current tax liabilities comprise current taxes on income of the individual companies, based on their respective national taxation. other tax liabilities are shown under “other liabilities“.
deferred tax obligations are shown under equity and liabilities item g.
g // deferred tax liabilities under ias 12, deferred tax liabilities must be recognised if asset items have to be val­ ued higher, or liabilities items lower, in the consolidated balance sheet than in the tax accounts of the reporting company and these differences will be eliminated at a later date with a corresponding impact on taxable income (temporary differences); cf. notes on assets item h.
the object of our asset­liability management, on which we report on page 61, is to eco­ nomically minimise excess or insufficient cover in foreign currencies within the group. insofar as this is done across group companies with different functional currencies, it produces economically non­existent fluctuations in the consolidated result. Where exchange gains or losses occur in the translation of foreign­currency transactions into the national currencies of the consolidated companies, they are accounted for under “other non­operating income” and “other non­operating expenses” respectively.
We have consequently identified seven segments to be reported: // life reinsurance (global life reinsurance business) // property-casualty reinsurance (global property-casualty reinsurance business) // life primary insurance (global life primary insurance business) // health primary insurance (german health primary insurance business and global travel insurance business) // property-casualty primary insurance (global property-casualty primary insurance business) // munich health (global health reinsurance business and health primary insurance business outside germany) // asset management (management of assets for the group and for external investors)
up to the third quarter of 2011, munich Re’s primary insurance segments comprised all the activities of the eRgo insurance group with the exception of the international health primary insurance business handled by munich health. following the legal transfer of the international dKV companies to munich health in the fourth quarter of 2011, health primary insurance business outside germany is no longer an activity of the eRgo insurance group. as a consequence, with effect from that quarter, all of the eRgo group’s activities are recognised in the primary insurance segments. moreover, certain primary insurers whose business requires special solution-finding competence are coupled to reinsurance as the risk carrier. We therefore transact their business from within reinsurance and consequently allocate them to the reinsurance segments.
munich Re uses different performance indicators and measures, depending on the type and duration of the business. Besides this, ifRs result contributions are a central feature of planning and strategy in all segments. therefore, the uniform assessment basis used for the measure of segment result is the operating result adjusted to eliminate non-operating components (e.g. foreign currency gains and losses, income and expenses from the sale of intangible assets). in line with our internal management approach, the operating result is split into a technical result and a non-technical result, with an interest component allocated to the underwriting business in the form of income from technical interest; cf. (30) income from technical interest.
transactions between reported segments are measured on the basis of market prices, like transactions with third parties, and eliminated in the consolidation.
Primary insurance Munich Health Asset management Consolidation Total 2011 Prev. year 2011 Prev. year 2011 Prev. year 2011 Prev. year 2011 Prev. year 2011 Prev. year
– – – – – – – – – – 24 –
Reinsurance Life Property-casualty Life €m 2011 Prev. year 2011 Prev. year 2011 Prev. year Gross premiums written 9,602 7,901 16,903 15,701 6,263 6,484 thereof: from insurance transactions with other segments 121 135 346 324 1 – from insurance transactions with external third parties 9,481 7,766 16,557 15,377 6,262 6,484 1. earned premiums gross 9,610 7,975 16,628 15,286 6,261 6,484 ceded 427 416 859 1,093 269 282 net 9,183 7,559 15,769 14,193 5,992 6,202 2. income from technical interest 682 556 1,385 1,371 2,195 3,052 3. expenses for claims and benefits gross 7,277 5,977 14,002 10,669 7,243 8,333 ceded share 222 174 786 765 147 163 net 7,055 5,803 13,216 9,904 7,096 8,170 4. operating expenses gross 2,576 2,391 4,896 4,652 1,300 1,148 ceded share 133 158 117 215 78 58 net 2,443 2,233 4,779 4,437 1,222 1,090 thereof: amortisation and impairment losses of acquired insurance portfolios 6 13 – – 45 28 5. Technical result (1– 4) 367 79 –841 1,223 –131 –6 6. investment result investment income 2,626 1,799 6,746 4,696 4,817 4,712 investment expenses 1,646 926 4,589 2,133 2,241 1,227 total 980 873 2,157 2,563 2,576 3,485 thereof: interest and similar income 798 727 1,671 1,724 3,030 3,019 interest charges and similar expenses 25 41 104 69 29 26 Write-downs of investments 892 539 1,684 755 1,375 658 Write-ups of investments 711 470 1,298 558 725 660 income from associates accounted for using the equity method 13 7 62 35 – 7 7. other operating income 119 84 302 321 486 462 thereof: interest and similar income 31 27 36 66 35 7 Write-ups of other operating assets 23 1 53 3 2 1 8. other operating expenses 72 46 231 227 530 534 thereof: interest charges and similar expenses 16 6 26 9 21 19 Write-downs of other operating assets 5 3 11 28 18 30 9. deduction of income from technical interest –682 –556 –1,385 –1,371 –2,195 –3,052 10. Non-technical result (6– 9) 345 355 843 1,286 337 361 11. Operating result 712 434 2 2,509 206 355 12. other non-operating result, finance costs and impairment losses of goodwill –160 –86 –428 –269 –89 –102 13. taxes on income 149 55 –797 434 4 81 14. Consolidated result 403 293 371 1,806 113 172 thereof: attributable to munich Reinsurance company equity holders 404 294 375 1,809 115 172 attributable to non-controlling interests –1 –1 –4 –3 –2 –
Non-current assets by country1 €m 31.12.2011 Prev. year 1 the non-current assets mainly comprise intangible assets (especially goodwill) and our owner-occupied and investment property, as well as investments in renewable energy (Rent).
Notes to the consolidated balance sheet – Assets the additions are largely due to the acquisition of Windsor. We describe this acquisition and others in detail in our notes on business combinations in the financial year.
Allocation of goodwill to cash-generating units for impairment testing, the goodwill is allocated to the cash-generating units or groups of cash-generating units that derive benefit from the synergies of the business combination. at the same time, the unit or group of units to which the goodwill is allocated represents the lowest level at which goodwill is monitored for internal management purposes. in reinsurance, we have allocated the goodwill to divisions or groups of divisions, while in primary insurance it has been allocated to legal entities or groups of legal entities. in the case of munich health, goodwill is allocated to the segment bearing that name. details of our divisions are provided on page 53 in the management report.
our goodwill was fully allocated to the following cash-generating units or groups of cash-generating units: Development of goodwill
Munich Total Total €m Reinsurance Primary insurance Health 2011 Prev. year eRgo munich Re insurance goodwill from the acquisition of america other group other other gross carrying amount at 31.12. previous year 1,028 427 1,754 554 113 3,876 3,791 accumulated impairment losses at 31.12. previous year – 22 – 361 40 423 314 carrying amount at 31.12. previous year 1,028 405 1,754 193 73 3,453 3,477
Reclassifications – –8 – – – –8 –16 carrying amount at 31.12. financial year 1,062 408 1,754 173 114 3,511 3,453 accumulated impairment losses at 31.12. financial year – 27 – 381 40 448 423 gross carrying amount at 31.12. financial year 1,062 435 1,754 554 154 3,959 3,876
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the goodwill from the acquisition of munich Re america has been allocated to the cash-generating unit “reinsurance property-casualty segment.” the carrying amount shown includes other goodwill that is impairment-tested on the basis of cash-generating units at the level of divisions or groups of divisions within the segment, with the goodwill allocated to each unit not being significant in comparison with the total carrying amount of goodwill. as a rule, the recoverable amounts of these cash-generating units are based on the same key assumptions as those given for the reinsurance property -casualty segment in the following table. the goodwill from the acquisition of shares in the eRgo insurance group has been allocated to the cash generating unit “eRgo”.
Reinsurance Cash-generating unit or group of property-casualty cash-generating units segment ERGO method for calculating the Value in use Value in use recoverable amount Key assumptions regarding in the detailed planning phase (three years), we for the detailed planning (four years), cash flow planning (at the time of expect a more or less stable premium income growth in results is expected on average. the planning) with an improvement in the loss ratios. our general assumption was that there will our general assumption was that there will be moderate upward movement on the be moderate upward movement on the equity equity markets and a stable interest-rate markets and a stable interest-rate level. level. growth rates used for extrapolating 0.5% 0.5% beyond the cash flow planning based on financial plans/forecasts discount rates 9.3% 9.5%
Acquired distribution Acquired Acquired networks/ insurance brand client portfolios Software names bases Self- €m developed Other gross carrying amount at 31 dec. previous year 1,378 329 774 272 997 accumulated depreciation and accumulated impairment losses at 31 dec. previous year 774 152 567 185 524 carrying amount at 31 dec. previous year 604 177 207 87 473 currency translation differences –1 – –2 2 7 additions disposals loss of control 3 1 2 – –
Reclassifications – – – – 6 impairment losses reversed – – – – – depreciation and impairment losses carrying amount at 31 dec. financial year 533 158 209 85 433 accumulated amortisation and accumulated impairment losses at 31 dec. financial year 826 184 605 201 311 gross carrying amount at 31 dec. financial year 1,359 342 814 286 744
3 // land and buildings, including buildings on third-party land the impairment losses are distributed between the different group segments as follows: in reinsurance, €2m (2m) is apportionable to life and €5m (4m) to property- casualty; in primary insurance, €46m (23m) is apportionable to life, €3m (8m) to health and €1m (–) to property-casualty.
property pledged as security and other restrictions on title amount to €742m (996m). expenditures recognised in the carrying amount for assets in the course of construction total €37m (113m) at the balance sheet date, and contractual commitments to acquire property amount to €18m (29m). the fair value of investment property at the balance sheet date amounted to €5,324m (5,672m). the valuation was performed for each directly held site at 31 december 2011, calculations being carried out mainly by valuers within the group but in individual cases by external valuers, in accordance with the rules of the german investment companies act. determining the sustainability of cash inflows and outflows, taking into account the market conditions at the respective property location, is material for the valuation. the fair value is determined individually per item by discounting the future cash flow to the valuation date. depending on the type and opportunity/risk profile of the property, discount rates of 3.25% to 5.50% are used for residential buildings, 4.00% to 8.00% for office buildings, and 4.00% to 8.25% for retail.
Business combinations 4 13 disposals loss of control 260 6 impairment losses reversed 7 19 depreciation and impairment losses impairment losses 57 37 carrying amount at 31 dec. financial year 3,889 4,247 accumulated depreciation and accumulated impairment losses at 31 dec. financial year 1,014 895 gross carrying amount at 31 dec. financial year 4,903 5,142
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 4 // investments in affiliated companies and associates the fair value of investments in associates accounted for using the equity method amounted to €1,250m (1,181m) at the balance sheet date. in the financial year, shares of losses of associates amounting to €11m (15m) were not recognised in the balance sheet. altogether, the losses not recognised in the balance sheet totalled €26m (16m).
the fair value of the loans, based on recognised valuation methods in line with the present value principle and taking observable market parameters into account, totalled €56,893m (50,488m) at the reporting date.
Carrying amounts €m 31.12.2011 Prev. year mortgage loans 4,421 4,496 loans and advance payments on insurance policies 602 612 other loans 48,237 43,827
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the rating categories are based on those of the leading international rating agencies. in deviation from the purely economic view, the carrying amount of the loans represents the maximum exposure to credit risk at the balance sheet date, in accordance with ifRs 7. Virtually no credit risk exists in respect of the mortgage loans or the loans and advance payments on insurance policies.
6 // other securities held to maturity the fair values are based on recognised valuation methods in line with the present value principle and taking observable market parameters into account.
Carrying amounts €m 31.12.2011 Prev. year up to one year 2,011 1,881 over one year and up to two years 1,361 1,536 over two years and up to three years 2,118 1,455 over three years and up to four years 3,015 2,146 over four years and up to five years 2,194 3,257 over five years and up to ten years 13,394 13,228 over ten years 29,167 25,432
Carrying amounts fair values €m 31.12.2011 Prev. year 31.12.2011 Prev. year up to one year 6 29 6 29 over one year and up to two years 3 6 3 7 over two years and up to three years 4 3 4 3 over three years and up to four years – 4 – 4 over four years and up to five years – – – – over five years and up to ten years – – – –
Rating according to carrying amounts €m 31.12.2011 Prev. year aaa – – aa – 2
Prev. year €m Level 1 Level 2 Level 3 Total other securities available for sale investments in affiliated companies measured at fair value – 9 194 203 investments in associates measured at fair value – – 18 18 other securities at fair value through profit or loss designated as at fair value through profit or loss – 242 – 242 investments for the benefit of life insurance policyholders who bear the investment risk 4,957 – – 4,957 1 including hedging derivatives.
the only investments held for trading that are allocated to level 3 are derivatives with the corresponding hierarchy-level allocation. changes during the year under review largely derive from a positive change in the market value and subsequent sale of a catastrophe bond. the transfers out of level 3 in the case of investments in affiliated companies, recognised at fair value, derive mainly from the first-time consolidation of companies, which are consequently no longer shown in the reconciliation. the following table presents the reconciliation from the beginning balances to the ending balances for investments allocated to level 3.
Other securities available for sale fixed-interest non-fixed-interest €m 31.12.2011 Prev. year 31.12.2011 Prev. year carrying amount at 31 dec. previous year 1,078 2,478 549 331 gains and losses 4 225 37 –65 gains (losses) recognised in the income statement 11 35 –6 –72 gains (losses) recognised in equity –7 190 43 7 transfer to/out of level 3 243 –2,297 –116 162 changes in the market value of derivatives – – – – Carrying amount at 31 Dec. financial year 1,202 1,078 626 549 gains (losses) recognised in the income statement that are attributable to investments shown at the end of the financial year 4 – – –57 investments in affiliated companies measured at investments in associates fair value measured at fair value €m 31.12.2011 Prev. year 31.12.2011 Prev. year carrying amount at 31 dec. previous year 194 – 18 – gains and losses –26 3 –1 –
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 8 // other securities available for sale over half the corporate debt securities are pfandbriefs or issues by development banks and comparable institutions. the remaining portfolio is composed of securities issued by companies outside the banking sector (with each individual risk making up less than 1%), bonds issued by banks and state central savings banks (with state guarantees), and asset-backed securities/mortgage-backed securities that largely have implicit state guarantees or an above-average rating.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 assets pledged as security and other restrictions on title amount to €10,142m (9,422m). some €1,419m (1,936m) of the securities shown are loaned to third parties. these secur ities are not derecognised, as the main resultant risks and rewards remain with munich Re. as at 31 december 2011, for our securities lending, we had received collateral of − (€764m) that may be sold or passed on as collateral. of the €5,585m (3,835m) in unrealised gains and losses, €3,404m (2,636m) has been recognised in equity (other reserves), after deduction of provisions for deferred premium refunds, deferred taxes, non-controlling interests and consolidation effects.
Realised gains and losses €m 2011 Prev. year gains on disposal 2,480 2,253 fixed-interest securities 1,621 1,434 non-fixed-interest securities 859 819 losses on disposal 1,182 552 fixed-interest securities 860 367 non-fixed-interest securities 322 185
derivative financial instruments are used by munich Re to hedge against interest-rate, currency, and other market risks. this is done at the group companies within the framework of individual supervisory regulations and additional internal company direct ives. the risk of default is practically non-existent in the case of products traded on the stock exchange. over-the-counter products, on the other hand, harbour a theoretical risk in the amount of the replacement costs. therefore, munich Re selects only top-quality counterparties for such transactions.
as at 31 december 2011, munich Re held collateral for derivatives in the form of securities with a minimum rating of aa that may either be sold or transferred as collateral. the fair value of this collateral amounts to €668m.
Rating of fixed-interest securities according to fair values €m 31.12.2011 Prev. year no rating 165 280
Rating of fixed-interest securities according to fair values €m 31.12.2011 Prev. year lower – 4 no rating 11 14
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the following table shows the fair values and the related notional amounts of all our open positions, broken down according to risk types. positive and negative fair values have been netted. at 31 december 2011, the open positions amounted to €689m (437m), or 0.3% (0.2%) of the balance sheet total.
Currency risks traded on the stock exchange fair values – – – – – – – – notional amounts 20 – – – – – 20 –
Equity and index risks traded on the stock exchange over-the-counter total equity and index risks
Credit risks over-the-counter fair values –2 – – –2 –95 –12 –111 –24
Weather risks over-the-counter fair values –28 – – – – – –28 –15
Other risks over-the-counter fair values – – – – – –72 –72 –7
although the derivatives used by munich Re essentially serve to hedge against risks, only an amount of €254m (197m) meets the requirements of ias 39 for hedge accounting.
ias 39 distinguishes between fair value hedges and cash flow hedges.
Cash flow hedges play a role in countering fluctuations that may be caused, for example, by variable interest payments. munich Re uses cash flow hedges chiefly to hedge against interest-rate risks, with interest-rate swaps the main instruments employed. changes in the fair value of the hedging instrument are recognised directly in equity for this purpose. only when the actual cash inflow or outflow takes place, as a result of the hedged circumstance, is the relevant equity item reversed with recognition in profit or loss.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 10 // deposits retained on assumed reinsurance deposits retained on assumed reinsurance serve directly as collateral for technical provisions covering business assumed from cedants in reinsurance. they do not trigger any cash flows and may not be used by the cedant independently. the credit risk is therefore limited. the amount of and changes in deposits retained on assumed reinsurance in the balance sheet year generally derive from the values for the changes in the related technical provisions for the reinsured business. deposits retained on assumed reinsurance business thus do not have a fixed maturity date, their release generally being dependent on the run-off of the corresponding provisions.
11 // other investments other investments comprise deposits with banks totalling €2,392m (3,153m), our tangible assets in renewable energies amounting to €260m (46m), and forestry investments of €3m (–). deposits with banks include receivables of €104m (64m) from repurchase agreements that have been booked by us as the lender to borrowers for securities lent under repurchase agreements.
as the deposits with banks mainly have a period to maturity of less than one year, the fair values largely correspond to the carrying amounts. in deviation from the purely economic view, the carrying amount of these other investments represents the maximum exposure to credit risk at the balance sheet date, in accordance with ifRs 7. assets pledged as security and other restrictions on title amount to €31m (–) for deposits with banks.
Development of tangible assets in renewable energies €m 2011 Prev. year gross carrying amount at 31 dec. previous year 55 – accumulated depreciation and accumulated impairment losses at 31 dec. previous year 9 – carrying amount at 31 dec. previous year 46 – changes due to currency translation – – additions
carrying amount at 31 dec. financial year 260 46 accumulated depreciation and accumulated impairment losses at 31 dec. financial year 22 9 gross carrying amount at 31 dec. financial year 282 55
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 12 // ceded share of technical provisions details of the ceded share of technical provisions are shown in (20) unearned premiums, (21) provisions for future policy benefits, (22) provisions for outstanding claims, (23) other technical provisions and (39) credit risks from ceded reinsurance business.
13 // other receivables €672m (632m) of the amounts receivable on primary insurance business is apportionable to receivables from insurance agents. the miscellaneous receivables contain receivables of €519m (305m) resulting from reinsurance contracts without significant risk transfer, which do not fall within the scope of ifRs 4. in deviation from the purely economic view, the carrying amount of the receivables represents the maximum exposure to credit risk at the balance sheet date, in accordance with ifRs 7.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 14 // deferred acquisition costs
Equity and liabilities c. net technical provisions 2,024 3,525 1,694 3,821
Off balance sheet loss carry-forwards and tax credits 523 – 133 –
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the column “set off against income/deconsolidation” includes changes due to losing control and to changes in exchange rates.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 16 // other assets these mainly comprise owner-occupied property totalling €2,385m (2,411m), plant and equipment of €294m (284m), advance payments on insurance amounting to €437m (467m), derivatives totalling €261m (197m) and miscellaneous deferred items of €129m (137m). €18m (20m) of the owner-occupied property and − (€1m) of the plant and equipment involve finance leases.
the impairment losses are distributed between the different group segments as follows: in reinsurance €8m (4m) is apportionable to life and €14m (7m) to property- casualty; in primary insurance, the impairment losses amount to €1m (14m) in life, €7m (2m) in health and €2m (2m) in property-casualty; munich health accounts for €4m (2m).
how the non-current assets and disposal groups held for sale are allocated between the segments is disclosed in the segment reporting.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 on 31 december 2011, a total of 1,752,462 munich Reinsurance company shares with a calculated nominal value of around €5.7m were held by group companies. this represents 1.0% of the share capital.
no shares have so far been bought back under the new authorisation to buy back shares adopted by the annual general meeting on 20 april 2011.
in 2011, no employee share programmes were set up for the employees of munich Reinsurance company or of dependent group companies or enterprises in which the company has a majority shareholding. there are no shares remaining from former employee share programmes.
one subsidiary holds 1,423,055 shares to hedge stock appreciation rights granted to the Board of management and top munich Reinsurance company executives since 1999. in 2011, no shares were acquired for hedging these programmes, but a total of 186,012 shares were sold at an average price of €121.36.
Reductions acquisition of shares for retirement (share buy-back programme) 3,037,591 11,797,271 acquisition of shares to hedge stock appreciation rights under long-term incentive plans – 34,063
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 in the year under review, a total of €1,110m was distributed to munich Reinsurance company’s equity holders for the financial year 2010 in the form of a dividend of €6.25 per dividend-bearing share.
Retained earnings contain equalisation reserves of €4,791m (5,795m). 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 31.12.2011 Prev. year non-consolidated affiliated companies and associates not accounted for using the equity method 143 161 associates accounted for using the equity method 72 68 other securities available for sale fixed-interest 4,892 2,201 non-fixed-interest 693 1,634 less provision for deferred premium refunds recognised in equity 847 598 deferred taxes recognised in equity 1,276 605 non-controlling interests 10 11 consolidation and currency translation effects 64 –
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the taxes of €600m recognised directly in equity comprise current taxes on unrealised gains of €233m on assets, with the remainder of €367m being deferred tax assets.
the non-controlling interests are mainly minority interests in individual companies of the primary insurance group. We disclose direct minority interests in special funds under “other liabilities”.
information on capital management and minimum capital requirements is provided in the sections on those items under “financial position – capital management” and “financial position – group solvency”.
Tax effects in the income and expenses recognised directly in equity 2011 Prev. year €m Before tax Tax After tax Before tax Tax After tax unrealised gains and losses on investments 1,421 671 750 112 –18 130 change resulting from valuation at equity 5 – 5 –8 – –8 change resulting from cash flow hedges 9 3 6 –5 –2 –3 actuarial gains and losses on defined benefit plans –209 –74 –135 –73 –23 –50 other changes –3 – –3 –20 – –20 Income and expense recognised directly in equity 1,613 600 1,013 651 –43 694
Non-controlling interests €m 31.12.2011 Prev. year unrealised gains and losses 10 11 consolidated result 10 9 other equity 227 225
in the case of munich Reinsurance company’s bonds, annual outflows of liquidity occur for the interest payments until the first possible call dates in 2021, 2013, 2018, and 2017; in the financial year, these amounted to €282m. thereafter, the liquidity outflows will vary, depending on the respective interest-rate level. in the case of the Bank austria creditanstalt Versicherung ag registered bonds from 2004, the annual outflow of liquidity is €2m. for its registered bonds from 2001, the annual outflow for the first ten years amounts to €1m. thereafter the payments for these bonds and the registered bonds from 1998 are, like those for the hsB group bonds, variable, depending on the respective interest-rate levels.
Munich Health Total €m1 31.12.2011 Prev. year 31.12.2011 Prev. year status at 31 dec. previous year 443 370 7,879 6,946 currency translation effects –13 23 101 363 change in consolidated group – –16 –27 –16
Primary insurance Life Health Property-casualty €m1 31.12.2011 Prev. year 31.12.2011 Prev. year 31.12.2011 Prev. year status at 31 dec. previous year 1 1 96 88 1,687 1,491 currency translation effects 6 – –6 1 –84 28 change in consolidated group – – –7 – –20 –
Status at 31 Dec. financial year 8 1 97 96 1,728 1,687 1 after elimination of intra-group transactions across segments.
Reinsurance Life Property-casualty €m1 31.12.2011 Prev. year 31.12.2011 Prev. year ceded share 645 684 – –
the change under “other” contains €368m in savings premiums for capitalisation prod ucts and €3,372m for portfolio entries and withdrawals. 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.
the case reserve reflects the amount which is expected to be needed to settle claims which are known and have already been reported at the balance sheet date. the major part of this provision is measured at face value. the iBnR reserve is calculated using actuarial methods on the basis of historical claims development data and taking into account foreseeable future trends.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 it should be borne in mind that the expected timing of payments from the provisions for outstanding claims involves considerable uncertainty.
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.
Development of the claims reserve in the property-casualty segment 2011 Prev. year Ceded Ceded €m1 Gross share Net Gross share Net status at 31 dec. previous year 41,540 2,310 39,230 39,833 2,517 37,316 change in consolidated group –53 –4 –49 – – – claims expenses for the year under review 17,931 895 17,036 14,242 782 13,460 for previous years –809 41 –850 –597 94 –691 less payments for the year under review 5,930 172 5,758 5,213 262 4,951
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the ultimate loss of an accident year comprises all payments made for that accident year up to the reporting date, plus the claims reserve at the reporting date. given complete information regarding all losses incurred up to the balance sheet date, the ultimate loss status for each accident-year period would remain the same. in practice, however, it may be assumed that the ultimate loss status (based on estimates) is exposed to fluctuations that reflect the growth in knowledge about the claims cases. changes in the consolidated group, especially new acquisitions or the composition of segments to be reported, can also have an influence on the ultimate loss status.
23 // other technical provisions of the provision for premium refunds based on national regulations, €74m (63m) is apportionable to property-casualty insurance. the provision for deferred premium refunds is established solely for life and health insurance.
the ceded share of “other technical provisions” amounts to €29m (39m), of which €1m (–) is apportionable to the ceded share of the provision for premium refunds based on national regulations.
Development of provision for premium refunds based on national regulations €m 2011 Prev. year status at 31 dec. previous year 5,213 4,880 change in consolidated group – – allocations/Withdrawals 498 333 Status at 31 Dec. financial year 5,711 5,213
24 // gross technical provisions for life insurance policies where the investment risk is borne by the policyholders these provisions are valued retrospectively. the withdrawal for underwriting risks from the premiums and provision for future policy benefits is made on the basis of prudent assumptions regarding expected mortality and morbidity. here, as with the provision for future policy benefits for non-unit-linked life insurance, we base the underlying calculation on best estimates, with appropriate provisions for adverse deviation.
Development of provision for deferred premium refunds €m 2011 Prev. year status at 31 dec. previous year 3,557 4,343 change in consolidated group –8 – change resulting from unrealised gains and losses on investments (recognised directly in equity) 258 –1,032 change resulting from other revaluations (recognised in profit or loss) –95 246 Status at 31 Dec. financial year 3,712 3,557
expenses for defined contribution plans in the year under review totalled €56m (59m).
defined benefit obligations include medical-care benefits. the present value of defined benefit obligations for these items amounted to €163m (145m) at the balance sheet date.
Breakdown of other accrued liabilities €m 31.12.2011 Prev. year provisions for post-employment benefits 1,691 1,562 other provisions 1,831 1,896
Change in the present value of obligations under defined benefit plans €m 2011 Prev. year status at 31 dec. previous year 2,952 2,618 currency translation differences 31 59 change in consolidated group –2 – current service cost 107 101 interest cost 133 131 actuarial gains/losses 210 131 paid pension benefits –103 –94 plan curtailments –3 –2 past service cost 9 5
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the reimbursement rights derive from insurance concluded to cover the benefit obligations.
Change in the plan assets for defined benefit plans €m 2011 Prev. year status at 31 dec. previous year 1,449 1,229 currency translation differences 18 43 change in consolidated group –4 – expected return 73 66 actuarial gains/losses 26 49 capital transfer to plan assets 214 85 paid pension benefits –48 –26 other –3 3 Status at 31 Dec. financial year 1,725 1,449
payments –53 –66 capital transfer to plan assets –214 –85 transfer to other receivables 13 22 actuarial gains/losses recognised in equity 196 78
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 a change in the medical cost trend rate by one percentage point would have the following effects on the present value of defined benefit obligations and pension expenses: the miscellaneous other provisions comprise a large number of different items, including €50m (73m) for medium- and long-term incentive plans, €61m (89m) for salary obligations, €44m (43m) for other remuneration for desk and field staff, €262m (258m) for restructuring, €21m (28m) for competitions for sales staff, €28m (29m) for litigation risks, and – (€5m) for insurance tax on outstanding premiums. the provisions for restructuring mainly concern the eRgo group’s “continuous improvement of our competitive position” project.
effects of change in the medical cost trend rate increase Reduction by one by one percentage percentage €m point point present value of defined benefit obligations 19 –15 pension expenses 2 –1
Other €m Prev. year Additions Withdrawals Reversal changes 31.12.2011 early retirement benefits/semi-retirement 165 33 24 – 22 196
€81m of the amounts owed to banks are attributable to bank borrowing by wind park companies acquired by munich Re as part of the Rent (Renewable energies and new technologies) programme.
Breakdown of other liabilities €m 31.12.2011 Prev. year amounts payable on primary insurance business 3,788 3,848 accounts payable on reinsurance business 4,146 3,634 amounts due to banks 616 1,843 miscellaneous liabilities 4,501 3,778
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 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. for information on this, see (37) Risks from life and health insurance business and (38) Risks from property-casualty insurance business. the derivatives listed below are recognised at market value.
the major portion of the liabilities up to one year involve interest-free items, where the carrying amounts and the undiscounted cash flows are identical. €258m (1,341m) of the amounts owed to banks and €648m (436m) of the liabilities from derivatives are due within one year. any deviations in the liabilities with remaining terms of over one year from the undiscounted cash flows are not material for the presentation and significance of the financial liabilities for our financial position and performance.
Primary insurance Life Health Property-casualty €m 2011 Prev. year 2011 Prev. year 2011 Prev. year change in unearned premiums – gross 1 – 14 7 145 168 change in unearned premiums – ceded share – – 1 – 11 5 1 after elimination of intra-group transactions across segments.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the total gross premiums include not only the gross premiums written but also savings premiums from unit-linked life insurances and capitalisation products. premiums from long-term insurance business, especially in the life primary insurance segment, are recognised in full as earned premiums and income when they become due. under gross premiums written, only those parts of the premium from unit-linked life business are included that are used to cover the risks and associated costs.
Munich Health Total €m 2011 Prev. year 2011 Prev. year Income from technical interest 43 46 5,897 6,587
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 short-term 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.
Primary insurance Life Health Property-casualty €m 2011 Prev. year 2011 Prev. year 2011 Prev. year Gross claims and benefits paid 7,045 6,278 3,911 3,720 3,279 3,138 change in technical provisions provision for future policy benefits –585 1,126 1,068 1,026 2 47 other technical result 185 182 –5 –5 –18 30 Gross expenses for claims and benefits 7,227 8,327 5,858 5,802 3,540 3,467
other technical result –71 –73 – – – – Expenses for claims and benefits – Ceded share 91 88 11 7 118 124
Ceded share claims and benefits paid 34 24 1,114 1,452 change in technical provisions provision for future policy benefits – – 24 –4 provision for outstanding claims 27 –3 285 –179 provision for premium refunds – – 1 1 other technical result – – –135 –106 Expenses for claims and benefits – Ceded share 61 21 1,289 1,164
Net expenses for claims and benefits 4,743 3,834 41,034 36,583 1 after elimination of intra-group transactions across segments.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the change in the provision for future policy benefits (net) contains –€259m (275m) in unrealised gains/losses from unit-linked life insurance. expenses for claims and benefits include expenses for policyholders’ bonuses. of this, €972m (1,308m) is for the allocation to the provision for premium refunds on the basis of national regulations, €42m (240m) for the change in the provision for deferred premium refunds recognised in the income statement, and €397m (329m) for direct crediting. the “other technical result” for life primary insurance mainly includes interest on policyholders’ accumulated credit.
Munich Health Total €m 2011 Prev. year 2011 Prev. year acquisition costs, profit commission and reinsurance commission paid 959 892 9,765 9,416 changes in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios 5 –23 –136 –493 ceded share of acquisition costs, profit commission and reinsurance commission paid 11 4 290 447 ceded share of changes in deferred acquisition costs and contingent commissions – – 26 –16 Operating expenses – Ceded share 11 4 316 431
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 1 after elimination of intra-group transactions across segments.
Other securities at fair value through profit or loss held for trading fixed-interest – – – – 22 22 non-fixed-interest – – – – – 1 designated at fair value through profit or loss fixed-interest – – – – –7 10 non-fixed-interest – – – – –3 –4
Other securities held to maturity 1 3 – – – – Other securities available for sale
designated at fair value through profit or loss fixed-interest –7 10 – – – – non-fixed-interest –3 –4 – – – –
Investment income by segment (before deduction of income from technical interest)1
Reinsurance Life Property-casualty €m 2011 Prev. year 2011 Prev. year income from write-ups 711 470 1,298 558 gains on the disposal of investments 870 481 3,164 2,108 other income – – – –
Primary insurance Life Health Property-casualty €m 2011 Prev. year 2011 Prev. year 2011 Prev. year gains on the disposal of investments 586 466 225 265 496 382 1 after elimination of intra-group transactions across segments.
Reinsurance Life Property-casualty €m 2011 Prev. year 2011 Prev. year Write-downs of investments 892 539 1,684 755 losses on the disposal of investments 684 304 2,613 1,119 management expenses, interest charges and other expenses 64 77 271 237
they also contain expenses of €44m (45m) for owner-occupied property, some of which is also leased out.
Munich Health Asset management Total €m 2011 Prev. year 2011 Prev. year 2011 Prev. year
Primary insurance Life Health Property-casualty €m 2011 Prev. year 2011 Prev. year 2011 Prev. year 1 after elimination of intra-group transactions across segments.
Primary insurance Life Health Property-casualty €m 2011 Prev. year 2011 Prev. year 2011 Prev. year impairment losses of goodwill – – – – 20 109
Reinsurance Life Property-casualty €m 2011 Prev. year 2011 Prev. year other non-operating income 587 730 1,034 1,519 other non-operating expenses 676 744 1,273 1,609 impairment losses of goodwill 1 – 4 –
Munich Health Asset management Total €m 2011 Prev. year 2011 Prev. year 2011 Prev. year impairment losses of goodwill – – – – 25 109 1 after elimination of intra-group transactions across segments.
Finance costs by financing instrument €m 2011 Prev. year subordinated bonds of munich Reinsurance company, munich 241 249 senior notes of munich Re america corporation, Wilmington 26 23 Bank borrowing of munich Reinsurance company, munich 12 12 subordinated bonds of BacaV ag, Vienna 6 6 other 3 3 Total 288 293
Recognised tax expenses/income broken down according to Germany and other countries €m 2011 Prev. year current tax 631 1,065 other countries 250 392 deferred tax –1,183 –373 germany –965 –183 other countries –218 –190
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the effective tax burden is the ratio between the taxes on income recognised and the result before taxes on income (after “other tax”). in the year under review, there was tax relief of 345% (previous year: tax burden of 22%).
“tax-free income” is made up of tax-free gains on the sales of shareholdings in jointstock companies, tax-free dividends and other tax-free income.
the tax effect of €462m (244m) from changes in valuation allowances for deferred taxes/loss carry-forwards mainly involves an amount of €300m (–) in income from the subsequent recognition of deferred tax assets for loss carry-forwards from prior years and €180m (246m) from the offsetting of positive taxable income with tax loss carryforwards 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.
Reconciliation to effective tax expenses €m 2011 Prev. year Result before taxes on income (after “other tax”) 160 3,122 group tax rate in % 33.0 33.0 derived taxes on income 53 1,030 tax effect of: tax rate differences –129 –155 tax-free income –59 –84 non-deductible expenses 253 205 Valuation allowances for deferred taxes/loss carry-forwards –462 –244 change in tax rates and tax legislation 1 –13 tax for prior years –250 –92 trade tax adjustments 1 7
– largely long-term contracts under which mainly mortality, longevity and disability risks are assumed from cedants
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 accounting 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.
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, a discount rate of 3.5% (3.5%) is applied for calculating the provision for premium loadings and the provision for future premium reductions totalling €3,480m (3,086m), which are part of the provision for premium refunds; in principle, however, this rate can be altered by way of a premium adjustment.
We measure sensitivity to this interest-rate risk using an embedded value analysis; cf. page 258.
Other market risks and embedded derivatives in reinsurance, other market risks are generally ruled out through suitable treaty design. some reinsurance contracts contain derivative components of variable annuities. these are measured separately 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 primary insurance, the risks to be considered – besides the interest-rate guarantee, which we analyse in the modelling of the interest-rate risk – are particularly risks from unit-linked life insurance and the lump-sum option in the case of deferred annuity policies. other embedded derivatives are financially insignificant.
We measure sensitivity to changes in the lapse rate in life insurance and for long-term contracts in health insurance using an embedded value analysis; cf. page 258.
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, 2 €m 31.12.2011 Prev. year up to one year –1,485 –2,342 over one year and up to five years –10,336 –9,061 over five years and up to ten years –17,828 –17,222 over ten years and up to 20 years –39,712 –36,543 over 20 years3 –120,086 –141,399 1 premiums less benefits guaranteed at the balance sheet date and costs (excluding unit-linked products). 2 after elimination of intra-group transactions across segments. 3 the reduction in this estimate from the previous year to 2011 is due to an adjustment in the underlying assumptions.
for information on our risk management processes, reference is made to the risk report, pages 120–123 and page 125.
Impact on equity and the consolidated income statement in the liability adequacy test pursuant to ifRs 4, the technical provisions and deferred acquisition costs are regu larly tested to ensure they are appropriate. an adjustment is made if such tests show that, as a whole, the amounts calculated using the previous assumptions for biometric actuarial rates, for discounting provisions and for lapses are no longer sufficient. par ticularly in primary insurance, the possibilities of adjusting participation in surplus are taken into account.
munich Re continues to adhere to the strict rules of market-consistent evaluation as at the end of the year. the low interest-rate level and high volatility at the reporting date of 31 december 2011 result in distortions in life primary insurance in particular, owing to the long-term interest-rate guarantees. Besides this, there are impacts from the losses in value of our bonds from peripheral eurozone countries. further details are provided in the management report, pages 60 and 86.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 38 // Risks from property-casualty insurance business the risks presented in this section concern business from the primary insurance and reinsurance property-casualty segments.
of particular importance for these insurance contracts is the estimation risk with regard to the amount of the expected claims expenditure for future claims from current insurance contracts (premium risk) and for claims already incurred (reserve risk). in estimating claims expenditure, we also take cost increases into account. there is an interest-rate risk for parts of the portfolio. Besides this, the liquidity risk has to be taken into account.
a particular sensitivity exists in the case of contracts with long run-off periods. this characteristic applies especially to casualty insurance, where liabilities may manifest themselves with a considerable time lag. in addition, changes in court verdicts, class actions, inflation in medical care costs and modifications in general life expectancy can 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.
Large and very large losses in reinsurance according to individual calendar years (net)
large and very large losses 5,126 2,228 1,158 1,509 1,103 thereof losses from natural catastrophes 4,544 1,564 196 832 634 1 special impact for 2009: in credit and surety business, defaults triggered by the financial crisis led to a claims burden of €510m.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 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.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 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 (29) premiums. all our companies have intra-group and external reinsurance and retrocession cover. particularly important in this context is an accumulation excess-of-loss cover, which provides protection against property damage losses from natural catastrophes. the dimensions of this cover are based on analyses of our 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.
Interest-rate risks economically, an interest-rate risk derives in principle from the need to earn a return on the investments covering the provision that is commensurate with the discount rate used in measuring the provision. in balance sheet terms, the interest-rate risk affects only those parts of the technical provisions that are discounted and for which an inflow of investment income from deposits retained is not secured from cedants in at least the same amount.
the major part of the discounted provisions in reinsurance are for us workers’ compensation business, for which the discount rates are governed by supervisory law and are determined prospectively per accident year. We currently do not expect any changes in the us regulatory authorities’ approval procedure. a sustained reduction in market interest rates is taken into account through conservative discount rate assumptions for future provisions for outstanding claims. if the discount rate were subsequently lowered by 100 Bp, this would necessitate additional reserving of €169m (222m), which would have to be recognised as an expense in the income statement.
Reinsurance Primary insurance Total €m1 31.12.2011 Prev. year 31.12.2011 Prev. year 31.12.2011 Prev. year discount rate > 4.5% – – – – – –
Liquidity risks such risks could result for munich Re if the cash outflow for insurance claims payments and the costs related to the business were to exceed the cash inflow from premiums and investments. in property-casualty insurance, a distinction must be 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 constitutes only a fraction of the total payments to be made and is temporally stable according to our experience. consequently, the liquidity risks in respect of these payments can also be minimised by means of asset-liability management.
the following table shows that in the past calendar years the liquidity situation has always been positive. not explicitly considered in the quantification is the fact that owing to our far-reaching asset-liability management for payments of claims incurred in prior years, even extremely large losses (from natural-catastrophe and non-naturalcatastrophe scenarios) are covered by our liquidity position. Besides this, we pursue a consistent asset-liability management approach in our investment strategy. the structure and characteristics of the payment obligations from insurance business determine the investments selected. this also applies to our ability to respond to shock scenarios. to this end, we regularly simulate the impact of major shock scenarios on our liquidity situation. the losses simulated in these scenarios exceed the demands of very large claims burdens sustained in the past (e.g. from the recent earthquakes or, in the past, from major hurricanes or the attack on the World trade center) in terms of both absolute amount and speed of settlement.
claims payments for financial year 5,930 5,213 4,378 4,393 4,264 claims payments for previous years 8,096 8,613 7,589 7,675 7,597
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 39 // credit risks from ceded reinsurance business in connection with the business we cede, the credit risk is also of relevance. for our reinsurance and retrocessions to be placed externally, we choose only business partners that meet the requirements of our Retro security guideline and analogous regulations.
48% (50%) of the ceded share of provisions is directly collateralised through deposits, so the credit risk can be ignored for this portion.
Market risk – Share prices the impact of a change on the stock markets in terms of absolute amounts decreased in the year under review. this is due to our reduction of equity positions and derivative hedging measures. a change in the stock market by 10% has an impact of 8.2% (11.2%) on the market value of the equity portfolio. the recognition of the hedging transactions in profit or loss has the effect that in the case of rising share prices, the overall impact on the consolidated income statement is nevertheless negative.
the impact on the consolidated income statement is small compared with the impact on equity, as most of the changes in the value of fixed-interest investments are accounted for in equity, with no effect on profit or loss. also, around a third of the investments considered in this analysis are measured at amortised cost, so that changes in market value have no effect on the financial statements.
economically speaking, the impact of the fixed-interest investments on equity is paralleled by a change in the economic value of the liabilities. therefore our asset-liability management steers the investments in such a way that the effects of interest-rate changes on the value of the investments and on the economic value of the liabilities largely cancel each other out. this offsetting does not have an impact on the balance sheet, however, since significant portions of the liabilities are not valued on the basis of the current interest-rate curves.
Change in share prices 31.12.2011 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 decrease of 10% –0.334 –0.134 –0.620 –0.393 –0.489 –1.014 decrease of 30% –1.063 –0.341 –1.859 –1.560 –1.085 –3.040 market values 7.541 9.057 1 gross before tax and policyholder participation in surplus.
Other information 41 // parent the group parent is münchener Rückversicherungs-gesellschaft aktiengesellschaft in münchen (munich Reinsurance company Joint-stock company in munich), Königinits registered seat is munich, germany.
in addition to its function as a reinsurer, the parent also fulfils the function of holding company for the group.
under each long-term incentive plan, participants receive a certain number of stock appreciation rights.
Breakdown of personnel expenses €m 2011 Prev. year Wages and salaries 2,532 2,534 social security contributions and employee assistance 457 472 expenses for employees’ pensions 214 208
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the relevant initial share price for the stock appreciation rights is calculated from the average of closing prices for munich Re shares in frankfurt Xetra trading over the last three months prior to plan commencement. the obligations arising from the long-term incentive plans are covered by munich Reinsurance company shares.
number of rights on 31 dec. 2005 456,028 485,527 – – – – – additions – – 443,609 – – – – exercised 119,363 – – – – – – forfeited – – 1,019 – – – –
number of rights on 31 dec. 2006 336,665 485,527 442,590 – – – –
number of rights on 31 dec. 2007 251,013 397,306 440,199 341,234 – – –
Number of rights on 31 Dec. 2011 – 147,426 425,623 329,883 428,225 450,646 665,309
Incentive Incentive Incentive Incentive Incentive Incentive Incentive Plan 2004 Plan 2005 Plan 2006 Plan 2007 Plan 2008 Plan 2009 Plan 2010 intrinsic value 2011 for one right €4.13 €4.68 – – – – – fair value 2011 for one right – €5.07 €2.99 €1.83 €3.64 €7.78 €6.43 number of rights on 31 dec. 2004 154,189 – – – – – –
number of rights on 31 dec. 2005 122,059 187,530 – – – – – additions – – 173,682 – – – – exercised 31,390 – – – – – – forfeited – 3,072 – – – – –
number of rights on 31 dec. 2006 90,669 184,458 173,682 – – – – additions – – – 121,821 – – –
number of rights on 31 dec. 2009 47,134 110,509 160,187 108,224 170,749 148,834 – additions – – – – – – 39,046 number of rights on 31 dec. 2010 14,579 65,379 159,946 106,368 168,243 148,834 39,046
Number of rights on 31 Dec. 2011 – 28,358 159,665 106,192 167,968 148,579 39,046
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 each stock appreciation right entitles the holder to draw in cash the difference between the munich Re share price at the time when the right is exercised and the initial share price. the stock appreciation rights may only be exercised after a two-year vesting period and then only if the share price is at least 20% higher than the initial price. in addition, munich Re shares must have outperformed the euRo stoXX 50 twice at the end of a three-month period during the term of the plan. the gross amount that may be obtained from the exercising of the stock appreciation rights is limited to an increase of 150% of the initial share price.
45 // mid-term incentive plan since 1 January 2009, munich Reinsurance company has set up mid-term incentive plans, each with a term of three years. entitled to participate in these cash-settled share-price-related remuneration plans are members of senior management in munich, and – for 2009 only – the members of the Board of management. eRgo Versicherungsgruppe ag and some of its subsidiaries, as well as meag munich eRgo assetmanagement gmbh, established a similar plan for their Board members and company management for 2009 only. the participants receive performance share units (psus). in the fourth year after plan commencement, participants are entitled to a bonus payment dependent on the achievement of value-based performance targets and the increase in the total shareholder return (tsR).
the value-based performance targets are set in the form of an average target to be achieved over the three following years and are allocated according to responsibilities.
at plan commencement, the psus are granted on the basis of the set target amount for 100% achievement of objectives and the initial tsR value. the total return index of the Xetra listing of munich Re shares, starting on 22 January 1996, is used for the tsR. the basis for the full and partial allocation of the psus is the first plan year.
the mid-term incentive plan at the reporting date is valued indirectly at the fair value of the liabilities. the fair value takes account of the value-based performance target and the total shareholder return (tsR) during the performance period. to this end, the tsR index value observable in the market is updated with the current dividend yield of munich Re shares at the termination date and discounted with appropriate market interest rates.
the members of the supervisory Board and Board of management did not receive any cash advances or loans in the year under review. neither were there any notifiable transactions between Board members and munich Re. nor, apart from the above-mentioned remuneration for membership of supervisory boards at other group companies, were any payments made or advantages extended to members of the supervisory Board for services provided internally within the meaning of item 5.4.6 para. 3 of the german corporate governance code.
all other disclosures on the remuneration of Board members, on share trading and shares held by the members of the Board of management and the supervisory Board, and on the structure of the Board of management’s remuneration system can be found in the remuneration report on page 32.
Incentive Incentive Incentive Plan 2009 Plan 2010 Plan 2011 fair value 2011 for one right €171.48 €183.20 €195.41 number of rights (for 100% achievement of objectives) on 1 January 2009 87,347 – –
number of rights (for 100% achievement of objectives) on 31 december 2011 86,349 37,441 63,769
48 // auditor’s fees 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 Belgium, Kpmg netherlands, Kpmg luxembourg, Kpmg turkey, Kpmg Russia, Kpmg georgia, Kpmg ukraine, Kpmg armenia, Kpmg Kazakhstan, Kpmg Kyrgyzstan, Kpmg norway, Kpmg Kuwait, Kpmg Jordan and Kpmg saudi arabia.
49 // contingent liabilities, other financial commitments munich Re enters into contingent liabilities in connection with its normal business operations. in this context, the obligations from guarantees total €68m (106m), those from legal disputes €30m (4m), and those from letters of support €4m (8m). as a result of the sale of capital square pte. ltd. (cf. (17) non-current assets and disposal groups held for sale), guarantees exist in the amount of the purchase price at most. all information on risks arising from legal disputes can be found on page 138 in the risk report.
the application of fiscal regulations may 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 authorities may be of a deviating opinion in this area, which may give rise to additional tax liabilities.
Besides this, munich Re has entered into various other financial obligations amounting to €205m (218m) for work and service contracts and €1,037m (1,001m) for investment obligations. at the reporting date, there were loan commitments amounting to €507m (9m), which mainly have to be settled on 12 January 2012. these figures represent undiscounted nominal amounts. there are other financial commitments amounting to €4m (4m).
there are no other financial commitments of significance for the assessment of the group’s financial position. no contingent liabilities have been entered into for the benefit of Board members.
Munich Re as lessee at the balance sheet date, future minimum lease payments under non-cancellable operating leases totalled €406m (455m).
Due dates €m 31.12.2011 Prev. year not later than one year 106 114 later than one year and not later than five years 214 267 later than five years 86 74
consolidated financial statements // notes munich Re gRoup annual RepoRt 2011 the finance leases concern in particular rents for offices and business premises of the group. they include extension options as well as restrictions regarding the agreement of subleases. the following table shows the future minimum lease payments and their present value for finance leases at 31 december 2011.
the total of future minimum sublease payments expected to be received under noncancellable subleases was €1m (2m) at the reporting date.
Due dates 31.12.2011 Prev. year Present value Present value Minimum of minimum Minimum of minimum lease Interest lease lease Interest lease €m payments component payments payments component payments not later than one year 7 – 7 8 2 6 later than one year and not later than five years 27 3 24 27 5 22
Due dates €m 31.12.2011 Prev. year not later than one year 175 164 later than one year and not later than five years 474 447 later than five years 325 300
the number of outstanding shares has decreased owing to the repurchase of 2,789,833 (11,531,594) shares in the course of the financial year 2011.
Consolidated�subsidiaries 40, Rue courcelles sas, paris 100.0000 80e limited, Bristol 100.0000 adelfa servicios a instalationes fotovoltaicas, s.l., santa cruz de tenerife 100.0000 aeVG 2004 Gmbh, frankfurt/main4 0.0000 aktiva Vermittlung von Versicherungen und finanz-dienstleistungen Gmbh, cologne 100.0000 alice Gmbh, düsseldorf 100.0000 allfinanz limited, dublin 100.0000 almeda Gmbh, munich 100.0000 almeda Versicherungs-aktiengesellschaft, 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 life insurance company, 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., colchester 100.0000 amicus ltd., colchester 100.0000 arkansas life insurance company, phoenix, arizona 100.0000 avanturo Gmbh, düsseldorf 100.0000 B&c international insurance, hamilton, Bermuda 100.0000 Bank austria creditanstalt Versicherung aG, Vienna 90.0000 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 90.0240 capital plaZa holding Gmbh & co. singapur KG, düsseldorf 100.0000 cJsic “european travel insurance”, moscow 100.0000 compagnie européenne d´assurances, nanterre 100.0000 compania europea de seguros s.a., madrid 100.0000 the following disclosures relate to companies in which our directly and indirectly held shareholdings (as defined in section 16 paras. 2 and 4 of the German stock companies act) add up to 20% or more of the share capital, and large companies (as defined in section 267 para. 3 of the German commercial code) in which our directly and in directly held shareholdings add up to more than 5% of the voting rights.
� %�share Company�and�registered�seat� of�capital eRGo direkt lebensversicherung aG, schwechat 100.0000 eRGo diReKt Versicherung aG, fürth 100.0000 eRGo Élétbiztosító Zrt., Budapest 100.0000 eRGo emeklilik ve hayat a.s., istanbul 99.9999 eRGo eurosolar Gmbh & co. KG, nuremberg 100.0000 eRGo funds as, tallinn 100.0000 eRGo General insurance company s.a., athens 99.9999 eRGo Generales seguros y Reaseguros, s.a., madrid 100.0000 eRGo Grubu holding a.s., istanbul 100.0000 eRGo Grundstücksverwaltung GbR, düsseldorf 100.0000 eRGo immobilien-Gmbh 14. Victoria & co. KG, Kreien 100.0000 eRGo immobilien-Gmbh 5. hamburg-mannheimer & co.KG, Kreien 100.0000 eRGo insurance n.V., Brussels 99.9999 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 Kindlustuse as, tallinn 100.0000 eRGo latvija Versicherung aG (eRGo latvija apdrosinasanas akciju sabiedriba), Riga 100.0000 eRGo lebensversicherung aktiengesellschaft, hamburg 100.0000 eRGo lietuva draudimo uadB, Vilnius 100.0000 eRGo life insurance company s.a., thessaloniki 100.0000 eRGo life insurance se, Vilnius 100.0000 eRGo pensionsfonds aktiengesellschaft, düsseldorf 100.0000 eRGo pensionskasse aG, düsseldorf 100.0000 eRGo previdenza s.p.a., milan 100.0000 eRGo private capital Gesundheit Gmbh & co. KG, düsseldorf 100.0000 eRGo private capital leben Gmbh & co. KG, düsseldorf 100.0000 eRGo private equity Gesundheit Gmbh, düsseldorf 100.0000 eRGo private equity Komposit Gmbh, düsseldorf 100.0000 eRGo private equity leben Gmbh, düsseldorf 100.0000 eRGo Russ Versicherung aG, st. petersburg 100.0000 eRGo shisn, moscow 100.0000 eRGo siGoRta a.s., istanbul 99.9999 eRGo Versicherung aktiengesellschaft, düsseldorf 100.0000 eRGo Versicherungsgruppe aG, düsseldorf 100.0000 eRGo Vida seguros y Reaseguros, sociedad anónima, saragossa 100.0000 eRGo Zavarovalnica d. d., ljubljana 100.0000 eRGo životná poistovna, a. s., Bratislava 100.0000 eRGo Zweite Beteiligungsgesellschaft mbh, düsseldorf 99.9999 europaeiske Rejseforsikring a/s, copenhagen 100.0000 euRopÄische Reiseversicherung aktiengesellschaft, munich 100.0000 european international holding a/s, copenhagen 100.0000 europeiska försäkringsaktiebolaget, stockholm 100.0000 evropska cestovni pojistovna a.s., prague 90.0000 e&s claims management inc., Reston, Virginia, usa4 0.0000 d.a.s. defensa del automovilista y de siniestros – internacional, s.a. de seguros y Reaseguros, Barcelona 100.0000 d.a.s. deutscher automobil schutz allgemeine Rechtsschutz -Versicherungs-aktiengesellschaft, munich 100.0000 d.a.s. hellas allgemeine RechtsschutzVersicherungs -aG, athens 99.9983 d.a.s. Jogvédelmi Biztosíto Részvénytársaság, Budapest 100.0000 d.a.s. luxemburg allgemeine RechtsschutzVersicherung s.a., strassen 99.9500 d.a.s. oigusabikulude Kindlustuse as, tallinn 100.0000 d.a.s. Österreichische allgemeine RechtsschutzVersicherungs -aktiengesellschaft, Vienna 99.9800 d.a.s. poist’ovna právnej ochrany, a.s., Bratislava 100.0000 d.a.s. pojišt’ovna právní ochrany, a.s., prague 100.0000 d.a.s. société anonyme belge d’assurances de protection Juridique, Brussels 99.9800 d.a.s. towarzystwo ubezpieczen ochrony prawnej s.a., Warsaw 99.9000 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 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 seRVices 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 support B.V., amsterdam 100.0000 das uK holdings limited, Bristol 100.0000 dB platinum iV sicaV (subfonds institutional fixed income, inhaber-anteile i2d), luxembourg4 100.0000 dKV – alpha Vermögensverwaltungs Gmbh, cologne 100.0000 dKV BelGium s.a., Brussels 100.0000 dKV deutsche Krankenversicherung aktiengesellschaft, cologne 100.0000 dKV Globality s.a., luxembourg 100.0000 dKV luxembourg s.a., luxembourg 75.0000 dKV pflegedienste & Residenzen Gmbh, cologne 100.0000 dKV seguros y Reaseguros, sociedad anónima española, saragossa 100.0000 eiG, co., Wilmington, delaware 100.0000 einzelanlage hohenseefeld Gmbh & co KG, Bremen 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 daum direct General insurance co. ltd., seoul 100.0000 eRGo diReKt Krankenversicherung aG, fürth 100.0000 eRGo diReKt lebensversicherung aG, fürth 100.0000
� %�share Company�and�registered�seat� of�capital iRis capital fund ii German investors Gmbh & co. KG, düsseldorf 85.7143 iteRGo informationstechnologie Gmbh, düsseldorf 100.0000 itus Verwaltungs aG, Grünwald 100.0000 Joint stock insurance company eRGo, minsk 92.3100 Jordan health cost management services W.l.l., amman 100.0000 K & p pflegezentrum immac uelzen Renditefonds Gmbh & co. KG, düsseldorf 84.8817 Ka Köln assekuranz.agentur Gmbh, cologne 100.0000 Kapdom-invest Gmbh, moscow 100.0000 landelijke associatie van Gerechtsdeurwaarders B.V., Groningen 90.0240 laVG associatie van Gerechtsdeurwaarders Zuid holding B.V., Breda 80.0000 lawassist limited, Bristol 100.0000 leGial aG, munich 100.0000 lifeplans inc., Waltham, massachusetts 100.0000 lifeplans ltc services, inc., ontario 100.0000 lloyds modern corporation, dallas, texas 100.0000 longial Gmbh, düsseldorf 100.0000 marina salud s.a., alicante 65.0000 marina sp.z.o.o., sopot 100.0000 meaG adam, munich4 100.0000 meaG anGlo celtic fund, munich4 100.0000 meaG Benedict, munich4 100.0000 meaG Bln 2, munich4 100.0000 meaG Bln 3, munich4 100.0000 meaG cash management Gmbh, munich 100.0000 meaG consortio, munich4 100.0000 meaG edl curryGov, munich4 100.0000 meaG edl euroValue, munich4 100.0000 meaG eds aGil, munich4 100.0000 meaG euR Global 1, munich4 100.0000 meaG eurak, munich4 100.0000 meaG euro 1, munich4 100.0000 meaG euro 2, munich4 100.0000 meaG euRo-fonds, munich4 100.0000 meag eurostar (spezialfonds), munich4 100.0000 meaG euRo-Yield, munich4 100.0000 meaG GBp equities, munich4 100.0000 meaG GBp-Global-staR, munich4 100.0000 meaG German prime opportunities (Gpo), munich4 100.0000 meaG Gilagrent, munich4 100.0000 meaG Golf 1, munich4 100.0000 meaG hBG 1, munich4 100.0000 meaG hm Renten, munich4 100.0000 meaG hm sach 1, munich4 100.0000 meaG hm sach Rent 1, munich4 100.0000 meaG hm2000, munich4 100.0000 meaG hmR1, munich4 100.0000 meaG hmR2, munich4 100.0000 meaG iRen, munich4 100.0000 meaG Kapital 2, munich4 100.0000 meaG Kapital 5, munich4 100.0000 meaG lambda euR 2, Grünwald4 100.0000 faiRance Gmbh, düsseldorf 100.0000 first legal protection limited, st. albans 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 95.2708 Gf 65, Vienna4 100.0000 Global standards llc, Wilmington, delaware 100.0000 Great lakes Reinsurance (uK) plc., london 100.0000 Great lakes services ltd., london 100.0000 Group Risk services limited, london 100.0000 Groves, John & Westrup limited, london 100.0000 habiriscos – investimentos imobiliarios e turisticos, 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 pyt ltd., Kolkata 100.0000 hartford steam Boiler international-Gmbh, Rheine 100.0000 hmi partners n.V., Brussels 100.0000 hmV GfKl Beteiligungs Gmbh, düsseldorf 100.0000 hsB engineering finance corporations, Wilmington, delaware 100.0000 hsB engineering insurance limited, london 100.0000 hsB engineering insurance services limited, oldham 100.0000 hsB Group, inc., Wilmington, delaware 100.0000 hsB Japan KK, minato-Ku, tokyo 100.0000 hsB professional loss control, inc., lenoir city, tennessee 100.0000 hsB solomon associates llc, Wilmington, delaware 100.0000 hsB technical consulting & services (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 63.5532 imofloresmira – investimentos imobiliarios s.a., lisbon 100.0000
Non-consolidated�subsidiaries� 50 plus strategies, inc., Brentwood, tennessee 100.0000 acalter 140014 s.l., playa del inglés 100.0000 agenzia chianti s.R.l., milan 100.0000 aitesacho 5005 s.l., playa del inglés 100.0000 albulzaga 8008 s.l., playa del inglés 100.0000 aleama 150015 s.l., madrid 100.0000 allfinanz inc., Wilmington, delaware 100.0000 allfinanz KK, tokyo 100.0000 allfinanz ptY, sydney 100.0000 allfinanz software services Gmbh, Grünwald 100.0000 amladeza 7007 s.l., playa del inglés 100.0000 arridabra 130013 s.l., madrid 100.0000 aRtes assekuranzservice Gmbh, düsseldorf 100.0000 arztpartner almeda aG, munich 100.0000 olympic health management systems, inc., Bellingham, Washington 100.0000 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 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 international Brokers limited, london 100.0000 Roanoke Real estate holdings inc., schaumburg, illinois 100.0000 Roanoke trade services inc., schaumburg, illinois 100.0000 san marino life impresa sammarinese di assicurazione sulla vita s.p.a., san marino 100.0000 seminaris hotel- und Kongreßstätten-Betriebsgesellschaft mbh, lüneburg 75.0000 silvanus Vermögensverwaltungsges.mbh, munich 100.0000 solomon associates limited, london 100.0000 sopocki instytut ubezpieczen s.a., sopot 100.0000 sopockie towarzystwo ubezpieczen ergo hestia spolka akcyjna, sopot 100.0000 sopockie towarzystwo ubezpieczen na Zycie ergo hestia spolka akcyjna, sopot 100.0000 specialty insurance services corp., amelia, ohio 100.0000 sterling life insurance company, Bellingham, Washington 100.0000 temple insurance company, toronto 100.0000 the atlas insurance agency, inc., amelia, ohio 100.0000 the Boiler inspection and insurance company of canada, toronto 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 100.0000 the princeton excess and surplus lines insurance company, Wilmington, delaware 100.0000 the Roanoke companies inc., schaumburg, illinois 100.0000 union Beteiligungsholding Gmbh, Vienna 100.0000 unión médica la fuencisla, s.a., compañia de seguros, saragossa 100.0000 Van arkel Gerechtsdeurwaarders B.V., leiden 79.9000 Venus Vermögensverwaltungsgesellschaft mbh, munich 100.0000 VhdK Beteiligungsgesellschaft mbh, düsseldorf 100.0000 VictoRia investment properties two l.p., atlanta 100.0000 VictoRia italy property Gmbh, düsseldorf 100.0000 VictoRia lebensversicherung aktiengesellschaft, düsseldorf 100.0000 Victoria osiguranje d.d, Zagreb 74.9000 Victoria us holdings, inc., Wilmington, delaware 100.0000
� %�share Company�and�registered�seat� of�capital das incasso arnhem B.V., arnhem 100.0000 das incasso den Bosch B.V., ’s-hertogenbosch 95.0000 das incasso Rotterdam B.V., Rotterdam 80.0000 das legal protection pty. ltd., sydney 100.0000 das lex assistance, s.l., Barcelona 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 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 economic data Research B.V., leidschendam 100.0000 economic data Resources B.V., leidschendam 100.0000 edR acquisition B.V., amsterdam 80.0000 edR credit services B.V., the hague 100.0000 eRGo alpha Gmbh, düsseldorf 100.0000 eRGo asia management pte. ltd., singapore 100.0000 eRGo Bilisim teknolojisi limited sirketi, istanbul 100.0000 eRGo Business solutions s.r.l., Bucharest 100.0000 eRGo eurosolar der welivit solar italia Gmbh & co. KG, Bolzano 100.0000 eRGo Gmbh, herisau 100.0000 eRGo Gourmet Gmbh, düsseldorf 100.0000 eRGo immobilien-Gmbh 1. dKV & co. KG, Kreien 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 6. hamburg-mannheimer & co. KG, Kreien 100.0000 eRGo immobilien-Gmbh 7. hamburg-mannheimer & co. KG, Kreien 100.0000 eRGo immobilien-Verwaltungs-Gmbh, Kreien 100.0000 eRGo insurance service Gmbh, Vienna 99.6000 eRGo neunte Beteiligungsgesellschaft mbh, düsseldorf 100.0000 eRGo poRtfÖY YÖnetimi a.s., istanbul 99.9999 eRGo private capital Gmbh, düsseldorf 100.0000 eRGo private capital Zweite Gmbh & co. KG, düsseldorf 100.0000 eRGo sigorta ve emeklilik satis aracilik hizmetleri limited sirketi, istanbul 100.0000 eRGo specialty Gmbh, hamburg 100.0000 eRGo trust erste Beteiligungsgesellschaft mbh i.l., munich 100.0000 eRGo Versicherungs- und finanzierungs-Vermittlung Gmbh, hamburg 100.0000 eRin sigorta aracilik hizmetleri limited sirketi, istanbul 99.9950 eRV (china) travel service and consulting ltd., Beijing 100.0000 eRV seyahat sigorta aracilik hizmetleri ve danismanlik ltd.sti., istanbul 99.0000 esoleme 120012 s.l., playa del inglés 100.0000 etics, s.r.o., prague 100.0000 etoblete 160016 s.l., madrid 100.0000 associated asset management corporation B.V., ’s-hertogenbosch 51.0000 B&d acquisition B.V., amsterdam 80.0000 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 Bell & clements underwriting managers ltd, london 100.0000 Beteiligung hmm hamburg-mannheimer erste Bürogebäude -Verwaltungsgesellschaft mbh, hamburg 100.0000 Beteiligung hmm hamburg-mannheimer Zweite Bürogebäude -Verwaltungsgesellschaft mbh, hamburg 100.0000 Bioenergie elbe-elster Gmbh & co. KG, elsterwerda 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 Bureau voor kredietinformaties Janssen B.V., the hague 100.0000 Bureau voor kredietinformaties Janssen holding B.V., the hague 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 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 chobocuga 150015 s.l., playa del inglés 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 daman health insurance – Qatar llc, doha, Qatar 100.0000 das consultancy & detachering Rotterdam B.V., Rotterdam 65.0200
� %�share Company�and�registered�seat� of�capital horbach Gmbh, düsseldorf 70.1000 hsB associates, inc, new York 100.0000 hsB inspection Quality, limited, oldham 100.0000 hsB investment corporation, hartford, connecticut 100.0000 hsB Reliability technologies llc, Wilmington, delaware 100.0000 hsB Ventures, inc., Wilmington, 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 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 fe management 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 premium 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 isVicRe siGoRta KiBRis limited, istanbul 51.0000 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 KQV solarpark franken 1 Gmbh & co. KG, fürth 100.0000 Kuik & partners credit management BVBa, Brussels 98.9000 etogibon 100010 s.l., playa del inglés 100.0000 etolede 6006 s.l., playa del inglés 100.0000 euReKa Gmbh, düsseldorf 99.9999 euro alarm assistance prague, prague 100.0000 euro-center (cyprus) ltd., larnaca 100.0000 euro-center (thailand) co. ltd., Bangkok 100.0000 euro-center cape town (pty.) ltd., cape town 100.0000 euro-center china (hK) co., ltd., Beijing 100.0000 euro-center holding a/s, copenhagen 83.3330 euro-center holding north asia (hK) pte. ltd., hong Kong 100.0000 euro-center ltda., Rio de Janeiro 100.0000 euro-center usa, inc., 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 90.7508 everything legal ltd., Bristol 100.0000 eVV logistik management Gmbh, düsseldorf 100.0000 exolvo Gmbh, hamburg 100.0000 first marine financial services, amelia, ohio 100.0000 forst ebnath aG, ebnath 96.7315 Gamaponti 140014 s.l., madrid 100.0000 GBG Vogelsanger straße Gmbh, cologne 94.0000 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 Genius ii Vermögensverwaltungsgesellschaft mbh, munich 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 gomedus partnerkliniken Gmbh, cologne 100.0000 GRancan sun-line s.l., madrid 100.0000 Great lakes marine insurance agency pty ltd, sydney 100.0000 Great lakes Re management company (Belgium) s.a., Brussels 100.0000 Guanzu 2002 s.l., madrid 100.0000 hamburger hof management Gmbh, hamburg 100.0000 hamburg-mannheimer forsikringservice a/s, copenhagen 100.0000 hamburg-mannheimer Rechtsschutz schaden-service Gmbh, hamburg 100.0000 hartford steam Boiler colombia ltda., Bogotá, colombia 100.0000 health oÜ, tallinn 100.0000 hestia advanced Risk solutions sp. z.o.o., sopot 100.0000 hestia Kontakt sp. z o.o., sopot 100.0000 hestia loss control sp. z o.o., sopot 100.0000 hmi ceska republika, spol. s.r.o., prague 100.0000 hmi s.r.l., Verona 100.0000 hmi sp. z o.o., Warsaw 100.0000
Associates�accounted�for�at�fair�value� “poRt elisaBeth” Gmbh & co. KG, hamburg 31.9658 “poRt louis” Gmbh & co. KG, hamburg 26.4129 agricultural management services s.r.l., Verona 33.3333 assistance partner Gmbh & co. KG, munich 21.6600 Bf.direkt aG, stuttgart 27.2000 carexpert Kfz-sachverständigen Gmbh, Walluf 25.0000 fernkälte Geschäftsstadt nord Gesellschaft bürgerlichen Rechts, hamburg 35.8715 finsure investments (private) limited, harare 24.5000 hannover finanz-umwelt Beteiligungsgesellschaft mbh, hillerse 20.0000 hartford Research llc, Wilmington, delaware 41.7500 iffoXX aG, Rosenheim 28.0020 iK objektgesellschaft frankfurt theodor-heuss-allee Gmbh & co. KG, düsseldorf 47.4000 K & p objekt hamburg hamburger straße immobilienfonds Gmbh & co.KG, düsseldorf 36.6889 lcm logistic center management Gmbh, hamburg 50.0000 mcaf management Gmbh, düsseldorf 50.0000 msmR parkview llc, dover, delaware 38.4600 perils aG, Zurich5 11.1100 pool sp. z o.o., Warsaw 33.7500 Rehacare Gmbh, munich 25.1000 Reisegarant, Vermittler von insolvenzversicherungen mbh, hamburg 24.0000 Rm 2264 Vermögensverwaltungs Gmbh, munich 25.0000 Rumba Gmbh & co. KG, munich 25.0000 Rural affinity insurance agency pty limited, sydney 50.0000 secundi cBVa, Brussels 33.0000 teGG corporation, dover, delaware 33.3400 teko – technisches Kontor für Versicherungen Gesellschaft mit beschränkter haftung, düsseldorf 30.0000 teRtianum seniorenresidenz Betriebsgesellschaft munich mbh, munich 33.3333 teRtianum seniorenresidenzen Betriebsgesellschaft mbh, constance 25.0000 trend capital Gmbh & co. solarfonds 2 KG, mainz 34.4234 triple ip B.V., amsterdam 50.0000 Verwaltungsgesellschaft “poRt elisaBeth” mbh, hamburg 50.0000 Verwaltungsgesellschaft “port hedland” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt KelanG” mbh, hamburg 50.0000 Verwaltungsgesellschaft “port lincoln” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt louis” Gmbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt mauBeRt” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt melBouRne” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt menieR” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt moodY” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt moResBY” mbh, hamburg 50.0000 d.a.s. difesa automobilistica sinistri, s.p.a. di assicurazione, Verona 49.9920 daman – national health insurance company, abu dhabi 20.0000 dovull spV Gmbh & co. KG, frankfurt/main 20.0597 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 25.0000 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 mcaf Verwaltungs-Gmbh & co.KG, düsseldorf 50.0000 mdp Ventures i l.l.c., new York 50.0000 meaG pacific star holdings ltd., hong Kong 50.0000 mediclin aktiengesellschaft, offenburg1 (mc €171m) 35.0042 meGa 4 GbR, Berlin 34.2569 millennium entertainment partners ii l.p., new York 42.2992 millennium entertainment partners l.p., new York 27.5400 millennium partners llc, new York 20.3039 picc asset management company ltd., shanghai5 19.0000 property finance france s.a., luxembourg 45.4605 protección agropecuaria, compañía de seguros s.a., mexico5 19.9900 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 seaflower health Ventures iii l.p., Waltham 28.8434 seBa Beteiligungsgesellschaft mbh, nuremberg 48.9931 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 munich 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 ii l.p., atlanta 33.3333 u.s. property management iii l.p., atlanta 20.0000 uelzener lebensversicherungs-aG, uelzen 23.9750 us pRopeRties Va Gmbh & co. KG, düsseldorf 45.8348 VictoRia-VolKsBanKen pensionskassen aktiengesellschaft, Vienna 47.5028 VictoRia-VolKsBanKen Vorsorgekasse aG, Vienna 50.0000 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
Other�shareholdings�exceeding�5%� of�the�voting�rights�in�large�companies�as�defined� in�the�German�Commercial�Code� admiral Group plc, cardiff 10.0219 adveq europe ii Gmbh, frankfurt/main 9.7800 asia Real estate income fund sicaV, luxembourg 19.8000 Best doctors, health Resources and technology, inc., Boston 5.9400 credit Guarantee insurance corporation, Johannesburg 7.1000 crown premium private equity Buyout sicaV, luxembourg 6.4200 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 Österreichische Volksbanken-aG, Vienna 9.3800 picc health insurance company limited, Beijing 5.2100 protektor lebensversicherungs-aG, Berlin 10.7600 swaziland Royal insurance corporation, mbabane 16.0000 1 the market capitalisation (mc) of this company as at 31 december 2011. 2 this fully consolidated German subsidiary with the legal form of a partnership, as defined in section 264a of the German commercial code, intends to fulfil the conditions required in section 264b of the German commercial code and, in the financial year 2011, 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 264b para. 3 of the German commercial code and, in the financial year 2011, to avail itself of the relevant provision exempting it from preparing annual financial statements.
4 control owing to the existence of a special purpose entity as per sic 12 in which the main risks and rewards remain with munich Re.
9 only significant influence owing to reduced voting power. 10 no significant influence owing to reduced voting power.
Verwaltungsgesellschaft “poRt mouton” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt nelson” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt Russel” Gmbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt said” Gmbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt stanleY” Gmbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt steWaRt” mbh, hamburg 50.0000 Verwaltungsgesellschaft “poRt union” mbh, hamburg 50.0000 Verwaltungsgesellschaft “port Williams” mbh, hamburg 50.0000 Viseq Gmbh, Grünwald 34.0000 Volksbanken-Versicherungsdienst Gmbh, Vienna 25.2319 VV immobilien Gmbh & co. GB KG, düsseldorf 40.9241 VV immobilien Verwaltungs Gmbh, munich 30.0000 VV immobilien Verwaltungs und Beteiligungs Gmbh, munich 30.0000 Wisma atRia holding Gmbh, düsseldorf 50.0000 � Other�shareholdings�of�20%�or�more� aRies, Wilmington, delaware10 (equity: €2,706k; result for year: –€579k) 21.6000 capital dynamics champion Ventures Vi, l.p., Woodside11 (equity: €44,538k; result for year: €3,939k) 27.3400 fia timber partners ii l.p., Wilmington6 (equity: €280k; result for year: -€472k) 21.1600 hRJ capital Global Buy-out iii (u.s.), l.p., Woodside11 (equity: €78,350k; result for year: €13,023k) 44.8788 drawn up and released for publication, munich, 2 march 2012.
munich Re GRoup annual RepoRt 2011 auditoR’s RepoRt the following is a translation of the auditor’s opinion in respect of the original German consolidated financial statements and Group management report: Auditor’s report
We have audited the consolidated financial statements prepared by the 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 consolidated 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 2011. 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.
munich Re GRoup annual RepoRt 2011 declaRation of the BoaRd of manaGement
“to the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group.”
Capital Asset Pricing Model (CAPM) // capital market model used to evaluate securities, based on the portfolio theory. the capm expands the portfolio theory to include the question of which part of a security’s overall risk cannot be eliminated by means of risk diversification and explains how investment opportunities entailing risk are assessed in the capital markets. accordingly, in efficient markets where prices already incorporate all the information, a greater return can only be achieved by assuming more risk.
Catastrophe bond // also referred to as “cat bonds” and “act of God bonds”, catastrophe bonds are used to transfer (natural) catastrophe risks to the capital markets. the buyers of such bonds profit from a comparatively high coupon rate, but assume all or part of the (re)insurer’s risk with regard to a (natural) catastrophe. if a catastrophe exceeds the predefined parametric trigger, some or all of the capital and interest is used to pay the (re)insurer’s financial loss from the (natural) catastrophe instead of being repaid/credited to the buyers.
Convexity // a volatility measure to describe how a bond’s price will change as interest rates rise or fall. as with duration, the concept of convexity is based on an estimate of the bond’s present value. a customary bond with regular coupon payments and complete repayment of the principal on maturity will rise in price more strongly if interest rates decline than it will fall in price if interest rates rise. this phenomenon of convexity is caused by a change in the bond’s duration when interest rates change. falling interest rates result in an increase in the bond’s duration and thus in its interest-rate sensitivity, so that if interest rates continue to fall, the price rise accelerates. in the case of rising interest rates, the converse occurs.
Delta // also referred to as delta factor. a measure of the change in the option price relative to a change in the value of an underlying asset by one unit. if, for example, an option has a delta of 2, the option price rises by 2% if the value of the underlying asset increases by 1%.
Economic solvency ratio // calculated by dividing the available financial resources (after dividend and share buy-backs) by the economic risk capital, this ratio is an expression of munich re’s capital strength.
Income from technical interest // amount earned by assumed insurance business from the mainly risk-free investment of assets covering the technical provisions.
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.
Managing general agency business // Business where the insurer transfers the underwriting authority for a specific portfolio to a managing general agent or managing general agency (mGa) that acts on its behalf. Depending on the arrangement involved, the agent/agency may be assigned additional responsibilities such as claims handling or administrative tasks.
Morbidity // the probability that an individual in a given group will develop a certain disease or disorder.
Obligatory reinsurance // With this reinsurance, 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).
Solvency II // project of the european commission to fundamentally reform and harmonise european insurance supervisory regulations. solvency ii follows the three-pillar approach: minimum capital requirements (quantitative), supervisory review processes (qualitative) and market discipline (disclosure).
Technical provisions // uncertain liabilities directly connected with insurance business. these provisions are made to ensure that obligations under insurance contracts can always be met.
Ultimate loss // as calculated at the end of the calendar year under consideration, the ultimate loss for an accident year indicates the estimated aggregate claims expenditure that will have to be paid to finally settle the claim(s). it comprises the claims payments already made for the accident year in question and the remaining claims reserve posted for payments in future years. since claims re serves are based on estimates, the ultimate loss changes from one calendar year to the next. reference may therefore also be made to the ultimate loss position or the ultimate loss estimate.
Underwriter // member of an insurance or reinsurance company that acts on behalf of his or her employer to negotiate, accept or reject the terms of a (re)insurance contract. they are responsible for ensuring the quality and reliability of risk-transfer solutions. their job is to develop products that best reflect the characteristics of the risks and clients’ needs.
Unearned premium // the portion of premium income in the financial year that is attributable to periods after the balance sheet date is accounted for within the technical provisions as unearned premiums.
Value at risk // method of quantifying risk; measures the potential future losses that may not be exceeded within a specified period and with a specified probability.
General information // index of key terms munich re Group annual report 2011
Balance sheet total 103, 206 Board of management 8 f, 21 ff, 27 ff, 32 ff, 63 ff,
Participating interests 107, 277 ff pension provisions 162, 272 premium 73 ff, 87 ff property-casualty 79 ff, 90 ff, 130 f, 259 f remuneration report 32 ff, 109, 272 report of the supervisory Board 21 ff return on equity 61, 72 return on risk-adjusted capital (rorac) 34, 61 f, 72 risk capital 15, 61, 128 ff risk management 15, 120 ff risk model 129 ff
Share buy-back 12, 106 ff, 218 share price performance 10 ff, 70 strategic debt 104 subordinated bonds 106, 221 supervisory Board 7, 21 ff, 28 ff, 46 ff, 63 index of key terms
UK Great lakes reinsurance (uk) plc plantation place 30 fenchurch street, 3rd floor london ec 3m 3aJ
South Africa munich reinsurance company of africa limited munich re centre 47 empire road, parktown Johannesburg 2193
General information // important aDDresses munich re Group annual report 2011
Primary insurance erGo Versicherungsgruppe aG Victoriaplatz 2 40198 Düsseldorf tel.: 0800 37 46-0 00 tel.: +49 211 4 77-71 00 (from outside Germany)
Germany D.a.s. Deutscher automobil schutz allgemeine rechtsschutz-Versicherungs aG thomas-Dehler-strasse 2 81728 münchen tel.: +49 89 62 75-71 01 (from outside Germany) fax: +49 89 62 75-16 50 kundenservice@das.de www.das.de
info@ergo.de www.ergo.de erV europäische reiseversicherung aG rosenheimer strasse 116 81669 münchen contact@erv.de www.reiseversicherung.de further addresses may be obtained at www.ergo.com
Income from technical interest 5,897 6,587 5,794 4,804 – Net expenses for claims and benefits 41,034 36,583 32,392 28,716 30,469
Deduction of income from technical interest –5,897 –6,587 –5,794 –4,804 –
Attributable to Munich Reinsurance Company equity holders 702 2,422 2,521 1,555 3,840 Attributable to non-controlling interests 10 8 43 24 83 1 The figure for 2011 is not adjusted for relief of 1.3 percentage points from economic risk transfer to the capital markets.
1. Earned premiums 3. Expenses for claims and benefits 4. Operating expenses
Thereof: Income from associates accounted for using the equity method 100 16 35 43 6 9. Deduction of income from technical interest –5,897 –1,780 –1,547 –1,147 –1,423 12. Other non-operating result –707 –216 –407 2 –86 13. Impairment losses of goodwill 25 – 4 – 21 15. Taxes on income –552 –144 62 142 –612
Thereof: Attributable to Munich Reinsurance Company equity holders 702 627 286 736 –947 Attributable to non-controlling interests 10 5 4 2 –1