of convertible bonds, bonds with warrants, profit participation rights or profit participation certificates (or combinations of such instruments) with conversion rights, warrants or conversion obligations, which are issued by the Company or a Group Company in accordance with the authorisation granted by the Annual General Meeting on 29 April 2020 for the period from 29 April 2020 to the end of the day on 28 April 2025. The increase in the share capital is to be carried out only to the extent that warrants or conversion rights under the aforementioned instruments are exercised, or conversion obligations under these instruments are fulfilled, and insofar as other means of fulfilment are not introduced.
The SCR is the amount of eligible own funds that Munich Re needs to have available, with a given risk tolerance, to cover unexpected losses in the following year. It corresponds to the value at risk of the economic profit and loss distribution over a one-year time horizon with a confidence level of 99.5%, and thus equates to the economic loss for Munich Re that, given unchanged exposures, will be exceeded each year with a statistical probability of 0.5%. Our internal model is based on specially modelled distributions for the risk categories property-casualty, life and health, market, credit and operational risks. We use primarily historical data for the calibration of these distributions, complemented in some areas by expert judgement. Our historical data covers a long period to provide a stable and appropriate estimate of our risk parameters. We continue to take account of diversification effects we achieve through our broad spread across various risk categories and the combination of primary insurance and reinsurance business. We also take into account dependencies between the risks, which can result in higher capital requirements than would be the case if no dependency were assumed. We then determine the effect of the loss absorbency of deferred taxes.
At Group level, the SCR increased by 9.4% to €19.2bn, compared with €17.5bn as at 31 December of the previous year. This rise is attributable to increases in all risk categories. The SCR increase in the property-casualty category is mainly a consequence of further growth in business with natural hazard exposure in line with our business strategy. The SCR in life and health increased, mainly due to the fall in interest rates worldwide and to business growth in life reinsurance. The market risk SCR at Group level increased owing to opposite effects in both fields of business and a lower diversification. The market risk for the reinsurance field of business decreased appreciably owing to the lower currency and equity risk, whereas the market risk in the ERGO field of business was up, mainly owing to lower interest rates. The credit risk
Based on these scenarios, the potential effects on our portfolio are determined using stochastic models.
Solvency capital requirement – Life and health The solvency capital requirement increased by 10.0% at Group level. In the reinsurance field of business, the increase in the SCR was due primarily to lower interest rates worldwide and to business growth. The increase in the SCR in the ERGO field of business was triggered above all by lower euro interest rates.
Currency risk The currency risk is falling, primarily due to a decrease in US dollar positions.
The sensitivity in the internal model is regularly checked against the most important input parameters. This mainly relates to the dependence of the result on frequency and loss amounts and the parameters for the correlations between scenarios. The analyses showed no anomalies in the year under review.
Furthermore, significant investments in data, infrastructure, and human resources make it possible for us to use big data analytics even more systematically for our own business and make the technology available to our clients. We are supporting our transformation towards more innovative products and services through major investments in our digital infrastructure and know-how, as well as through joint ventures with strategic partners such as start-ups. With Munich Re’s presence in major start-up hubs, our collaboration with accelerators, and our corporate venture capital activities, numerous new business and cooperation ideas are arising which will help us to expand our business model beyond the insurance value chain, and tap the growth opportunities offered by the digital world. Given our clients’ hybrid requirements, we are actively driving the integration of various products and sales channels, and the expansion of direct sales in all classes of primary insurance.
At the beginning of the year, we had set a profit target of around €530m for the ERGO field of business as part of the ERGO Strategy Programme. With an annual result of €517m, we almost achieved this target. The negative impact caused by the coronavirus pandemic amounted to €64m after tax and resulted primarily from business closure and event cancellation insurance in the ERGO property-casualty segment and a decline in premium income from travel insurance in the ERGO Life and Health segment. Nonetheless, thanks in particular to pleasing growth in the ERGO International segment, the result was significantly higher than that of the previous year.
Gross premium volume in reinsurance as a whole should be around €37bn in 2021, i.e. at roughly the same level as the previous year. Currency translation effects could potentially have a considerable impact on this estimate. In reinsurance, we anticipate COVID-19-related losses of around €500m and an additional decline in the technical result of around €50m after tax owing to foregone premiums. The consolidated result in reinsurance will thus total around €2.3bn, approximately €1.6bn more than in the previous year.
As at 1 January 2021, around two-thirds of the non-life reinsurance business was up for renewal, representing a premium volume of €10.5bn. Total premium volume written increased by 10.9% to around €11.6bn. Thanks to our excellent client relationships and our expertise, we were able to tap into attractive business opportunities across all regions and classes of business. These involved the expansion of existing client relationships as well as new business.
The combined ratio for the Property-casualty Germany segment should be around 92% provided major losses are at a normal level. Adjusted for the impact of COVID-19, the combined ratio would be around 91%.
In property-casualty reinsurance, we posted growth in gross premium income of 12.9% to €16,682m (14,773m) in 2020. The increase was due to an expansion of business across almost all lines and regions, and was dampened slightly by negative currency effects. If exchange rates had remained the same, premium volume would have been up by 13.8%.
Reinsurance treaty renewals once again took place in a very competitive market environment. The slightly positive price trend continued, such that prices improved overall. Price trends varied among market segments in accordance with varying levels of capacity, claims experience, and demand. Prices rose – considerably in some instances – for reinsurance cover in regions and classes of business with high loss experience, while they remained relatively stable in regions and classes of business with low expected losses. Munich Re takes the different price trends into account and has withdrawn from business that no longer met risk-return expectations. All in all, prices for the Munich Re portfolio increased by around 1.8%. Overall, we are adhering to our profit-oriented underwriting policy.
Combined ratio % 94.2 166.3 Underwriting result before claims equalisation provision and similar provisions €m
As the effects from the more precise categorisation by class of business largely balanced each other out across all classes of business, the impact on the underwriting result was minor overall.
Other information 190 41 Parent 190 42 Related parties 190 43 Personnel expenses 190 44 Incentive Plans 190 45 Remuneration report 191 46 Number of staff 191 47 Auditors’ fees 191 48 Contingent liabilities, other financial commitments 192 49 Significant restrictions 192 50 Leases 193 51 Events after the balance sheet date 194 52 Earnings per share 194 53 Proposal for appropriation of profit 194
Net change in technical provisions 5,264 11,816 Change in deferred acquisition costs 29 –150 Change in deposits retained 209 96 Change in other receivables and liabilities 597 –2,798 Gains and losses on the disposal of investments and insurance-related investments –3,838 –1,715 Change in securities at fair value through profit or loss –95 –889 Change in other balance sheet items 815 1,277 Other non-cash income and expenses 3,027 –850
Discretionary judgements and estimates are of significance for the following items in particular and are described in more detail in the relevant disclosures: − Consolidated group − Goodwill and other intangible assets − Fair values of and impairment losses on financial instruments − Deferred acquisition costs − Technical provisions − Provisions for post-employment benefits − Deferred tax − Contingent liabilities
On the further discussion of IFRS 9 in conjunction with IFRS 17, Insurance Contracts, see New standards and amendments to standards that are not yet effective.
With the exception of the amendments to IAS 1, which will apply from 2023, these new requirements will become mandatory from 2022. They will have little or no material effects on Munich Re.
Securities that we lend by way of securities lending continue to be recognised in our balance sheet, as the main risks and rewards remain with Munich Re; securities that we have borrowed are not recognised in the balance sheet. Fees from securities lending are recognised in the investment result.
Investments for unit-linked life insurance contracts are measured at fair value. Unrealised gains or losses from changes in fair value are included in the insurance-related investment result. They are matched by corresponding changes in the technical provisions (see Equity and liabilities D – Gross technical provisions for unit-linked life insurance), which are included in the technical result.
Deferred tax assets must be recognised in cases where asset items have to be valued lower, or liability items higher, in the consolidated balance sheet than in the tax accounts of the Group company concerned and these differences will be eliminated at a later date with a corresponding effect on taxable income (temporary differences). Also included are tax assets deriving from tax loss carry-forwards. Deferred tax assets are recognised to the extent that, on the basis of tax result planning, it is probable that they will be utilised. As a rule, a five-year forecast period is considered. We take into account the tax rates of the countries concerned and the consolidated company’s respective tax situation; in some cases, for purposes of simplification, we use uniform tax rates for individual circumstances or subsidiaries. Changes in tax rates and tax legislation that have already been adopted by the government at the balance sheet date are taken into account.
− ERGO Life and Health Germany (German life and health primary insurance business, global travel insurance business and Digital Ventures business)
Life and health Property-casualty €m 2020 Prev. year 2020 Prev. year Gross premiums written 12,707 11,716 24,615 22,091 1. Net earned premiums 11,461 10,540 22,566 20,566 2. Income from technical interest 666 652 1,107 1,215 3. Net expenses for claims and benefits –10,128 –8,580 –16,866 –13,714 4. Net operating expenses –2,077 –2,246 –6,978 –6,910 5. Technical result (1–4) –78 365 –171 1,157 6. Investment result 846 1,097 2,347 2,220 7. Insurance-related investment result 69 37 –45 65 8. Other operating result 53 2 –263 –463 9. Deduction of income from technical interest –666 –652 –1,107 –1,215 10. Non-technical result (6–9) 303 484 931 607 11. Operating result 225 849 759 1,764 12. Other non-operating result 1 –10 –11 –47 13. Currency result –46 47 6 149 14. Net finance costs –40 –39 –128 –128 15. Taxes on income –16 –142 –55 –176 16. Consolidated result 123 706 571 1,562 1 Previous year’s figures adjusted owing to IAS 1 and IAS 8; see section Changes in accounting policies and other adjustments. 2 You can download this information as an Excel file; please refer to the Financial Supplement under www.munichre.com/results-reports.
By contrast, the effects of the pandemic on ERGO were immaterial in all segments. In the ERGO Property-casualty Germany segment, losses from business closure and event cancellation insurance were partly offset by lower losses in personal lines business, particularly in motor. The negative impact arising from COVID-19 totalled €64m after tax.
Cost-of-equity rates derived using the Capital Asset Pricing Model (CAPM) were used as discount rates. As with the target results, we did not assume a permanent increase in cost-of-equity rates due to COVID-19 effects.
Gross carrying amount at 31 Dec. financial year 1,296 1,319 482 483 1,740 1,556
Disposals Loss of control 0 0 0 0 Other 0 0 –3 –14
Bonds Pricing method Parameters Pricing model Interest-rate risks Loans against borrower’s note/ registered bonds
The derivative components of catastrophe bonds are measured based on the values supplied by brokers for the underlying bonds, which is why the extent to which inputs used were not based on observable market data cannot readily be assessed.
At 31 December 2020, around 10% (12%) of the investments measured at fair value were allocated to Level 1 of the fair value hierarchy, 85% (84%) to Level 2 and 5% (4%) to Level 3, as shown in the table below.
Investments in associates and joint ventures measured at fair value €m 2020 Prev. year 2020 Prev. year Carrying amount at 31 Dec. previous year 194 177 29 36 Gains and losses –10 –16 1 8
We altered our investment policy already in spring 2020 in response to the current coronavirus pandemic. The impact on fixed-interest securities was negligible. Instead, the lowinterest -rate policy pursued by central banks resulted in higher valuation reserves and higher realised gains on the disposal of fixed-interest securities.
By contrast, in Q1 2020 we had to recognise impairment losses of €1,347m (68m) on our equity portfolio owing to the sharp decline in share prices. Here too, we altered our investment policy and reduced our equity portfolio or hedged with offsetting derivative positions.
Investments, other securities, designated as at fair value through profit or loss 2,339 2,099
Deposits retained on assumed reinsurance serve as collateral for technical provisions covering business assumed from cedants in reinsurance. The amount of and changes in deposits retained on assumed reinsurance derive from the values for the changes in the related technical provisions. Deposits retained on assumed reinsurance business thus do not have a fixed maturity date, and their return is generally dependent on the run-off of the corresponding provisions.
An investment property of Munich Reinsurance Company, Munich, classified as held for sale since Q2 2020, was sold in early January 2021. Another investment property of Munich Reinsurance Company, Munich, initially classified as held for sale in Q4 2020, was sold as at the end of the reporting period.
In addition, the two eastern European insurance companies ERGO pojist’ovna, a.s., Prague, and ERGO ASIGURARI S.A., Bucharest, were still classified as held for sale as at 31 December 2020. The transactions are subject to the approval of the supervisory authorities. The sales are expected to occur in the course of 2021.
The total share capital of €587,725,396.48 at 31 December 2020 was divided into 140,098,931 no-par-value registered shares, each fully paid up and carrying one vote. The number of shares in circulation was as follows: Development of shares in circulation
A total of €1,373m was distributed to Munich Reinsurance Company’s equity holders for the financial year 2019 in the form of a dividend of €9.80 per dividend-bearing share.
As in the previous year, the plan assets do not include any own shares.
Plan assets –4,067 –3,746 Assets from the defined benefit plan 430 412 Effect of asset ceiling 15 17 Other 0 –2 Net balance sheet liability 502 344
Thereof: Interest and similar income 229 239 Write-ups of other operating assets 95 25
The other non-operating result is unrelated to the conclusion, administration or settlement of insurance contracts or the administration of investments. It essentially comprises the other non-technical result of €28m (14m), impairment losses of €59m (46m) on other intangible assets, and restructuring expenses of €51m (60m).
In long-term health primary insurance, a discount rate is also used for calculating the provision for future policy benefits. However, this rate can generally be altered by way of premium adjustment. For short-term business, there is no direct interest-rate risk.
Liability 119.3 100.5 105.7 119.3 107.4 Accident 112.8 106.9 51.0 94.2 99.2 Motor 98.4 100.3 103.3 107.9 100.9 Marine, aviation, space 86.1 115.0 75.1 81.8 92.3 Fire 87.8 99.1 98.5 137.8 86.3 Engineering 88.6 90.1 95.1 107.8 93.1 Credit and surety 106.6 63.7 89.0 101.8 110.8 Other classes of business 138.5 106.0 107.4 105.9 90.3
The major part of the discounted provisions in reinsurance is for US workers’ compensation business, for which the discount rates are governed by supervisory law and are determined prospectively per accident year. The discounting of the provisions in primary insurance is also largely governed by supervisory law.
Munich Re enters into contingent liabilities in connection with its normal business operations. At the end of the reporting period, the obligations from guarantees were immaterial. The obligations from legal disputes totalled €30m (32m). There are other contingent liabilities amounting to €57m (32m).
There were several finance leases for property at the end of the reporting period, which are listed in the following table: Due dates 31.12.2020 Prev. year €m Gross investment Interest element
The following disclosures relate to our aggregated directly and indirectly held shareholdings (pursuant to Section 16(2) and (4) of the German Stock Corporation Act – AktG) in entities included in consolidation pursuant to Section 315a of the German Commercial Code, and in participating interests as defined in Section 271(1) of the German Commercial Code.
We assessed whether the valuation models used ensured a reliable determination of fair values. In addition, we examined the key valuation parameters as to whether the significant valuation parameters used and observed in the market (yield curves and credit spreads) had been derived in a comprehensible manner. We assessed the suitability of unobservable inputs by having valuation specialists make their own calculations in order to verify the fair values.
The Supervisory Board is responsible for overseeing the Group’s financial reporting process for the preparation of the consolidated financial statements and of the combined management report.
Reasonable assurance opinion We have performed assurance work in accordance with Section 317(3)(b) of the Commercial Code (HGB) to obtain reasonable assurance about whether the reproduction of the consolidated financial statements and the combined management report (hereinafter the “ESEF documents”) contained in the attached electronic file Munich_Re_KA+ ZLB_ESEF-2020-12-31.zip and prepared for publication purposes complies in all material respects with the requirements of Section 328(1) of the Commercial Code (HGB) concerning the electronic reporting format (“ESEF format”). In accordance with German legal requirements, this assurance extends only to the conversion into ESEF format of the information contained in the consolidated financial statements and the combined management report and therefore relates neither to the information contained in this reproduction nor to any other information contained in the above-mentioned electronic file.
− Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) enables an appropriate and complete machine-readable XBRL copy of the XHTML reproduction.
− Inquiries of employees responsible for data capture and consolidation as well as the preparation of the nonfinancial statement, to evaluate the reporting processes, the data capture and compilation methods as well as internal controls to the extent relevant for the assurance of the non-financial statement