In connection with the acquisition of the shares in Bank Austria Creditanstalt Versicherung AG, goodwill of €402.8m and other intangible assets of €201.1m have been recognised. The acquisition of shares totalling 29.46% in the past had resulted in goodwill of €25.4m. Altogether, an amount of €226.5m has been recognised for our stake of 90%. The goodwill and other intangible assets are derived from synergies and the growth potential of Bank Austria Creditanstalt Versicherung AG. Particularly through Bank Austria’s reputation, brand and existing distribution network, ERGO will significantly expand the banking business and systemat ically use Austria as a platform for tapping the promising central and eastern European markets. Considerable added value from synergies is scheduled to result from combining operations, transferring know-how and efficient use of resources following the restructuring of all ERGO companies in Austria.
Since the time of acquisition, the provisional figures have been adjusted. The adjustments mainly involve the change of –€98.2m in intangible assets and of €7.1m in goodwill.
The company was consolidated for the first time in our financial statements as at the end of the third quarter 2008. Income and expenses for the months October to December have been recognised in the consolidated income statement. In this period, Bank Austria Creditanstalt Versicherung AG contributed an IFRS result of –€24m to the 2008 consolidated financial result. In the financial year 2008, Bank Austria Creditanstalt Versicherung AG posted total premiums of €543.4m and a result of –€40.1m. These figures are based on local accounting.
On 1 April 2008, through its subsidiary Munich American Holding Corpor ation, Wilmington, Delaware, the Munich Re Group acquired 100% of the share capital of Sterling Life Insurance Company (Sterling) and Olympic Health Management Systems, Inc. (Olympic) – both based in Bellingham, Washington State – at a total price of €222.6m. The purchase price includes all the incidental acquisition expenses and other charges, such as fees for consulting services and taxes incurred.
In connection with the acquisition of the two companies, goodwill of €32.8m and other intangible assets of €73.8m have been recognised. The goodwill is based mainly on the exploitation of additional future business potential.
Since the time of acquisition, the provisional figures have been adjusted. The adjustments mainly involve the reduction of the purchase price by €6.9m and the reduction of goodwill by €5.1m. The income and expenses for the months April to December 2008 have been recognised in the consolidated income statement. During this period, Sterling and Olympic contributed €11.8m to the consolidated result for 2008. In the financial year 2008, Sterling and Olympic posted gross premiums written of €700.3m and a result of €9.4m.
Direct Auto Insurance Co., Seoul, for a price of €68.9m. This price, which includes all the incidental acquisition expenses and other charges, such as fees for consulting services and taxes incurred, was paid in part as a capital increase.
Since the time of acquisition, the provisional figures have been adjusted. The adjustments mainly involve a change of –€18.8m in intangible assets and of €7.6m in goodwill.
The income and expenses for the months of April to December 2008 have been recognised in the consolidated income statement. During this period, ERGO Daum Direct contributed –€8.2m to the consolidated result for 2008. In the financial year 2008, ERGO Daum Direct posted gross premiums written of €150.8m and a result of –€20.4m.
An overview of the group of consolidated companies and other important shareholdings is provided on page 275. The list of all our shareholdings is filed with the Company Registry in Munich under registration number HRB 42039.
We generally consolidate subsidiaries and special funds as soon as the Group holds the majority of the voting shares or has the factual ability to exercise control. In the case of affiliated companies in which the Munich Re Group 1 In addition, 63 German and 3 non-German special funds were included in the consolidated group.
Germany Other countries Total 31 Dec. fi nancial year 79 207 286
Germany Other countries Total 31 Dec. fi nancial year 185 155 340 70_Konzernanhang_e 19470_Konzernanhang_e 194 10.03.2009 11:24:43 Uhr10.03.2009 11:24:43 Uhr
Recognition and measurement The annual financial statements of the consolidated subsidiaries and special funds are subject to uniform accounting policies. For the annual financial statements of significant associates we have, in accordance with IAS 28.27, made appropriate adjustments to conform the accounting policies to those of the Munich Re Group. Valuations used in the financial statements of associates not classified as significant are maintained. In preparing the consolidated financial statements, we have to use our judgement in applying accounting policies and to make estimates and assumptions that affect the year-end items shown in the consolidated balance sheet, the consolidated income statement and the disclosures on contingent assets and liabilities. Details are provided in recognition and measurement methods for the individual items.
Changes in accounting policies Application of the recognition, measurement and disclosure methods follows the principle of consistency. In the financial year 2008, no new IFRSs had to be applied for the first time.
In October 2008, waiving the usual due process, the IASB adopted amendments to IAS 39, Financial Instruments: Recognition and Measurement, and IFRS 7, Financial Instruments: Disclosures, which became valid retroactively as from 1 July 2008 upon publication. The amendment to IAS 39 allows financial instruments under the categories “held for trading” and “available for sale” to be reclassified under certain circumstances. If such reclassifications are made, the amended IFRS 7 requires separate disclosures to be made in the notes. The Munich Re Group has not availed itself of these new rules.
In the financial year 2008, we adjusted previous-year figures retrospectively pursuant to IAS 8 for the following items: a) As from the financial year 2008, insurance contract guarantees dependent on the capital markets, which we previously recognised and measured as technical provisions on the basis of US GAAP (SOP 03-1), are measured at fair value with impact on profit or loss. If they are embedded in a host contract, they are separated from this. The guarantees are shown as derivatives under investments or “other liabil ities” respectively. Currently, this concerns the derivative components of variable annuities. The adjustment results in more relevant and reliable information as regards the recognition and measurement of such contract components in the financial statements.
B. IV. 3. Other securities held for trading 1,343 19 – 1,362
A. IV. Consolidated result attributable to Munich Re equity holders 3,425 10 –2 3,433
C. II. Provision for future policy benefi ts 94,660 –7 – 94,653
B. IV. 3 Other securities held for trading 1,280 19 – – 1,299
Total income (1–3) 47,323 –24 – 47,299 4. Expenses for claims and benefi ts – gross 31,317 –3 – 31,314
Expenses for claims and benefi ts – ceded share 843 2 – 845
Expenses for claims and benefi ts – net 30,474 –5 – 30,469 7. Result before impairment losses of goodwill 5,089 –16 –5 5,068 11. Taxes on income 808 –5 –2 801
Thereof: Attributable to Munich Re equity holders 3,854 –11 –3 3,840 70_Konzernanhang_e 19770_Konzernanhang_e 197 10.03.2009 11:24:43 Uhr10.03.2009 11:24:43 Uhr
Notes b) An increase which had been omitted in the interest rate of bonds was subsequently effected in the year under review. This added €20m to retained earnings.
c) Besides this, there were further adjustments whose effects were so small that we have dispensed with a detailed presentation. Altogether, these increased retained earnings by €2m.
The adjustments have the following effects on the consolidated balance sheet for the financial year 2008: Standards or changes in standards Application of the following amended standards is mandatory for financial not yet entered into force years beginning on or after 1 January 2009: IFRS 2 (rev. 2008), Share-based Payment – Vesting Conditions and Cancellations, provides for clarification regarding exercise conditions and premature termination of plans. The new rules have no repercussions for the Munich Re Group.
IFRS 8, Operating Segments, provides new rules for segment reporting. Firsttime application will result not only in more extensive information in the notes but also in a more detailed disclosure of the segments and a change in result presentation. Based on the internal management of the Munich Re Group, the previous segment “life and health” will be broken down into two separate segments “life” and “health” in primary insurance. The result presentation for the whole Group will thus be based on the management approach and show an operating result adjusted to eliminate non-operating components. This operating result will be broken down into a technical and a non-technical result.
The main change to IAS 1 (rev. 2007), Presentation of Financial Statements, is that tax effects included in income and expenses recognised directly in equity are disclosed separately in the notes to the consolidated financial statements. In addition, IAS 1 now requires the publication of the opening balance sheet of the earliest comparative period, plus the relevant disclosures in the notes, when an accounting policy is applied retrospectively. Non-owner changes in equity now have to be disclosed in a separate statement of recognised income and expense, with only the total shown in the changes in equity. Further more, there is the option to rename individual components of the financial statements or to publish a single statement of income combining the income statement and the statement of recognised income and expense.
As part of its first Annual Improvement Process Project, the IASB published an omnibus standard in May 2008 summarising minor changes – i.e. changes that are not part of one of the IASB’s major projects – to a total of 19 standards. Some of these involve amendments that have an impact on accounting, whilst others merely concern changes in terminology or editorial changes that have virtually no effect on recognition or measurement in the financial statements. The changes have no significant implications for the Munich Re Group.
The change in IAS 39 (rev. 2008), Financial Instruments: Recognition and Measurement, Eligible Hedged Items, provides guidance on designating a portion of cash flows or a risk as a “hedged item“ and the extent to which inflation risks may be designated “hedged items“. The new rules will have no impact for the Munich Re Group.
In addition, the interpretations IFRIC 13, Customer Loyalty Programmes, IFRIC 15, Agreements for the Construction of Real Estate, IFRIC 16, Hedges of a Net Investment in a Foreign Operation, and IFRIC 17, Distributions of Noncash Assets to Owners, have not yet entered into force.
Land and buildings shown under investments comprise property used by third parties and are carried at cost. Maintenance expenses are recognised as an expense. Structural measures equivalent to 5% or more of the historical cost of a building are generally assessed with regard to whether they have to be capitalised. Buildings are depreciated on a straight-line basis in accordance with the component approach over 40 to 55 years, depending on the weighted useful life for their specific building class. If the recoverable amount of land and buildings falls below their carrying amount, the carrying amount is written down to the recoverable amount. Impairment losses are recognised as investment expense in the consolidated income statement, and reversals of impairment losses as investment income. Land and buildings classified as “held for sale“ are recognised at the lower of book value or fair value less sales costs.
Securities held for trading are accounted for at fair value at the balance sheet date. If there are no stock market prices available, fair values (particularly with derivatives) are based on recognised valuation methods. The Munich Re Group uses a range of valuation models for this purpose, details of which may be obtained from the following table: 71_Aktiv_Passiv_e 20171_Aktiv_Passiv_e 201 10.03.2009 11:24:33 Uhr10.03.2009 11:24:33 Uhr
Determining fair values IAS 39 defines the fair value of a financial instrument as the amount for which a financial asset could be exchanged, or a financial liability settled, between knowledgeable, willing parties in an arm’s length transaction. Where financial instruments are quoted in an active market, the quoted prices are used to determine the fair values. If this is not the case, we determine the values using recognised valuation methods with observable market data. Only if no such market parameters are available do we use valuation models based on nonobservable, company-specific parameters.
Total return swaps Theoretical price Market values of the funds Present-value method (hedge fund certifi cates) Interest-rate curve
Swaptions Theoretical price At-the-money volatility matrix and skew Black-76 Swap curve Money-market interest-rate curve
Where in individual cases the valuation is based on such company-specific data, we specifically point this out. Insofar as realistic changes in the assumptions underlying such valuation methods would have significant effects on profit or loss or on equity, we would disclose this as well.
Securities lending 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 accounted for by the lender. Fees from securities lending are shown in the investment result.
Current tax receivables and other receivables are accounted for at face value. Adjustments of value are made if there is objective evidence of impairment, cf. assets item B – Impairment.
Deferred acquisition costs comprise commissions and other variable costs directly connected with acquisition or renewal of insurance contracts. In life business and long-term health primary insurance, acquisition costs are capitalised and amortised over the duration of the contracts, either proportionally to the premium income (FAS 60) or proportionally to the respective contracts’ expected gross profit margins calculated for the relevant year of the contract term (FAS 97, 120). The allocation of individual contracts to the FASs concerned is shown in the notes on equity and liabilities item C. In determining the amount of amortisation, we take into account an actuarial interest rate and 71_Aktiv_Passiv_e 20471_Aktiv_Passiv_e 204 10.03.2009 11:24:33 Uhr10.03.2009 11:24:33 Uhr
Notes Assets changes resulting from the disposal of contracts from the portfolio. In property -casualty business, short-term health primary insurance and health reinsurance, the deferred acquisition costs are amortised on a straight-line basis over the average term of the policies, from one to five years. Deferred acquisition costs are regularly tested for impairment using a liability adequacy test as per IFRS 4; cf. notes on equity and liabilities item C.
Under IAS 12, 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 de riving from tax loss carry-forwards. We take into account the tax rates of the countries concerned and the company’s respective tax situation; in some cases, for purposes of simplification, we use uniform tax rates for individual circumstances or subsidiaries. Where unrealised losses on securities available for sale are recognised in equity (see notes on asset item B – Other securities available for sale), the resulting deferred tax assets are recorded but not recognised in income. Deferred tax assets are reversed if a realisation of the corresponding receivable is not probable.
Under retained earnings, we show the profits which consolidated companies have earned and retained since becoming part of the Munich Re Group, and income and expenses resulting from changes in the consolidated group. In addition, the adjustment amount resulting from changes in accounting policies for earlier periods not included in the consolidated financial statements is recognised in the opening balance of the retained earnings for the earliest prior period reported.
The measurement of the provisions for future policy benefits depends on the type of contract, being based either on FAS 60 (life primary insurance without performance-related participation in surplus, health primary insurance and the bulk of reinsurance), on FAS 97 (life primary insurance with limited premium payment, life primary insurance on the universal life model, unit-linked life insurance and life reinsurance for assumed policies based on FAS 97) or on FAS 120 (life primary insurance with performance-related participation in surplus).
For contracts in accordance with FAS 60, the provision for future policy benefits is calculated from the present value of estimated future policy benefits (including claims adjustment expenses) less the present value of future net level premiums. Net level premium is that part of the gross premium that is needed to finance future policy benefits. Life primary insurance contracts with limited premium payment as per FAS 97 are generally valued in the same way as contracts falling under FAS 60. For all other contracts as per FAS 97, an account is kept to which net level premiums and interest earnings are credited and from which risk premiums and administration expenses are debited, not all credits and debits being contractually fixed at the time the contracts are concluded. The provision for future policy benefits for life primary insurance where policyholders bear the investment risk themselves (unit-linked life insurance) is shown separately under equity and liabilities item D. In the case of contracts as per FAS 120, the provision for future policy benefits comprises the net level premium reserve and liabilities for terminal dividends. The net level premium reserve is calculated from the present value of guaranteed policy benefits (including acquired bonuses but excluding claims adjustment expenses) less the present value of future net level premiums. The net level premium is the net premium less the portion of the premium envisaged for covering claims adjustment expenses. The actuarial assumptions are generally the same as those used for premium calculation. The provision for terminal dividends is built up proportionally with a fixed share of the expected gross profit margins. The same method is used for this as for determining the amortisation of the deferred acquisition costs.
The provision for outstanding claims is for payment obligations arising from insurance contracts in primary insurance and reinsurance where the size of the claim or the timing of the payment is still uncertain at the balance sheet date. Part of the provision is for known claims for which individually calculated provisions are posted. Another part is for expenses for claims whose occurrence is not yet known (e.g. because they have not been reported yet or have not yet manifested themselves). A third class of provisions covers claims which are known but whose extent has turned out to be greater than originally foreseen. All these provisions include expenses for internal and external loss adjustment expenses. The provision for outstanding claims is based on estimates: the actual payments may be higher or lower. The amounts posted are the realistically estimated future amounts to be paid; they are calculated on the basis of past experience and assumptions about future developments (e.g. social, economic or technological factors). Future payment obligations are generally not discounted; exceptions are some provisions for occupational disability pensions and annuities in workers’ compensation and other lines of property-casualty business, which we discount. For determining the provision for outstanding claims, the Munich Re Group uses a range of actuarial projection methods, including the chain ladder and the Bornhuetter-Ferguson method. In applying the statistical methods, we regard large exposures separately.
All technical provisions are regularly subjected to a liability adequacy test in accordance with IFRS 4. If current experience shows that the provisions posted on the basis of the original assumptions – less the related deferred acquisition costs and the present value of the related premiums – are inadequate to cover the expected future benefits, we adjust the relevant technical provisions with recognition in profit or loss and disclose this under impairment losses/unscheduled changes in the notes to the consolidated balance sheet; see (13) Deferred acquisition costs and (20) Provision for future policy benefits). The appropriateness of unearned premiums and of the provision for outstanding claims is assessed in relation to the realistically estimated future 71_Aktiv_Passiv_e 20871_Aktiv_Passiv_e 208 10.03.2009 11:24:33 Uhr10.03.2009 11:24:33 Uhr
Notes Equity and liabilities amount to be paid. The appropriateness of the provision for future policy bene fits is assessed on the basis of realistic estimates of the actuarial assumptions, the proportional investment result and, for contracts with participation in surplus, the future profit sharing.
Pension obligations are recognised in accordance with IAS 19, Employee Benefits, using the projected unit credit method and based on actuarial studies. The calculation includes not only the pension entitlements and current pensions known on the balance sheet date but also their expected future development.
This item comprises bonds and notes issued, deposits retained on ceded business, current tax liabilities, and other liabilities. Financial liabilities are generally recognised at amortised cost. Derivatives (derivative financial instruments and derivative components of variable annuities) are recognised at fair value.
Munich Re’s presentation currency is the euro (€). The balance sheets of foreign subsidiaries whose national currency is not the euro are translated in accordance with the functional currency principle using the year-end exchange rates, and their income statements using quarterly average exchange rates. Any exchange differences arising in the process are recognised in equity (“other reserves“). Foreign currency transactions are essentially translated into the Group companies’ respective national currencies in accordance with IAS 21. In the case of reinsurance, the principle of currency matching also applies. This means that Group companies which write a significant portion of their business in foreign currency generally safeguard themselves against exchange losses by attempting to match assets and liabilities in the same currency. Where exchange gains or losses occur nevertheless in the translation of foreign currency transactions into the national currencies of the consolidated companies, they are accounted for under “other income“ and “other expenses“ respectively. The following table shows the exchange rates of the most important currencies for our business: Currency translation rates
Balance sheet Income statement 71_Aktiv_Passiv_e 21171_Aktiv_Passiv_e 211 13.03.2009 13:28:34 Uhr13.03.2009 13:28:34 Uhr
For impairment testing, IFRS 3 in conjunction with IAS 36 requires that the goodwill be allocated to the cash-generating units or groups of cash-generating units expected to derive benefit (in the form of cash flows) from the business combination. To ascertain whether there is any impairment, the carrying amount (including allocated goodwill) of a cash-generating unit or group of cash-generating units is compared with that unit’s or group’s recoverable amount. The recoverable amount is the higher of
Accumulated impairment losses at 31 Dec. fi nancial year 189 22
Gross carrying amount at 31 Dec. fi nancial year 3,759 3,157 72_Erlaeut_Aktiva_e 21272_Erlaeut_Aktiva_e 212 10.03.2009 11:24:21 Uhr10.03.2009 11:24:21 Uhr
The goodwill from the acquisition of Bank Austria Creditanstalt Versicherung AG was allocated to the group of cash-generating units “Austria” in the fourth quarter of 2008. This group comprises the Austrian holding company ERGO Austria International, the Austrian companies Bank Austria Creditanstalt Versicherung and Victoria Volksbanken Versicherungsaktiengesellschaft, along with their central and eastern European subsidiaries, given that ERGO is systematically using Austria as a platform for tapping the promising central and eastern European markets. Prior to the impairment test, goodwill of €228m and intangible assets of €395.9m were allocated to this group of cash-generating units.
The recoverable amount of this group was calculated as the fair value less costs to sell. It mainly comprises the appraisal value, which is made up of the embedded value and the value of new business. The calculation of the appraisal value takes into account the financial planning and forecasts of the company’s management. The appraisal value used for the impairment test was based on the actuarial assumptions currently available at the time of the test. We made a flat-rate deduction of 1% for costs to sell. No expected synergetic added value was included.
The impairment test identified an impairment of €167m, and the goodwill was written down by this amount. The write-down is recognised in the income statement under the item “impairment losses of goodwill” and is apportionable to the life and health primary insurance segment.
No impairment needed to be recognised for the intangible assets, as these had already been valued with appropriate risk discounts.
The impairment test for the goodwill from the acquisition of Munich Re America and from the acquisition of ERGO was carried out on the basis of the current cash flow plans at the time of testing in the third quarter.
Signifi cant assumptions regarding cash fl ow planning (at the time of the planning)
Detailed cash fl ow planning on the basis of fi nancial plans/forecasts 3 years 3 years 0–1.5% 1.5% as maximum growth factor as per Circular 2108/2003 of the German Insurance Association
Growth rates used for extrapolating beyond the cash fl ow planning based on fi nancial plans/ forecasts1
Reinsurance ERGO property-casualty segment 1 In the impairment test, sensitivity analyses with the stated ranges were performed for these parameters.
The figures shown under acquired insurance portfolios include amortised carrying amounts of €356m resulting from the assumption of CNA Financial Corporation’s life reinsurance business and the acquisition of additional shares in the ERGO Insurance Group. The “change in consolidated group” comprises additions resulting from company acquisitions; detailed information on this is provided in the notes on consolidated companies. The impairment losses are distributed between the different Group segments as follows: in primary insurance €1m (1m) is apportionable to life and health and – (€1m) to property-casualty. The remaining other intan gible assets include land rights amounting to €1m (1m). Assets pledged as security and other restrictions on title amount to €1m (3m). Commitments to acquire other intangible assets total €2m (1m). Costs of €26m (24m) for research and development incurred in connection with software projects were not capitalised but recognised as expenses.
Development of investments in land and buildings, including buildings on third-party land €m 2008 Prev. year
Gross carrying amount at 31 Dec. previous year 1,017 1,113 586 2,716 2,385
Carrying amount at 31 Dec. previous year 348 521 257 1,126 1,044
Accumulated amortisation and accumulated impairment losses at 31 Dec. fi nancial year 565 613 373 1,551 1,590
The impairment losses mainly involve €44m for a complex under construction and are attributable to buildings. They result from a deterioration in the market environment combined with falling rents and rising required returns; they are based on the net realisable value. The best possible information from external sources was used for the valuation, assuming an active market (longterm market rents, market-adjusted management costs, appropriate market interest rates). Some €28m of these impairment losses are apportionable to the reinsurance property-casualty segment and €16m to the reinsurance life and health segment.
The total impairment losses are distributed between the different Group segments as follows: in reinsurance, €18m (2m) is apportionable to life and health and €31m (4m) to property-casualty; in primary insurance, €31m (62m) is apportionable to life and health, €1m (–) to property-casualty, and – (€7m) to asset management .
The fair value of investments in associates valued at equity amounted to €1,117m (1,277m) at the balance sheet date. In the financial year, shares of losses of associates amounting to €8.2m (0.3m) were not recognised in the balance sheet. Altogether, the losses not recognised in the balance sheet total €8.2m (0.3m). An overview of the most important shareholdings is provided on pages 275 f.
Breakdown of investments in affi liated companies and associates €m 31.12.2008 Prev. year
The other loans mainly comprise government bonds, pfandbriefs and borrowers ’ note loans of banks.
The fair value of the loans is based on recognised valuation methods in line with the present value principle and taking observed market parameters into account. At the reporting date, it totalled €41,052m (34,179m).
Over four years and up to fi ve years 2,401 1,798
Over fi ve years and up to ten years 14,837 13,979
Rating of “other loans“ according to carrying amounts €m 31.12.2008 Prev. year
Carrying amounts Fair values €m 31.12.2008 Prev. year 31.12.2008 Prev. year
Other loans 35,231 30,213 72_Erlaeut_Aktiva_e 21772_Erlaeut_Aktiva_e 217 10.03.2009 11:24:21 Uhr10.03.2009 11:24:21 Uhr
Over half the corporate debt securities are pfandbriefs or issues by development banks and comparable institutions. The remaining portfolio is composed of securities issued by companies outside the banking sector, with each individual risk making up less than 10%, bonds issued by banks and state central savings banks (with state guarantees), and asset-backed securities/ mortgage-backed securities that largely have implicit state guarantees or an above-average rating.
Carrying amounts Unrealised gains/losses Amortised cost €m 31.12.2008 Prev. year 31.12.2008 Prev. year 31.12.2008 Prev. year
Over two years and up to three years 45 38 45 39
Over three years and up to four years 7 47 8 46
Over fi ve years and up to ten years 9 16 8 16 72_Erlaeut_Aktiva_e 21872_Erlaeut_Aktiva_e 218 10.03.2009 11:24:21 Uhr10.03.2009 11:24:21 Uhr
Over one year and up to two years 10,353 10,595 10,247 10,616
Over three years and up to four years 8,260 6,598 8,177 6,631
Over fi ve years and up to ten years 31,073 27,271 30,401 27,408 72_Erlaeut_Aktiva_e 21972_Erlaeut_Aktiva_e 219 10.03.2009 11:24:22 Uhr10.03.2009 11:24:22 Uhr
The securities held for trading include fixed-interest securities totalling €1,177m (722m), non-fixed-interest securities totalling €30m (15m), and de rivatives amounting to €1,915m (562m). The fixed-interest securities include €482m (–) classified as recognised at fair value with impact on profit or loss,
Interest-rate risks Traded on the stock exchange Fair values –8 – – – – – –8 – Notional principal amounts 9,686 – – – – – 9,686 1,021
Total currency risks Fair values 259 – – –5 – 3 257 92
Credit risks Over-the-counter Fair values 1 7 – – –5 –5 –2 –63
Other risks Over-the-counter Fair values – – – – – –128 –128 –48 Notional principal amounts – – – – – 2,308 2,308 2,395
Total of all risks 72_Erlaeut_Aktiva_e 22172_Erlaeut_Aktiva_e 221 10.03.2009 11:24:22 Uhr10.03.2009 11:24:22 Uhr
At the balance sheet date, there is an equity item of €3m (–) from cash flow hedges. The net fair value of the derivatives falling into this category amounted to €20m (–1m) at the balance sheet date.
Deposits retained on assumed reinsurance serve directly as collateral for technical provisions covering business assumed from cedants in reinsurance. They do not trigger any cash flows and may not be used by the cedant independently. The credit risk is therefore limited. The amount of and changes in deposits retained on assumed reinsurance in the balance sheet year generally derive from the values for the changes in the related technical provisions for the reinsured business. Deposits retained on assumed reinsurance business thus do not have a fixed maturity date, their release generally being dependent on run-off of the corresponding provisions.
Details of the ceded share of technical provisions are shown in (19) Unearned premiums, (20) Provisions for future policy benefits, (21) Provisions for outstanding claims, (22) Other technical provisions and (38) Credit risks from ceded reinsurance business.
As at 31 December 2008, our accounts receivable on ceded business were split between the following ratings (based on those of Standard & Poor’s): €288.8m (249.1m) of all our receivables on underwriting business at the balance sheet date was outstanding for more than 90 days. The average defaults of the last three years amount to €136.3m (150.1m).
Over fi ve years and up to ten years 40 141
Over ten years 24 21 72_Erlaeut_Aktiva_e 22472_Erlaeut_Aktiva_e 224 10.03.2009 11:24:22 Uhr10.03.2009 11:24:22 Uhr
Amortisation includes accrued interest as well as write-downs. The impairment losses comprise write-ups and write-downs stemming from changes in the assumptions underlying the calculations, which require an adjustment in the measurement.
Status at 31 Dec. previous year 1,749 1,811 887 916 5,219 5,071 533 500 8,388 8,298
Currency translation differences –198 –61 –26 –46 –8 1 –32 1 –264 –105
These mainly comprise owner-occupied property totalling €2,313m (2,238m), plant and equipment and inventories totalling €314m (282m), deferred expenses from the conclusion of insurance contracts amounting to €16m (37m), and other deferred items of €126m (93m).
The impairment losses mainly involve €27m for a complex under construction and comprise €13m for land and €14m for buildings. They are induced by special factors related to own use and are based on the net realisable value. The best possible information from external sources was used for the valuation, assuming an active market (long-term market rents, market-adjusted management costs, appropriate market interest rates).
The total impairment losses are distributed between the different Group segments as follows: in reinsurance, €11m (3m) is apportionable to life and health and €22m (5m) to property-casualty; in primary insurance, the impairment losses amount to €3m (19m) in life and health and – (€21m) in propertycasualty.
Accumulated depreciation and accumulated impairment losses at 31 Dec. previous year 721 750
Accumulated amortisation and accumulated impairment losses at 31 Dec. fi nancial year 794 721
Gross carrying amount at 31 Dec. fi nancial year 3,107 2,959 72_Erlaeut_Aktiva_e 22672_Erlaeut_Aktiva_e 226 10.03.2009 11:24:22 Uhr10.03.2009 11:24:22 Uhr
Ownership of the minority holding in the US company Health Dialog Corporation classified as “held for sale” in the fourth quarter of 2007 was transferred in the first quarter of 2008. This holding, with a carrying amount of €34m, is therefore no longer recognised at the reporting date.
In the third quarter of 2007, we had adopted a plan to sell five hotels. However, the subprime mortgage crisis in the USA led to a significant alteration in the investment behaviour of potentially interested parties, so that in the second quarter of 2008 a sale of the hotels was considered no longer attractive under the given conditions. At the time the sales activities were terminated, expenditure of €1.2m had accrued from continuing operations.
We decided in the fourth quarter of 2007 to sell our stake in MPE Hotel I L.L.C., New York. Owing to the changed market environment, this sale did not take place in 2008 either, being classified as no longer attractive in the third quarter of 2008. At the time the sales activities were terminated, no expend iture from continuing operations had accrued.
The carrying amount of the property portfolio of HGE Haus- und Grundbesitzgesellschaft Elsterwerda mbH, first classified in a disposal group in the second quarter of 2007, remains unchanged at the balance sheet date. We are adhering to our plans to sell the portfolio, but owing to the global financial crisis, this undertaking has been postponed to 2009.
Balance sheet items relating to disposal groups at the reporting date €m 31.12.2008 Prev. year1
I. Land and buildings, including buildings on third-party land 3,732 3,753
Thereof: Provision for deferred premium refunds relating to disposal groups – –172
On 4 May 2007 and 29 January 2008, Munich Re’s Board of Management decided on a share buy-back programme, thus availing itself of the authorisation granted by the Annual General Meeting on 26 April 2007, in accordance with Section 71 para. 1 item 8 of the German Stock Companies Act. In the period from 10 May 2007 to 23 January 2008, 15,135,611 Munich Re shares were acquired via the stock exchange. The shares were then retired – 3,650,745 as at 26 June 2007 and 11,484,866 as at 9 April 2008 – in a simplified pro cess, without reducing the share capital, by adjusting the proportion of the Company’s share capital represented by each of the remaining no-par-value shares. On 6 May 2008, Munich Re’s Board of Management decided on a further share buy-back programme, thus availing itself of the authorisation granted by the Annual General Meeting on 17 April 2008, in accordance with Section 71 para. 1 item 8 of the German Stock Companies Act. The share buyback was restricted to a total purchase price (excluding incidental expenses) of €1bn. There was also the possibility, within the framework of the authorisations granted by the Annual General Meeting on 26 April 2007 and 17 April 2008, to buy back shares using derivatives. In the period from 8 May 2008 to 31 December 2008, including the exercise of put options (= 1,310,000 shares), a total of 8,434,680 shares were acquired at an average price of €111.74. The share buy-back will probably be concluded by the end of March 2009. Al together, 11,840,105 shares were acquired in 2008 at an average price of €117.10.
Acquisition of shares to safeguard stock appreciation rights under long-term incentive plans 328,584 56,935
For the employee share programme set up in 2008 by Europäische Reiseversicherung AG, 600 shares were acquired at an average price of €106.74. Some 401 of these were purchased by employees at an average price of €79.66 and 199 sold at an average price of €109.75. No shares remain in the portfolio.
For the employee share programme set up in 2008 by Mercur Assistance Deutschland GmbH, 170 shares were acquired at an average price of €106.28. 165 of these were purchased by employees at an average price of €79.66 and five sold at an average price of €114.65. No shares remain in the portfolio.
For the employee share programme set up in 2008 by MEAG MUNICH ERGO AssetManagement GmbH, 2,246 shares were purchased at an average price of €94.77, which staff acquired at a price of €79.20 each. No shares remain in the portfolio.
In the financial year 2008, companies of the ERGO Insurance Group acquired 8,412 shares at an average price of €108.20 each to cover future commitments from the long-term incentive plans launched since 2002 and sold 30,378 shares at a price of €107.14 each. Together with the remaining Munich Re shares acquired to safeguard the stock appreciation rights granted in 2002– 2008, the ERGO Insurance Group had a total portfolio of 300,590 shares at 31 December 2008.
MEAG MUNICH ERGO AssetManagement GmbH acquired 16,364 shares at €120.80 each and sold 3,311 shares at an average price of €102.13 in the financial year 2008 to safeguard obligations from its long-term incentive plan and thus has a portfolio of 119,073 Munich Re shares.
Retained earnings were increased by €6m due to adjustments under IAS 8. Details are given in the section “Changes in accounting policies.” In the course of acquiring further shares in KarstadtQuelle Versicherungen, ERGOISVIÇRE SIGORTA A.S. and ERGO Previdenza S.p.A. for a purchase price of €365.3m, the amount of €126.5m exceeding the book value of minority interests in these companies was offset against retained earnings.
The “other reserves” include –€1,186m (–1,161m) from currency translation and €3m (–) resulting from valuation of cash flow hedges. In addition, “other reserves” contains unrealised gains and losses distributed between the different items as follows: These are mainly minority interests in the ERGO Insurance Group. We disclose direct minority interests in special funds under “other liabilities.” Information on capital management is provided in the management report on page 111 f.
In the case of the Munich Re bonds, annual outflows of liquidity occur for the interest payments of €203m, £23m and €86m respectively until the first possible call dates in 2013, 2018 and 2017. Thereafter these payments will vary, depending on the respective interest-rate level.In the case of the Bank Austria Creditanstalt Versicherung AG registered bonds from 2004, the annual outflow of liquidity is €2m. For its registered bonds from 2001, the annual outflow for the first ten years amounts to €1m. Thereafter the payments for these bonds and the registered bonds from 1998 will, like those for the Midland bonds, be vari able, depending on the respective interest-rate levels.
To optimise our capital structure and with it our cost of capital, we placed a subordinated bond with a total volume of €1.5bn in June 2007. It is a perpetual bond and callable by Munich Reinsurance Company from ten years after the date of issue. Up to then, it will have a fixed coupon rate of 5.767% and thereafter a floating rate. The fair value of the subordinated bond is hedged in respect of the risk-free interest rate by means of an interest-rate swap. The changes in value of the subordinated liability and of the interest-rate swap are shown in the finance costs with impact on profit or loss in each case.
The fair value of the subordinated liabilities at the balance sheet date amounted to €4,017m (5,034m). For the Munich Re bonds, we take the stock market prices as fair values. For the other subordinated liabil ities, we determine the fair values using net present value methods with observable market data.
1 Bank Austria Creditanstalt Versicherung AG, consolidated in the financial statements, holds bonds with a nominal value of €2m; the volume outstanding has been reduced accordingly.
Munich Reinsurance Company, Munich, 5.767%, until 2017, thereafter fl oating, €1,498m1, Bonds 2007/perpetual 1,613 1,492
Bank Austria Creditanstalt Versicherung AG, Vienna, 4.95%, €50m, Registered bonds 2004/2014 45 –
Bank Austria Creditanstalt Versicherung AG, Vienna, secondary market yield on federal government bonds (Austria) +70 BP, €13m², Registered bonds 1998/perpetual 8 –
Life and health Property-casualty Life and health Property-casualty €m1 2008 Prev. year2 2008 Prev. year 2008 Prev. year 2008 Prev. year 2008 Prev. year2
Status at 31 Dec. previous year 183 188 3,820 4,123 104 92 1,612 1,467 5,719 5,870
Currency translation effects –4 –15 –76 –214 –7 7 –78 –12 –165 –234
Status at 31 Dec. fi nancial year 273 183 4,366 3,820 103 104 1,679 1,612 6,421 5,719 73_Erlaeut_Passiva_e 23373_Erlaeut_Passiva_e 233 10.03.2009 11:24:02 Uhr10.03.2009 11:24:02 Uhr
The changes in the consolidate group mainly concern the acquisition of Bank Austria Creditanstalt Versicherung AG. The item “Change/Other” concerns portfolio entries and withdrawals of –€1.248m (–2,437m). Scheduled changes in the provision for future policy benefits contain the changes deriving from prospective calculation as a result of premium payments, benefit cases and the unwinding of discount in the year under review. Unscheduled changes stem from alterations in the assumptions underlying the calculations, which required an adjustment in the measurement.
(21) Provision for outstanding claims 1 After elimination of intra-Group transactions across segments. 2 Adjusted pursuant to IAS 8.
In the property-casualty segment, the claims reserve consists of the case reserve and the IBNR reserve. The case reserve reflects the amount which is expected to be needed to settle claims which are known and have already been reported at the balance sheet date. The major part of this provision is measured at face value. A smaller part refers to provisions for annuities in personal accident, liability and workers’ compensation insurance. For this, the present value of the expected future payments is calculated. The respective discount rates are disclosed in (37) Risks from insurance contracts in the property -casualty segment. The underlying biometric actuarial assumptions are selected using appropriate actuarial principles. The IBNR reserve is calculated using actuarial methods on the basis of historical claims development data and taking into account foreseeable future trends.
Reinsurance Primary insurance Total €m1 31.12.2008 Prev. year2 31.12.2008 Prev. year 31.12.2008 Prev. year2
Over fi fteen years 6.0 5.9 4.1 4.4 73_Erlaeut_Passiva_e 23573_Erlaeut_Passiva_e 235 10.03.2009 11:24:02 Uhr10.03.2009 11:24:02 Uhr
It should to be borne in mind that the expected timing of payments from the provisions for outstanding claims naturally involves considerable uncertainty.
Changes in the consolidated group result mainly from the acquisition of Midland.
The level of long-tail claims from US workers’ compensation business remained at a high level in the year under review. Therefore, the loss reserves for this portfolio were strengthened, especially for accident years far back in the past. Allocation to Munich Re America’s provisions for asbestos-related claims also continued in the financial year. In contrast to this, the post-2001 accident years show a trend towards improvement across all lines of business, which was maintained in the year under review.
Development of the claims reserve in the property-casualty segment 2008 Prev. year €m1 Gross Ceded share Net Gross Ceded share Net
Status at 31 Dec. previous year 38,859 3,030 35,829 40,462 3,906 36,556
For the year under review 12,972 692 12,280 12,041 591 11,450
Status at 31 Dec. fi nancial year 39,285 2,846 36,439 38,859 3,030 35,829 73_Erlaeut_Passiva_e 23673_Erlaeut_Passiva_e 236 10.03.2009 11:24:02 Uhr10.03.2009 11:24:02 Uhr
The ultimate loss of an accident year comprises all payments made for that accident year up to the reporting date, plus the claims reserve at the reporting date. Given complete information regarding all losses incurred up to the balance sheet date, the ultimate loss status for each accident-year period would remain the same. In practice, however, it may be assumed that the ultimate loss status (based on estimates) is exposed to fluctuations that reflect the growth in knowledge about the claims cases. Changes in the consolidated group, especially new acquisitions, can also have an influence on the ultmiate loss status.
Of the provision for premium refunds based on national regulations, €57m
The ceded share of “other technical provisions” amounts to €34m (89m), of which €2m (3m) is apportionable to the ceded share of the provision for premium refunds based on national regulations.
Provision for premium refunds based on national regulations – – 4,442 4,925 4,442 4,925
Thereof resulting from unrealised gains and losses on investments (recognised directly in equity) – – 791 1,360 791 1,360
Development of provision for premium refunds based on national regulations €m 2008 Prev. year
Insurance Control Act and with the Statutory Order on Minimum Allocation have to be observed.
Change resulting from unrealised gains and losses on investments (recognised directly in equity) –569 –1,371
Defined benefit obligations include medical-care benefits. The present value of defined benefit obligations for these items amounted to €140m (132m) at the balance sheet date.
To finance these obligations, it is necessary for the trust assets to correspond to the present value of pension obligations. In the process, however, account has to be taken of the difference between the actuarial interest rate relevant for measuring the obligations and the return attainable on the investments. Therefore, the present value of the pension obligations was calculated using an actuarial interest rate equivalent to the expected investment return, which increased the present value of defined benefit obligations at 31 December 2008 by €133m (69m).
Change in the present value of obligations under defi ned benefi t plans €m 2008 Prev. year
Change in the plan assets for defi ned benefi t plans €m 2008 Prev. year
Change in the reimbursement rights for defi ned benefi t plans €m 2008 Prev. year
Status at 31 Dec. fi nancial year 1,335 1,224 73_Erlaeut_Passiva_e 24173_Erlaeut_Passiva_e 241 10.03.2009 11:24:03 Uhr10.03.2009 11:24:03 Uhr
Medical cost trend rate 6.1 5.3 73_Erlaeut_Passiva_e 24273_Erlaeut_Passiva_e 242 10.03.2009 11:24:03 Uhr10.03.2009 11:24:03 Uhr
A change in the medical cost trend rate by one percentage point would have the following effects on the present value of defined benefit obligations and pension expenses: The miscellaneous other provisions comprise a large number of different items, including €86m (74m) for long-term incentive plans, €77m (69m) for salary obligations, €44m (50m) for other remuneration for desk and sales staff, €155m (33m) for reconciliation of interests, €29m (26m) for competitions for sales staff, €11m (9m) for litigation risks, and €3m (3m) for insurance tax on outstanding premiums.
Present value of defi ned benefi t obligations 26 – 21
Other fi gures for the current fi nancial year and the previous years
Other provisions €m Prev. year Additions Withdrawals Reversal Other changes 31.12.2008
Early retirement benefi ts/semi-retirement 239 52 64 16 8 219 73_Erlaeut_Passiva_e 24373_Erlaeut_Passiva_e 243 10.03.2009 11:24:03 Uhr10.03.2009 11:24:03 Uhr
The accounts payable on primary insurance business mainly contain liabilities towards policyholders resulting from accumulated participation in surplus, premium deposits and insurance contracts without significant risk transfer. Of the amounts due to banks totalling €1,650m (1,823m) at 31 December 2008, €19m (19m) concerns disposal groups held for sale, cf. (16) Non-current assets and disposal groups held for sale. In addition, €456m (–) of the amounts due to banks is apportionable to cash collateral held by the banks.
2 In August 2008, the issuer bought back bonds with a nominal value of US$ 79m.
Munich Re America Corporation, Princeton, 7.45%, US$ 421m, Senior Notes 1996/20261, 2 302 341
The following table provides information on the remaining contractual maturities of the items shown under “other liabilities”. Since the amounts payable on primary insurance business are directly linked to the underlying insurance business, the liquidity risk arising from these is analysed together with the corresponding insurance contracts. This currently also applies to the derivatives embedded in variable annuity business. For further information on this, see (36) Risks from insurance contracts in the life and health segment and (37) Risks from insurance contracts in the property-casualty segment. The derivatives listed below are recognised at market value.
The major portion of the liabilities up to one year involve interest-free items, where the carrying amounts and the undiscounted cash flows are identical. €1,107m (1,091m) of the amounts owed to banks and €119m (274m) of the liabilities from derivatives are due within one year. Any deviations in the liabilities with remaining terms of over one year from the undiscounted cash flows are not material for the presentation and significance of the financial liabilities for our financial position and performance.
Over fi ve years and up to ten years 364 148
Of the gross premiums written from short-term insurance business, the portions attributable to periods after the balance sheet date are posted as un earned premiums, cf. (19) Unearned premiums. Unearned premiums are reversed in accordance with the reduction in risk, over the duration of the contracts.
Change in unearned premiums Gross 94 10 307 –97 6 5 145 157 552 75
Change in unearned premiums Ceded share 1 –1 8 –100 – – 4 –7 13 –108 74_Erlaeut_GuV_e 24674_Erlaeut_GuV_e 246 10.03.2009 11:23:51 Uhr10.03.2009 11:23:51 Uhr
The result for land and buildings includes rental income of €316m (344m).
The expenses for the management of investments include running costs and expenses for repair and maintenance of property totalling €62m (65m). We earned interest income of €1,731m (1,441m) on loans, €9m (12m) on other securities held to maturity, and €5,179m (5,278m) on securities available for sale.
Other securities held to maturity – – – – 8 11 1 1 – – 9 12
Deposits retained on assumed reinsurance, and other investments 168 348 27 57 –31 –32 28 9 13 74 205 456
Investments for the benefi t of life insurance policyholders who bear the investment risk – – – – –562 2 – – – – –562 2
Expenses for the management 74_Erlaeut_GuV_e 24774_Erlaeut_GuV_e 247 10.03.2009 11:23:52 Uhr10.03.2009 11:23:52 Uhr
The change in the provision for future policy benefits (net) contains –€591m (38m) in unrealised gains/losses from unit-linked life insurance. Expenses for claims and benefits include expenses for policyholders’ bonuses. Of this, €439m (1,259m) is for the allocation to the provision for premium refunds on the basis of national regulations, –€111m (600m) for the change in the provision for deferred premium refunds recognised in the income statement, and €290m (391m) for direct crediting. The “other technical result“ for life primary insurance mainly includes interest on policyholders’ accumulated credit.
1 After elimination of intra-Group transactions across segments. 2 Adjusted pursuant to IAS 8.
Claims and benefi ts paid 4,229 5,446 9,132 8,875 10,392 10,057 3,144 2,986 26,897 27,364
Provision for deferred premium refunds – – 6 – 551 2,047 15 21 572 2,068
Claims and benefi ts paid 182 333 1,019 1,008 81 69 162 267 1,444 1,677
Provision for outstanding claims –21 –128 –357 –579 3 3 107 –136 –268 –840
Provision for deferred premium refunds – – – – – – 1 1 1 1
Claims and benefi ts paid 4,047 5,113 8,113 7,867 10,311 9,988 2,982 2,719 25,453 25,687
In addition to foreign currency exchange losses of €3,654m (1,839m), the other expenses mainly include expenses for services rendered of €250m (310m), interest and similar expenses of €157m (161m), other write-downs of €139m (87m), and other tax of €18m (20m). They also contain expenses of €53m (76m) for owner-occupied property, some of which is also leased out.
Reinsurance commission and profi t commission 1,405 1,556 2,948 3,045 7 16 39 9 4,399 4,626
The current tax is derived from the tax results of the financial year, to which the local tax rates of the respective subsidiaries are applied. Deferred tax is also calculated using the local tax rates. Sometimes for simplicity’s sake 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 generally taken into account.
The following table shows the reconciliation between the expected taxes on income and the tax on income actually shown. The expected tax expenses are calculated by multiplying the operating result before taxes on income (after “other tax“) by the Group tax rate. The applicable Group tax rate has reduced from 40% in the previous year to 33%. This takes into account corporation tax including solidarity surcharge, and a mixed trade-tax rate.
Deferred tax resulting from the occurrence or reversal of loss carry-forwards 172 277
The Group effective tax rate in 2008 was significantly increased by the negative developments in the capital markets, since impairments/losses on equities are not deductible under German tax law.
Tax reserves set up in previous years were released in 2008 after the reason for posting them no longer applied.
The item “municipal trade earnings tax“ includes the differences between the trade-tax rate applied by the respective Group companies and the Group mixed trade-tax rate.
Our portfolios’ degree of exposure to biometric risks depends on the type of insurance contracts: Product category
– Long-term contracts with a death benefit – In most cases, a lump-sum payment on termination – Actuarial assumptions fixed when contract is concluded; premium adjustments not possible
– In most cases, guaranteed lifetime annuity payment – Actuarial assumptions mainly fixed when contract is concluded
– Long-term contracts with a guaranteed limited annuity in the event of disablement – Actuarial assumptions fixed when contract is concluded
– In most cases, short-term contracts under which morbidity risks are assumed from cedants
Longevity: – Increased expenditure due to rise in the average duration of annuity period
Mortality (short term): – Increase in claims expenditure due to exceptional, one-off circumstances (e.g. pandemics) Mortality (long term): – Increase in claims expenditure due to sustained rise in mortality in cedants’ portfolios Disablement: – Increased expenditure for disability insurances in cedants’ portfolios
Interventions by legislators or courts in the distribution of risks and rewards underlying the contracts concluded between the parties to insurance may mask or aggravate the biometric risks described, making it necessary to adjust the provision.
In reinsurance, we use the following discount rates for the provision for future policy benefits and the provision for outstanding claims: If provisions are covered by deposits retained on assumed reinsurance, the interest is directly secured by an inflow of investment income guaranteed by the ceding company. For this part of the portfolio, there is no interest-rate risk. For the remaining portfolio, application of the liability adequacy test as per IFRS 4 inter alia ensures that the expected income from the investments covering the technical provisions is sufficient to meet future obligations as a whole.
The discount rates relevant for the portfolio in calculating the provision for future policy benefits and the provision for outstanding claims are as follows: Provisions in reinsurance and primary insurance that are not covered by deposits retained are covered by investments. In the case of a discrepancy between the durations of these investments and the liabilities (“duration mismatch”), the main risk lies in the fact that if interest rates fall markedly over the remaining settlement period of the liabilities, the return on the reinvested assets may be lower than the discount rates and thus necessitate further expenses. But a 1 After elimination of intra-Group transactions across segments. 2 Adjusted pursuant to IAS 8.
Notes Disclosures on type and extent of risks from insurance contracts and financial instruments complete duration matching of liabilities with fixed-interest investments of identical maturities would not be expedient, because if interest rates rise, policyholders might make increasing use of their surrender rights, resulting in a liquidity requirement for premature payouts.
The lump-sum option in the case of deferred annuity policies gives policyholders the option of having their annuity paid out in a single payment at a fixed date. With this embedded derivative, there is a potential risk if an unexpectedly large number of policyholders exercise their option at an interestrate level markedly higher than the discount rate used for the annuity calculation.
In life primary insurance, the reported technical provision in the case of contracts with a surrender option is generally at least as high as the relevant surrender value. Expected surrenders are taken into account in the amortisation of deferred acquisition costs in life primary insurance and reinsurance and in the calculation of provisions in health primary insurance. The underlying assumptions are regularly checked. The policyholder’s right in some contracts to maintain the contract with a waiver of premium and an adjustment of the guaranteed benefits constitutes a partial lapse and is taken into account in the calculations analogously.
We measure sensitivity to changes in the lapse rate in life insurance and for long-term contracts in health insurance using an embedded value analysis; cf. page 258 f.
Further information on the liquidity risk is provided in the risk report on page 160 f.
Over twenty years –100,515 75_Erlaeut_ArtAus_e 25775_Erlaeut_ArtAus_e 257 10.03.2009 11:23:39 Uhr10.03.2009 11:23:39 Uhr
In primary insurance, there is substantial risk minimisation through product design. For the most part, prudent actuarial assumptions are used in fixing the guaranteed benefits, in addition to which policyholders are granted a performance-related participation in surplus. More than 99% (99%) of the amounts shown under (20), Provision for future policy benefits, is apportionable to such contracts. Given the relevant margins in the actuarial assumptions, it is also possible to fulfil the future guaranteed obligations without adjusting the provisions in the case of moderate changes in assumptions. Of great significance for risk-balancing in the case of adverse developments are parts of the provision for premium refunds based on national regulations, parts of the provision for deferred premium refunds resulting from other revaluations, and unrealised gains and losses on investments taken as a basis for posting the provision for deferred premium refunds. Reference is made to (22) Other technical provisions.
For information on our risk management processes, reference is made to the risk report, pages 155–157 and page 159.
Munich Re measures the sensitivity of its long-term insurance business in the segments life and health using an economic valuation in the context of the embedded value calculation; cf. page 55 f. This covers 100% (100%) of the long-term business in reinsurance and more than 90% (90%) of the long-term business in primary insurance.
The degree of exposure to estimation risks differs according to class of business and also between primary insurance and reinsurance. On the basis of the loss ratios and combined ratios of recent years, conclusions can be drawn about the historical volatilities in the different classes of business and about possible interdependencies. The differences in volatility are due equally to fluctuations in claims burdens and fluctuations in the respective market price level for the covers granted.
Embedded value at the balance sheet date 6,116 6,662 3,509 5,406
Change in the event of a sustained increase in interest rates of 100 BP –397 –443 968 746
Change in the event of a sustained decrease in interest rates of 100 BP 443 515 –1,564 –895
Change in the event of a decrease in mortality by 5% –20 –27 –38 –30 in the case of contracts mainly covering the longevity risk
Change in the event of an increase in morbidity by 5% –149 –130 –12 –10
The estimation of technological, social and demographic parameters plays an important part in assessing and pricing risks assumed in all classes of business. Beyond this, in liability insurance, workers’ compensation insurance and sections of motor insurance, the development of economic and legal parameters can be significant, whereas especially in the lines of business fire and marine, and also in sections of engineering business and primary insurance, there is a high degree of sensitivity regarding the underlying assumptions about natural catastrophes. In the latter area, we include expected trends in our considerations when assessing the risks, with special importance given to a precise analysis of climate-related changes in the risk profile. The following table shows the combined ratios of the Munich Re Group with and without inclusion of natural catastrophes: 1 Thereof World Trade Center and reserve strengthening at Munich Re America: 24.3%.
The development of our claims reserves and the corresponding run-off results are shown under (21) Provision for outstanding claims.
In addition, there are loss scenarios which are highly influenced by the continuously evolving practice of jurisprudence under tort law, but also by a growing number of class actions. The main lines of business affected are product liability and professional liability in the USA. Besides this, we see increased uncertainties in the assessment of liability scenarios for pure financial losses as a result of the massive change in economic parameters. The subprime loan crisis and the ensuing global financial crisis has led to a wave of lawsuits from aggrieved investors and shareholders, particularly against the managements of financial institutions. We will continue to carefully monitor trends and to respond to the emergence of new information as appropriate.
In the area of bodily injury losses, the Group carries a significant amount of reserves for individual claims where the claimant is severely injured and is in need of a high degree of individual, specialised medical treatment and care. US workers’ compensation business and motor liability business in some European countries are particularly affected by such claims. In both cases, coverage is provided for permanent disability cases where the claimant is expected to live for a considerable length of time and requires significant medical attention. Accordingly, the loss provisions are highly sensitive especially to inflation of medical care costs and to the trend with regard to general life expectancy. Owing to unexpectedly high price inflation, we have repeatedly had to increase these provisions in the past. Actual claims reported are compared with projected amounts to check whether the loss development patterns used are still appropriate for projecting future claims payments.
Another important measure for controlling underwriting risks is the cession of a portion of our risks to other carriers via external reinsurance and retrocession; cf. (11) Ceded share of technical provisions and (28) Premiums. All our companies have intra-Group and external reinsurance and retrocession cover. Particularly important in this context is an accumulation excess-of-loss cover, which provides protection against property damage losses from natural catastrophes. The dimensions of this cover are based on analyses of our accumu lation budgets in those parts of the world exposed to natural catastrophes. The protection afforded by retrocession comes into play if we are hit by an ex tremely large loss.
Economically, an interest-rate risk derives in principle from the need to earn a return on the investments covering the provision that is commensurate with the discount rate used in measuring the provision. In balance sheet terms, the interest-rate risk affects only those parts of the technical provisions that are discounted and for which a guaranteed inflow of investment income from deposits retained is not secured from the cedant in at least the same amount.
The discounting of the provisions in primary insurance is also largely governed by supervisory law. An interest-rate risk arises for us here primarily for annuity insurance claims. However, as only around 10.9% (10.6%) of the actuarial and claims reserves to be considered in this connection in our property-casualty primary insurance segment are discounted, this risk can be assessed as small. If the investment income failed to cover the expenses arising from the discounting, this would result in losses not included in the calculations. In such a case, a reserve adjustment might be necessary. Conversely, if the investment income were higher, this would result in unforeseen gains.
Reinsurance Primary insurance Total €m1 31.12.2008 Prev. year 31.12.2008 Prev. year 31.12.2008 Prev. year
The following table shows that in the past calendar years the liquidity situ ation has always been positive. Not explicitly considered in the quantification – but important – is the fact that owing to our far-reaching asset-liability management for payments of claims incurred in prior years, even extremely large losses (from natural-catastrophe and non-natural-catastrophe scenarios) are covered by our liquidity position. In addition, we regularly simulate the impact of major shock scenarios on our liquidity situation and take appropriate account of this in our liquidity planning. The losses simulated in this connection exceed the demands of very large claims burdens sustained in the past (e.g. World Trade Center or hurricanes like Katrina) in terms of both absolute amount and speed of settlement.
The credit ratings of our retrocessionaires and reinsurers for the externally ceded share of our provisions are given on page 167 of the risk report, which also includes further information on credit risks on page 159 f.
Apart from this, there are credit risks from the underwriting of credit reinsurance contracts. Information on these can be found under (37) Risks from insurance contracts in the property-casualty segment. We do not conduct any active credit insurance business in our primary insurance.
Claims payments for fi nancial year 4,562 4,264 3,493 3,734 3,935
The sensitivity analysis shows the effect of capital market events on the value of investments and the corresponding impact on the income statement. Sensitivities of investments to share prices, interest rates and exchange rates are analysed independently of one another, i.e. ceteris paribus, with the change in market value being determined under selected capital market scenarios as follows: The analysis of equities and equity derivatives is based on a change in market value of ±10%, ±30% of the delta-weighted exposure. For interest-rate-sensitive instruments, on the other hand, the change in market value resulting from a global change in interest rates of ±100 BP und ±200 BP is determined using duration and convexity. The reaction of interest-rate derivatives to the change in market value of the underlying investment is taken into account using the delta of the derivative. By contrast, changes in exchange rates affect both interest-rate-sensitive and share-price-sensitive instruments. The sensitivity of instruments in foreign currency is determined by multiplying the euro market value by the assumed change of ±10% in the exchange rates. Alternative investments (private equity, hedge funds and commodities) are analysed together with the equities.
The effects of the capital market events listed in the following table do not take account of tax or the provision for premium refunds (gross disclosure), i.e. the analysis does not take into account the effects resulting from policyholders’ participation in surplus in insurances of the person. The impact on the results and equity shown below would be substantially reduced if these effects were considered. It is also assumed that changes in the capital markets occur instantaneously, preventing our limit systems and active counter-measures from taking effect. The analysis considers around 92% of the Munich Re Group’s investments.
Change in share prices 31.12.2008 Previous year Impact on Impact on Total change in Impact on Impact on Total change in €bn profi t or loss1 equity1 market value profi t or loss1 equity1 market value
Market values 7.005 23.838 75_Erlaeut_ArtAus_e 26575_Erlaeut_ArtAus_e 265 10.03.2009 11:23:40 Uhr10.03.2009 11:23:40 Uhr
In terms of market value, the Munich Re Group’s fixed-interest investments respond to changes in interest rates in a similar way to an interest-bearing bond with a period of around six years to maturity. As a portion of the investments are recognised at amortised cost, however, the effects shown deviate from this.
The impact on the income statement is small compared with the impact on equity, as most of the changes in the value of fixed-interest investments are accounted for in equity, with no effect on profit or loss. Also, nearly a third of the investments considered in this analysis are measured at amortised cost, so that changes in market value have no effect on the financial statements.
Increase of 200 BP – 0.652 –7.937 –11.993 – 0.280 –7.903 –12.173
The parent of the Munich Re Group is Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (Munich Reinsurance Company JointStock Company in Munich), Königinstrasse 107, 80802 München. Its registered seat is Munich, Germany. In addition to its function as a reinsurer, the parent also fulfils the function of holding company for the Group.
Information on the remuneration of Board members and transactions with these persons can be found in the remuneration report, starting on page 134, and under (44) Remuneration report. Transactions between Munich Re and subsidiaries that are to be deemed related parties have been eliminated in consolidation and are not disclosed in the notes. Business relations with unconsolidated subsidiaries are of subordinate importance as a whole; this also applies to business relations with associates.
The relevant initial share price for the stock appreciation rights is calculated from the average of closing prices for Munich Re shares in Frankfurt Xetra trading over the last three months prior to plan commencement. The initial price for the 2008 long-term incentive plan is €121.84 (134.07). As a result of Munich Reinsurance Company’s capital increase in the financial year 2003, the initial share prices for the stock appreciation rights issued up to then and the number of stock appreciation rights already granted were adjusted in accordance with the conditions. In the year under review, a total of 448,117 (347,860) stock appreciation rights were granted, 143,101 (91,919) of these to Board of Management members. The future obligations arising from the long-term incentive plans are covered by Munich Re shares.
The personnel expenses and income incurred for the stock appreciation rights are determined on the basis of the change in the fair value of the underlying options. The fair value recognises not only the intrinsic value (difference between current share price and initial share price of the stock appreciation rights) but also the possibility of growth in value up to the date of forfeiture or
Incentive Incentive Incentive Incentive Incentive Incentive Incentive Incentive Plan 2001 Plan 2002 Plan 2003 Plan 2004 Plan 2005 Plan 2006 Plan 2007 Plan 2008
Old initial share price €320.47 €260.37 €86.24 – – – – –
New initial share price after 2003 capital increase €304.80 €247.64 €82.02 €88.65 €88.10 €108.87 €134.07 €121.84
Intrinsic value 2008 for one right – – €29.98 €23.35 €23.90 €3.13 – –
Number of rights on 31 Dec. 2001 109,474 – – – – – – –
Number of rights on 31 Dec. 2003 107,428 135,200 439,581 – – – – –
Number of rights on 31 Dec. 2006 106,286 133,772 195,736 336,665 485,527 442,590 – –
Number of rights on 31 Dec. 2007 105,745 132,787 125,046 251,013 397,306 440,199 341,234 –
Since 1 July 2002, ERGO Versicherungsgruppe AG and some of its subsidiaries, as well as Europäische Reiseversicherung AG and MEAG MUNICH ERGO AssetManagement GmbH, have also set up long-term incentive plans at yearly intervals and with terms of seven years each. The persons entitled to participate – Board of Management members, managing directors and, in individual cases, also top executives – are granted a defined number of stock appreciation rights in respect of Munich Re shares. The design of the plans is identical to that of Munich Re’s long-term incentive plans and they are accounted for in the same way. In the year under review, a total of 173,153 (121,821) stock appreciation rights were granted, 132,383 (93,988) of these to Board of Management members. The future obligations arising from the longterm incentive plans are covered by Munich Re shares or options on Munich Re shares. In the year under review, provisions of €21.4m (18.1m) had to be posted for the primary insurers and asset managers in the Munich Re Group. The personnel expenses/income recognised in the income statement correspond(s) to the change in the provision in the year under review, taking into consideration any rights exercised. In 2008, this resulted in expenses of €4.4m (–0.8m). The weighted average share price for the stock appreciation rights exercised in 2008 was €126.48 for plan year 2003, €120.94 for plan year 2004, and €121.20 for plan year 2005. The intrinsic value of the exercisable stock appreciation rights amounted to €5.2m at the balance sheet date.
1 Owing to retirement from the Board of Management, payments in the amount of the grant value were made in lieu of the stock appreciation rights and rights already granted under the conditions reduced pro rata temporis.
New initial share price after 2003 capital increase €247.64 €82.02 €88.65 €88.10 €108.87 €134.07 €121.84
Number of rights on 31 Dec. 2002 45,476 – – – – – –
Number of rights on 31 Dec. 2005 42,892 59,108 122,059 187,530 – – –
Each stock appreciation right entitles the holder to draw in cash the difference between the Munich Re share price at the time when the right is exercised and the initial share price. The stock appreciation rights may only be exercised after a two-year vesting period and then only if the share price is at least 20% higher than the initial price. In addition, Munich Re shares must have outperformed the EURO STOXX 50 twice at the end of a three-month period during the term of the plan. The gross amount that may be obtained from the exer cising of the stock appreciation rights is limited to an increase of 150% of the initial share price.
When the stock appreciation rights are exercised, the cash payment is made (in the respective national currency) by the company that granted the rights. Stock appreciation rights not exercised on the last trading day of the plan term are exercised on the participant’s behalf insofar as the prerequisites for this are met. If the prerequisites are not met, the stock appreciation rights are forfeited. If another company acquires control of Munich Re or the company’s group of shareholders changes significantly due to a merger or comparable transaction or intended business combination (“change of control”), all plan participants from the Munich Re Group may exercise their stock appreciation rights within 60 days after the change of control becomes effective, even if the prerequisites for exercising the rights are not yet met at that juncture.
Payments to retired members of the Board of Management or their surviving dependants totalled €5.5m (6.0m).
Personnel expenses of €0k (0k) were incurred for retired members of the Board of Management. As at 31 December 2008, the pension provisions and provisions for comparable benefits for the retired members of the Board of Management or their surviving dependants amounted to €0m (0m) after deduction of plan assets held by a separate entity (under a contractual trust agreement).
All other disclosures on the remuneration of Board members, on share trading and shares held by the members of the Board of Management and the Supervisory Board, and on the structure of the Board of Management’s remuneration system can be found in the remuneration report on page 134 f.
For services rendered to the parent and consolidated subsidiaries by the Group auditor (KPMG Bayerische Treuhandgesellschaft AG Wirtschaftsprüfungsgesellschaft, Munich, and its affiliated companies within the meaning of Section 271 para. 2 of the German Commercial Code), the following fees have been recognised as an expense in the financial year: With effect from 1 October 2008, KPMG Spain and, with retroactive effect from 1 October 2007, KPMG Switzerland became part of KPMG Europe LLP. This makes KPMG Spain and KPMG Switzerland, along with KPMG LLP (UK) affiliated companies of KPMG Germany within the meaning of Section 271 para. 2 of the German Commercial Code. Consequently, these units been included in the auditor’s fees to be disclosed.
The “other services” mainly involve support for a Group company in developing and implementing a data base as the foundation for a management information system and assistance in analysing various aspects in the development of a hedging platform.
Asset management 808 802 76_SonstAngaben_e 27176_SonstAngaben_e 271 10.03.2009 11:23:28 Uhr10.03.2009 11:23:28 Uhr
Following amendments to the German Insurance Control Act (VAG) at the end of 2004, all German life and health insurers of our Group are obliged to be members of a protection fund. For life insurers, the protection fund can levy special contributions of up to one per mille of total net technical provisions, in addition to a regular contribution of 0.2 per mille of total net technical provisions. For the health insurers, there is no pre-financing, but the fund may levy special contributions of up to two per mille of net technical provisions to fulfil its functions. This could give rise to a potential payment obligation of €156m (160m) at Group level. The functions and powers of the statutory protection fund for life insurance were transferred by the German Federal Ministry of Finance to Protektor Lebensversicherungs-AG in a statutory order of 11 May 2006, and those of the statutory protection fund for health insurance were entrusted to Medicator AG in another statutory order of the same date.
At the balance sheet date, future minimum lease payments under non-cancellable operating leases totalled €356m (362m): Payments from operating leases concern in particular rents for offices and business premises of the Group. At €3m (3m), the amount of minimum lease payments under finance leases at the balance sheet date was insignificant.
Consolidated result attributable to Munich Re equity holders €m 1,503 3,840
Number of shares at 1 Jan. fi nancial year 207,824,071 225,616,173
Earnings per share € 7.48 17.83 76_SonstAngaben_e 27476_SonstAngaben_e 274 10.03.2009 11:23:28 Uhr10.03.2009 11:23:28 Uhr
ERGO Daum Direct Auto Insurance Co. Ltd., Seoul 61.55% 15,616 3,626
ERGO Latvija Versicherung AG (ERGO Latvija Apdrosinasanas Akciju Sabiedriba), Riga 94.69% 7,212 715
ERGO Vida Seguros y Reaseguros, Sociedad Anónima, Saragossa 94.69% 26,236 2,033
Sopockie Towarzystwo Ubezpieczen na Zycie Ergo Hestia Spolka Akcyjna, Sopot 94.69% 16,586 3,590
DAMAN – National Health Insurance Company, Abu Dhabi 20.00% 51,618 9,434
Munich Re Capital Markets New York, Inc., Wilmington, Delaware 100.00% 7,183 –29,996
General information Glossary 280 Important addresses 286 Index of key terms 288 Important dates 289
Munich Re Group Annual Report 2008 279 90_Gloss_Anschr_Impress_e 27990_Gloss_Anschr_Impress_e 279 10.03.2009 11:22:56 Uhr10.03.2009 11:22:56 Uhr
Capital Asset Pricing Model (CAPM) Capital market model based on the portfolio theory, used to evaluate secur ities.
The CAPM expands the portfolio theory to include the question of which part of a security’s overall risk cannot be eliminated by means of risk diversification and explains how investment opportunities entailing risk are assessed in the capital markets. Accordingly, in efficient markets where prices already incorporate all the information, a greater return can only be achieved by assuming more risk.
Captive An insurance company established as a subsidiary of one or more industrial/
trading companies or groups mainly for the purpose of insuring the risks of these companies and their affiliates.
Credit default swaps Capital market instruments used by investors to hedge against the risk of debtors defaulting. The size of the spread depends on the market’s assessment of the default probability and therefore provides a good indicator of a company’s or country’s credit standing.
Cycle management Insurance, reinsurance and retrocession markets are subject to global and regional cycles that may have external (interest-rate development, economic development, major losses, etc.) and internal causes (price competition, premium calculation methods, etc.). We manage the cycle by continuously analysing its course, taking proactive strategic measures and ensuring riskadequate terms (prices, scope of cover, and conditions) in every phase of the cycle.
Deferred acquisition costs Costs incurred for the acquisition or the renewal of insurance policies (e.g.
commission, cost of processing applications) which are capitalised and amortised over the term of the contracts.
Fair value The amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s-length transaction.
Layer Term used in excess-of-loss reinsurance to denote a stratum of cover. Its point of attachment and extent is defined in terms of the sum insured. Example: €5,000 in excess of €1,000 refers to the layer €1,000 to €6,000.
Managing general agency business Business where the insurer transfers the underwriting authority for a specific portfolio to a managing general agent or managing general agency (MGA) that acts on its behalf. Depending on the arrangement involved, the agent/ agency may be assigned additional responsibilities such as claims handling or administrative tasks.
Morbidity The probability that an individual in a given group will develop a certain disease or disorder.
Net operating expenses Commission, personnel costs and general expenses for the acquisition and ongoing administration of insurance contracts, less any commission reimbursed by reinsurers, including profit commission, plus expenses from amortisation of the present value of future profits (PVFP).
Provision for premium refunds Provision made for obligations involving bonuses and rebates – especially in life and health insurance – which are not yet payable at the balance sheet date; the amount posted is based on supervisory or contractual regulations. It also includes the policyholders’ share of accumulated valuation differences between IASs/IFRSs and the German Commercial Code (provision for deferred premium refunds).
Public-private partnership Long-term arrangement between private companies and public bodies with the aim of providing public services in a more economical manner.
Risk exposure Essentially, the extent of a risk in terms of its potential deviation from the expected value under certain probability assumptions; in connection with accounting, the term is also used to quantify the potential loss resulting for a company from certain assets.
Run-off triangle Also known as “loss triangle”, this is a tabular representation of claims-related data (such as payment, claims reserve, ultimate loss) in two, time-related dimensions. One of these is the calendar year, while the other is usually the accident year (year of the loss occurrence). Run-off triangles – as the basis for measuring claims reserves – make clear how the claims reserve changes over the course of time due to payments made and new estimates of the expected ultimate loss at the respective balance sheet date.
Solvency II Project of the European Commission to fundamentally reform and harmonise
Stop-loss cover Non-proportional reinsurance which triggers limited liability if the primary insurer’s total loss burden for a specific duration of cover exceeds a predefined value.
Technical provisions Uncertain liabilities directly connected with insurance business. These provisions are made to ensure that obligations under insurance contracts can always be met.
Value at risk Method of quantifying risk, which measures the potential future losses that may not be exceeded within a specified period and with a specified p robability.
Variable annuity product A special form of unit-linked life insurance where the investment risk is borne primarily by the policyholder but the insurer guarantees a minimum payment on occurrence of the insured event.
Germany Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München Königinstrasse 107 80802 München Tel.: +49 (89) 38 91-0 Fax: +49 (89) 39 90 56 E-mail: feedback@munichre.com www.munichre.com
Canada Munich Reinsurance Company of Canada (MROC) Munich Re Centre 390 Bay Street, 22nd Floor Toronto, Ont., M5H 2Y2 Tel.: +1 416 366 9206 Fax: +1 416 366 4330 E-mail: info@mroc.com www.mroc.com
Italy Münchener Rück Italia Corso Venezia, 48 20121 Milano Tel.: +39 02 764 161 Fax: +39 02 76 41 69 00 E-mail: mritalia@munichre.com www.munichre.it
Switzerland New Reinsurance Company Rue de l’Athénée 6–8 P.O. Box 35 04 1211 Genève 3 Tel.: +41 22 31 98 500 Fax: +41 22 31 05 332 E-mail: info@newre.com www.newre.com
UK Great Lakes Reinsurance (UK) PLC Plantation Place 30 Fenchurch Street, 3rd Floor London EC3M 3AJ Tel.: +44 203 003 7000 Fax: +44 203 003 7010 E-mail: 30Fsreception@munichre.com www.greatlakes.co.uk
DKV Deutsche Krankenversicherung AG Aachener Strasse 300 50933 Köln Tel.: 0 18 01/35 81 00 Fax: 0 18 05/78 60 00 E-mail: service@dkv.com www.dkv.com
Hamburg-Mannheimer Versicherungen Überseering 45 22297 Hamburg Tel.:+49 (40) 63 76-0 Fax: +49 (40) 63 76-33 02 E-mail: ksc@hamburg-mannheimer.de www.hamburg-mannheimer.de
KarstadtQuelle Versicherungen Nürnberger Strasse 91–95 90758 Fürth Tel.: +49 (911) 1 48-16 66 Fax: +49 (911) 1 48-16 67 E-mail: info@kqv.de www.kqv.de
Longial GmbH Immermannstrasse 23 40210 Düsseldorf Tel.: +49 (211) 49 37-76 00 Fax: +49 (211) 49 37-76 31 E-mail: info@longial.de www.longial.de
Victoria Versicherungen Victoriaplatz 1 und 2 40198 Düsseldorf Tel.: +49 (211) 4 77-0 Fax: +49 (211) 4 77-22 22 E-mail: info@victoria.de www.victoria.de
Turkey ERGOISVIÇRE Kısıklı Caddesi No. 30 Altunizade TR-34662 İstanbul Tel.: +90/216/554-8100 Fax: +90/216/474-1387 E-mail: isvicre@ergoisvicre.com.tr www.ergoisvicre.com.tr
MEAG MUNICH ERGO AssetManagement GmbH Oskar-von-Miller-Ring 18 80333 München Tel.: +49 (89) 24 89-0 Fax: +49 (89) 24 89-25 55 E-mail: info@meag.com www.meag.com 90_Gloss_Anschr_Impress_e 287 13.03.2009 13:33:54 Uhr
Cairnstone 80 Capital management 13, 54, 111, 154 Capital model, internal 55 Changing Gear 3, 9, 15, 18, 50, 90 Climate change 7, 31, 66, 86, 124, 128, 170 Combined ratio 57 f., 71 ff., 82 ff., 150 Cooperations 28 Corporate Climate Centre (CCC) 31, 124, 170 Corporate governance 10,127, 130 ff., 190 Corporate responsibility 127 Corporate Underwriting 50, 60, 112, 157 ff. Cycle management 58, 83, 144
D.A.S. 41, 91, 286 Daman National Health Insurance 36, 80 Daum Direct Auto Insurance 121, 193 Dividend 2, 13, 70, 110 ff., 144, 154, 274 DKV Salute 19
Emma 71, 75, 82 Equity 24, 57, 110, 113 ff., 167, 178, 231 ERGO 3, 6, 18, 39, 49, 71, 91 ff., 123 ERGO Daum Direct 73, 93, 121, 193 ERGO Previdenza 96, 231 ERGOISVIÇRE 18, 53, 96, 287 Europäische Reiseversicherung 6, 18, 53, 91, 95, 287 European Embedded Value (EEV) 55, 59, 71, 77, 93 f.
Geo risks research 31 Global Earthquake Model (GEM) 28 Globe of Natural Hazards 33 Great Lakes Australia 86
Hartford Steam Boiler Group (HSB) 6, 8, 19, 90, 149 HDFC Ltd. 39, 96 Health 2, 6, 7, 18, 34 ff., 79,148 HealthCare 50, 60
Life and health 49, 71, 77, 93, 145 Life reinsurance 55, 71, 77 ff., 148
MEAG 7, 53, 109, 123, 127, 153, 287 Mercur Assistance 6, 18, 53, 91 Midland Company 6, 19, 50, 90, 191 Münchener Rück do Brasil 85 Münchener Rück Italia 50, 84 Munich American Reassurance Company (MARC) 78 Munich-American RiskPartners (MARP) 89
Share buy-back 9, 13, 18, 70, 74, 110 ff., 145, 229, 273 Shares 2, 12 ff., 54, 70, 114, 128, 132, 142, 274 Solvency II 9, 24, 66, 69, 148, 162 Staff 2, 11, 36, 56, 125 ff. Sterling Life Insurance Company 6, 19, 49 f., 72, 79, 192 Subordinated bonds 16, 116, 232 Supervisory Board 8 ff., 62, 130 ff., 142 Sustainability 15, 97, 128
Important dates 2009/2010 22 April 2009 Annual General Meeting 23 April 2009 Dividend payment 6 May 2009 Interim report as at 31 March 2009 4 August 2009 Interim report as at 30 June 2009 4 August 2009 Half-year press conference 5 November 2009 Interim report as at 30 September 2009 25 February 2010 Balance sheet press conference for 2009 fi nancial statements (preliminary fi gures)
28 April 2010 Annual General Meeting 29 April 2010 Dividend payment 7 May 2010 Interim report as at 31 March 2010 4 August 2010 Interim report as at 30 June 2010 4 August 2010 Half-year press conference 9 November 2010 Interim report as at 30 September 2010 90_Gloss_Anschr_Impress_e 28990_Gloss_Anschr_Impress_e 289 12.03.2009 10:43:33 Uhr12.03.2009 10:43:33 Uhr
The official German original of this report is also available from the Company. In addition, you can find our annual report and interim reports, along with further information about Munich Re, on the internet at www.munichre.com.
If you are an institutional investor or analyst, please contact our investor relations team: Christian Becker-Hussong
1. Earned premiums 2. Investment result 4. Expenses for claims and benefits 5. Operating expenses 7. Result before impairment losses of goodwill 3,429 1,011 245 1,033 1,140 8. Impairment losses of goodwill 167 167 – – –
Earthquake zones, storm tracks, hail fields. What geo risks have to be reckoned with and where? The interactive DVD shows worldwide natural hazards and climate effects at a glance – yesterday, today and in the future. Extensive knowledge modules for historical catastrophes, megacities and change processes are linked with each other and displayed on the maps, making geo risks transparent and easier to assess.
Installation The DVD has an autostart feature. If the autostart function is activated, the DVD starts automatically as soon as you insert it in your drive. Otherwise, you can start the program by double-clicking the file MR_Globe.exe. You can go to the Help menu to familiarise yourself with the functional details of the application.
utzung dieser DVD unterliegt den auf dem Produkt festgelegten Bedingungen. T he u se o f t he
is s ub je ct t o th e co n d it io n s st ip ul at ed in th is p ro du ct
Large and very large losses (net)3 €m 1,507 1,126 585 3,134 1,084