ERGO Life and Health Property-casualty Germany Germany International €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year
Change in consolidated group/Other 0 0 0 6 New deferred acquisition costs 204 279 1,337 1,373 Changes
Amortisation –281 –273 –1,362 –1,396 Impairment losses 0 –24 –25 –91
Status at 31 Dec. financial year 4,032 4,166 368 344 1,139 1,138
The amortisation includes accrued interest as well as write-downs. The impairment losses comprise impairment losses and reversals of impairment losses stemming from changes in the assumptions underlying the calculations which require an adjustment in the measurement.
The line item “Change in consolidated group/Other” includes deferred acquisition costs of the disposal group amounting to €70m.
Munich Health Total €m 31.12.2015 Prev. year 31.12.2015 Prev. year Status at 31 Dec. previous year 105 92 9,555 9,603
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 €2,852m (2,625m) for claims equalisation provisions, which are not posted under IFRS.
No deferred taxes were posted for temporary differences of €57m (54m) in connection with investments in subsidiaries and associates, also referred to as outside basis differences.
Loss carry-forwards excluding deferred tax assets stem mainly from Australia, New Zealand, Turkey, and the USA. Based on planning for future taxable income, no deferred tax assets were set aside to cover most of these loss carry-forwards.
Tax loss carry-forwards and tax credits 31.12.2015 Prev. year For which For which For which For which deferred deferred deferred deferred tax assets tax assets tax assets tax assets are are not are are not €m recognised recognised Total recognised recognised Total Corporation tax loss carry-forwards
Expiring in up to three years 108 97 205 124 103 227 Expiring in over three years and up to ten years 37 94 131 110 103 213 Expiring in over ten years 21 130 151 234 126 360
Expiring in up to three years 6 63 69 0 0 0 Expiring in over three years and up to ten years 0 0 0 0 72 72 Expiring in over ten years 0 0 0 0 0 0
Expiring in up to three years 0 0 0 4 0 4 Expiring in over three years and up to ten years 25 45 70 13 0 13 Expiring in over ten years 2 6 8 3 0 3
The impairment losses reversed are distributed between the following different Group segments: in reinsurance, €4m (2m) is apportionable to life and €5m (2m) to property- casualty; in the ERGO field of business, €14m (2m) is apportionable to Life and Health Germany and €3m (0m) to ERGO International, and €2m (1m) is allocable to Munich Health.
Gross carrying amount at 31 Dec. previous year 3,561 1,032 42 4,635 Accumulated depreciation and accumulated impairment losses at 31 Dec. previous year –1,137 –758 –34 –1,929 Carrying amount at 31 Dec. previous year 2,424 274 8 2,706
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 3,510 978 51 4,539 Accumulated depreciation and accumulated impairment losses at 31 Dec. previous year –1,091 –729 –31 –1,851 Carrying amount at 31 Dec. previous year 2,419 249 20 2,688
Disposals Loss of control 0 0 0 0 Other –17 –11 –16 –44
The fair value of the property amounts to €2,924m (2,909m). This is allocated to Level 3 of the fair value hierarchy; see Assets – B Investments, Determining fair values. The methodology for determining the fair values is described in (3) Land and buildings, including buildings on third-party land.
The expenditures recognised in the carrying amount for assets in the course of construction total €25m (21m) for property and €24m (21m) for plant and equipment. Commitments to acquire property total €3m (5m) and commitments to acquire plant and equipment €12m (12m). For plant and equipment, no assets were pledged as security or other restrictions on title.
These non-current assets and disposal groups sold in 2015 are no longer taken into account separately in the previous year’s figures of the consolidated balance sheet. As at 31 December 2014, the following items were affected by the reclassification into “held for sale”: B Investments – II Investments in affiliated companies, associates and joint ventures (€27m) and IV Other securities, 2. Available for sale (€79m); C Gross technical provisions – II Provision for future policy benefits (€48m).
Subject to the approval of the supervisory authorities, the buyer is acquiring all shares in ERGO Italia. We expect the transaction and the resulting deconsolidation in our consolidated financial statements to be completed in the second quarter of 2016. As at 31 December 2015, ERGO Italia was classified in accordance with IFRS 5 as a disposal group to be recognised at the lower of carrying amount or fair value less sales cost. This valuation did not produce any impact on the result. The agreed sale results in an expected loss of €82m, for which we have established a reserve.
Net unrealised gains on investments recognised in “other reserves” comprise €142m in net unrealised gains on the ERGO Italia disposal group.
Assets and liabilities of the disposal group €m 31.12.2015 Assets Investments 5,125 Investments for unit-linked life insurance contracts 28 Ceded share of technical provisions 1,387 Cash at bank, cheques and cash in hand 86 Other assets 320 Total assets 6,947 Liabilities Gross technical provisions 4,833 Gross technical provisions for unit-linked life insurance 28 Deposits retained on ceded business 1,336 Other liabilities 105 Total liabilities 6,301
Allocation of disposal group (including insurance-related investments) to levels of the fair value hierarchy €m Level 1 Level 2 Level 3 Total Investments measured at fair value Other securities available for sale
Investments not measured at fair value Loans 0 213 55 268
On 20 March 2014, 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 30 April 2014, in accordance with Section 71 (1) no. 8 of the German Stock Corporation Act (AktG). From 14 May 2014 to 10 April 2015, a total of 6,098,657 Munich Reinsurance Company shares were purchased via the stock exchange. Of these, 1,673,576 shares were acquired at an average price of €183.00 in the 2015 calendar year. All shares from this buy-back programme were retired on 23 April 2015 in a simplified process, 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.
MEAG MUNICH ERGO AssetManagement GmbH sold 1,859 Munich Re shares at an average price of €172.87 in the financial year 2015 in connection with the hedging of obligations from its long-term incentive plan. The sale generated proceeds of €0.3m, which were used to strengthen liquid funds. With the remaining Munich Re shares acquired in prior years to hedge the stock appreciation rights granted, MEAG had a total portfolio of 671 shares at 31 December 2015.
The acquisition costs of all Munich Re shares in the possession of Group companies at the end of the financial year totalled €697,525,723.26.
In the year under review, a total of €1,293m was distributed to Munich Reinsurance Company’s equity holders for the financial year 2014 in the form of a dividend of €7.75 per dividend-bearing share.
Included in the retained earnings are claims equalisation provisions of €7,077m (6,837m). These provisions are established under national regulations to smooth fluctuations in loss experience in future years. In IFRS accounting, they are recognised in equity.
Unrealised gains and losses €m 31.12.2015 Prev. year Unconsolidated affiliated companies, associates and joint ventures not accounted for using the equity method 81 168 Associates and joint ventures accounted for using the equity method 91 113 Other securities available for sale
Information on capital management and minimum capital requirements is provided in the management report under “Financial position – Capital management” and “Financial position – Group solvency” respectively.
Regularly, at each reporting date, we assess whether the allocation of these liabilities to the levels of the fair value hierarchy is still appropriate. If changes in the basis of valuation have occurred – for instance, if a market is no longer active or the valuation was performed using inputs requiring another allocation – we make the necessary adjustments.
Tax effects in the income and expenses recognised directly in equity 2015 Prev. year €m Before tax Tax After tax Before tax Tax After tax
Non-controlling interests €m 31.12.2015 Prev. year Unrealised gains and losses 19 24 Consolidated result 15 18 Other equity 264 229
Munich Re Group Annual Report 2015 we use the market values provided by price quoters for the corresponding assets. The fair values of our amounts due to banks are determined using the present value method, in part exclusively using observable market inputs, and partly also taking into account non-observable inputs.
The following table presents the reconciliation from the opening balances to the closing balances for other liabilities allocated to Level 3.
Prev. year €m Level 1 Level 2 Level 3 Total Liabilities measured at fair value Other liabilities
Liabilities not measured at fair value Subordinated liabilities 4,955 62 0 5,017 Bonds and notes issued 371 0 0 371 Amounts due to banks 1 184 276 461
Other liabilities at fair value through profit or loss €m 31.12.2015 Prev. year Carrying amount at 31 Dec. previous year 276 147 Gains and losses –166 –173
Gains (losses) recognised in the income statement –137 –161 Gains (losses) recognised in equity –29 –12
Disposals –145 –150 Transfer to Level 3 0 2 Transfer out of Level 3 0 0 Change in the market value of derivatives 0 0 Carrying amount at 31 Dec. financial year 413 276 Gains (losses) recognised in the income statement that are attributable to liabilities shown at the end of the financial year –123 –121 1 ERGO International AG holds bonds with a nominal value of €3m; the volume outstanding has been reduced accordingly. 2 ERGO Versicherungsgruppe AG holds bonds with a nominal value of €3m; the volume outstanding has been reduced accordingly.
Identification A.M. €m number Best Fitch Moody’s S&P 31.12.2015 Prev. year Munich Reinsurance Company, Munich, WKN: A1ML16 6.25% until 2022, thereafter floating, ISIN: XS0764278528 €900m, Reuters: DE076427852= Bonds 2012/2042 Bloomberg: MUNRE a A – A 895 894 Munich Reinsurance Company, Munich, WKN: A1ML15 6.625% until 2022, thereafter floating, ISIN: XS0764278288 £450m, Reuters: DE076427828= Bonds 2012/2042 Bloomberg: MUNRE a+ A – A 609 578 Munich Reinsurance Company, Munich, WKN: A1KQYJ 6.00% until 2021, thereafter floating, ISIN: XS0608392550 €1,000m, Reuters: DE060839255= Bonds 2011/2041 Bloomberg: MUNRE a A – A 992 991 Munich Reinsurance Company, Munich, WKN: A0N4EX 5.767% until 2017, thereafter floating, ISIN: XS0304987042 €1,349m, Reuters: DE030498704= Bonds 2007/perpetual Bloomberg: MUNRE a A A3 (hyb) A 1,445 1,502 Munich Reinsurance Company, Munich, WKN: 843449 7.625% until 2018, thereafter floating, ISIN: XS0167260529 £300m, Reuters: DE016726052= Bonds 2003/2028 Bloomberg: MUNRE a+ A+ A2 (hyb) A 406 385 ERGO Versicherung Aktiengesellschaft, Vienna, secondary market yield on federal government bonds (Austria) +70 BP, €12m1, Registered bonds 2001/perpetual – – – – 12 12 ERGO Versicherung Aktiengesellschaft, Vienna, secondary market yield on federal government bonds (Austria) +70 BP, €13m2, Registered bonds 1998/perpetual – – – – 13 13 HSB Group Inc., Delaware, LIBOR +91 BP, US$ 76m, Bonds 1997/2027 – – – – 44 38
The fair value of the subordinated liabilities at the balance sheet date amounted to €4,921m (5,017m). 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 inputs.
The item “Change in consolidated group/Other” includes premium reserves of the disposal group amounting to –€29m.
Earned premiums –10,541 –10,047 –17,751 –16,850 Status at 31 Dec. financial year 21 24 6,238 5,973
ERGO Life and Health Property-casualty Germany Germany International €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year Status at 31 Dec. previous year 174 159 443 449 1,363 1,287 Currency translation effects 4 –1 1 –1 –7 –9 Changes in consolidated group/Other –4 0 0 0 –29 0
Earned premiums –9,403 –9,796 –3,111 –3,120 –3,827 –3,724 Status at 31 Dec. financial year 198 174 495 443 1,446 1,363
Earned premiums –5,586 –5,450 –50,219 –48,987 Status at 31 Dec. financial year 444 396 8,841 8,373
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.
Development of gross provision for future policy benefits €m 2015 Prev. year Status at 31 Dec. previous year 112,648 111,427 Currency translation differences 1,616 770 Changes in consolidated group/Other –4,726 –103 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 presented in the Disclosures on risks from insurance contracts and financial instruments (38) Disclosures on risks from life and health insurance business and (39) Disclosures on risks from property-casualty insurance business.
The claims expenses for the year under review show payments made for the year under review and expenses for posting the claims reserve in that year. The provisions set up for claims from previous years are regularly updated using best estimates based on exposure and claims information and past claims experience. The respective change is shown under “claims expenses for previous years”. The item “Changes in consolidated group/Other” includes gross claims provisions for the disposal group amounting to –€148m, and the ceded share attributable to the disposal group amounting to €15m.
1 Comprises the segments property-casualty reinsurance, ERGO Property-casualty Germany and the property-casualty section of the ERGO International segment.
For the year under review –5,517 131 –5,386 –5,357 98 –5,259 For previous years –7,619 394 –7,225 –8,184 359 –7,825
€m Accident year Calendar year ≤ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total
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 2015). This ensures that currency translation does not lead to run-off effects.
Of the provision for premium refunds based on national regulations, €81m (87m) is apportionable to property-casualty insurance. The provision for deferred premium refunds is established solely for life and health insurance.
Development of provision for deferred premium refunds €m 2015 Prev. year Status at 31 Dec. previous year 10,622 6,243 Changes in consolidated group 0 0 Change resulting from unrealised gains and losses on investments (recognised directly in equity) –1,509 3,600 Change resulting from other revaluations (recognised in profit or loss) 77 779 Status at 31 Dec. financial year 9,190 10,622
Development of gross provision €m 2015 Prev. year Status at 31 Dec. previous year 7,837 7,043 Changes in consolidated group/Other 63 148 Savings premiums 862 722 Unrealised gains/losses on fund assets 233 495 Withdrawal for expenses and risk –81 –84 Withdrawal for benefits –713 –487 Status at 31 Dec. financial year 8,201 7,837
The present value of obligations under defined benefit pension plans amounted to €5,389m (5,584m), the plan assets to be deducted totalled €2,847m (2,741m). The defined benefit obligations comprise the following main plans: Munich Reinsurance Company’s pension obligations account for €1,408m (1,484m) of the present value of obligations under defined benefit plans and €1,441m (1,432m) 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 defined benefits granted up to 31 December 2007 are financed through a fund. New members on or after 1 January 2008 receive pension commitments in the form of defined contribution plans financed by means of intra-Group insurance contracts securing the obligations under pension schemes. The fund and insurance contracts have been grouped in a contractual trust agreement (CTA).
The pension obligations of Munich Re America account for €733m (695m) of the present value of obligations under defined benefit plans and €488m (466m) of plan assets. The obligations include pensions for employees and surviving dependants. The amount of the pensions generally depends on includable compensation and length of service. The plan is financed through a trust and pension provisions. The plan was closed to new members effective 1 January 2006 and to all remaining members effective 31 December 2011. With effect from 1 January 2012, all members now receive pension commitments in the form of defined contribution plans. There are also retiree medicalcare benefit obligations.
Breakdown of other accrued liabilities €m 31.12.2015 Prev. year Provisions for post-employment benefits 2,751 2,965 Other provisions 1,393 1,508
The present value of the obligations under defined benefit plans breaks down as follows: Pension obligations are measured using assumptions about future developments. The consolidated companies used the following actuarial assumptions (weighted-average values): Munich Re uses generally recognised biometric actuarial assumptions, adjusted as a rule to take account of company-specific circumstances. The average remaining life expectancy of a 65-year-old plan participant is 23.6 years for females and 23.1 years for males.
Change in the present value of the defined benefit obligations €m 2015 Prev. year Status at 31 Dec. previous year 5,584 3,992 Currency translation differences 106 122 Changes in consolidated group 0 –1 Current service cost 160 118 Past service cost 3 17 Gains and losses from plan settlements 0 –14 Contributions by plan participants 8 4 Interest expense 123 145 Payments –139 –121 Payments from plan settlements 0 –28 Transfer of obligations 0 1 Actuarial gains/losses: Change in demographic assumptions –27 35 Actuarial gains/losses: Change in financial assumptions –469 1,281 Actuarial gains/losses: Experience adjustments –31 28
Change in the fair value of plan assets for defined benefit plans €m 2015 Prev. year Status at 31 Dec. previous year 2,741 2,012 Currency translation differences 71 86 Changes in consolidated group 0 0 Interest income 70 80 Return excluding interest income –98 516 Contributions by the employer 56 120 Contributions by plan participants 6 3 Payments –57 –43 Payments from plan settlements 0 –32 Transfer of assets 0 0 Other 58 –1 Status at 31 Dec. financial year 2,847 2,741
Obligations funded through plan assets Present value of defined benefit obligations 2,838 2,821 Fair value of plan assets –2,847 –2,741 Assets from the defined benefit plan 209 122 Effect of asset ceiling 0 0
Obligations independent of funded obligations Present value of defined benefit obligations 5,389 5,584 Fair value of plan assets –2,847 –2,741 Assets from the defined benefit plan 209 122 Effect of asset ceiling 0 0
The actual losses on plan assets amount to €28m (actual gains of €596m), and the actual losses on reimbursements to €13m (actual gains of 52m).
Payments –82 –74 Capital transfer to plan assets –62 –123 Transfer to other receivables 85 –43 Actuarial gains/losses recognised in equity –404 795 Other –9 56 Status at 31 Dec. financial year 2,751 2,965
The provisions for restructuring, early-retirement benefits/semi-retirement, anniversary benefits and medium- and long-term incentive plans are mainly long term, whereas the provisions for earned commission, salary obligations, other remuneration for desk and field staff, and miscellaneous are essentially short term.
Sensitivity analysis €m 31.12.2015 Prev. year Increase in actuarial discount rate by 50 BP –490 –515 Decrease in actuarial discount rate by 50 BP 570 600 Increase in salary/entitlement trends by 10 BP 25 43 Decrease in salary/entitlement trends by 10 BP –24 –42 Increase in pension trends by 10 BP 59 57 Decrease in pension trends by 10 BP –54 –56 Increase in medical cost trend rate by 100 BP 40 47 Decrease in medical cost trend rate by 100 BP –33 –38 Increase in mortality rate by 10% –134 –143 Decrease in mortality rate by 10% 145 154
Munich Re Group Annual Report 2015 26 Bonds and notes issued
Outflows of liquidity occur annually in the amount of the interest payments until the notes mature. These totalled US$ 25m in the financial year. We use the prices provided by price quoters to determine the fair value of the notes issued. The fair value at the reporting date amounts to €402m (371m).
Of the amounts due to banks, €150m is attributable to bank borrowing by Group companies acquired by Munich Re under its infrastructure investment programme including renewable energies and new technologies.
Identification A.M. Prev. €m number Best Fitch Moody’s S&P 31.12.2015 year Munich Re America Corporation, CUSIP No.: 029163AD4 Wilmington, 7.45%, US$ 342m, ISIN, Reuters: – Senior Notes 1996/2026 Bloomberg: AMER RE CORP MUNRE a– A+ A2 A– 314 282
In terms of the assets required to cover the technical provisions, the composition of the technical interest varies from segment to segment, depending on the type of insurance business conducted and the related statutory regulations.
In the life reinsurance segment, the income from technical interest corresponds to the risk-free interest on our technical provisions. For deposited provisions, the income from technical interest corresponds to the contractually agreed interest rate.
Reinsurance Life Property-casualty €m 2015 Prev. year 2015 Prev. year Income from technical interest 749 683 1,373 1,209
ERGO Life and Health Property-casualty Germany Germany International €m 2015 Prev. year 2015 Prev. year 2015 Prev. year 8303 A–C
Reinsurance Life Property-casualty €m 2015 Prev. year 2015 Prev. year Gross Claims and benefits paid –7,883 –7,605 –10,012 –10,578 Change in technical provisions
Provision for future policy benefits 28 –214 0 1 Provision for outstanding claims –502 –318 49 624 Provision for premium refunds 0 0 –4 –6
Other technical result 0 2 –4 –2 Gross expenses for claims and benefits –8,358 –8,135 –9,972 –9,961
Ceded share Claims and benefits paid 368 333 422 374 Change in technical provisions
Provision for future policy benefits –434 –585 –1 –1 –48 –410 Provision for outstanding claims –137 –56 –210 –99 –310 –133 Provision for premium refunds –1,432 –2,584 –18 –19 88 –47
Other technical result –12 –6 –4 1 –50 –65 Expenses for claims and benefits – Ceded share 7 22 41 –20 236 149
Other technical result –130 –135 –11 –6 –32 –54 Net expenses for claims and benefits –11,654 –12,923 –2,009 –1,971 –2,811 –2,816
Other technical result –3 –4 –113 –129 Gross expenses for claims and benefits –4,668 –4,459 –39,756 –40,416
Ceded share Claims and benefits paid 79 66 1,199 1,097 Change in technical provisions
Munich Re Group Annual Report 2015 33 Investment result 8312 A
ERGO Life and Health Property-casualty Germany Germany International €m 2015 Prev. year 2015 Prev. year 2015 Prev. year Land and buildings, including buildings on third-party land 171 180 9 8 4 9 Investments in affiliated companies –9 –4 –2 –7 –82 1 Investments in associates and joint ventures 73 25 2 4 –1 6
Other securities available for sale Fixed-interest 1,807 1,542 114 131 499 463
Deposits retained on assumed reinsurance, and other investments 6 7 2 2 12 11 Expenses for the management of investments, other expenses –226 –231 –15 –14 –26 –28
8312 C Munich Health Total €m 2015 Prev. year 2015 Prev. year Land and buildings, including buildings on third-party land 0 1 334 315 Investments in affiliated companies 9 9 –82 8 Investments in associates and joint ventures 14 –12 375 77
Write-ups of non-derivative investments 0 0 94 132 Gains on the disposal of non-derivative investments 52 27 3,648 2,970 Write-ups and gains on the disposal of derivatives 2 2 2,156 2,726
Write-ups of non-derivative investments 36 51 11 13 7 34 Gains on the disposal of non-derivative investments 895 604 220 142 208 95 Write-ups and gains on the disposal of derivatives 269 707 121 86 35 109 8315 A–C
Reinsurance Life Property-casualty €m 2015 Prev. year 2015 Prev. year Write-downs of non-derivative investments –74 –22 –345 –165 Losses on the disposal of non-derivative investments –107 –41 –527 –219 Write-downs and losses on the disposal of derivatives –459 –540 –2,051 –2,659 Management expenses, interest charges and other expenses –53 –48 –207 –183
Other operating expenses –80 –78 –385 –320 Thereof: Interest charges –14 –12 –23 –24 Write-downs of other operating assets –7 –3 –11 –10
Thereof: Interest income 4 6 103 105 Write-ups of other operating assets 7 3 57 23
In addition to expenses of €414m (362m) for services rendered, other operating expenses chiefly include interest charges and similar expenses of €97m (131m), other write-downs of €61m (71m), and other tax of €107m (96m). They also contain expenses of €14m (16m) for owner-occupied property, some of which is also leased out.
36 Other non-operating result, impairment losses of goodwill and net finance costs
Other non-operating expenses –1,343 –680 –414 –289 –124 –158 Impairment losses of goodwill –429 0 0 0 –23 –445 Net finance costs –30 –29 –15 –15 –28 –28
Munich Health Total €m 2015 Prev. year 2015 Prev. year Other non-operating income 25 18 4,393 2,728 Other non-operating expenses –24 –21 –4,924 –3,224 Impairment losses of goodwill 0 0 –452 –445 Net finance costs –1 –1 –238 –228
Information on the Group’s strategic debt can be found in the management report on page 98 and in the Notes to the consolidated balance sheet – Equity and liabilities (19) Subordinated liabilities and (26) Bonds and notes issued.
Recognised tax expenses/income broken down according to Germany and other countries €m 2015 Prev. year Current tax –60 478
Main components of tax expenses/income €m 2015 Prev. year Current tax for financial year –987 –993 Current tax for other periods 927 1,471 Deferred tax resulting from the occurrence or reversal of temporary differences –435 –513 Deferred tax resulting from the occurrence or utilisation of loss carry-forwards 117 392 Valuation allowances for deferred taxes/loss carry-forwards –99 –48 Effects of changes in tax rates on deferred tax 1 3 Taxes on income –476 312
“Tax-free income” is made up of tax-free currency gains, gains on the sales of share- holdings in joint-stock companies, and other tax-free income.
“Tax for prior years” is for actual and expected changes to tax assessments for previous years and includes deferred tax for other periods totalling €29m (130m) as well as current tax for other periods amounting to €927m (1,471m). Deferred taxes result from adjustments to tax accounts after the tax returns have been filed or tax audits have been concluded. Current tax results in particular from adjustments made to the tax provisions for all years not yet finally assessed to take account of recent developments in ongoing tax audits.
Risk reporting concerns not only accounting but also the activities of integrated risk management (IRM) at Munich Re. To take both perspectives into account, information on risks is provided in the risk report within the management report, in the disclosures on risks from insurance contracts, and in the disclosures on technical provisions and financial instruments in the notes to the financial statements. Where necessary, we refer to the relevant information in the risk report and information on the respective items.
The disclosures in the risk report largely adopt a purely economic view. The report provides a detailed account of the organisation of risk management and Munich Re’s risk strategy, briefly outlines the main risks we are exposed to, and describes in detail the economic risk capital calculated by means of our internal risk model and available financial resources. The report also contains information on specific risk complexes.
In accordance with the requirements of IFRS 4, the quantitative effects of a change in the assumptions underlying the measurement of insurance contracts and/or in the market environment are covered by information about economic risk capital stated in the risk report.
Significant risks from life and health insurance business comprise underwriting risks, market risks and liquidity risks. These risks are described in detail in the risk report.
If provisions are covered by deposits retained on assumed reinsurance, the interest is directly secured by an inflow of investment income generally guaranteed by the cedants. Consequently, for provisions for which at least the discount rate is guaranteed by the cedants, there is no interest-rate risk. For all deposits retained (previous year: €6,135m), cedants provide an interest-rate guarantee.
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 long-term health primary insurance, a discount rate is also used for calculating the provision for future policy benefits. However, this rate can generally be altered by way of premium adjustment. For shortterm business, there is no direct interest-rate risk.
In primary insurance, 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, discount rates of 2.0–3.5% are applied for calculating the provision for premium loadings and the provision for future premium reductions, which are both part of the provision for premium refunds and total €4,882m (4,552m). These discount rates can be altered by way of a premium adjustment.
Life Health Total €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year
Expected future technical cash flow (gross)1 €m 31.12.2015 Prev. year Up to one year –3,879 –3,441 Over one year and up to five years –10,762 –12,505 Over five years and up to ten years –15,154 –17,913 Over ten years and up to 20 years –36,237 –41,192 Over 20 years –94,543 –101,918
Premium risk The degree of exposure to premium risks differs according to class of business and also between primary insurance and reinsurance. The following table shows the loss ratios and combined ratios of past years. On the basis of these ratios, 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 marketprice level for the covers granted.
In the pricing of risks assumed in the accident, fire and marine lines of business, and also in sections of engineering reinsurance and in primary insurance, there is a high degree of sensitivity regarding the underlying assumptions about natural catastrophes. The following table therefore shows the combined ratios for property-casualty reinsurance including and excluding natural catastrophe losses.
Major losses, by which we mean individual losses exceeding €10m, are of particular relevance for the volatility of property-casualty business in reinsurance. The analysis below shows that the volatility of the individual years in this loss category is mainly attributable to the respective intensity of natural catastrophe losses, whilst the other accumulation risks exhibit a distinctly less volatile pattern.
Further information on risks from large and accumulation losses can be found in the section on business performance, and in the risk report.
Thereof losses from natural catastrophes –149 –537 –764 –1,284 –4,538 Thereof other accumulation losses –897 –625 –925 –515 –510
Interest-rate risks Economically, however, an interest-rate risk derives 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 interestrate risk affects only those parts of the technical provisions that are discounted and for which an inflow of investment income from deposits retained is not secured from cedants in at least the same amount. We use the following interest rates for discounting the technical provisions: The major part of the discounted provisions in reinsurance is for US workers’ compensation business, for which the discount rates are governed by supervisory law and are determined prospectively per accident year. The discounting of the provisions in primary insurance is also largely governed by supervisory law.
Provisions for asbestos and environmental claims 31.12.2015 Prev. year €m1 Gross Net Gross Net
Reinsurance Primary insurance Total €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year
Munich Re Group Annual Report 2015 40 Market risks from financing instruments – Sensitivity analysis
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 increased in the year under review. This is due especially to the good development of the stock markets in the year under review. A change in the stock market by 10% has an impact of 9.8% (8.8%) on the market value of investments sensitive to share prices. The relative change in market value is in fluenced in particular by additional and restructured derivative hedging. This contributes to the impact shown on the consolidated income statement at the reporting date. Furthermore, an increase in investments, for which only a decrease in market value is recognised in the income statement, contributes to the impact shown on equity and on the consolidated income statement at the reporting date.
Change in share prices 31.12.2015 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
Information on the remuneration of Board members and transactions with these persons can be found in the remuneration report, starting on page 49 and under (46) Remuneration report. Transactions between Munich Reinsurance Company 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 and joint ventures.
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: 44 Long-Term Incentive Plan
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 €3.0m (5.8m) 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 2015, this resulted in expenses of €3.0m (1.1m). The weighted average share price for the stock appreciation rights exercised in 2015 was €172.43 for plan year 2008, €185.89 for plan year 2009, and €191.72 for plan year 2010. The intrinsic value of the exercisable stock appreciation rights amounted to €3.0m at the balance sheet date.
Number of rights on 31 Dec. 2015 0 0 671 Exercisable at year-end 0 0 671
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 appre ciation 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 Reinsurance Company or if the latter’s group of shareholders changes significantly due to a merger or comparable transaction or intended business combination (“change of control”), all plan participants from Munich Re 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.
In the financial year 2015, expenses of €22.0m (7.9m) were recognised for the MidTerm Incentive Plan. The provision at the reporting date amounted to €49.2m (58.9m).
Payments to retired members of the Board of Management or their surviving dependants totalled €8.6m (7.2m).
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 (1.4m). There were no significant notifiable transactions between Board members and Munich Re.
Fair value 2015 for one right 0.00 € 415.19 € 434.49 € 454.45 € Number of rights (for 100% achievement of objectives) on 1 January 2012 78,568 0 0 0 Number of rights (for 100% achievement of objectives) on 31 December 2012 78,568 0 0 0 Number of rights (for 100% achievement of objectives) on 1 January 2013 78,568 51,168 0 0
Number of rights (for 100% achievement of objectives) on 31 December 2013 76,654 51,168 0 0 Number of rights (for 100% achievement of objectives) on 1 January 2014 76,654 51,168 42,233 0
Number of rights (for 100% achievement of objectives) on 31 December 2014 76,095 51,212 42,233 0 Number of rights (for 100% achievement of objectives) on 1 January 2015 76,095 51,212 42,233 38,217
Breakdown of auditor’s fees €k 2015 Audits of financial statements1 –6,686 Other assurance and appraisal services –3,185 Tax consultancy services –1,359 Other services –1,838 Total –13,069
Besides this, Munich Re has entered into various other financial obligations amounting to €348m (303m) for work and service contracts and €1,439m (1,075m) for investment obligations. At the reporting date, there were loan commitments amounting to €580m (610m). These figures represent undiscounted nominal amounts. There are other financial commitments amounting to €7m (7m).
There are no significant restrictions on Munich Re’s ability to settle the liabilities of the Group.
The contracts mainly concern offices and business premises of the Group, IT infra- structure, and land that we use in connection with our infrastructure investment programme (including renewable energies and new technologies). They partly include extension options as well as restrictions regarding the agreement of subleases. In the period under review, minimum lease payments of €108m (108m) and contingent lease payments of €9m (9m) were recognised as an expense. The total of future minimum sublease payments expected to be received under non-cancellable subleases was €1m (15m) at the reporting date.
Under the share buy-back programme decided on by Munich Reinsurance Company’s Board of Management in March 2015, we repurchased a further 1.0 million Munich Re shares with a volume of €169m from the balance sheet date to the end of February 2016.
On 12 January 2016, via its subsidiary RENT-Investment GmbH, Munich, Munich Re acquired 100% of the voting shares in the wind park company Eolus Vindpark Tio AB, Hässleholm, Sweden, from Eolus Vindpark Nio AB, Hässleholm, Sweden. Eolus Vindpark Tio AB was renamed Wind Farms Västra Götaland AB immediately after the acquisition, and owns wind power plants with an installed capacity of 12 megawatts.
ERGO Versicherungsgruppe AG acquired an additional 22.9% of the shares in HDFC ERGO General Insurance Company (HDFC ERGO), thus increasing its shareholding in the company to 48.7%. The purchase price amounts to €155m. The carrying amount of the shareholding will probably be increased in the first half of 2016.
Due dates €m 31.12.2015 Prev. year Not later than one year 205 182 Later than one year and not later than five years 514 433 Later than five years 415 230
The retrospective adjustment of the previous year’s figures did not result in a change to the earnings per share in the previous year (see Recognition and measurement – Changes in accounting policies and other adjustments). The number of outstanding shares decreased by 5,732,416 (8,906,893) over the course of the financial year 2015, essentially owing to the share buy-back programme.
Earnings per share 2015 Prev. year Consolidated result attributable to Munich Reinsurance Company equity holders €m 3,107 3,152 Weighted average number of outstanding shares 165,893,895 172,170,439 Earnings per share € 18.73 18.31
Consolidated subsidiaries 13th & F associates Limited Partnership, Washington D.C.9 98.0000 40, Rue Courcelles SAS, Paris 100.0000 Adelfa Servicios a Instalaciones Fotovoltaicas S.L., Santa Cruz de Tenerife 100.0000 AEVG 2004 GmbH, Frankfurt4 0.0000 ALICE GmbH, Düsseldorf 100.0000 ALLYSCA Assistance GmbH, Munich 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 Property & Casualty Insurance Company, Cincinnati, Ohio 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 ATU Landbau GmbH, Heiligengrabe 94.9000 avanturo GmbH, Düsseldorf 100.0000 Bagmoor Holdings Limited, London 100.0000 Bagmoor Wind Limited, London 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 Calibre Commercial Insurance Pty Ltd, Sydney 90.0000 Calliden Insurance Pty Limited, Sydney 100.0000
Cannock Chase B.V., Leidschendam 100.0000 Cannock Chase Holding B.V., Amsterdam 85.0000 Cannock Chase Purchase B.V.,The Hague 100.0000 Cannock Connect Center B.V., Brouwershaven 100.0000 CAPITAL PLAZA Holding GmbH & Co. Singapur KG, Düsseldorf 100.0000 Ceres Demetra GmbH, Munich 100.0000 Comino Beteiligungen GmbH, Grünwald 100.0000 Compagnie Européenne d’Assurances, Paris 100.0000 Corion Pty Limited, Sydney 100.0000 Cornwall Power (Polmaugan) Limited, London 100.0000 Countryside Renewables (Forest Heath) Limited, London 100.0000 D.A.S. Defensa del Automovilista y de Siniestros – Internacional, S.A. de Seguros y Reaseguros, Barcelona 100.0000 D.A.S. HELLAS Allgemeine RechtsschutzVersicherungs -AG, Athens 100.0000 D.A.S. Jogvédelmi Biztosíto Részvénytársaság, Budapest 100.0000 D.A.S. Luxemburg Allgemeine RechtsschutzVersicherung S.A., Strassen 100.0000 D.A.S. Oigusabikulude Kindlustuse AS, Tallinn 100.0000 D.A.S. Rechtsschutz Aktiengesellschaft, Vienna 100.0000 D.A.S. Société anonyme belge d‘assurances de Protection Juridique, Brussels 100.0000 D.A.S. Towarzystwo Ubezpieczen Ochrony Prawnej S.A., Warsaw 99.9524 Daman Health Insurance – Qatar LLC, Doha, Qatar 100.0000 DAS Assistance Limited, Bristol 100.0000 DAS Holding N.V., Amsterdam 51.0000 DAS Law Limited, Bristol 100.0000 DAS Legal Expenses Insurance Co., Ltd., Seoul 100.0000 DAS Legal Expenses Insurance Company Limited, Bristol 100.0000 DAS Legal Finance B.V., Amsterdam 100.0000 DAS Legal Protection Insurance Company Ltd., Toronto 100.0000 DAS MEDICAL ASSIST LIMITED, Bristol 100.0000 DAS Nederlandse Rechtsbijstand Verzekeringmaatschappij N.V., Amsterdam 100.0000 DAS Rechtsschutz-Versicherungs-AG, Lucerne 100.0000 DAS Services Limited, Bristol 100.0000 DAS UK Holdings Limited, Bristol 100.0000 DB Platinum IV SICAV (Subfonds Institutional Fixed Income, Inhaber-Anteile I2D), Luxembourg4 100.0000 DB Platinum IV SICAV (Subfonds Institutional Fixed Income, Inhaber-Anteile I4D), Luxembourg4 100.0000 DB Platinum IV SICAV (Subfonds Institutional Fixed Income, Inhaber-Anteile I5D), Luxembourg4 100.0000 DB Platinum IV SICAV (Subfonds Institutional Fixed Income, Inhaber-Anteile I6D o.N.), Luxembourg4 100.0000 DKV BELGIUM S.A., Brussels 100.0000
DKV Deutsche Krankenversicherung Aktiengesellschaft, Cologne 100.0000 DKV Pflegedienste & Residenzen GmbH, Cologne 100.0000 DKV Seguros y Reaseguros, Sociedad Anónima Española, Saragossa 100.0000 EIG, Co., Wilmington, Delaware 100.0000 ERGO ASIGURARI DE VIATA SA, Bucharest 100.0000 ERGO Assicurazioni S.p.A., Milan 100.0000 ERGO Austria International AG, Vienna 100.0000 ERGO Beratung und Vertrieb AG, Düsseldorf 100.0000 ERGO DIREKT Krankenversicherung AG, Fürth 100.0000 ERGO DIREKT Lebensversicherung AG, Fürth 100.0000 ERGO DIREKT Versicherung AG, Fürth 100.0000 ERGO Életbiztosító Zrt., Budapest 100.0000 ERGO Elfte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 ERGO Emeklilik ve Hayat A.S., Istanbul 100.0000 ERGO General Insurance Company S.A., Athens 100.0000 ERGO Generales Seguros y Reaseguros, S.A., Madrid 100.0000 ERGO Grubu Holding A.Ş., Istanbul 100.0000 ERGO Grundstücksverwaltung GbR, Düsseldorf 100.0000 ERGO Immobilien-GmbH 14. Victoria & Co. KG, Kreien2 100.0000 ERGO Immobilien-GmbH 5. Hamburg-Mannheimer & Co. KG, Kreien2 100.0000 ERGO Insurance Company, St. Petersburg 100.0000 ERGO Insurance N.V., Brussels 99.9999 ERGO Insurance Pte. Ltd., Singapore 100.0000 ERGO Insurance SE, Tallinn 100.0000 ERGO International Aktiengesellschaft, Düsseldorf 100.0000 ERGO International Services GmbH, Düsseldorf 100.0000 ERGO Invest SIA, Riga 100.0000 ERGO Italia Business Solutions S.c.r.l., Milan 100.0000 ERGO Italia Direct Network s.r.l., Milan 100.0000 ERGO Italia S.p.A., Milan 100.0000 ERGO Lebensversicherung Aktiengesellschaft, Hamburg 100.0000 ERGO Life Insurance Company S.A., Thessaloniki 100.0000 ERGO Life Insurance SE, Vilnius 100.0000 ERGO Neunte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 ERGO osiguranje d.d., Zagreb 100.0000 ERGO Partners N.V., Brussels 100.0000 ERGO Pensionsfonds Aktiengesellschaft, Düsseldorf 100.0000 ERGO Pensionskasse AG, Düsseldorf 100.0000 ERGO Poist´ovna, a. s., Bratislava 100.0000 ERGO pojist´ovna, a.s., Prague 100.0000 ERGO Previdenza S.p.A., Milan 100.0000 ERGO Private Capital Dritte GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Capital Gesundheit GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Capital Komposit GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Capital Leben GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Capital Vierte GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Capital Zweite GmbH & Co. KG, Düsseldorf 100.0000 ERGO SIGORTA A.S., Istanbul 100.0000 ERGO Versicherung Aktiengesellschaft, Düsseldorf 100.0000 ERGO Versicherung Aktiengesellschaft, Vienna 93.4536 ERGO Versicherungsgruppe AG, Düsseldorf 100.0000 ERGO Vida Seguros y Reaseguros, Sociedad Anónima, Saragossa 100.0000 ERGO Zivljenjska zavarovalnica d.d., Ljubljana 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 MEGA 4 Service 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 Janus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 Jogszerviz Kft., Budapest 100.0000 K & P Objekt Hamburg Hamburger Straße GmbH, Düsseldorf 100.0000 K & P Objekt Hamburg Hamburger Straße Immobilienfonds GmbH & Co.KG, Düsseldorf4 36.6889 K & P Objekt München Hufelandstraße GmbH, Düsseldorf 100.0000 KQV Solarpark Franken 1 GmbH & Co. KG, Düsseldorf 100.0000 Kuik & Partners Credit Management BVBA, Brussels 98.9000 Larus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 Law On The Web Limited, Bristol 100.0000 LawAssist Limited, Bristol 100.0000 Legal Net GmbH, Munich 100.0000 Leggle B.V., Amsterdam 100.0000 m:editerran POWER FRANCE GmbH, Düsseldorf 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 EmergingMarkets Rent A-Anteile, Munich4 100.0000 MEAG EmergingMarkets Rent I-Anteile4 100.0000 MEAG GlobalRent A, Munich4 99.7294 MEAG GlobalRent I, Munich4 100.0000 MEAG Hong Kong Limited, Hong Kong 100.0000 MEAG Luxembourg S.à r.l., Luxembourg 100.0000 MEAG Osteuropa A, Munich4 42.3526 MEAG Pension Rent, Munich4 29.8958 MEAG Pension Safe, Munich4 68.9365 MEAG Property Fund II, Munich4 100.0000 MEAG Real Estate Erste Beteiligungsgesellschaft, Munich 100.0000 MEAG RealReturn Inhaber-Anteile A, Munich4 49.5073 MEAG Vermögensanlage Komfort, Munich4 67.4875 MEAG Vermögensanlage Return A, Munich4 100.0000 MEAG Vermögensanlage Return I, Munich4 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 i. L., Grünwald 100.0000 Mediastream Zweite Film GmbH, Grünwald 100.0000
Euro-Center China (HK) Co., Ltd., Beijing 100.0000 Euro-Center Holding North Asia (HK) Pte. Ltd., Hong Kong 100.0000 Euro-Center Holding SE, Prague 83.3331 Euro-Center Ltda., São Paulo 100.0000 Euro-Center North Asia Consulting Services (Beijing) Co., Ltd., Beijing 100.0000 Euro-Center Prague, s.r.o., Prague 100.0000 Euro-Center USA, Inc., New York City, New York 100.0000 Euro-Center Yerel Yardim, Istanbul 100.0000 Euro-Center, S.A. (Spain), Palma de Mallorca 100.0000 Europäische (UK) Ltd., London 100.0000 European Assistance Holding GmbH, Munich 100.0000 Evaluación Médica TUW, S.L., Barcelona 100.0000 Exolvo GmbH, Hamburg 100.0000 First Legal Protection Limited, Bristol 100.0000 First Marine Financial Services, Amelia, Ohio 100.0000 Flexkonzept – Basis, Luxembourg4 100.0000 Flexkonzept – Wachstum, Luxembourg4 100.0000 Flexkonzept EuroBase, Luxembourg4 100.0000 FlexKonzept EuroGrowth, Luxembourg4 100.0000 Gamaponti 140014 S.L., Valencia 100.0000 GBG Vogelsanger Straße GmbH, Cologne 94.7826 Gebäude Service Gesellschaft Überseering 35 mbH, Hamburg 100.0000 GEMEDA Gesellschaft für medizinische Datenerfassung und Auswertung sowie Serviceleistungen für freie Berufe mbH, Cologne 100.0000 goDentis – Gesellschaft für Innovation in der Zahnheilkunde mbH, Cologne 100.0000 goMedus Gesellschaft für Qualität in der Medizin mbH, Cologne 100.0000 goMedus GmbH & Co. KG, Cologne 100.0000 GRANCAN Sun-Line S.L., Valencia 100.0000 Great Lakes Re Management Company (Belgium) S.A., Brussels 100.0000 Guanzu 2002 S.L., Valencia 100.0000 Hamburger Hof Management GmbH, Hamburg 100.0000 Hamburg-Mannheimer ForsikringService A/S, Copenhagen 100.0000 Hartford Steam Boiler Colombia Ltda, Bogotá 100.0000 Hartford Steam Boiler UK Limited, Chelmsford 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 Ventures, Inc., Dover, Delaware 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
Welivit Solar Italia s.r.l., Bolzano 100.0000 Windpark Langengrassau Infrastruktur GbR, Bremen 83.3300 WNE Solarfonds Süddeutschland 2 GmbH & Co. KG, Düsseldorf 100.0000 Wohnungsgesellschaft Brela mbH, Hamburg 100.0000 WP Kladrum/Dargelütz GbR, Bremen 64.7000 Zacobu 110011 S.L., Valencia 100.0000 Zacuba 6006 S.L., Valencia 100.0000 Zacubacon 150015 S.L., Valencia 100.0000 Zafacesbe 120012 S.L., Valencia 100.0000 Zapacubi 8008 S.L., Valencia 100.0000 Zarzucolumbu 100010 S.L., Valencia 100.0000 Zetaza 4004 S.L., Valencia 100.0000 Zicobucar 140014 S.L., Valencia 100.0000 Zucaelo 130013 S.L., Valencia 100.0000 Zucampobi 3003 S.L., Valencia 100.0000 Zucarrobiso 2002 S.L., Valencia 100.0000 Zucobaco 7007 S.L., Valencia 100.0000 Zulazor 3003 S.L., Valencia 100.0000 Zumbicobi 5005 S.L., Valencia 100.0000 Zumcasba 1001 S.L., Valencia 100.0000 Zuncabu 4004 S.L., Valencia 100.0000 Zuncolubo 9009 S.L., Valencia 100.0000
Associates and joint ventures accounted for using the equity method Apollo Munich Health Insurance Co. Ltd. , Hyderabad 25.4800 Avantha ERGO Life Insurance Company, Mumbai 25.9998 BHS tabletop AG, Selb1 (MC €41.6m) 28.9134 Consorcio Internacional de Aseguradores de Crédito, S.A., Madrid5 15.0353 Consortia Versicherungs-Beteiligungsgesellschaft mbH, Nuremberg 33.7027 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, Shandong Province 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 25.8370 HighTech Beteiligungen GmbH und Co. KG i. L., Düsseldorf 23.1000 Invesco MEAG US Immobilien Fonds IV B4 37.1375 KarstadtQuelle Finanz Service GmbH i. L., Düsseldorf 50.0000 Marchwood Power Limited, Marchwood 50.0000 MAYFAIR Holding GmbH & Co. Singapur KG, Düsseldorf9 71.4285 MCAF Verwaltungs-GmbH & Co.KG, Düsseldorf 50.0000 MEAG Pacific Star Holdings Ltd., Hong Kong 50.0000 MEDICLIN Aktiengesellschaft, Offenburg1 (MC €194.7m) 35.0042 MEGA 4 GbR, Berlin 34.2569 Rendite Partner Gesellschaft für Vermögensverwaltung mbH i. L., Frankfurt/Main 33.3333 RP Vilbeler Fondsgesellschaft mbH i. L., Frankfurt/Main 40.0000 Sana Kliniken AG, Munich 22.3217 SAS Le Point du Jour, Paris 50.0000
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 pursuant to Section 264b of the Commercial Code and, in the 2015 financial year, to avail itself of the relevant provision exempting it from preparing annual financial statements.
3 This fully consolidated German subsidiary intends to fulfil the conditions required in Section 264 (3) of the German Commercial Code (HGB) and, in the 2015 financial year, to avail itself of the relevant provision exempting it from preparing annual financial statements.
7 Not currently utilised. 8 No significant influence, as this is a purely financial investment managed by an external asset manager.
Verwaltungsgesellschaft “PORT MOODY” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT MORESBY” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT MOUTON” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT NELSON” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT RUSSEL” GmbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT SAID” GmbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT STANLEY” GmbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT STEWART” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT UNION” mbH, Bramstedt 50.0000 VisEq GmbH, Grünwald 34.0000 Volksbanken-Versicherungsdienst GmbH, Vienna 25.2319 VV Immobilien Verwaltungs GmbH, Munich 30.0000 VV Immobilien Verwaltungs und Beteiligungs GmbH, Munich 30.0000 Windpark Osterhausen-Mittelhausen Infrastruktur GbR, Bremen 58.9400 WISMA ATRIA Holding GmbH, Düsseldorf 50.0000
Other shareholdings of 20% or more Capital Dynamics Champion Ventures VI, L.P., Woodside, California11
(equity: €83,387k; result for year: €5,674k) 44.6509 Infra IV-D Investments, S.C.A., Luxembourg8
(equity: € ---k; result for year: €---k) 99.9999 Invenergy Miami Wind I Holdings #2 LLC, Wilmington11
(equity: €92.815k; result for year: €1,104k) 49.0000 ORM Timber Fund III (Foreign) LLC, Wilmington, Delaware8
(equity: € ---k; result for year: €---k) 37.4257 RMS Forest Growth International, L.P., Grand Cayman, Cayman Islands8
Other shareholdings exceeding 5% of the voting rights in large companies as defined in the German Comercial Code (HGB) Admiral Group plc, Cardiff 10.1565 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 299Consolidated financial statements Notes
Dr. Ellenbürger Hansen Wirtschaftsprüfer Wirtschaftsprüfer (Certified Public Accountant) (Certified Public Accountant)
Catastrophe bond Capital market instrument for transferring (natural) catastrophe risks to the capital markets. The buyers of such bonds profit from a comparatively high coupon rate, but assume the (re)insurer’s risk if the (natural) catastrophe occurs. If a predefined parametric trigger is activated by the catastrophe, the buyers’ capital is only partially repaid or not repaid at all, and the interest payments to the buyers are reduced or stopped. The capital made available serves to compensate the financial loss incurred by the (re)insurer as a result of the (natural) catastrophe.
Corporate citizenship A company’s social involvement, i.e. its active involvement as a “good citizen” in local civil society, and in ecological or cultural issues, above and beyond the defines of its business activities.
Corporate responsibility Concept whereby organisations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations.
Gross/net In insurance terminology, designation for before/after deduction of the portion attributable to business ceded in reinsurance.
Income from technical interest Amount earned by assumed insurance business from the mainly risk-free investment of assets covering the technical provisions. The deposits retained on ceded business are also taken into account. Thus the portion of investment income that corresponds to the deposit interest expense is included in the calculation of the technical interest.
Liability adequacy test Regular check of the technical provisions, including the related deferred acquisition costs, on the basis of the current estimates for future cash flows. The test provides an assessment of whether the technical reserves or deferred acquisition costs need to be increased or reduced.
Morbidity Probability that an individual in a given group will develop a certain disease or disorder.
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 longer periods (see facultative reinsurance).
Premium Amount that has to be paid for insurance cover. It may be paid as a regular or single premium. Premiums written means all premium income that has become payable in the financial year. The portion of this premium income that constitutes payment for insurance cover in the financial year is referred to as earned premiums. In the case of products that are largely of an investment nature (e.g. capitalisation products and unit-linked life insurance), it only includes – under IFRSs – the amount serving to cover the risk and costs. However, under statutory accounting rules in the insurance company’s home country, premium income may also include the policy- holders’ savings premiums from unit-linked life insurance and capitalisation products.
Provision for premium refund 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 IFRSs and German GAAP accounting (provision for deferred premium refunds).
Run-off triangle Also known as loss triangle. A tabular representation of claims- related parameters (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.
Structured entities Entities that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights related to administrative tasks only and the relevant business activities are directed by means of contractual arrangements.
USA Munich Reinsurance America, Inc. 555 College Road East P.O. Box 5241 Princeton, NJ 08543 www.munichreamerica.com
Middle East and Africa Munich Health Middle East and Africa Munich Re Underwriting Agents (DIFC) Ltd. Level 4, Unit 4, Currency House (Al Fatan) Dubai International Financial Center P.O. Box 506512 United Arab Emirates
Asia Pacific Munich Health Asia Pacific Munich Reinsurance Singapore Branch 20 Collyer Quay #13-01 Tung Centre Singapore 049319 Republic of Singapore
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. The Group operates in all lines of insurance, with over 43,000 employees throughout the world. In reinsurance, Munich Re is one of the world’s leading risk carriers, especially when clients require solutions for complex risks. Its primary insurance operations are concentrated mainly in the ERGO Insurance Group, one of the leading insurance groups in Germany and Europe. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re’s global investments are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.
Net –38,731 –9,156 –9,678 –9,701 –10,196 4. Operating expenses Gross –12,846 –3,702 –2,970 –3,114 –3,060
Important dates 2017 15 March 2017 Balance sheet press conference for 2016 financial statements 26 April 2017 Annual General Meeting 9 May 2017 Quarterly statement as at 31 March 2017 9 August 2017 Half-year financial report as at 30 June 2017 9 August 2017 Half-year press conference 9 November 2017 Quarterly statement as at 30 September 2017