The deferred tax assets and liabilities recognised in the consolidated balance sheet concern the following balance sheet items: The deferred taxes for technical provisions include the deferred taxes for deferred acquisition costs and €2,207m (1,916m) for claims equalisation provisions, which are not posted under IFRS.
No deferred taxes were posted for temporary differences of €42m (48m) in connection with investments in subsidiaries and associates, also referred to as outside basis differences.
8100 Deferred tax 31.12.2013 Prev. year €m Assets Liabilities Assets Liabilities
Equity and liabilities C. Net technical provisions 2,157 3,856 1,836 3,480
Expiring in up to three years 84 98 182 30 192 222 Expiring in over three years and up to ten years 489 64 553 856 520 1,376 Expiring in over ten years 469 17 486 67 396 463
The impairment losses reversed are distributed between the following different Group segments: In reinsurance, €1m (2m) is apportionable to life and €1m (2m) to propertycasualty; in primary insurance, €3m (16m) is apportionable to life, €2m (6m) to health and – (€1m) to Munich Health.
Gross carrying amount at 31 Dec. previous year 3,417 962 55 4,434 Accumulated depreciation and accumulated impairment losses at 31 Dec. previous year 1,026 689 34 1,749 Carrying amount at 31 Dec. previous year 2,391 273 21 2,685 Currency translation differences –11 –4 – –15 Additions
Carrying amount at 31 Dec. financial year 2,419 249 20 2,688 Accumulated amortisation and accumulated impairment losses at 31 Dec. financial year 1,091 729 31 1,851 Gross carrying amount at 31 Dec. financial year 3,510 978 51 4,539
Owner- Operating occupied and office €m property equipment Other Total Prev. year Prev. year Prev. year Prev. year Gross carrying amount at 31 Dec. previous year 3,385 976 57 4,418 Accumulated depreciation and accumulated impairment losses at 31 Dec. previous year 1,000 682 30 1,712 Carrying amount at 31 Dec. previous year 2,385 294 27 2,706 Currency translation differences 3 2 –1 4 Additions
Property is allocated to Level 3 of the fair value hierarchy; see Assets B – Investments.
The expenditures recognised in the carrying amount for assets in the course of construction total €78m (158m) for property and €15m (17m) for plant and equipment. Commitments to acquire property total €33m (33m) and commitments to acquire plant and equipment €13m (12m). For plant and equipment, no assets were pledged as security or other restrictions on title .
In the third quarter of 2013, with economic effect from the fourth quarter of 2013, we sold the fully consolidated subsidiary Windsor Health Group, Inc., Atlanta, Georgia, including its subsidiaries. The loss from the sale of these companies totalled €25m. It is shown under “investment result” and “other non-operating result” in the consolidated income statement.
On 7 November 2013, Munich Reinsurance Company’s Board of Management decided on a share buy-back programme, thus availing itself of the authorisation granted by the Annual General Meeting on 20 April 2011, in accordance with Section 71 para. 1 (8) of the German Stock Corporation Act (AktG). From 14 November 2013 to 31 December 2013, a total of 1,905,838 shares in Munich Reinsurance Company were purchased via the stock exchange at an average price of €157.41.
In the financial year 2013, the complete portfolio of 712,000 Munich Re shares held by the Company at the beginning of the year to hedge stock appreciation rights granted to the Board of Management and top Munich Reinsurance Company executives since 1999 was sold at an average price of €136.02 as part of the reduction of hedges for these obligations. The proceeds of the sale totalling €96.8m were used to strengthen liquid funds.
In the financial year 2013, companies of the ERGO Insurance Group acquired 16,415 shares at an average price of €133.35 to cover future commitments from the long-term incentive plans launched since 2002 and sold a total of 38,250 shares at a price of €142.64 each, also as part of the reduction of hedges for these obligations. The proceeds of the sale totalling €5.5m were used to strengthen liquid funds. As at 31 December 2013, no more Munich Re shares were held for these incentive plans.
Disposals from hedging stock appreciation rights under long-term incentive plans 816,883 1,020,083
The acquisition costs of all Munich Re shares in the possession of Group companies at the end of the financial year totalled €301,688,353.67.
After taking into account tax effects, externally generated costs directly connected with equity capital measures and deducted from retained earnings amount to €31m. Retained earnings of €2,512m (2,374m) are allocable to Munich Reinsurance Company.
The “other reserves” include –€1,002m (–292m) from currency translation and €3m (–4m) resulting from valuation of cash flow hedges. In addition, “other reserves” contain unrealised gains and losses distributed between the different items as follows: Composition of the capital authorised for capital increases €m 31.12.2013 Authorised Capital Increase 2011 (until 19 April 2016) 10 Authorised Capital Increase 2013 (until 24 April 2018) 280 Total 290
Composition of contingent capital €m 31.12.2013 Contingent Capital Increase 2010 (until 27 April 2015) 117 Total 117
Composition of equity €m 31.12.2013 Prev. year Issued capital 581 585 Capital reserve 6,845 6,836 Retained earnings 12,875 10,938 Other reserves 2,369 5,650 Consolidated result attributable to Munich Reinsurance Company equity holders 3,313 3,188 Non-controlling interests 243 242 Total equity 26,226 27,439
The non-controlling interests are mainly minority interests in individual companies of the primary insurance group. We disclose direct minority interests in special funds and in partnerships under “other liabilities”. In the financial year 2013, there were no significant changes in the percentage interest held in consolidated subsidiaries.
Munich Re Group Annual Report 2013 19 Fair value hierarchy of liabilities
For information on the valuation models used for measuring derivatives, please see the table and notes under (4) Hierarchy for the fair value measurement of investments. The valuation of subordinated bonds for which no market prices are available is conducted using the present value method and taking observable market parameters into account. For the bonds in our portfolio, we use the market values provided by price quoters for the corresponding assets.
No fair values are available for the bulk of the amounts due to banks, which are accordingly not represented in the following table.
8131A+BAllocation of liabilities to levels of the fair value hierarchy €m Level 1 Level 2 Level 3 Total Liabilities measured at fair value Other liabilities
Prev. year €m Level 1 Level 2 Level 3 Total Liabilities measured at fair value Other liabilities 1 As the requirement to provide information on investments not measured at fair value through profit or loss became mandatory for the first time with respect to the financial year 2013, there are no comparative figures for the previous year.
Transfer to Level 3 – – Transfer out of Level 3 – – Change in the market value of derivatives 1 – Carrying amount at 31 Dec. financial year 147 191 Gains (losses) recognised in the income statement that are attributable to liabilities shown at the end of the financial year 72 49
Munich Re Group Annual Report 2013 2001 and 1998, and for the HSB Group bonds, the annual outflow is variable, depending on the respective interest-rate levels.
The fair value of the subordinated liabilities at the balance sheet date amounted to €4,828m (5,953m). For the Munich Reinsurance Company bonds, we take the stock market prices as fair values. For the other subordinated liabilities, we determine the fair values using net present value methods with observable market parameters.
Munich Re Group Annual Report 2013 8139 A–C Development of gross unearned premiums
Primary insurance Life Health Property-casualty €m 31.12.2013 Prev. year 31.12.2013 Prev. year 31.12.2013 Prev. year Status at 31 Dec. previous year 15 8 99 97 1,755 1,728 Currency translation effects –2 – 1 –1 –14 62 Change in consolidated group – – – – –32 –75
Munich Health Total €m 31.12.2013 Prev. year 31.12.2013 Prev. year Status at 31 Dec. previous year 452 443 8,134 8,391 Currency translation effects –29 –1 –328 61 Change in consolidated group – – –32 –98
Munich Health 976 908 Primary insurance 27,175 25,544 Property-casualty 461 457
Development of gross provision for future policy benefits €m 2013 Prev. year Status at 31 Dec. previous year 109,769 108,477 Currency translation differences –571 –194 Change in consolidated group/Other 2,220 559 Changes
The provision for annuity claims involves periodic payments for disability cases and is usually due long term. A major part of this provision is established in the life reinsurance and life primary insurance segment for future annuity payments; a small part refers to provisions for annuities in personal accident, liability and workers‘ compensation insurance. The biometric actuarial assumptions are selected using appropriate actuarial principles. Provisions for annuity claims are calculated as the present value of the expected future payments. The discount rates used are explained under (38) Risks from life and health insurance business and (39) Risks from property-casualty insurance business.
Reinsurance Primary insurance % 31.12.2013 Prev. year 31.12.2013 Prev. year Up to one year 29.8 30.6 37.3 36.5 Over one year and up to five years 44.7 44.2 39.4 39.6 Over five years and up to ten years 14.3 13.7 13.3 14.1 Over ten years and up to fifteen years 5.4 5.3 4.9 5.9
In the year under review, most sectors experienced comparatively low claims-reporting activity from previous years, which had a positive influence on the ultimate-loss projection. Exceptions were the latent claims complex of asbestos and individual major liability claims, for which reserves were strengthened.
Development of the claims reserve in the property-casualty segment 2013 Prev. year Ceded Ceded €m Gross share Net Gross share Net Status at 31 Dec. previous year 44,580 2,317 42,263 45,704 2,603 43,101 Currency translation differences –1,604 –55 –1,549 –158 –6 –152 Change in consolidated group –25 –1 –24 –38 –11 –27 Claims expenses
Status at 31 Dec. financial year 43,577 2,121 41,456 44,580 2,317 42,263
The run-off triangles are prepared on a currency-adjusted basis. To this end, all figures are translated from the respective local currency into the Group currency (euro), consistently using the exchange rates applicable at the end of the year under review (i.e. at 31 December 2013). This ensures that currency translation does not lead to run-off effects.
The ceded share of “other technical provisions” amounts to €3m (23m), of which €2m (1m) is apportionable to the ceded share of the provision for premium refunds based on national regulations.
Reinsurance Primary insurance Munich Health Total €m 31.12.2013 Prev. year 31.12.2013 Prev. year 31.12.2013 Prev. year 31.12.2013 Prev. year Provision for premium refunds based on national regulations 3 3 6,649 6,400 – – 6,652 6,403 Provision for deferred premium refunds – – 6,238 6,842 5 7 6,243 6,849
Thereof resulting from unrealised gains and losses on investments (recognised directly in equity) – – 2,736 3,687 14 15 2,750 3,702 Thereof resulting from other revaluations (recognised in profit or loss) – – 3,502 3,155 –9 –8 3,493 3,147
Development of provision for deferred premium refunds €m 2013 Prev. year Status at 31 Dec. previous year 6,849 3,732 Change in consolidated group –231 – Change resulting from unrealised gains and losses on investments (recognised directly in equity) –952 2,826 Change resulting from other revaluations (recognised in profit or loss) 577 291 Status at 31 Dec. financial year 6,243 6,849
Expenses for defined contribution plans in the year under review totalled €69m (66m). Expenses for contributions to state plans totalled €117m (122m) in the financial year.
The pension obligations of the ERGO Insurance Group account for €1,966m (1,959m) of the present value of obligations under defined pension plans and €194m (178m) of plan assets. The obligations include disability and old-age pensions, and pensions for surviving dependants. The amount of the pensions generally depends on salary and length of service. The commitments are generally funded through pension provisions. New members receive pension commitments in the form of defined contribution plans financed by means of intra-Group insurance contracts securing the obligations under pension schemes. There are medical-care benefit obligations.
Breakdown of other accrued liabilities €m 31.12.2013 Prev. year Provisions for post-employment benefits 2,140 2,324 Other provisions 2,029 1,994
% 31.12.2013 Prev. year Active members 50 52 Deferred members 13 12
Change in the fair value of plan assets for defined benefit plans €m 2013 Prev. year Status at 31 Dec. previous year 2,000 1,725 Currency translation differences –43 1 Change in consolidated group – – Interest income 67 74 Return excluding interest income –54 174 Contributions by the employer 75 92 Contributions by plan participants 5 4 Payments –33 –41 Payments from plan settlements –4 – Transfer of assets 1 – Other –2 –29 Status at 31 Dec. financial year 2,012 2,000
Breakdown of expenses booked in the financial year €m 2013 Prev. year Net interest income or expense 60 59 Service cost 140 114 Other –11 –
The weighted average contractual period to maturity of our pension obligations is 18 (19) years.
An increase or decrease in the following essential actuarial assumptions has an impact on the present value of defined benefit obligations: The calculations for the actuarial assumptions classified as essential were carried out individually in order to display their effects separately.
Contractual period to maturity of pension obligations €m 31.12.2013 Prev. year Up to one year 119 112 Over one year and up to five years 537 529 Over five years and up to ten years 788 795 Over ten years and up to twenty years 2,106 2,037
The provisions for restructuring also included in this item mainly concern €178m (219m) for the ERGO Group’s “Continuous improvement of our competitive position” project and €343m (258m) for the comprehensive restructuring of its sales organisation. The miscellaneous other provisions comprise a large number of different items, including €92m (91m) for medium- and long-term incentive plans, €94m (106m) for salary obligations, €57m (57m) for other remuneration for desk and field staff, €19m (17m) for competitions for sales staff, and €43m (46m) for litigation risks.
The provisions for early-retirement benefits/semi-retirement, anniversary benefits and medium- and long-term incentive plans are mainly long term, whereas the provisions for earned commission, outstanding invoices, bonuses, holiday and overtime pay, and miscellaneous are essentially short term.
Identification A.M. Prev. €m number Best Fitch Moody’s S&P 31.12.2013 year Munich Re America Corporation, CUSIP-Nr.: 029163AD4 Wilmington, 7.45%, US$ 342m, ISIN, Reuters: – Senior Notes 1996/2026 Bloomberg: AMER RE CORP MUNRE a– A+ A2 A– 248 259
The miscellaneous liabilities contain liabilities of €230m (415m) resulting from reinsurance contracts without significant risk transfer, derivative financial instruments with a negative fair value of €528m (508m), and negative fair values totalling €427m (461m) for insurance-linked derivatives, derivative components separated from the host insurance contract, and hedging derivatives of variable annuities. The miscellaneous liabilities also include €17m (14m) for social security and €199m (250m) for interest and rent.
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, we analyse the liquidity risk arising from these together with the corresponding insurance contracts. This currently also applies to the derivatives embedded in variable annuity business; cf. (38) Risks from life and health insurance business and (39) Risks from property- casualty insurance business. The derivatives listed below are recognised at market value.
Breakdown of other liabilities €m 31.12.2013 Prev. year Amounts payable on primary insurance business 3,358 3,648 Accounts payable on reinsurance business 4,491 5,097 Amounts due to banks 462 493 Miscellaneous liabilities 4,121 4,002
Change in unearned premiums – Gross 17 7 –1 3 57 40
Change in unearned premiums – Ceded share – – –3 10 15 8
In the life reinsurance segment, the income from technical interest corresponds to the risk-free interest on our technical provisions. For deposited provisions, it corresponds to the agreed interest rate.
Munich Health Total €m 2013 Prev. year 2013 Prev. year Income from technical interest 39 52 6,764 6,918
Primary insurance Life Health Property-casualty €m 2013 Prev. year 2013 Prev. year 2013 Prev. year
In the health primary insurance segment, the income from technical interest for German insurance business corresponds to the allocation of interest to the ageing reserve (actuarial interest) and the allocation to the provision for premium refunds. The latter is based on the allocation of interest to the provision for non-performance-related premium refunds, on the investment result exceeding the actuarial interest rate, and on policyholders’ participation in the other non-technical result components.
In the Munich Health segment, the income from technical interest for international primary insurance business is based on the interest on technical provisions at the relevant national risk-free interest rate and, where applicable, on the interest allocated to the provision for future policy benefits. In the case of long-term reinsurance treaties, the interest corresponds to the contractually agreed allocations of interest. For shortterm reinsurance business, the income from technical interest is calculated on the basis of the risk-free interest on technical provisions at the relevant national interest rate.
Net Claims and benefits paid 7,668 7,721 9,502 11,217 Change in technical provisions
Provision for future policy benefits –355 22 –5 – Provision for outstanding claims 731 473 511 –1,060 Provision for premium refunds – – 5 6
Provision for future policy benefits –171 327 992 1,074 8 16
Net Claims and benefits paid 6,223 6,257 4,010 3,884 3,030 3,027 Change in technical provisions
Net expenses for claims and benefits 7,472 7,719 5,953 5,998 3,326 3,496
Provision for future policy benefits 94 72 487 1,444 Provision for outstanding claims –2 –112 1,473 –421 Provision for premium refunds – – 2,081 1,972
Other technical result –57 63 68 308 Gross expenses for claims and benefits 5,186 5,423 40,698 41,842
Provision for future policy benefits – – –90 –27 Provision for outstanding claims 23 43 –120 –110 Provision for premium refunds – – 1 –2
Other technical result – – –112 –95 Expenses for claims and benefits – Ceded share 121 90 782 846
Provision for future policy benefits 94 72 577 1,471 Provision for outstanding claims –25 –155 1,593 –311 Provision for premium refunds – – 2,080 1,974
The change in the provision for future policy benefits (net) contains €401m (603m) in unrealised gains/losses from unit-linked life insurance. Expenses for claims and benefits include expenses for policyholders’ bonuses. Of this, €1,135m (966m) is for the allocation to the provision for premium refunds on the basis of national regulations, €337m (292m) for the change in the provision for deferred premium refunds recognised in the income statement, and €173m (251m) for direct crediting. The “other technical result” for life primary insurance mainly includes interest on policyholders’ accumulated credit.
Primary insurance Life Health Property-casualty €m 2013 Prev. year 2013 Prev. year 2013 Prev. year Gross Acquisition costs, profit commission and reinsurance commission paid 747 854 537 568 1,160 1,178
Ceded share Acquisition costs, profit commission and reinsurance commission paid 13 16 18 21 29 43 Change in deferred acquisition costs and contingent commissions 5 3 3 –3 –1 –2 8309 C
Munich Health Total €m 2013 Prev. year 2013 Prev. year Gross Acquisition costs, profit commission and reinsurance commission paid 1,012 1,023 10,466 10,002
Change in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios 16 22 –516 122
Munich Re Group Annual Report 2013 34 Investment result 8312 A+B
Reinsurance Life Property-casualty €m 2013 Prev. year 2013 Prev. year Land and buildings, including buildings on third-party land 19 20 95 108 Investments in affiliated companies – 4 – 6 Investments in associates – – –28 16
Deposits retained on assumed reinsurance, and other investments 283 265 –34 42 Investments for the benefit of life insurance policyholders who bear the investment risk – – – – Expenses for the management of investments, other expenses 93 51 154 176
Primary insurance Life Health Property-casualty €m 2013 Prev. year 2013 Prev. year 2013 Prev. year Land and buildings, including buildings on third-party land 98 108 61 52 6 14 Investments in affiliated companies 1 3 –14 –11 12 –26
Other securities held to maturity – – – – – – Other securities available for sale Fixed-interest 1,478 1,214 598 520 224 227
Fixed-interest –6 10 – – – – Non-fixed-interest – – – – – –
Deposits retained on assumed reinsurance, and other investments 11 9 – 1 9 7 Investments for the benefit of life insurance policyholders who bear the investment risk 400 603 – – – – Expenses for the management of investments, other expenses 173 172 71 54 29 25
Other securities held to maturity – – – – – – Other securities available for sale Fixed-interest 118 107 3 5 4,495 4,575 Non-fixed-interest 9 – –2 – 1,203 685 Other securities at fair value through profit or loss Held for trading
Fixed-interest – – – – –3 20 Non-fixed-interest – – – – 2 3
Deposits retained on assumed reinsurance, and other investments 1 1 1 1 271 326 Investments for the benefit of life insurance policyholders who bear the investment risk – – – – 400 603 Expenses for the management of investments, other expenses 4 6 – – 524 484
Gains on the disposal of investments 52 54 3 2 3,355 3,419
Gains on the disposal of investments 559 564 160 94 223 162
Losses on the disposal of investments 155 504 210 209 82 88 Management expenses, interest charges and other expenses 395 223 84 65 29 23
Write-downs of investments €m 2013 Prev. year Land and buildings, including buildings on third-party land 94 117 Investments in affiliated companies 4 33 Investments in associates 101 52
Munich Re Group Annual Report 2013 36 Other non-operating result, impairment losses of goodwill and net finance costs
The other non-operating income and expenses are unrelated to the conclusion, administration or settlement of insurance contracts or the administration of investments.
Besides foreign-currency exchange gains of €2,558m (3,040m), the other non- operating income contains other non-technical income of €177m (144m).
The other non-operating expenses comprise foreign-currency exchange losses of €2,868m (3,229m), write-downs of €87m (154m) on other intangible assets, and other non-technical expenses of €453m (631m), such as other amounts that cannot be allocated elsewhere and restructuring expenses.
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 amounts to 33%. This takes into account corporation tax including solidarity surcharge, and trade tax. The trade-tax municipal factors range from 240% to 490%.
Net finance costs by financing instrument €m 2013 Prev. year Subordinated bonds of Munich Reinsurance Company, Munich –232 –266 Senior notes of Munich Re America Corporation, Wilmington –19 –20 Subordinated bonds of ERGO Versicherung Aktiengesellschaft, Vienna –3 –6 Other –3 –5 Total –257 –297
Recognised tax expenses/income broken down according to Germany and other countries €m 2013 Prev. year Current tax 527 1,240
The non-deductible expenses mainly comprise non-tax-deductible currency losses, expenses in connection with tax-free income and interest on back tax payments.
The tax effect of –€229m (–111m) from changes in valuation allowances for deferred taxes/loss carry-forwards mainly involves an amount of –€38m (–7m) in income from the subsequent recognition of deferred tax assets for loss carry-forwards and an amount of –€211m (–105m) in tax savings from the offsetting of positive taxable income with tax loss carry-forwards for which no deferred tax assets had previously been recognised. The remaining amount involves counter-effects from the change in valuation allowances for deferred tax assets from temporary differences.
Reconciliation to effective tax expenses/income €m 2013 Prev. year Result before taxes on income (after “other tax”) 3,450 4,082 Group tax rate in % 33 33 Derived taxes on income 1,138 1,347 Tax effect of: Tax rate differences –143 –188 Tax-free income –254 –466 Non-deductible expenses 494 324 Valuation allowances for deferred taxes/loss carry-forwards –229 –111 Change in tax rates and tax legislation –12 –5 Tax for prior years –946 –98 Trade tax adjustments 11 28
Munich Re’s reporting is based on various legal regulations governing risks it is exposed to as a result of its business operations: IFRS 4 prescribes disclosures on the type and extent of risks from insurance contracts. Under IFRS 7, analogous disclosures on risks from financial instruments are required. Besides this, Section 315 para. 2 (2) of the German Commercial Code (HGB) prescribes disclosures in the management report on risk management objectives and methods, hedging and risks in connection with financial instruments. These requirements are specified in more detail in German Accounting Standard No. 20 (DRS 20) for management reports.
The notes to the financial statements deal in detail with the various risks from insurance contracts and describe uncertainties in measuring them. In accordance with the requirements of IFRS 4, the effects of a change in the assumptions underlying the measurement of insurance contracts and/or in the market environment are also quantified. For risks from financial instruments, IFRS 7 stipulates that the disclosures must comprise information on the maximum credit risk exposure, the remaining terms, the rating, and a sensitivity analysis regarding the market risk. This information is also relevant for assessing the risk.
Interest-rate risks A distinction must be made between risks of changes in interest rates on the one hand and interest-rate guarantee risks on the other. Risks of changes in interest rates would result from the discounting of the provision for future policy benefits and of parts of the provision for outstanding claims. In accordance with accoun ting valuation rules, the discount rate is fixed at contract commencement and will generally not be adjusted during the term of the contract. To this extent, the accounting valuation of these technical provisions does not depend directly on the level of the market interest rates.
Economically, however, 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 life primary insurance, an implicit or explicit interest-rate guarantee is granted for the majority of contracts over their whole duration, based on a fixed interest rate applying at the time the contract is concluded. The discount rate used to calculate the provision for future policy benefits is identical with this interest rate for the majority of contracts in our portfolios. An appropriate minimum return needs to be earned in the long term from the investment result (possibly also with assistance from the technical result) for the contractually guaranteed benefits. In health primary insurance, a dis count rate is also used for calculating the provision for future policy benefits, but for long-term business this rate can generally be altered by way of premium adjustment. For short-term business, there is no direct interest-rate risk.
The discount rates relevant for the portfolio in calculating the provision for future policy benefits and the provision for outstanding claims are as follows: Besides this, in German health primary insurance, the following discount rates are applied for calculating the provision for premium loadings and the provision for future premium reductions, which are part of the provision for premium refunds: a rate of 3.5% (3.5%) for an amount of €4,066m (3,783m) and a rate of 2.75% for an amount of €86m (–). In principle, however, these discount rates can be altered by way of a premium adjustment.
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 complete duration matching of liabilities with fixed-interest investments of identical maturities would not be expedient, because if interest rates rise significantly, policyholders might make increasing use of their surrender rights, resulting in a liquidity requirement for premature payouts.
Life Health Total €m 31.12.2013 Prev. year 31.12.2013 Prev. year 31.12.2013 Prev. year
Some primary insurance and reinsurance contracts contain derivative components of variable annuities. These are measured separately from the underlying contract and their changes in value are recognised in the investment result. The valuation of these embedded derivatives is sensitive to share prices, exchange rates and interest rates, but these sensitivities are nearly fully compensated for by the fact that such derivatives are for the most part directly matched by financial derivatives for hedging purposes.
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. As with the lump-sum option in the case of deferred annuity policies, a potential lapse risk may result from a higher interest-rate level than that on which the calculation was based. This is allowed for by means of appropriate liquidity planning and adequate calculation of the surrender value. Expected surrenders are taken into account in the amortisation of deferred acquisition costs in life primary insurance and reinsurance. 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. Based on the relevant legal parameters, reserves for primary health insurance business are calculated considering amounts payable due to cancellation of policies. The underlying assumptions are regularly checked.
Further information on the liquidity risk is provided in the risk report on page 117.
Risk minimisation measures In reinsurance, we control the assumption of biometric risks by means of a risk-adequate underwriting policy. Risks are restricted through appropriate treaty design, specifically by limiting the coverage in the case of non- proportional business. In particular, the underwriting of longevity risks from reinsured portfolios is strictly limited. Interest-rate and other market risks are frequently ruled out by depositing the provisions with the cedant, with a guaranteed rate of interest from the deposit. In individual cases, these risks are also hedged by means of suitable capital market instruments.
Expected future technical cash flow (gross)1 €m 31.12.2013 Prev. year Up to one year –2,738 –2,088 Over one year and up to five years –11,208 –11,264 Over five years and up to ten years –17,518 –18,094 Over ten years and up to 20 years –40,326 –41,988 Over 20 years –95,349 –96,065
For information on our risk management processes, reference is made to the risk report, pages 109–115.
The sensitivities given below measure the impact of changes in the calculation bases and capital market parameters on the calculated economic value of our business. They take account of our risk minimisation measures and tax effects.
Munich Re continues to adhere to the strict rules of market-consistent evaluation as at the end of the year and currently refrains from applying high interest margins, e.g. illiquidity premiums, until the definitive stipulations for Solvency II are available. The low interest-rate level and high volatility at the reporting date of 31 December 2013 result in distortions in life primary insurance in particular, owing to the long-term interest-rate guarantees and high capital market sensitivities.
Further information on risks from large and accumulation losses can be found in the section on business performance on pages 71–75 and 79 f., and in the risk report, pages 120–122.
Reserve risks The provision for outstanding claims is subject to the risk that actual claims settlement may be less than or exceed the amount reserved (reserve risk). Particular attention is given to those situations where the funds dedicated to future claims payments may be inadequate.
Thereof losses from natural catastrophes 764 1,284 4,538 1,564 196 1 In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year have been adjusted accordingly. Comparability with the years up to and including 2010 is thus limited. 2 Special impact for 2009: In credit and surety business, defaults triggered by the financial crisis led to a claims burden of €510m.
Munich Re Group Annual Report 2013 influence the valuation of reserves. The following section discusses the areas in the current reserve portfolio where, within the framework of an appropriate reserve estimate, the uncertainty is the greatest.
Asbestos insurance liabilities currently emanating predominantly from the US and some European countries are an area of concern for the entire insurance and reinsurance industry. Since the mid-1980s, industrial insurers writing business worldwide have found themselves being confronted with losses from policies taken out decades before. This also applies to Munich Re. In our case, the policies mainly cover claims which manifest themselves after a latency period of as long as 30 to 50 years. In response, we have posted provisions for claims under long-cancelled general liability policies which provided coverage according to the then-applicable legal environment.
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 the liability scenarios for pure financial losses as a result of the massive change in economic parameters. We continue to carefully monitor trends and respond to the emergence of new information as appropriate.
In the area of bodily injury losses, Munich Re 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 instances, coverage is provided for permanent dis ability 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.
Provisions for asbestos and environmental claims 31.12.2013 Prev. year €m1 Gross Net Gross Net
Another important measure for controlling underwriting risks is the cession of a portion of our risks to other carriers via external reinsurance or retrocession; cf. (12) Ceded share of technical provisions and (30) Premiums. All our companies have intraGroup and/or 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 accumulation 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 extremely large loss.
For information on our risk management processes, reference is made to the risk report, pages 109–113.
Munich Re Group Annual Report 2013 made between payments for claims for which reserves were posted in previous years and immediate payments, i.e. payments for claims incurred in the current financial year. If claims reserves are posted, the liquidity risk can be minimised through our asset- liability management, in which investments are geared to the character of the liabilities. The proportion of immediate claims payments, which is temporally stable according to our experience, constitutes only a fraction of the total payments to be made. Consequently, the liquidity risks in respect of these payments can also be minimised by means of asset-liability management.
Impact of changes in underwriting assumptions on equity and the consolidated income statement As part of the monitoring of our portfolio, we check whether original assumptions need to be adjusted. By means of the IFRS 4 liability adequacy test, we review expected claims expenditure in the light of updated assumptions, taking into account our risk minimisation measures. If this test shows that an adjustment to technical provisions is required, the amount is recognised in the consolidated income statement.
52% (51%) of the ceded share of provisions is directly collateralised through deposits, so the credit risk can be ignored for this portion.
Claims payments for financial year 5,617 5,968 5,930 5,213 4,378 Claims payments for previous years 7,388 8,898 8,096 8,613 7,589
Apart from this, there are credit risks from the underwriting of credit reinsurance contracts. Information on these can be found under (39) Risks from property-casualty insurance business. We do not conduct active credit insurance business to any material extent in our primary insurance.
The sensitivity analysis shows the effect of capital market events on the value of investments and the corresponding impact on the consolidated income statement. Sensitivities of investments to share prices and interest 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: To analyse equities and equity derivatives, a change in market value of ±10% and ±30% is calculated on the basis of the portfolio’s delta. Non-linear effects of equity options or other asymmetrical strategies are not taken into account in this presentation. 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, ±50 and –25 BP is determined using duration and convexity. Owing to the low market interest-rate level, an assumed reduction in interest rates by 100 BP would lead to interest rates becoming partially negative. By contrast, an interest-rate increase of 100 BP is not unrealistic, which results in an asymmetrical presentation of the market interest-rate risk of investments sensitive to interest rates. 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. Alternative investments (private equity, hedge funds and commodities) are analysed together with the equities.
The effects of the capital market events listed here 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 countermeasures from taking effect. The analysis considers around 99% of Munich Re’s investments.
Market risk – Share prices The impact of a change on the stock markets in terms of absolute amounts on the market value of investments sensitive to share prices and on equity increased in the year under review. This is due to the good development of the stock markets in the reporting period. A change in the stock market by 10% has an impact of 10.4% (10.8%) on the market value of investments sensitive to share prices.
Change in share prices 31.12.2013 Prev. year Impact on Total change Impact on Total change profit Impact on in market profit Impact on in market €bn or loss1 equity1 value or loss1 equity1 value
The interest-rate sensitivity of Munich Re’s investments declined in the year under review. Restructurings of the interest-rate derivatives used for hedging result in the impact on the income statement shown as at the reporting date.
Market values 179.492 190.024 1 Gross before tax and policyholder participation in surplus.
Munich Reinsurance Company has established a contractual trust agreement in the form of a two-way trust for its unfunded company pension obligations. The Munich Re pension scheme is considered a related party in accordance with IAS 24. Contributions to the pension scheme are recognised as expenses for defined contribution plans; cf. (26) Other accrued liabilities. For transactions of related parties with Munich Reinsurance Company shares, please refer to (18) Equity.
The following personnel expenses are included in the operating expenses, in the expenses for claims and benefits (for claims adjustment) and in the investment result: 45 Long-Term Incentive Plan Every year from 1999 to 2010, Munich Reinsurance Company set up long-term incentive plans, each with a term of seven years. From 1999 to 2009, the members of the Board of Management and senior management in Munich, and the top executives in Munich Re’s international organisation were participants in the scheme. In 2010, this share-price-related remuneration plan was only provided for senior management members and selected top executives in the international organisation.
Breakdown of personnel expenses €m 2013 Prev. year Wages and salaries 2,733 2,727 Social security contributions and employee assistance 487 490 Expenses for employees’ pensions 215 217
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 expiry of the rights and is determined on the basis of recognised valuation models, taking into account the exercise conditions. At each balance sheet date, the fair value is calculated and reserved in full. In the year under review, provisions of €10.9m (20.7m) had to be posted for Munich Reinsurance Company. The personnel expense/income recognised in the income statement corresponds to the change in the provision in the year under review, taking into consideration any rights exercised. In 2013, this resulted in expenses of €18.6m (35.0m). The weighted average share price for the stock appreciation rights exercised in 2013 was €139.72 for plan year 2006, €161.00 for plan year 2007, €147.84 for plan year 2008, €145.44 for plan year 2009 and €144.67 for plan year 2010. The intrinsic value of the exercisable stock appreciation rights amounted to €11.0m at the balance sheet date.
Intrinsic value 2013 for one right 48.03 € 22.83 € 35.06 € 59.33 € 47.79 € Fair value 2013 for one right – 22.83 € 35.06 € 59.33 € 47.79 € Number of rights on 31 Dec. 2006 442,590 – – – –
Number of rights on 31 Dec. 2008 434,811 339,399 441,041 – –
Number of rights on 31 Dec. 2009 431,907 336,595 437,310 459,271 – Additions – – – – 675,029 Exercised – – – – –
Number of rights on 31 Dec. 2008 162,233 109,802 172,552 – – Additions – – – 148,834 – Exercised – – – – –
Number of rights on 31 Dec. 2009 160,187 108,224 170,749 148,834 – Additions – – – – 39,046 Exercised – – – – –
Number of rights on 31 Dec. 2010 159,946 106,368 168,243 148,834 39,046 Additions – – – – – Exercised – – – – –
Number of rights on 31 Dec. 2011 159,665 106,192 167,968 148,579 39,046 Additions – – – – –
The share-based factor TSR represents the total return on Munich Re shares and comprises share price increases plus dividends paid over a certain observation period. The initial TSR value and the final TSR value are determined from the average of the last 60 calendar days prior to plan commencement and plan termination respectively.
The members of Munich Reinsurance Company’s Board of Management received remuneration totalling €24.7m (13.3m). The total remuneration of Munich Reinsurance Company’s Supervisory Board amounted to €2.3m (2.2m); not included in this figure is €0.1m (0.2m) for membership of supervisory boards at other Group companies, so that the overall amount came to €2.4m (2.4m).
Payments to retired members of the Board of Management or their surviving dependants totalled €5.7m (5.8m).
The members of the Supervisory Board and Board of Management did not receive any cash advances or loans in the year under review. For their service as employees of the Group, Supervisory Board members received remuneration in the amount of €1.3m (1.2m). There were no significant notifiable transactions between Board members and Munich Re.
Number of rights (for 100% achievement of objectives) on 31 December 2013 – 62,144 76,654 51,168
The number of staff employed by the Group at year-end totalled 23,131 (23,700) in Germany and 21,534 (21,737) in other countries.
For services rendered to the parent and consolidated subsidiaries by the Group auditor (KPMG Bayerische Treuhandgesellschaft AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, 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: The affiliated companies of KPMG Bayerische Treuhandgesellschaft AG comprise the following entities: KPMG Germany, KPMG Spain, KPMG Switzerland, KPMG LLP (UK), KPMG Netherlands, KPMG Luxembourg, KPMG Turkey, KPMG Russia, KPMG Georgia, KPMG Ukraine, KPMG Armenia, KPMG Azerbaijan, KPMG Kazakhstan, KPMG Kyrgyzstan, KPMG Norway, KPMG Jordan, and KPMG Saudi Arabia.
Primary insurance 29,595 29,768 Munich Health 2,913 3,766 Asset management 842 809 1 Thereof fees totalling €7,520k (7,549k) for KPMG Bayerische Treuhandgesellschaft AG Wirtschaftsprüfungs gesellschaft Steuerberatungsgesellschaft.
The application of fiscal regulations may yet be unresolved at the time of calculation of tax refund claims and tax liabilities. The calculation of tax items is based on the regulations most likely to be applied in each case. Regardless of this, the fiscal author ities may be of a deviating opinion in this area, which may give rise to additional tax liabilities.
Our subsidiary Munich American Reassurance Company shows a negative earned surplus in its local financial statements as at 31 December 2013 (Statutory Accounting Principles). For this reason, the company can only pay dividends or transfer capital to the parent company with the approval of the competent US regulatory authority.
Munich Re as lessor Operating leases mainly involve leased property. The total of future minimum lease payments under non-cancellable leases at the balance sheet date was €911m (957m).
Due dates 31.12.2013 Prev. year Present value Present value Minimum of minimum Minimum of minimum lease Interest lease lease Interest lease €m payments element payments payments element payments Not later than one year 7 1 6 7 – 7 Later than one year and not later than five years 20 2 18 26 2 24 Later than five years – – – 1 –1 2
Due dates €m 31.12.2013 Prev. year Not later than one year 186 177 Later than one year and not later than five years 477 501 Later than five years 248 279
Munich Reinsurance Company’s net retained profits for 2013 according to its financial statements prepared on the basis of German GAAP accounting amount to €1,300,223,787.00. The Board of Management will propose to shareholders at the Annual General Meeting that these net retained profits be used for payment of a dividend of €7.25 per dividend-bearing share, with the remaining amount being carried forward to new account.
Due dates 31.12.2013 Prev. year Gross Interest Net Gross Interest Net €m investment element investment investment element investment Minimum lease payments not later than one year – – – – – – Minimum lease payments later than one year and not later than five years 2 – 2 2 – 2 Minimum lease payments later than five years 74 57 17 74 57 17
Consolidated subsidiaries 40, Rue Courcelles SAS, Paris 100.0000 Adelfa Servicios a Instalaciones Fotovoltaicas, S.L., Santa Cruz de Tenerife 100.0000 AEVG 2004 GmbH, Frankfurt/Main 4 0.0000 AGC Gerechtsdeurwaarders & Incasso B.V., Stadskanaal 100.0000 aktiva Vermittlung von Versicherungen und Finanz-Dienstleistungen GmbH, Cologne 100.0000 ALICE GmbH, Düsseldorf 100.0000 American Alternative Insurance Corporation, Wilmington, Delaware 100.0000 American Family Home Insurance Company, Jacksonville, Florida 100.0000 American Modern Home Insurance Company, Amelia, Ohio 100.0000 American Modern Home Service Company, Amelia, Ohio 100.0000 American Modern Insurance Company of Florida, Inc., Jacksonville, Florida 100.0000 American Modern Insurance Group, Inc., Amelia, Ohio 100.0000 American Modern Lloyds Insurance Company, Dallas, Texas 100.0000 American Modern Select Insurance Company, Amelia, Ohio 100.0000 American Modern Surplus Lines Insurance Company, Amelia, Ohio 100.0000 American Southern Home Insurance Company, Jacksonville, Florida 100.0000 American Western Home Insurance Company, Oklahoma City, Oklahoma 100.0000 Amicus Legal Ltd., Bristol 100.0000 ArztPartner almeda AG, Munich 100.0000 avanturo GmbH, Düsseldorf 100.0000 B&C International Insurance, Hamilton, Bermuda 100.0000 Bagmoor Holdings Limited, London 100.0000 Bagmoor Wind Limited, Bristol 100.0000 Beaufort Dedicated No.1 Ltd, London 100.0000 Beaufort Dedicated No.2 Ltd, London 100.0000 Beaufort Dedicated No.5 Ltd, London 100.0000 Beaufort Underwriting Agency Limited, London 100.0000 Bell & Clements (Bermuda) Ltd., Hamilton, Bermuda 100.0000 Bell & Clements (London) Ltd, London 100.0000 Bell & Clements (USA) Inc, Reston, Virginia 100.0000 Bell & Clements Inc, Reston, Virginia 100.0000 Bell & Clements Ltd, London 100.0000 Bos Incasso B.V., Groningen 89.7640 CAPITAL PLAZA Holding GmbH & Co. Singapore KG, Düsseldorf 100.0000 CJSIC “European Travel Insurance”, Moscow 100.0000 Comino Beteiligungen GmbH, Grünwald 100.0000
List of shareholdings as at 31 December 2013 in accordance with Section 313 para. 2 of the German Commercial Code (HGB)
EUROPÄISCHE Reiseversicherung Aktiengesellschaft, Munich3 100.0000 Everything Legal Ltd., Bristol 100.0000 FAIRANCE GmbH, Düsseldorf 100.0000 First Marine Insurance Company, Amelia, Ohio 100.0000 Flexitel Telefonservice GmbH, Berlin 100.0000 FOTOUNO S.r.l., Turin 100.0000 FOTOWATIO ITALIA GALATINA S.r.l., Turin 100.0000 Geschlossene Aktiengesellschaft Europäische Reiseversicherung, Kiev 99.9999 GF 65, Vienna4 100.0000 Global Standards, LLC, Dover, Delaware 100.0000 Globality S.A., Luxembourg 100.0000 Great Lakes Reinsurance (UK) Plc., London 100.0000 Group Risk Services Limited, London 100.0000 Groves, John & Westrup Limited, London 100.0000 Habiriscos-Investimentos Imobiliários e Turísticos, S.A., Lisbon 100.0000 Hamburg-Mannheimer Pensionskasse AG, Hamburg 100.0000 Hartford Steam Boiler (M) Sdn. Bhd., Kuala Lumpur 100.0000 Hartford Steam Boiler (Singapore) PTE Ltd, Singapore 100.0000 Hartford Steam Boiler International India Pvt. Ltd., Kolkata 100.0000 Hartford Steam Boiler International-GmbH, Rheine 100.0000 HMV GFKL Beteiligungs GmbH, Düsseldorf 100.0000 HSB Brasil Servicos de Engenharia e Inspecao, Ltda., São Paulo 100.0000 HSB Engineering Finance Corporation, Dover, Delaware 100.0000 HSB Engineering Insurance Limited, London 100.0000 HSB Engineering Insurance Services Limited, London 100.0000 HSB Group, Inc., Dover, Delaware 100.0000 HSB Japan KK, Minato-KU, Tokyo 100.0000 HSB Solomon Associates Canada Ltd., Saint John, Province of New Brunswick 100.0000 HSB Solomon Associates LLC, Dover, Delaware 100.0000 HSB Specialty Insurance Company, Hartford, Connecticut 100.0000 HSB Technical Consulting & Service (Shanghai) Company, Ltd, Shanghai 100.0000 Ibero Property Portugal – Investimentos Imobiliarios S.A., Lisbon 100.0000 Ibero Property Trust S.A., Madrid 100.0000 IDEENKAPITAL Financial Engineering GmbH, Düsseldorf 100.0000 IDEENKAPITAL Financial Service GmbH, Düsseldorf 100.0000 IDEENKAPITAL GmbH, Düsseldorf 100.0000 IDEENKAPITAL Media Finance GmbH, Düsseldorf 50.1000 IDEENKAPITAL Metropolen Europa GmbH & Co. KG, Düsseldorf 72.3477 iii, Munich4 100.0000 IK Einkauf Objekt Eins GmbH & Co. KG, Düsseldorf 100.0000 IK Einkauf Objektmanagement GmbH, Düsseldorf 100.0000 IK Einkaufsmärkte Deutschland GmbH & Co. KG, Düsseldorf 52.0387 IK Premium Fonds GmbH & Co. KG, Düsseldorf 100.0000 IK Premium Fonds zwei GmbH & Co. KG, Düsseldorf 100.0000 IKFE Properties I AG, Zurich 63.5708 Imofloresmira – Investimentos Imobiliarios S.A., Lisbon 100.0000 InterAssistance GmbH, Munich3 100.0000 IRIS Capital Fund II German Investors GmbH & Co. KG, 277Consolidated financial statements Notes
Princeton Eagle West (Holding) Inc., Wilmington, Delaware 100.0000 Princeton Eagle West Insurance Company Ltd., Hamilton, Bermuda 100.0000 Proserpina Vermögensverwaltungsges. mbH, Munich 100.0000 Queensley Holdings Limited, Singapore4 100.0000 Renaissance Hotel Realbesitz GmbH, Vienna 60.0000 Roanoke Group Inc., Schaumburg, Illinois 100.0000 Roanoke Insurance Group Inc., Schaumburg, Illinois 100.0000 Roanoke International Brokers Limited, London 100.0000 Scout Moor Group Limited, Manchester 100.0000 Scout Moor Holdings (No. 1) Limited., Manchester 100.0000 Scout Moor Holdings (No. 2) Limited, Manchester 100.0000 Scout Moor Wind Farm (No. 2) Limited, Manchester 100.0000 Scout Moor Wind Farm Limited, Manchester 100.0000 Seminaris Hotel- und KongreßstättenBetriebsgesellschaft mbH, Lüneburg 100.0000 Silvanus Vermögensverwaltungsges. mbH, Munich 100.0000 Solomon Associates Limited, London 100.0000 Sopocki Instytut Ubezpieczeń S.A., Sopot 100.0000 Sopockie Towarzystwo Ubezpieczeń Ergo Hestia Spółka Akcyjna, Sopot 100.0000 Sopockie Towarzystwo Ubezpieczeń na Zycie Ergo Hestia Spółka Akcyjna, Sopot 100.0000 Specialty Insurance Services Corp., Amelia, Ohio 100.0000 SunEnergy & Partners S.r.l., Brindisi 100.0000 Temple Insurance Company, Toronto, Ontario 100.0000 The Atlas Insurance Agency, Inc., Amelia, Ohio 100.0000 The Boiler Inspection and Insurance Company of Canada, Toronto, Ontario 100.0000 The Hartford Steam Boiler Inspection and Insurance Company of Connecticut, Hartford, Connecticut 100.0000 The Hartford Steam Boiler Inspection and Insurance Company, Hartford, Connecticut 100.0000 The Midland Company, Cincinnati, Ohio 100.0000 The Polytechnic Club, Inc., Hartford, Connecticut 100.0000 The Princeton Excess and Surplus Lines Insurance Company, Wilmington, Delaware 100.0000 Tir Mostyn and Foel Goch Limited, London 100.0000 UK Wind Holdings Ltd, London 100.0000 Union Beteiligungsholding GmbH, Vienna 100.0000 Unión Médica la Fuencisla, S.A., Compañía de Seguros, Saragossa 100.0000 Van Arkel Gerechtsdeurwaarders B.V., Leiden12 79.0000 Venus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 VHDK Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 VICTORIA Asien Immobilienbeteiligungs GmbH & Co. KG, Munich 100.0000 Victoria Investment Properties Two L.P., Atlanta, Georgia 100.0000 VICTORIA Italy Property GmbH, Düsseldorf 100.0000 VICTORIA Lebensversicherung Aktiengesellschaft, Düsseldorf3 100.0000 Victoria US Holdings, Inc., Wilmington, Delaware 100.0000 VICTORIA US Property Investment GmbH, Düsseldorf 100.0000 VICTORIA US Property Zwei GmbH, Düsseldorf 100.0000 VICTORIA Vierte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 Victoria Vierter Bauabschnitt GmbH & Co. KG, Düsseldorf 100.0000 VICTORIA-VOLKSBANKEN Biztosító Zrt., Budapest 100.0000
MR Solar GmbH & Co. KG, Nuremberg 100.0000 MR SOLAR SAS DER WELIVIT SOLAR ITALIA SRL, Bolzano 100.0000 MSP Underwriting Ltd., London 100.0000 MTU Moje Towarzystwo Ubezpieczeniowe S.A., Sopot 100.0000 MU068 MR Placem (FCP), Munich4 100.0000 Munich American Holding Corporation, Wilmington, Delaware 100.0000 Munich American Life Reinsurance Company, Atlanta, Georgia 100.0000 Munich American Reassurance Company, Atlanta, Georgia 100.0000 Munich Atlanta Financial Corporation, Atlanta, Georgia 100.0000 Munich Health Alpha GmbH, Munich3 100.0000 Munich Health Daman Holding Ltd., Abu Dhabi 51.0000 Munich Health Holding AG, Munich3 100.0000 Munich Health North America, Inc., Wilmington, Delaware 100.0000 Munich Holdings Ltd., Toronto, Ontario 100.0000 Munich Holdings of Australasia Pty. Ltd., Sydney 100.0000 Munich Life Management Corporation Ltd., Toronto, Ontario 100.0000 Munich Mauritius Reinsurance Co. Ltd., Port Louis 100.0000 Munich Re America Corporation, Wilmington, Delaware 100.0000 Munich Re America Services Inc., Wilmington, Delaware 100.0000 Munich Re Automation Solutions Limited, Dublin 100.0000 Munich Re Capital Limited, London 100.0000 Munich Re Capital Markets New York, Inc., Wilmington, Delaware 100.0000 Munich Re do Brasil Resseguradora S.A., São Paulo 100.0000 Munich Re Holding Company (UK) Ltd., London 100.0000 Munich Re of Malta Holding Limited, Ta´ Xbiex 99.9999 Munich Re of Malta p.l.c., Ta´ Xbiex 99.9999 Munich Re Stop Loss, Inc., Wilmington, Delaware 100.0000 Munich Re Trading LLC, Wilmington, Delaware 100.0000 Munich Re UK Services Limited, London 100.0000 Munich Re Underwriting Limited, London 100.0000 Munich Re Weather & Commodity Risk Advisors LLC, Wilmington, Delaware 100.0000 Munich Re Weather & Commodity Risk Holding, Inc., Wilmington, Delaware 100.0000 Munich Reinsurance America, Inc., Wilmington, Delaware 100.0000 Munich Reinsurance Company of Africa Ltd, Johannesburg 100.0000 Munich Reinsurance Company of Australasia Ltd, Sydney 100.0000 Munich Reinsurance Company of Canada, Toronto, Ontario 100.0000 MunichFinancialGroup GmbH, Munich 100.0000 Munichre General Services Limited i.L., London 100.0000 Munichre New Zealand Service Ltd., Auckland 100.0000 N.M.U. (Holdings) Limited, Leeds 100.0000 Neckermann Versicherung AG, Nuremberg 100.0000 New Reinsurance Company Ltd., Zurich 100.0000 Nightingale Legal Services Ltd., Bristol 100.0000 NMU Group Limited, London 100.0000 Northern Marine Underwriters Limited, Leeds 100.0000 OIK Mediclin, Wiesbaden4 66.6672 P.A.N. GmbH & Co. KG, Grünwald2 99.0000 Princeton Eagle Holding (Bermuda) Limited, Hamilton, Bermuda 100.0000 Princeton Eagle Insurance Company Limited, Hamilton, Bermuda 100.0000 279Consolidated financial statements Notes
Caracuel Solar Ocho S.L., Madrid 100.0000 Caracuel Solar Once S.L., Madrid 100.0000 Caracuel Solar Quince S.L., Madrid 100.0000 Caracuel Solar Seis S.L., Madrid 100.0000 Caracuel Solar Siete S.L., Madrid 100.0000 Caracuel Solar Trece S.L., Madrid 100.0000 Caracuel Solar Tres S.L., Madrid 100.0000 Caracuel Solar Uno S.L., Madrid 100.0000 CarePlus Gesellschaft für Versorgungsmanagement mbH, Cologne 100.0000 Ciborum GmbH, Munich 100.0000 Copper Leaf Research, Bingham Farms, Michigan 100.0000 Corion Pty Limited, Sydney 100.0000 Cotatrillo 100010 S.L., Madrid 100.0000 D.A.S. Prawo i Finanse Sp. z o.o., Warsaw 100.0000 D.A.S., Tomasz Niedzinski Kancelaria Prawna Spolka komandytowa, Warsaw 95.0000 DAS Consultancy & Detachering Rotterdam B.V., Rotterdam 85.0200 DAS Financial Services B.V., Amsterdam 51.0000 DAS Incasso Arnhem B.V., Arnhem 100.0000 DAS Incasso Eindhoven B.V., ’s-Hertogenbosch 80.0000 DAS Incasso Rotterdam B.V., Rotterdam 80.0000 DAS Law Limited, Bristol 100.0000 DAS Legal Protection Ireland Limited, Dublin 100.0000 DAS Legal Protection Limited, Christchurch, New Zealand 100.0000 DAS Legal Protection Limited, Vancouver 100.0000 DAS Legal Protection Pty. Ltd., Sydney 100.0000 DAS Lex Assistance, S.L., L´Hospitalet de Llobregat 100.0000 De Wit Vissers Incasso Holding B.V., Breda 95.0000 Diana Vermögensverwaltungs AG, Munich 100.0000 DKV – Beta Vermögensverwaltungs GmbH, Cologne 100.0000 DKV Gesundheits Service GmbH, Cologne 100.0000 DKV Immobilienverwaltungs GmbH, Cologne 100.0000 DKV Residenz am Tibusplatz gGmbH, Münster 100.0000 DKV Servicios, S.A., Saragossa 100.0000 DKV-Residenz in der Contrescarpe GmbH, Bremen 100.0000 DRA Debt Recovery Agency B.V., The Hague 100.0000 E&S Claims Management Inc., Reston, Virginia4 0.0000 Economic Data Research B.V., Leidschendam 100.0000 Economic Data Resources B.V., Leidschendam 100.0000 EDR Acquisition B.V., Amsterdam 100.0000 EDR Credit Services B.V., The Hague 100.0000 ERGO Alpha GmbH, Düsseldorf 100.0000 ERGO Asia Management Pte. Ltd., Singapore 100.0000 ERGO GmbH, Herisau 100.0000 ERGO Gourmet GmbH, Düsseldorf 100.0000 ERGO Immobilien-GmbH 15. Victoria & Co. KG, Kreien 100.0000 ERGO Immobilien-GmbH 4. DKV & Co. KG, Kreien 100.0000 ERGO Immobilien-GmbH 7. Hamburg-Mannheimer & Co. KG, Kreien 100.0000 ERGO Immobilien-Verwaltungs-GmbH, Kreien 100.0000 ERGO Leben Asien Verwaltungs GmbH, Munich 100.0000 ERGO PORTFÖY YÖNETIMI A.S., Istanbul 100.0000 ERGO Private Capital GmbH, Düsseldorf 100.0000 ERGO PRO S.r.l., Verona 100.0000 ERGO Pro Sp. z o.o., Warsaw 100.0000
Non-consolidated subsidiaries 80e LIMITED, Bristol 100.0000 Aleama 150015 S.L., Madrid 100.0000 Amicus Ltd., Bristol 100.0000 Arridabra 130013 S.L., Madrid 100.0000 ARTES Assekuranzservice GmbH, Düsseldorf 100.0000 Associated Asset Management Corporation B.V., ’s-Hertogenbosch 51.0000 B&D Acquisition B.V., Amsterdam 100.0000 B&D Business Solutions B.V., Utrecht 100.0000 Badozoc 1001 S.L., Madrid 100.0000 Bank Austria Creditanstalt Versicherungsdienst GmbH, Vienna 100.0000 Baqueda 7007 S.L., Madrid 100.0000 Beaufort Dedicated No.3 Ltd, London 100.0000 Beaufort Dedicated No.4 Ltd, London 100.0000 Beaufort Dedicated No.6 Ltd, London 100.0000 Beaufort Underwriting Services Limited, London 100.0000 BioEnergie Verwaltungs-GmbH, Elsterwerda 100.0000 Blitz 01-807 GmbH, Munich 100.0000 Bobasbe 6006 S.L., Madrid 100.0000 Botedazo 8008 S.L., Madrid 100.0000 Callopio 5005 S.L., Madrid 100.0000 Camcichu 9009 S.L., Madrid 100.0000 CAPITAL PLAZA Holding GmbH, Düsseldorf 100.0000 Caracuel Solar Catorce S.L., Madrid 100.0000 Caracuel Solar Cinco S.L., Madrid 100.0000 Caracuel Solar Cuatro S.L., Madrid 100.0000 Caracuel Solar Dieciocho S.L., Madrid 100.0000 Caracuel Solar Dieciseis S.L., Madrid 100.0000 Caracuel Solar Diecisiete S.L., Madrid 100.0000 Caracuel Solar Diez S.L., Madrid 100.0000 Caracuel Solar Doce S.L., Madrid 100.0000 Caracuel Solar Dos S.L., Madrid 100.0000 Caracuel Solar Nueve S.L., Madrid 100.0000
Hestia Loss Control Sp. z o.o., Sopot 100.0000 Horbach GmbH Versicherungsvermittlung und Finanzdienstleistungen, Düsseldorf 70.1000 HSB Associates, Inc., New York, New York 100.0000 HSB Inspection Quality Limited, Chelmsford 100.0000 HSB Professional Loss Control, Inc., Lenoir City, Tennessee 100.0000 HSB Ventures, Inc., Dover, Delaware 100.0000 Humanity B.V., The Hague 100.0000 Ibero Property Guadalix S.A., Madrid 100.0000 IDEENKAPITAL Anlagebetreuungs GmbH, Düsseldorf 100.0000 Ideenkapital Client Service GmbH, Düsseldorf 100.0000 Ideenkapital erste Investoren Service GmbH, Düsseldorf 100.0000 Ideenkapital Fonds Treuhand GmbH, Düsseldorf 100.0000 Ideenkapital Media Treuhand GmbH, Düsseldorf 100.0000 IDEENKAPITAL Metropolen Europa Verwaltungsgesellschaft mbH, Düsseldorf 100.0000 IDEENKAPITAL PRORENDITA EINS Treuhandgesellschaft mbH, Düsseldorf 100.0000 IDEENKAPITAL Schiffsfonds Treuhand GmbH, Düsseldorf 100.0000 Ideenkapital Treuhand US Real Estate eins GmbH, Düsseldorf 100.0000 IK Einkauf Objektverwaltungsgesellschaft mbH, Düsseldorf 100.0000 IK Einkaufsmärkte Deutschland Verwaltungsgesellschaft mbH, Düsseldorf 100.0000 IK FE Fonds Management GmbH, Düsseldorf 100.0000 IK Komp GmbH, Düsseldorf 100.0000 IK Objekt Bensheim GmbH, Düsseldorf 100.0000 IK Objekt Frankfurt Theodor-Heuss-Allee GmbH, Düsseldorf 100.0000 IK Pflegezentrum Uelzen Verwaltungs-GmbH, Düsseldorf 100.0000 IK Property Eins Verwaltungsgesellschaft mbH, Hamburg 100.0000 IK Property Treuhand GmbH, Düsseldorf 100.0000 IK US Portfolio Invest DREI Verwaltungs-GmbH, Düsseldorf 100.0000 IK US Portfolio Invest Verwaltungs-GmbH, Düsseldorf 100.0000 IK US Portfolio Invest ZWEI Verwaltungs-GmbH, Düsseldorf 100.0000 InterAssistance Gesellschaft für Dienstleistungen mit beschränkter Haftung, Munich 100.0000 Janus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 Jupiter Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 Juventus Vermögensverwaltungs AG, Hamburg 100.0000 K & P Objekt Hamburg Hamburger Straße GmbH, Düsseldorf 100.0000 K & P Objekt Munich Hufelandstraße GmbH, Düsseldorf 100.0000 Koole & Sennef Gerechtsdeurwaarders kantoor B.V., The Hague 100.0000 KQV Solarpark Franken 1 GmbH & Co. KG, Fürth 100.0000 Kuik & Partners Gerechtsdeurwaarders & Incassobureau B.V., Eindhoven 100.0000 Kuik & Partners Credit Management BVBA, Brussels 98.9000 Larus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 LAVG Zuid B.V., Breda 100.0000 LawAssist Limited, Bristol 100.0000 Legal Net GmbH, Munich 100.0000 m:editerran POWER FRANCE GmbH, Nuremberg 100.0000
Munich Re Automation Solutions Inc., Wilmington, Delaware 100.0000 Munich Re Automation Solutions KK, Tokyo 100.0000 Munich Re Automation Solutions Pty Limited, Sydney 100.0000 Munich Re Capital Markets GmbH, Munich 100.0000 Munich Re India Services Private Limited, Mumbai 100.0000 Munich Re Japan Services K. K., Tokyo 100.0000 Munich Re Life and Health (UK) Plc. i.L., London 100.0000 Munich Re Underwriting Agents (DIFC) Limited, Dubai 100.0000 Munich-American Global Services (Munich) GmbH i.L., Munich 100.0000 Munich-American Risk Partners GmbH, Munich 100.0000 Munich-Canada Management Corp. Ltd., Toronto, Ontario 100.0000 MunichFinancialGroup AG Holding, Munich 100.0000 MunichFinancialServices AG Holding, Munich 100.0000 Munichre Service Limited, Hong Kong 100.0000 Naretoblera 170017 S.L., Madrid 100.0000 Nerruze 120012 S.L., Madrid 100.0000 One State Street Intermediaries, Inc., Hartford, Connecticut 100.0000 Orrazipo 110011 S.L., Madrid 100.0000 P.A.N. Verwaltungs GmbH, Grünwald 99.0000 PLATINIA Verwaltungs-GmbH, Munich 100.0000 ProContact Sp. z o.o., Gdańsk 100.0000 PRORENDITA DREI Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA EINS Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA Fünf Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA VIER Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA ZWEI Verwaltungsgesellschaft mbH, Hamburg 100.0000 ProVictor Immobilien GmbH, Düsseldorf7 50.0000 ProVictor Property Fund IV Management, Inc., Atlanta 51.0000 ProVictor Property Fund V Management, Inc., Atlanta 51.0000 ProVictor Property Fund VI Management, Inc., Atlanta 51.0000 ProVictor US Corporation, Atlanta 100.0000 Reaseguradora de las Américas S. A., La Habana 100.0000 Roanoke Trade Insurance Inc., Schaumburg, Illinois 100.0000 SAINT LEON ENERGIE S.A.R.L., Strasbourg 100.0000 Schloss Hohenkammer GmbH, Hohenkammer 100.0000 Schrömbgens & Stephan GmbH, Versicherungsmakler, Düsseldorf 100.0000 Seldac 1. Verwaltungs-GmbH, Düsseldorf 100.0000 Sensus Group B.V., Stadskanaal 100.0000 Solarfonds Garmisch-Partenkirchen 2011 GmbH & Co. KG, Nuremberg 100.0000 Sopockie Towarzystwo Doradcze Sp. z o.o., Sopot 100.0000 Stichting Aandelen Beheer D.A.S. Holding, Amsterdam 100.0000 Sydney Euro-Center Pty. Ltd., Sydney 100.0000 Synkronos Italia SRL, Milan 60.1000 TAS Assekuranz Service GmbH, Frankfurt/Main 100.0000 TAS Touristik Assekuranz Service International GmbH, Frankfurt/Main 100.0000 TAS Touristik Assekuranzmakler und Service GmbH, Frankfurt/Main 100.0000 TGR Biztosítás Többesügynöki Zrt., Budapest 100.0000 Three Lions Underwriting Ltd., London 100.0000 m:editerran Power S.a.s. di welivit Solar Italia S.r.l., Bolzano 100.0000 MAM Munich Asset Management GmbH, Munich 100.0000 Marbury Agency, Inc., Amelia, Ohio 100.0000 MAYFAIR Financing GmbH, Munich 100.0000 MAYFAIR Holding GmbH, Düsseldorf 100.0000 MEAG Hong Kong Limited, Hong Kong 100.0000 MEAG Luxembourg S.à r.l., Luxembourg 100.0000 MEAG Real Estate Erste Beteiligungsgesellschaft, Munich 100.0000 Mediastream Consulting GmbH, Grünwald 100.0000 Mediastream Dritte Film GmbH, Grünwald 100.0000 Mediastream Film GmbH, Grünwald 100.0000 Mediastream Vierte Medien GmbH, Grünwald 100.0000 Mediastream Zweite Film GmbH, Grünwald 100.0000 MedNet Europa GmbH, Munich 100.0000 MedNet Gulf E.C., Manama 100.0000 MedNet International Offshore SAL, Beirut 99.6700 MedWell Gesundheits-AG, Cologne 100.0000 MESA ASISTENCIA, S.A., Madrid 99.9000 miCura Pflegedienste Berlin GmbH, Berlin 100.0000 miCura Pflegedienste Bremen GmbH, Bremen 100.0000 miCura Pflegedienste Düsseldorf GmbH, Düsseldorf 100.0000 miCura Pflegedienste GmbH, Cologne 100.0000 miCura Pflegedienste Hamburg GmbH, Hamburg 100.0000 miCura Pflegedienste Krefeld GmbH, Krefeld 100.0000 miCura Pflegedienste München / Dachau GmbH, Dachau 51.0000 miCura Pflegedienste München GmbH, Munich 100.0000 miCura Pflegedienste München Ost GmbH, Munich 65.0000 miCura Pflegedienste Münster GmbH, Münster 100.0000 miCura Pflegedienste Nürnberg GmbH, Nuremberg 51.0000 MR Beteiligungen 14. GmbH, Munich 100.0000 MR Beteiligungen 15. GmbH, Munich 100.0000 MR Beteiligungen 16. GmbH, Munich 100.0000 MR Beteiligungen 18. GmbH, Grünwald 100.0000 MR Beteiligungen AG, Grünwald 100.0000 MR Parkview Holding Corporation, Wilmington, Delaware 100.0000 MR RENT-Management GmbH, Munich 100.0000 MR Solar Beneixama GmbH, Nuremberg 100.0000 Münchener Consultora Internacional S.R.L., Santiago de Chile 100.0000 Münchener de Argentina Servicios Técnicos S. R. L., Buenos Aires 100.0000 Münchener de Colombia S.A. Corredores de Reaseguros i.L., Santa Fe de Bogota D.C. 100.0000 Münchener de Mexico S. A., Mexico City 100.0000 Münchener de Venezuela C.A. Intermediaria de Reaseguros, Caracas 100.0000 Münchener Ecoconsult GmbH i.L., Munich 100.0000 Münchener Finanzgruppe AG Beteiligungen, Munich 100.0000 Münchener Vermögensverwaltung GmbH, Munich 100.0000 Munich American Reassurance Company PAC, Inc., Atlanta, Georgia4 0.0000 Munich Canada Systems Corporation, Toronto, Ontario 100.0000 Munich Columbia Square Corp., Wilmington, Delaware 100.0000 Munich Management Pte. Ltd., Singapore 100.0000 Munich Re America Brokers, Inc., Wilmington, Delaware 100.0000 Munich Re America Management Ltd., London 100.0000 Munich Re Automation Solutions GmbH, Munich 100.0000
D.A.S. Difesa Automobilistica Sinistri, S.p.A. di Assicurazione, Verona 49.9920 DAMAN – National Health Insurance Company, Abu Dhabi 20.0000 EGM Wind SAS, Paris 40.0000 ERGO China Life Insurance Co., Ltd., Jinan 50.0000 Europai Utazasi Biztosito Rt., Budapest 26.0000 Europäische Reiseversicherungs-Aktiengesellschaft, Vienna 25.0100 Global Aerospace Underwriting Managers Ltd., London 40.0000 Global Insurance Company, Ho Chi Minh City 35.0000 HDFC ERGO General Insurance Company Ltd., Mumbai 26.0000 HighTech Beteiligungen GmbH und Co. KG, Düsseldorf 23.1000 KarstadtQuelle Finanz Service GmbH, Düsseldorf 50.0000 Marchwood Power Limited, Marchwood 50.0000 MAYFAIR Holding GmbH & Co. Singapur KG, Düsseldorf 71.4285 MCAF Verwaltungs-GmbH & Co.KG, Düsseldorf 50.0000 MEAG Pacific Star Holdings Ltd., Hong Kong 50.0000 MEDICLIN Aktiengesellschaft, Offenburg1 (MC €209m) 35.0042 MEGA 4 GbR, Berlin 34.2569 PICC Asset Management Company Ltd., Shanghai5 19.0000 Rendite Partner Gesellschaft für Vermögensverwaltung mbH, Frankfurt/Main 33.3333 RP Vilbeler Fondsgesellschaft mbH, Frankfurt/Main 40.0000 Sana Kliniken AG, Munich 21.7025 SAS Le Point du Jour, Paris 50.0000 Saudi National Insurance Company B.S.C. (c), Manama 22.5000 SEBA Beteiligungsgesellschaft mbH, Nuremberg 44.7969 Storebrand Helseforsikring AS, Oslo 50.0000 Suramericana S.A., Medellín5 18.8669 TERTIANUM Besitzgesellschaft Berlin Passauer Strasse 5–7 mbH, Munich 25.0000 TERTIANUM Besitzgesellschaft Konstanz Marktstätte 2–6 und Sigismundstrasse 5–9 mbH, Munich 25.0000 TERTIANUM Besitzgesellschaft München Jahnstrasse 45 mbH, Munich 33.3333 T-Solar Global Operating Assets S.L.U., Madrid 37.0000 U.S. Property Fund IV GmbH & Co. KG, Munich 21.7286 U.S. Property Management III L.P., Atlanta 20.0000 US PROPERTIES VA GmbH & Co. KG, Düsseldorf 46.0939 VICTORIA-VOLKSBANKEN Pensionskassen Aktiengesellschaft, Vienna 47.5028 VICTORIA-VOLKSBANKEN Vorsorgekasse AG, Vienna 50.0000 Vier Gas Investments S.à r.l., Luxembourg 43.7516 VV Immobilien GmbH & Co. United States KG, Munich 28.9514 VV Immobilien GmbH & Co. US City KG, Munich 23.0999 VV Immobilien Verwaltungs GmbH & Co. Zentraleuropa KG, Munich 20.4082 WISMA ATRIA Holding GmbH & Co. Singapore KG, Düsseldorf 65.0000
Associates accounted for using the equity method 13th & F associates Limited Partnership, Washington D.C.9 80.0000 Apollo Munich Health Insurance Co. Ltd., Hyderabad 25.5800 Avantha ERGO Life Insurance Company, Mumbai 26.0000 BHS tabletop AG, Selb1 (MC €35m) 28.9134 Bloemers Beheer B.V., Rotterdam 23.1824 Consorcio Internacional de Aseguradores de Crédito, S.A., Madrid5 15.4588 Consortia Versicherungs-Beteiligungsgesellschaft mbH, Nuremberg 33.7027 283Consolidated financial statements Notes
Other shareholdings of 20 % or more Capital Dynamics Champion Ventures VI, L.P., Woodside, California11 (equity: €73,254k; result for year: €6,150k) 27.3400 FIA Timber Partners II L.P., Wilmington, Delaware6
(equity: €82,501k; result for year: –€1,085k) 39.0800 Hines Pan-European Core Fund FCP-FIS, Luxembourg11
(equity: €222,841k; result for year: €274k) 20.7500 HRJ Capital Global Buy-Out III (U.S.), L.P., Woodside, California11 (equity: €85,560k; result for year: €15,467k) 44.8788 ORM Timber Fund III (Foreign) LLC, Wilmington, Delaware8 (equity: €1,083k; result for year: –€81k) 39.1000 RMS Forest Growth International, L.P., Grand Cayman, Cayman Islands8 (equity: €25,042k; result for year: € ---) 43.4700
Other shareholdings exceeding 5% of the voting rights in large companies as defined in the German Commercial Code Admiral Group plc, Cardiff 10.1033 Best Doctors, Health Resources and Technology, Inc., Boston, Massachusetts 5.6100 Credit Guarantee Insurance Corporation, Johannesburg 7.1037 Extremus Versicherungs-Aktiengesellschaft, Cologne 16.0000 Jordan Insurance Co. p.l.c., Amman 10.0000 New National Assurance Company Ltd., Durban, South Africa 16.0000 Protektor Lebensversicherungs-AG, Berlin 10.7597 Saudi Enaya Cooperative Insurance Company, Jeddah 15.0000 Swaziland Royal Insurance Corporation, Mbabane 16.0000 Wataniya Cooperative Insurance Company, Jeddah 10.0000 1 The market capitalisation (MC) of this company as at 31 December 2013 is €xxm.
2 This fully consolidated German subsidiary with the legal form of a partnership, as defined in Section 264a of the German Commercial Code (HGB), intends to fulfil the conditions required in Section 264b of the German Commercial Code and, in the financial year 2013, to avail itself of the relevant provision exempting it from preparing annual financial statements.
6 No significant influence, as there are no close links with Munich Re of the kind defined in IAS 28.7.
11 No significant influence because, under the articles of association, statutes or other agreement, all key decisions regarding the company’s financial and operating policy are subject to a quorum which cannot be attained by the major ity shareholder without the non-controlling shareholders.
We have audited the consolidated financial statements prepared by Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, Munich, comprising the consolidated balance sheet, the consolidated income statement, the statement of recognised income and expense, the Group statement of changes in equity, the consol idated cash flow statement and the notes to the consolidated financial statements, together with the Group management report for the business year from 1 January to 31 December 2013. The preparation of the consolidated financial statements and the Group management report in accordance with IFRS, as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a para. 1 of the German Commercial Code (HGB) are the responsibility of the parent company’s management. Our responsibility is to express an opinion on the consolidated financial statements and on the Group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Section 317 of the German Commercial Code and German generally accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in Germany (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the Group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expec tations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the Group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and Group management report. We believe that our audit provides a reasonable basis for our opinion.
Duration Average term of an interest-sensitive investment (or portfolio) in years. The modified duration (in per cent) indicates how much a bond’s overall yield rises or falls when there is a change in interest rate in the market.
Economic risk capital (ERC) Amount of economic equity that Munich Re needs, with a given risk appetite, to cover unexpected losses in the following year. In Munich Re’s risk model, economic risk capital is calculated as 1.75 times value at risk for a 12-month time horizon with a confidence level of 99.5%.
Economic solvency ratio Ratio calculated by dividing the available financial resources (after dividend and share buy-backs) by the economic risk capital. It is an expression of Munich Re’s capital strength.
Facultative reinsurance Reinsurance of selected individual risks. The primary insurer can offer an individual risk in reinsurance, which the reinsurer for its part can either accept or decline (cf. obligatory reinsurance).
Insurance pool Risk community in which legally and economically independent insurers and reinsurers combine (or in some cases are required by the government) to create cover for particularly large or unbalanced risks. The participants undertake to write the risks defined in the pool contract only within the framework of the insurance pool and to transfer such risks to it in return for a commission. Every pool member participates in the pool’s profit or loss in accordance with its predefined quota share. To spread the risk further, reinsurance covers are often ceded or taken out. Types of pool include coinsurance pools, where all members act as primary insurers, and reinsurance pools, where primary insurers write the risks and then divide these between the participating insurers via reinsurance.
Interest-rate curve Curve that models the relationship between interest rates and the term of an investment (e.g. fixed-interest securities). As a rule, the interest rate increases the longer the term. This type of interest-rate curve is therefore referred to as rising (or normal). An interest-rate curve is defined as flat if the interest rate is independent of the term. Inverse (or declining) interest-rate curves are rare. They are produced when less interest is paid on long-term securities (bonds) than on short-term securities. The interest-rate curve is plotted on a graph.
Market Consistent Embedded Value (MCEV) Valuation measure for long-term insurance business. Embedded value is the total of a company’s equity (at market price) and the value of its in-force covered business. The latter is the present value of net future profits (where profits are post-taxation shareholder cash flows from the in-force covered business, and the assets backing the associated liabilities) calculated using actuarial methods. The value of in-force covered business additionally takes into consideration the time value of the financial options and guarantees, the explicitly determined cost of holding capital for the whole term of the portfolio, and the costs for non-hedgeable risks. Munich Re calculates embedded value in accordance with the MCEV Principles.
Obligatory reinsurance Type of reinsurance in which the primary insurer is obliged to cede all risks specified in the contract to the reinsurer within a certain scope. The reinsurer accepts these risks without assessing them on a case-by-case basis. Although obligatory reinsurance agreements contain agreed periods of notice, they are generally concluded for an unlimited duration. These treaties between insurers and reinsurers may therefore run for long periods (cf. facultative reinsurance).
Pandemic Spread of a disease or – in the narrower sense – infectious disease across national borders and continents. Unlike an epidemic, which is a disease occurring in a limited area and time, a pandemic is not restricted to a certain geographical area.
Public-private partnership Long-term arrangement between private companies and public bodies with the aim of providing public services in a more efficient manner.
Solvency II Project of the European Commission to fundamentally reform and har monise European insurance supervisory regulations. Solvency II follows the threepillar approach: minimum capital requirements (quantitative), supervisory review processes (qualitative) and market discipline (disclosure)
Stress test Special form of scenario analysis. It allows a quantitative statement to be made on the loss potential of portfolios in the event of extreme market fluctuations.
Technical result Balance of income and expenses apportionable to (re)insurance business. The technical result includes an interest component, the income from technical interest, which is reallocated from the non-technical result.
Unit-linked life insurance Type of life insurance with a savings component, where the benefits payable depend on the performance of the assets invested in a fund. The investment risk is borne by the policyholder.
Value in use Present value of the future cash flows expected to be derived from a cash-generating unit or group of cash-generating units. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows of other assets or groups of assets.
Annual General Meeting 27, 95 Asset-liability management (ALM) 40, 94 Audit Committee 21, 43 Auditor’s report 285
Share buy-back 67, 142, 275 Share capital 13, 95, 98, 214 Shareholdings 276 ff. Share price performance 10 ff. Shares 10 ff., 66 ff., 95 ff., 105 f., 214 Solvency 92 Solvency II 38 f., 129 Staff 103 ff., 108 Strategic debt 93 Subordinated bonds 89, 93, 219 Supervisory Board 19 ff., 26 f., 42 ff., 61 f.
Switzerland New Reinsurance Company Ltd. Zollikerstrasse 226 CH-8008 Zürich Tel.: +41 (0) 58 226 65 00 Fax: +41 (0) 44 811 99 01 www.newre.com
USA Munich Reinsurance America, Inc. 555 College Road East Princeton, NJ 08543-5241 www.munichreamerica.com
© 2014 Münchener Rückversicherungs-Gesellschaft Königinstrasse 107 80802 München Germany www.munichre.com www.twitter.com/munichre www.munichre.com/facebook
Editorial deadline: 6 March 2014 Online publication date: 20 March 2014 Print publication date: 8 April 2014
Picture credits pp. 3, 8, 9, 19: Andreas Pohlmann p. 7 top left and right: Corbis p. 7 bottom left: Shutterstock p. 7 bottom right: Christoph Bünten
3. Expenses for claims and benefits Gross 40,698 9,967 10,687 10,296 9,748
Thereof: Attributable to Munich Reinsurance Company equity holders 3,313 1,189 633 528 963 Attributable to non-controlling interests 29 9 –1 14 7
Munich Reinsurance Company’s market capitalisation €bn 28.7 25.9 25.4 26.2 Other Combined ratio