ITERGO commences operations as the central IT service provider in the ERGO Group.
Rating agency Standard & Poor’s reaffirms its top rating of AAA for Munich Re.
Since 1st April MEAG has been managing a large portion of the Munich Re Group’s assets.
ERGO reaches agreement with Deutsche Telekom on a joint venture: the creation of an Internet marketplace on which ERGO offers its insurance products and MEAG’s financial services.
The AGM authorizes the Board of Management to buy back Munich Re shares up to a total amount of 10% of the share capital.
Reinsurance: Since 1880 Munich Re has embodied competence in handling risks to an extent virtually unparalleled worldwide. 5,000 insurance companies in around 150 countries rely on our expertise and financial strength. We assume a part of their risk and find solutions for the whole spectrum of risk management.
Primary insurance: Our primary insurers – ERGO, Karlsruher and Europäische Reiseversicherung – offer the highest degree of security and service to their more than 25 million clients. Having a strong footing in primary insurance, especially personal lines business, is an important part of our strategy. Given current demographic trends, there is great potential for growth in insurances of the person in particular.
At a press conference Munich Re reports on the first half-year 2000: growth exceeds expectations, the result is satisfactory, but claims costs in reinsurance have continued to be high.
MARC reaches agreement with CNA to acquire its life reinsurance business.
Munich Re, together with several partners, opens the Internet-based reinsurance exchange “inreon” providing risk transfer for standardized reinsurance covers.
Munich Re presents an initial analysis of the natural hazard losses in 2000. According to this analysis, the number of natural catastrophes climbed to a new record high.
– We aim to increase our profit by 10% annually on average, and were certainly successful in this respect in the past business year: adjusted to eliminate special factors, our profit for 2000 was up by 50%.
More than 35,000 staff in Germany and around the world have contributed to our corporate success through their skill and commitment. I wish to thank them all most sincerely for their hard work in the past year and pay tribute to their performance and dedication.
– In reinsurance, too, there are promising growth perspectives for us in the medium term especially in life and health. Our outstanding capital strength makes us a preferred partner in this capital-intensive business. We will also continue to grow in non-life reinsurance.
Our business environment, and with it the Munich Re Group, will change further in the next ten years – even more than in the past decade. Besides the above-mentioned demographic developments, the following four factors will play a significant part: – The enormous capital requirements for investments in the high-tech sector
– The need for security deriving from the new lead technologies of microelectronics and genetic engineering
– An increasing interdependency of risk potentials as a consequence of urbanization, climate change, concentration of values, and economic globalization.
But within the Munich Re Group, too, things are in motion. This includes making timely adjustments to our organization and to our operational processes and tools in order to take account of changes in our business environment. A current example: the far-reaching restructuring of our organization in reinsurance business, which we initiated at the end of 2000 and which will be implemented at the beginning of July this year.
Ladies and gentlemen, in the past it has been worth your while being shareholders of Munich Re – not least for the long-term investors amongst you. We will do our utmost to ensure that this will continue to be the case in future.
Europe 1 together with Christian Kluge Europe 2 and Latin America together with Dr. jur. Nikolaus von Bomhard
Europe 2 and Latin America together with Dr. jur. Hans-Wilmar von Stockhausen
In the business year 2000 Munich Re took important strategic steps to consolidate and extend its position in the insurance and reinsurance markets. In so doing, it was able to continue building on very solid financial foundations.
All members of the Supervisory Board were notified without delay, as well as at the meetings, about transactions that were of particular significance for the further development of the Group. This included the plans of Munich Re and Allianz to restructure their shareholdings in jointly held companies and to reduce their reciprocal shareholdings to around 20% each.
The Annual General Meeting on 19th July 2000 adopted a number of amendments to the Articles of Association. In particular, the approval of a new amount for capital increases and the authorization to buy back shares were discussed with the Supervisory Board as a preparatory measure.
The Board of Management also informed us regularly about the problems in connection with the Holocaust and forced-labour compensation, and consulted us before Munich Re joined the Foundation Initiative of German Enterprises: Remembrance, Responsibility and Future.
With effect from 1st January 2000, we appointed Dr. Nikolaus von Bomhard (44) a member of the Board of Management. He has been with the company for many years, and most recently headed Munich Re’s business unit in São Paulo. With effect from 1st April 2000, we also appointed Dr. Jörg Schneider (42) to the Board of Management. He joined the company in 1988 and headed the Group section of the Asset Management Division prior to becoming a Board member. On being appointed to the Board of Management, Dr. Schneider gave up his seat on the Supervisory Board as at 31st March 2000. Mr. Klaus Biebrach was appointed his successor on the Supervisory Board.
The Supervisory Board wishes to express its thanks and appreciation to the members of the Board of Management and all staff for their hard work and commitment.
CHAIRMAN Ulrich Hartmann Chairman of the Board of Management of E.ON AG
Dr. jur. Rolf-E. Breuer Spokesman of the Board of Management of Deutsche Bank AG
Dr. techn. h. c. Dipl.-Ing. ETH Ferdinand Piëch Chairman of the Board of Management of Volkswagen AG
Member of the Board of Management of the Munich Reinsurance Company (from 1st April 2000)
>>_______Munich Re’s wide-ranging and globally diversified operations may also appear confusing to some people at first sight. However, the capital market has long recognized the clear strategy that lies behind these operations and the growth potential that it promises. And so, in the past year, Munich Re’s shares recorded an outstanding performance of plus 51%.
Well into the first quarter of 2001, the market’s underlying trend remained unclear. As at 11th May 2001 the DAX stood at 6,141 points.
With growth in value of 50.9% in the year 2000, Munich Re shares produced an outstanding performance. Also in comparison with the Morgan Stanley Insurance Index, their performance was well above average.
Our share price started the year at €251.80. It received a strong boost from the largely loss-free millennium changeover, so that on 13th April it had climbed to its first peak of €358.50. At the same time, Standard & Poor’s affirmed its top rating of AAA, which also had a positive effect. Turnover was generally at a high level, the annual average being 441,500 shares in Xetra trading.
Munich Re registered shares German share price index (DAX) Morgan Stanley Insurance Index (in €) Status: 11th May 2001
J F M A M J J A S O N D J F M A M
Profit-taking in December led to the price ending the year at €380.00. Our market capitalization as at 31st December totalled €67.2bn, having risen by 50.9% year on year. Our shares are one of the biggest stocks on the German market.
Market capitalization as at 31st December €bn 67.2 44.5 Average daily turnover in Xetra trading ’000 441.5 293.3 Price/earnings ratio as at 31st December 38.4 39.0 Earnings per share € 9.89 6.45 Dividend per share € 1.25 0.95 Tax credit per share (for German shareholders) € 0.54 0.41 Overall dividend amount €m 221 168
In 2000 Munich Re considerably stepped up its investor relations activities. Our first analysts’ conference took place in May and was very well received. During the course of the year Munich Re also held a large number of company presentations and telephone conferences. Besides this, the newly formed investor relations team conducted over 100 individual discussions with analysts and fund managers both in Germany and abroad and took part in several international conferences. Separate events on insurance-related topics have also met with a positive response from analysts and fund managers and helped give them a better understanding of our business operations.
– The exchangeable bonds were issued on 8th May 2000 with an annual coupon payment of 1% on the face value. Investors are entitled to convert each of their exchangeable bonds into Allianz shares, so that the investment represents a combination of bond and call option. The bonds’ volume totals €1.15bn or around 1% of Allianz’s share capital. They were several times oversubscribed and at the end of the year stood at 102.38%. Their term ends on 8th June 2005 with a redemption rate of approximately108.6%.
Performance of a specimen portfolio as from 30th December 1991 in €’000
“An overwhelming sight, this planet ...!” The astronauts of Apollo 11 were among the first men to view our planet like this, and what they saw filled them with awe: seas and deserts, fine weather zones and even cloud vortexes were clearly visible from space. >>
>>_______If Armstrong, Aldrin and Collins could have taken a similar look at the economic year 2000, they would have reported three things: an economic high-pressure zone extending almost right round the earth, mild weather over Europe, and, towards the end of the year, a cooling down of the economy, spreading from North America. Whilst the climate in the insurance industry distinctly improved, turbulences continued to predominate on the world’s stock markets.
Driven by exports, the economy in the European Monetary Union countries began to pick up in 2000 (+3.4% real GDP), but in the second half-year signs of a slowdown were apparent here as well. In particular, higher oil prices compared to the previous year and a total of seven interest rate hikes by the European Central Bank (ECB) since November 1999 had a detrimental effect. The strongest growth in Western Europe was again in Ireland – followed by Luxembourg and Finland – whereas Germany, with growth of 3.0%, could only manage a mid-table place. But here, too, the upswing reached its highest level since 1991.
The good economic situation meant an expansion in employment. EU-wide the unemployment rate showed a pleasing fall by almost one percentage point to 8.2%.
The emerging markets made good headway: with only a few exceptions, their growth curve showed an upward trend.
Growth in Indonesia, Thailand and the Philippines was below average. By contrast, the robust economic upturn in China and India (8.0% and 6.4% respectively) continued unbroken. After the crisis year 1999, the economy in Latin America rallied again, thanks in particular to strong exports to the US. Brazil seems to have overcome the loss of confidence connected with last year’s devaluation, while Argentina is still being hampered by the real overvaluation of its currency (financial crisis in the autumn). The economic trend in the Near and Middle East was also pleasing. The large increase in the price of oil gave additional impetus to growth and visibly improved balances of payments.
DAX 30 DJ EURO STOXX 50 DOW JONES INDUSTRIALS Source: DATASTREAM
Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Development in the past year was unspectacular. After 1999’s dynamic upward trend in interest rates, yields and volatility on the bond markets receded in 2000. In Euroland, yields on ten-year public-sector bonds fell from 5.35% at the start of the year to under 5% towards the end of the year, but they only fluctuated in a bandwidth of just over 80 basis points. A more pronounced movement, although tending in the same direction, was also to be seen in the US.
Particularly as from the middle of the year, however, increased risk aversion on the part of investors was evident. Triggered not least by the re-evaluation of risks in the IT sector, the interest rate differentials (spreads) between corporate and government bonds shot up.
Insurances of the person again proved to be the driving force behind the insurance industry as a whole in the year 2000, while the propertycasualty sector continued to struggle with meagre growth. Generally, the insurance industry benefited worldwide from the positive economic development.
Looking beyond 2001, the structural trend towards low inflation rates in the world economy will continue – core inflation is currently hovering around the 2% level. The general interest rate level should therefore not move outside the range of 4.5% to 6.5% in the long run. The yield curve will be comparatively flat, and periods with inverted interest rates will occur more frequently.
When, in 1957, six states got together to form the European Economic Community, scarcely anyone could have dreamt that it would grow into such a vital economic area. Back then, probably no one anticipated how this union would continue to develop, despite all national resistance, and that it would one day have a single currency. Today, Euroland even has the potential to become the engine of the world economy. >>
54% (51%) of the premium income derived from REINSURANCE. Here premiums grew by 19.2% (8.6%) to €18.3bn (15.4bn); the main contributors to this steep rise were life, motor and fire business. Regionally speaking, our business expanded particularly in the rest of Europe and in North America.
Our RESULT BEFORE AMORTIZATION OF GOODWILL improved in the business year 2000 by 43.6% to €2.6bn (1.8bn).
The CONSOLIDATED PROFIT FOR THE YEAR rose 54.5% to €1.75bn (1.1bn); in the previous year it had fallen by 5.6% compared with 1998. The result for 2000 was positively influenced by the first-time consolidation of investment funds classifying as “special funds” and the reduction of the corporation tax rate in Germany, which contributed €180m and €320m respectively. Without these two effects, the profit for the year would have been €1.25bn (0.8bn) or 50% up on the previous year.
One of the main competitive strengths of the Munich Re Group and its companies is their outstanding CAPITALIZATION. Shareholders’ equity increased to €23.6bn (18.5bn) in the year under review.
UNDERWRITING PROVISIONS grew to €131.5bn (123.5bn) and our INVESTMENTS reached €159.4bn (150.9bn).
For many years Munich Re has belonged to the small band of reinsurers awarded top ratings by the leading rating organizations A.M. Best, Standard & Poor’s and Moody’s (A.M. Best: A++; S&P: AAA; Moody’s: Aaa).
American Re-Insurance Company A++ AAA Aaa American Alternative Insurance Company A++ AAA Princeton Excess and Surplus Line Insurance Company A++ Munich American Reassurance Company A++ AAA Great Lakes Reinsurance (UK) PLC A++ AAA Munich Reinsurance Company of Canada A++ AAA Munich Reinsurance Company of Africa A++ Munich Reinsurance Company of Australasia A++ AAA Münchener Rück Italia A++ AAA New Reinsurance Company, Geneva A++ AAA
On the other hand, the global market for cover against risks continues to grow, not least because insured values and exposure to natural catastrophes are constantly increasing. The fact that many primary insurers seek comprehensive protection against risks and equalization of their results over time opens up many promising business opportunities for reinsurers.
Results for the year 2000 were disappointing for the reinsurance sector worldwide. The reinsurance capacity available decreased in many markets, but there was still an oversupply. Although global reinsurers’ underwriting results had declined considerably in the previous years and were heavily in deficit in 1999, it did not prove possible to achieve price increases and improved conditions across the board during the treaty renewals for the year 2000. Moreover, the losses caused by the gales of December 1999 came too late to be taken into account in the negotiations. Prices for reinsurance did rise in the course of 2000, however, and in some cases quite substantially – especially for business exposed to natural catastrophes. Original rates also rose in some primary insurance markets. These positive changes will only have an impact on the current year’s results, however.
Our basic business in non-life reinsurance suffered not only from inadequate prices and conditions, but also from a large number of major losses in the fire, engineering and liability classes of business. On top of this came heavy losses from our marine and aviation business on the London market.
In LIFE business we again succeeded in expanding our premium considerably, by 22.1% (19.1%). Unlike in the previous year, premium growth in 2000 came from outside Germany alone. Our growth in North America, the UK, France and Italy was particularly strong, while our premium income in Latin America also developed very satisfactorily. In Asia, on the other hand, we did not quite manage to match our earlier growth rates, as the Asian life insurance markets are only slowly recovering from the financial crisis. Premium from domestic business was slightly down on the previous year, mainly because of the restrained trend in the German life insurance market. We still managed to improve our result again compared with the previous year.
We provide our business partners with intensive support in developing modern life insurance products for new target groups. Our approach is to advise clients individually and provide solutions geared to their particular needs. We identify new business opportunities, help with financing, and offer specially tailored reinsurance concepts (e.g. in the area of private annuity or long-term care insurance), which are increasingly gaining in importance. As reinsurers, we also partner our clients in individual markets in such major changes as the transformation of mutual insurance companies into stock companies. Thus in the Canadian market in particular, we were able to strongly assist our business partners with special reinsurance solutions when the five biggest life insurance companies there completed their demutualization last year. The pleasing consequence for us was that on this basis we were again able to achieve above-average business growth.
The acquisition of CNA Financial Corporation’s life reinsurance business by our subsidiary Munich American Reassurance Company takes us a big step forward in the US market. We again expect our growth rates in North America to be higher than average. We also see new business opportunities in young or opening markets such as China, India and Brazil.
Liberalization and privatization of state social security systems is proceeding worldwide. This change offers chances for expansion, especially in the fast-growing economies of Latin America, the Middle East and Asia. We are well-placed to make use of every favourable opportunity. In China, for example, we entered into further strategic cooperation arrangements with local partners during the year under review. In India we acquired a stake in a service company that specializes in the administration of health business. However, we also see opportunities in the established markets of Europe and North America to further strengthen our position, because we not only offer our clients protection against risk but also provide advice and services along the entire value-added chain.
For 2001 we hope to see further growth in our premium income, especially from new business. Remedial measures and improvements in claims management will have a positive effect.
We continue to see liability insurance as a class of business with growth potential. But the trend among our clients of increasing retentions and switching from proportional to non-proportional covers is persisting. Demand for highly specialized reinsurance covering complex risks and new products also continues to grow.
In 2001 we expect a further increase in our gross premiums and on balance an improvement in results, despite greatly varying performances of individual markets.
Aviation and marine insurance performed exceptionally badly last year, with very negative results, particularly from our business in the London market.
In all three classes, however, prices rose perceptibly in both the insurance and reinsurance sectors. After four years of constantly falling rates, there are now clear signs of a sustained hardening of the market, which is characterized by strong cyclical patterns, especially where aviation and space business are concerned. We are now assuming that the cycle has bottomed out and are expecting an increase in our premium as well as a significant improvement in results in the coming years. Whether we will go into the black already in 2001 will largely depend on what major losses affect us during the current year.
In FIRE business the excessive competition in a series of important insurance markets eased off towards the end of the year under review – it had led to inadequate prices and conditions primarily in industrial fire insurance and for natural hazard covers. But an improved price-performance ratio could in fact only be achieved in a few markets. Nevertheless, in two important markets, namely the US and Japan, we did succeed in bringing the prices of our covers closer to a level commensurate with the risk.
Contrary to our original expectations, our premium in 2000 rose by 16.4% (3.7%), with growth coming exclusively from outside Germany. Thanks to intensive consultation and acquisition, we were able to write lucrative new business there that satisfied our quality requirements. Half of the growth in premium was due to changes in exchange rates, however.
In the previous year a large number of expensive natural catastrophe losses had led to an exceptionally negative result. In the year under review there was a sharp fall in losses from natural catastrophes, although the number and cost of other major losses remained at the same high level as in the previous year. Consequently, the result was less disappointing than in the previous year, but still totally unsatisfactory.
In the ENGINEERING classes of business (machinery, EAR, CAR, electronic equipment, etc.) massive exchange-rate influences and new business led to an 18.2% increase in premium, whereas in the previous year there had been a decrease of 10.5%.
The result was again negative in the year under review. There were two main reasons for this: on the one hand, prices were still inadequate and, on the other, we were hit by a large number of major losses.
Our result was positive overall in the year under review, although in large parts of Europe figures were badly hit by hail losses; in the previous year, losses from gales and hailstorms had brought us a large deficit. Credit business again recorded a satisfying profit.
The windstorms in December 1999 and the incipient hardening of the markets resulted in significant rises in the prices of our covers for business exposed to natural hazards. As long as there are no major windstorms in Germany this year, we should once again be able to achieve a profit. Credit business could also contribute to this, although the insolvency situation has deteriorated further.
Broken down by region, our premium income developed as follows: Gross premiums in €m 2000 Prev. year Change in %
Asia and Australasia 1,224 972 25.9 Africa, Near and Middle East 708 505 40.2
In the current business year we expect an increase in premium income and a better result.
Most of our German reinsurance business is written by the parent company. Our position as market leader is undisputed. Our premium income grew by 2.8% to €5.0bn (4.9bn), even though our clients are also raising their retentions and converting their reinsurance programmes to less premium-intensive forms of cover. In individual cases, we last year consciously gave up business for which we were unable to achieve commercially acceptable prices and conditions.
The UK is our second-largest market in terms of reinsurance premium, with a share of 21.0% (14.7%). We are represented in all segments of the market, with an office, two branches and several subsidiaries, including Great Lakes UK. We were able to strengthen our top position in non-life reinsurance further last year; in life reinsurance we continue to be the number two.
Our subsidiary Great Lakes UK generates a major part of its business from space insurance.
Although price competition in the primary insurance market is very strong, we were able to considerably expand our portfolio: not only did we acquire new business but we also profited from the restructuring of our clients’ reinsurance programmes.
In contrast to our premium income, the underwriting result for 2000 showed a decline, but it was still just in the black. Apart from pressure on prices, we were also affected by a random accumulation of loss events. One of particular note was the explosion in a fireworks factory in Enschede on 13th May 2000, which cost us around €25m.
Although we have not renewed a number of loss-producing treaties, our premium income will continue to increase in 2001. This will be mainly due to higher reinsurance prices, and will have a positive effect on our result.
Gross premiums Lit bn 1,200 1,046 Net premiums Lit bn 592 502 Loss ratio non-life % 86.2 88.7 Expense ratio non-life % 26.4 26.7 Profit for the year Lit bn 8.1 43.7 Investments Lit bn 2,159 1,999 * Financial statements in accordance with IAS.
There is potential for expanding our Italian business especially in insurances of the person; life insurance continues to experience one of the highest growth rates in Europe.
Although our Italian clients are also raising their retentions, we nevertheless expect a slight increase in premium income in the current year and a better result.
In 1999 our result had fallen deeply into the red owing to claims costs from the winter storms Lothar and Martin. In the year under review we did not manage to return to the profit zone; the renewed deficit was mainly caused by subsequently reported claims from the two gales, by hail damage and by problems in liability insurance.
The turnaround is there, however: reinsurance conditions are changing in our favour, so that the result should improve further.
After windstorm Lothar in December 1999, Switzerland was hit by heavy flooding and landslides in Vallais and Ticino in October 2000. These events also had a knock-on effect on our subsidiary New Re.
New Re’s unsatisfactory result again in 2000 is attributable to three factors: claims from natural catastrophes, major fire losses, and deficits in motor and marine business. In the treaty renewals for 2001 New Re terminated a large number of loss-producing treaties. On top of this, it was able to achieve improvements in reinsurance prices in many instances, so that we expect a reversal of the result trend in the current year. Premium income is likely to stagnate.
We were again able to record appreciable premium growth of 3.1% on the Iberian Peninsula in 2000. Our result, on the other hand, suffered badly. This was firstly because of the fall in original rates – especially in property insurance – and secondly because of several major losses in fire and motor business.
In Scandinavia we managed to extend our position as market leader and expand our premium volume by 28.9%. We profited from higher rates in primary insurance, but also managed to acquire new business and augment shares in existing reinsurance programmes. Our result in the year under review was again very negative, the reasons being largely the same as in the previous year: poor experience in Norwegian workers’ compensation insurance and subsequent claims from windstorm Anatol, which hit Denmark in December 1999.
Our premium income from the North American market grew by 23.6% (23.0%) to €5.5bn (4.4bn) in 2000. Without the appreciation in the value of the US dollar and the Canadian dollar, however, growth would have been restricted to 8% (18%). The result was better than in the previous year.
1999 saw prices reach what was evidently their lowest point, after several years with an oversupply of reinsurance capacity and attendant price erosion: since the first half-year 2000 insurers and reinsurers have been achieving rate increases again, especially in property, motor, and workers’ compensation business.
The upswing in the market and the remedial measures taken will only make themselves fully felt in the coming years. We anticipate significant growth, especially in specialized classes of business (alternative markets, health, and credit enhancement) and from the expansion of the business we write via brokers.
Munich American Reassurance Company (MARC), which specializes in life reinsurance business, exceeded its growth targets. It increased its new business by 118.8% (99.3%) and its premium income by 47.7% (65.9%). It distinctly improved its market position through the acquisition of CNA Financial Corporation’s life reinsurance portfolio. We thus took a big step towards our goal of being one of the top reinsurers in the important US life market as well; the acquisition will not be reflected in the figures until 2001.
In order to reinforce MARC’s financial base for the expansion of business, we increased its capital by US$ 470m.
Gross premiums US$ m 446 302 Net premiums US$ m 237 166 Profit for the year US$ m 6.4 14.1 Investments US$ m 1,584 936
Munich Reinsurance Company of Canada, Toronto, is the leading reinsurer in the Canadian non-life market. It managed to defend its position well, even though there was an oversupply of reinsurance capacity in the market and reinsurers’ premium volume suffered as a consequence.
Our branch in Toronto, Munich Reinsurance Company Canada Branch (Life), recorded very large growth in premium income and remains the market leader. We are proceeding on the assumption that our business in this market will continue to show above-average growth in the current year, despite the keen competition.
We are reckoning with a further increase in our gross premium income in the current year and with a good result. This expectation is founded to a considerable extent on the continuing rise in reinsurance prices.
Japan is still struggling with a recession. In the insurance industry the problems are exacerbated by the structural consequences of deregulation.
In both these developing markets, the investment climate improved in the year under review. It is now possible to establish and operate private insurance companies. In the People’s Republic of China we have therefore applied for a licence to open a branch; in India we have already obtained approval for a representation office.
This insurance market, in which deregulation has also now begun, is one of the ten largest in the world. It offers reinsurers considerable growth potential. We have obtained the necessary licence for converting our office there into a branch. Our premium and our result developed respectably in the year under review.
The long-standing consolidation process in the insurance industry is continuing in Australia and New Zealand. In life business the sale of term insurance products has been stagnating for years. On the other hand, there was a pleasing rise in original rates in property-casualty insurance in the year under review.
MRA did well in this conflicting environment: in its home market it was able to acquire new business, and in New Zealand it managed to keep within limits the fall in premium resulting from the renationalization of workers’ compensation business.
Gross premiums A$ m 460 401 Net premiums A$ m 145 104 Loss ratio non-life % 64.0 144.9 Expense ratio non-life % 27.8 20.5 Profit for the year A$ m 16.5 –19.7
Our premium income in this business region revived, rising by no less than 40% to €0.7bn (0.5bn). We selectively expanded our motor and health business. The result improved again in the year under review, but was still negative owing to major losses. For the current business year we expect higher premium income and a reduction of the deficit.
Munich Reinsurance Company of Africa (MRoA), which services all the sub-Saharan markets, achieved premium growth of 33.6%. In spite of windstorm and flood claims, as well as a large number of fire losses, the profit for the year was up by 14.3%.
Gross premiums Rm 1,738 1,301 Net premiums Rm 761 554 Loss ratio non-life % 72.2 75.4 Expense ratio non-life % 26.9 35.8 Profit for the year Rm 66.4 58.1 Investments Rm 2,222 1,734
Economic growth varied from country to country in this region last year, but was only moderate as a whole: countries with high growth rates, e.g. Mexico, Chile and Brazil, contrasted with others that are firmly in the grip of recession, e.g. Argentina, Venezuela and Colombia. The long hoped-for liberalization of the Brazilian insurance market, which promises a significant increase in our premium income, has still not been realized.
>>_______Because more and more people wish to (or have to) protect themselves against these risks, insurances of the person offer very promising growth potential. Our primary insurers are extremely well prepared for this. They contribute 46% of our Group’s premium income. In the past business year they recorded dynamic growth, especially abroad.
Gross premiums €bn 14.4 13.5 Result before amortization of goodwill €m 1,342 948 Investments €bn 102.9 97.5 Net underwriting provisions €bn 87.3 82.9
The result before amortization of goodwill improved by 41.6% (13.4%) to €1.3bn (0.9bn).
72% (73%) of our premium income in primary insurance derives from life and health business, where we recorded premium growth of 5.0% (7.2%) in the year under review.
The Munich Re Group ranks among the top three German life insurers. At €1.2bn, our new business production was less than in the exceptional year 1999. Particularly in the second half of 2000, clients held back with new policies, waiting for political decisions on the parameters of pension reform in Germany. This contrasted with 1999, when the tax reform plans of the German government had prompted many people to bring forward decisions to take out life insurance, which had enabled us to write new business amounting to €1.6bn.
Our premiums in life insurance climbed by 4.1% (9.8%) to €6.5bn (6.2bn), with foreign subsidiaries contributing €0.4m (0.3m) to this. Expenses for claims and benefits rose by 17.2% (6.8%). Operating expenses showed a decrease, mainly because of the reduction in new business.
There are two reasons for our strong growth in this sector. On the one hand, new subsidiaries – especially the companies of Alte Leipziger Europa – have been consolidated in our figures since 1st January 2000. On the other hand, the Group was also able to expand in all the main classes of business in Germany. Overall, our premium income rose by 11.4% (4.7%) to €4.1bn (3.7bn), to which the foreign subsidiaries contributed €0.9bn (0.7bn). Expenses for claims and benefits showed a further increase, but the combined ratio is satisfyingly low.
In legal protection insurance we were able to strengthen our position as European market leader.
There was growth of 4.4% (11.3%) to €88.8bn (85.0bn) in ERGO’s investments; the investment result totalled €7.2bn (5.3bn) – a plus of 36.8%, which reflected the first-time consolidation of the special funds.
Shareholders’ equity amounted to €6.3bn (5.2bn) at the end of 2000, or 22.7% (22.1%) more than in the previous year.
For ERGO, the year under review was hallmarked by its acquisitions abroad: the addition of Alte Leipziger Europa mid-year and Bayerische Vita in December has strengthened its position in European growth markets. ERGO’s foreign business recorded a leap in premium of over 42% to €1.7bn (1.2bn). The proportion of premium written abroad rose to 13% (10%); if the newly acquired companies had been fully consolidated rather than pro rata temporis, they would have contributed 18% to gross premium income.
Expenses for claims and benefits were up by 21.7% in the year under review and totalled €8.2bn (6.8bn). The first-time consolidation of the special funds was reflected in a markedly higher allocation to the provision for deferred premium refunds and policyholders’ dividends, because policyholders will participate in the capital gains achieved by these funds in the same way as with other investments.
€4.0bn (3.5bn) was paid out to policyholders in maturity benefits or annuity payments. A large portion of this was reinvested by clients in ERGO products: the reinvestment rate again totalled a satisfactory 19%.
At €4.2bn (3.6bn), expenditure for claims was 16.9% up on the previous year. The provision for deferred premium refunds and policyholders’ dividends in particular was substantially augmented owing to the firsttime consolidation of the special funds.
The property-casualty insurers succeeded in achieving growth of 7.4% (2.4%) to €3.5bn (3.3bn), with €0.6bn (0.4bn) stemming from abroad. The new foreign subsidiaries that were consolidated for the first time had a positive effect.
For the first time in many years, German motor business contributed to premium expansion as well, mainly due to rate increases for new and existing business. There was also pleasing premium growth in the strategically important personal lines of homeowners’, personal accident, and liability insurance.
Karlsruher Lebenversicherung AG’s new business declined by no less than 32.9%; in the business year 1999 it had received a boost from the German government’s tax plans and had grown by 61.7%. Gross premiums remained stable at €1.1bn. The insured portfolio (in terms of annual premiums) showed a slight rise of 0.2% to €0.8bn (0.8bn). The profit for the year increased to €17.0m (15.7m).
Karlsruher Versicherung AG grew its premiums by 12.0% to €205.3m (183.3m). Despite a higher loss ratio, it improved its profit for the year to €5.5m (3.4m).
Karlsruher will continue to concentrate on private and commercial clients. The field force is to be expanded, and cooperation with banks enhanced. Other strategic objectives are even closer collaboration with brokers and the use of the Internet to market its products.
The concentration process in the tourist industry has intensified in both Germany and Europe as a whole. The Federal Republic now has a third major travel group in addition to C&N and TUI – the REWE Group. All three operators are expanding their business beyond Germany to neighbouring European countries. EUROPÄISCHE, Munich, has taken account of this by building up an international network of subsidiaries and participating interests, and is now represented in all the main European countries.
A total of 656 (631) staff were employed by EUROPÄISCHE and its subsidiaries in 2000.
>>_______The investment experts of MEAG (the joint-venture asset management company of Munich Re and ERGO) are especially successful in this. Despite the downslide on the stock markets, they managed to substantially increase the investment profit again last year. Our investments grew by more than 5% to €159bn.
Pronounced price fluctuations and, all in all, a negative performance characterized the world’s stock markets in the year under review. Following index highs in spring 2000, some sharp price falls led to tension among the market players. By contrast, activity on the bond markets was unspectacular: after the dynamic upward trend in interest rates in 1999, yields and volatility on the bond markets decreased in 2000. Further details of how the equity and bond markets performed in 2000 can be found in Section 04 (Economic Parameters).
One criterion was more crucial than any other last year for the success of an investment in shares: the choice of individual stocks and sectors. The performances of different sectors were already starting to diverge at the end of 1999, and this trend continued in 2000. When a US court tried to break up Microsoft, the global market leader in software, technology stocks around the world began a downslide, with price losses of up to 70% in the representative technology indices.
Our asset management company MEAG MUNICH ERGO AssetManagement GmbH was set up in 1999 as a joint-venture subsidiary of Munich Re and ERGO. It manages the assets of all the insurance companies in the Group and also those of third parties. The concentration of all our expertise in this field and the specialization of our fund managers in individual investment sectors enables us to practice concerted asset management for the whole Munich Re Group.
In December 2000 our local unit in Hong Kong commenced operations. Together with our company in New York, we now have greater expertise locally to handle investments in the American and Asian markets. The three asset management units in Munich, New York and Hong Kong are closely linked through intensive knowledge transfer and a coordinated investment process.
Insurers have to bear in mind three criteria when making investments: profitability, security and liquidity. In an environment characterized by mounting performance expectations on the part of clients and shareholders, by low interest rates worldwide, and by considerable volatility on the capital markets, an appropriate investment structure is one of the most important elements of modern risk management. In the process of strategic asset allocation, the insurance companies of the Munich Re Group conduct their asset-liability management in close cooperation with MEAG; here the matching of liabilities with assets in the same currencies plays a key role, helping us to limit currency risks.
Shareholders’ equity at the balance sheet date contains unrealized gains on investments totalling €9.5bn (7.3bn). The fair value of our real estate amounted to €10.5bn (9.2bn), and the fair values of our investments in associated enterprises to €33.0bn (27.3bn). This means there are valuation reserves of €21.9bn (19.2bn) which are not included in shareholders’ equity.
The investment result rose by 28% to €12.2bn (9.5bn). In spring 2000 the Group’s primary insurers in particular took advantage of high prices on the stock markets to realize capital gains. Besides this, the first-time consolidation of the special funds gave the result an appreciable boost.
It really is a small miracle, a plant like this. Though extremely light and flexible, it has been formed by nature to withstand rain, hail, heat, and even drought. >>
We have set ourselves the goal of increasing our profit before tax and amortization of goodwill by an annual average of 10%. Whether we achieve this depends not only on how the capital markets perform but also, to a significant extent, on the claims costs from natural catastrophes and other major losses that may affect us in reinsurance. Our function as a reinsurer consists primarily of mitigating random fluctuations in the results of our clients. In individual cases, we assume high liabilities, which makes our results here correspondingly volatile.
In REINSURANCE the renewal of treaties for 2001 went well: Munich Re and its subsidiaries were able to implement price increases in many cases and also improve conditions in other respects. Owing to the rises in rating levels and the pleasing amount of new business – especially in life reinsurance – reinsurance should again show considerable growth in premium income. The foundations for a more favourable reinsurance underwriting result have thus been laid. Nevertheless, further corrections in prices and conditions are still imperative.
Altogether, we expect another good result from life reinsurance in the current business year and – given normal claims experience – a substantial improvement in the non-life reinsurance result; our target of achieving a combined ratio of less than 105% will probably not yet be reached, however.
All the transactions are scheduled to be completed next year, following approval by the competent authorities. They will lead to better use of the existing shareholders’ equity and, quite apart from the high tax-free capital gains, will have a lasting positive effect on results.
It was also agreed in May 2000 that Allianz would acquire Munich Re’s stakes of 45% in Bayerische Versicherungsbank AG and 49.9% in Frankfurter Versicherungs-AG. In return, Munich Re has already acquired Allianz’s interest of 39% in Mercur Assistance and will obtain its holding of 36.1% in Karlsruher Lebensversicherung in 2002.
In return, the Munich Re Group will acquire from Allianz and Dresdner Bank all of their shares in the HVB Group (13.55% and 2.5% respectively). Furthermore, Munich Re will increase its holding in ERGO Versicherungsgruppe AG from 62.9% to up to 95%; the HBV Group will hold a 5% stake in ERGO. Allianz’s stake in Munich Re will be reduced to 23%.
Our risk managers are responsible for risk management and risk control in their functional area (i.e. in the insurance and reinsurance subsidiaries or in the central and operational divisions at the parent company). They assess the risk situation and propose measures for making identified risks manageable – in other words, they control the risks in their particular area.
Central risk management is responsible for overarching risks and for the conceptual development and maintenance of the risk management system. It supports the risk managers of all units and has the authority to issue guidelines to them in respect of the risk management system. In order to ensure the independence of this function, the task of central risk management has been assigned to Munich Re’s Controlling Division.
Besides this, our Internal Auditing Division, an operationally independent unit, checks whether our monitoring measures are effective and complete.
Underwriting risks in insurance and reinsurance include the – PREMIUM/CLAIMS RISK: in property-casualty business, the risk of having to pay, from premiums fixed in advance, indemnity amounts whose scope is uncertain at the time the premium is fixed owing to the stochasticity of future claims payments (risk of random fluctuations and risk of change); – PREMIUM/BENEFITS RISK: in life and health insurance, the risk of having to pay over a long period, from a level premium that is fixed in advance, unchanging benefits that are dependent on future developments (risk of change); – INTEREST-GUARANTEE RISK: present in lines of insurance with guaranteed interest payments; – RESERVE RISK: inherent in underwriting provisions.
Investment risks comprise – MARKET PRICE RISKS, which involve potential losses as a result of deleterious changes in market prices, i.e. due to fluctuations in interest rates, share prices or exchange rates; – CREDIT RISKS, which result from changes in the creditworthiness of issuers or counterparties; – LIQUIDITY RISKS, which can jeopardize the fulfilment of payment obligations through delays in cash inflows and outflows.
– in the form of OPERATING RISKS attributable to human or technical failure or to external factors, and
– in the form of LEGAL RISKS arising from contractual agreements or the general legal environment.
In our underwriting guidelines and limits, we have clearly regulated responsibility and accountability for concluding reinsurance agreements. The sales staff of our primary insurance companies are given binding guidelines for the acceptance of business. Adherence to these guidelines is continually monitored.
It is therefore essential, and has long been our practice, for the natural hazard liabilities underwritten to be strictly limited and permanently controlled on a uniform basis throughout the Group. In order to limit loss amounts from natural catastrophe events, we already introduced Group-wide accumulation budgets more than ten years ago. Using these budgets, the Board of Management issues annual limits that restrict the overall liability of Munich Re and the individual Group units per lossaccumulation zone.
All companies in the Munich Re Group have appropriate reinsurance cover. Of particular significance for our reinsurance business is accumulation excess-of-loss retrocession, which is a further important means of reducing risks in addition to our natural catastrophe budget.
To protect itself against claims burdens from major natural catastrophe events, Munich Re buys various retrocession covers on the retrocession markets. The main component of these catastrophe retrocessions is the Property CatXL Programme, which covers the loss per catastrophe event. This programme is a combination of traditional reinsurance and finite-risk covers. It fulfils two purposes: in the case of major loss events, Munich Re obtains direct balance sheet relief, and the combination of traditional and finite-risk covers enables a greater retrocession capacity to be generated on the market for conventional retrocession covers.
In December 2000 we also placed two catastrophe bonds with a total volume of US$ 300m on the capital market. This cover gives our Group protection against losses from possible extreme events, i.e. in the US from earthquakes in Los Angeles and San Francisco and from hurricanes in Florida and New York, and in Europe from windstorms. Although these extreme events have only a very small occurrence probability, the potential extent of losses is substantial.
The following table shows the combined ratios for the Munich Re Group over the last ten years, with and without the impact of natural catastrophes.
PROVISIONS FOR ASBESTOS AND ENVIRONMENTAL CLAIMS In the mid-eighties industrial insurers writing business worldwide found themselves being confronted with losses from policies taken out decades before. In particular, these included US asbestos-related claims under product liability policies. On top of this, there were costs for claims involving pollution in the US, covered under old general liability policies. We have made continual and timely provision for these losses, in line with the latest knowledge. In 1999, on the basis of new findings, we strengthened American Re’s provisions for asbestos-related claims by means of a special allocation. The provisions for asbestos and environmental claims will continue to be reviewed by us annually and adjusted to the loss experience. Altogether, at the present time we believe our provisions for these claims complexes to be adequate. Further loss burdens – particularly from asbestos-related claims – cannot be ruled out, however, since the number of claimants and companies being claimed against is continuing to grow, not least because of changes in court awards.
Net provision for outstanding claims 16,001 17,085 18,851 18,336 21,625 22,429
Net provision for the year concerned and previous years, plus payments already made from the original provision 16,001 17,085 18,851 18,336 21,625 22,429
For our fixed-interest securities, which make up the major part of our investments available for sale and held to maturity, we perform regular duration analyses. We use this procedure to counter the risks posed by changes in interest rates for the coverage of our obligations from insurance and reinsurance business, and where necessary we hedge interestsensitive portfolios.
Increase of 200 BP* –€6.499bn Increase of 100 BP –€3.324bn Fall of 100 BP +€3.477bn Fall of 200 BP +€7.221bn
Increase of 10% +€2.962bn Fall of 10% –€2.960bn * Basis points.
Of central importance for credit risks in fixed-interest securities portfolios is the credit assessment of the individual investment. The main factor here is the quality of the issuer. This is reflected – as far as investments of the Munich Re Group are concerned – in the assessments of international rating agencies: 93% of our investments in fixed-interest securities have a rating of A or better, and 85% have a rating of AA or better (according to the assessment of Standard & Poor’s). The majority of fixed-interest securities in our portfolio have been issued by governments or banks with excellent ratings, e.g. German government bonds, US Treasuries, and mortgage bonds.
Also significant for assessing credit risks in the portfolio as a whole are investment volume, collateralization and the default probability assigned to the individual issuers in their rating. This is taken into account in our limit system for restricting credit risks Group-wide. The system considers the following criteria, among other factors: the issuer’s individual rating, the collateralization, the issuer’s capitalization as a basis for covering the liability, and our internally defined risk-carrying ability.
On top of this, our investment guidelines prevent risk concentrations in individual portfolios by laying down diversification rules.
The liquidity risks of companies in the Munich Re Group are controlled on a decentralized basis by the individual insurers and reinsurers. This includes all the cash flows from underwriting business, from investments and from general administration. In the past year our asset management company MEAG took over the task of central cash management for most of the units in the Group.
In a world that is becoming increasingly networked and more and more dependent on the availability and confidentiality of electronically stored and transferred information, security risks are growing larger and larger. We attach the greatest importance to the protection of our own data and the data entrusted to us, as well as to the secure operation of our computer systems. Our protection measures cover the whole life cycle of all information, i.e. from its generation or receipt to its erasure, disposal or mailing. We therefore devote ourselves to the issue of information security (IS) in its entirety, which includes IT security. Our staff within and outside the IT organization, as well as our projects, are guided by the IS strategy which the Corporate Information Security Officer (CISO) has developed. The IS Office and the IS Organization are working intensively on expanding our security concept further.
We have set out the principles of proper conduct in guidelines that are binding on all staff in the Munich Re Group. The clarifications provided in these guidelines serve to avoid disadvantages for the Group and conflicts of interest for staff as far as possible.
Even the suspicion of an infringement of insider laws can have a very detrimental effect on Munich Re’s reputation and standing. We have therefore taken measures to prevent such infringements. In addition, the parent company and all our main subsidiaries have appointed a compliance officer, whose duty is to ensure that insider information is handled in conformity with the law. This officer is responsible for Munich Re’s compliance system and monitors adherence to insider regulations.
In the last few years the Holocaust issue has occupied us a great deal. Lawsuits were brought against Munich Re and VICTORIA Leben in the US. However, these were dismissed by the courts after the establishment of the Foundation Initiative of German Enterprises: Remembrance, Responsibility and Future, to which Munich Re has made a substantial financial contribution. The Foundation has met the basic requirements for the creation of full and lasting relief from legal action before US courts. But as a result of special Holocaust legislation, Munich Re and its American subsidiaries continue to be subject to far-reaching reporting requirements and administrative action by insurance regulatory bodies in various US states; in individual cases we have had to appeal against measures in the courts. After several successes at first instance, final decisions are still pending in California.
Independent of this, we do not see any significant risks of lawsuits.
Here we intend to link value-based management – and in particular the introduction of a balanced scorecard – closely to our risk management system. This will help us to identify both risks and opportunities in good time and to react at an appropriately early stage.
All corporate governance rules have a common goal: they are designed to strengthen the confidence of shareholders, lenders, business partners, employees and the general public in a company’s management and control and thereby contribute to a sustained increase in the value of the company.
In managing our Group, we pay close attention to optimizing the employment of capital and the controlling of risks; the remarks on value-based management and the risk report show this. In the controlling of our risk management, internal auditing plays a key role. As far as external auditing is concerned, the firm commissioned by the Supervisory Board to audit our consolidated financial statements does so in accordance with the International Standards of Auditing.
Beyond our annual reporting, we are now publishing quarterly reports, beginning this year. These include segment reporting and details of earnings per share in accordance with International Accounting Standards. The quarterly reports will also be displayed on our website.
The practice adopted for donations is reported to the Standing Committee of the Supervisory Board in a special report once a year; this shows major individual donations separately.
Munich Re will continue to closely follow the ongoing debate and develop a corporate governance code which takes account of the special features of our line of business and our Group.
It has always been our aim to increase the value of Munich Re for our shareholders, our clients and our staff by optimizing the employment of capital and the management of risks. This principle holds true for all Group activities, be they in reinsurance, in primary insurance or in asset management.
For our shareholders, appreciation in value means an attractive Munich Re share performance, combined with a substantial dividend payment. For our clients in insurance and reinsurance worldwide, it guarantees – in the form of a strong capital base – the security which is so essential in our business. And for our staff it provides long-term, secure and interesting jobs.
Value-based management will help us to deploy our resources in the best possible way. For this, we will have to enhance the transparency and comparability of the individual value added and risks, as well as the profit and loss factors connected with them.
We calculate the necessary capital for each business unit on the basis of risk criteria. We use our own risk models for this, but also draw on models used by international rating agencies. In order to establish the risk capital of a unit as precisely as possible, we are currently working on a refined model that in the medium term will replace the current process, which is based on models of rating agencies.
What is more, the balanced scorecard can be usefully linked to our incentive system and agreement of objectives for performance appraisals. We now have result-based compensation elements for Board members and top executives at all Group companies. In future, it is intended that all senior executive staff will receive performance-related salary components coupled to the value added in their units.
Munich Re is known for not blindly following trends. However, we act decisively when our business environment changes.
At our Munich headquarters, we are currently reshaping our organizational structure more extensively than we have done for decades. The current matrix of 15 organizational units responsible for lines and products and 15 units responsible for markets and clients will be replaced as from 1st July 2001 by only seven operative divisions. In each of the new divisions, the entire responsibility for client relationships and the coordination of market and client knowledge will be in one set of hands.
The aims of the new structure are – to significantly enhance our client focus, – to better interlink strategic objectives and operative implementation, – to encourage partnership in enterprise among our staff, – to reduce the coordination requirements necessitated by the matrix system, – to make responsibility for decisions and results transparent, – to promote innovation, – and to exploit synergies.
Four of the new divisions cover the world’s markets. They are organized according to regional, economic, cultural and linguistic criteria: – Europe 1 (German-speaking countries, Eastern Europe, Greece, Turkey)
Corporate Underwriting/Global Clients will serve a number of our clients that operate worldwide. It will also be responsible for fundamental questions of underwriting, actuarial science and claims management. It will thus ensure that Munich Re’s technical expertise is maintained and extended with a close link to operative business.
Special and Financial Risks will focus on developing innovative products and client segments. It will additionally be responsible for e-business solutions, for the special line of credit insurance, and for aviation and space business.
Life and Health will service business in these classes, in line with the separate structure customarily adopted by our clients.
The new organizational structure gives us new scope, guarantees clear allocation of responsibilities and thus provides the platform for further value-based management.
The expansion of the Munich Re Group led to an increase in staff of 9.7%. The details: Number of staff – year-end position 2000 Prev. year
We have special measures in place to help staff reconcile the demands of working and family life. In the year under review Munich Re received a government award for its promotion of equal opportunities for women.
For 2001 Munich Re has set up a personnel development programme which integrates the main points of specialist knowledge and key qualifications, interaction and dialogue, and management and leadership.
Parallel to this, we are introducing a system for company-wide knowledge management. ERGO is in the process of concentrating on the further qualification of its staff in the “ERGO Academy”.
We intend in future to make more intensive use of our many years of experience in human resources work worldwide in the international recruitment of senior management staff. Munich Re and ERGO have therefore incorporated international assignments into their training for graduates. We have made it one of our main objectives in human resources policy to further intensify cooperation within the Munich Re Group in order to fully exploit existing synergy potentials.
The pension reform bill which has now been passed by the German Federal Parliament, after approval by the Bundesrat on 11th May 2001, takes up this idea: for the first time in the history of German pension insurance, the state pension is to be partially replaced by a funded pension. This will make it possible to reduce benefits under the state system and to stabilize contributions at an internationally competitive level. The element of certainty which this brings for companies’ planning as regards incidental labour costs strengthens Germany as an industrial location.
The Munich Re Group expects the pension reforms to provide excellent additional business opportunities in the fields of reinsurance, primary insurance and asset management – and not only because of the state subsidization. Just as important are the changes in surviving dependants’ pensions and provision for occupational disability. On top of this, the discussion about pension reform should have heightened people’s fundamental willingness to make personal provision.
Through MEAG we can extensively satisfy the demand for fund products. Above all, the strong distribution teams of the ERGO Insurance Group are ready and waiting to market these products.
For a provider of financial services like the Munich Re Group, the resources provided by IT are of particular importance – our business does not involve the production of tangible goods but is centred on information and the knowledge generated from it. Therefore, we regard efficient use of information technology as a strategic success factor for our enterprise and are systematically pursuing our course of standardizing our systems architecture and our IT organization: – In the reinsurance group we have established an effective global organization. This enables us to balance regional differences in the availability of IT resources and staff. In our centre of competence in Toronto, for example, we have succeeded in rapidly building up an expert group which safeguards our global information systems from a central base and protects them against possible abuse.
– In ITERGO, which combines all ERGO’s IT resources, a powerful IT service provider has been created for the primary insurance group. A first step towards practical integration was concluded in spring 2001: the combining of ERGO’s technical infrastructure in one common system. In the meantime we are in the process of integrating the core application systems.
What the bundling of resources and the standardization of systems gives us above all is increased flexibility and the ability to reduce costs by exploiting synergies: the more consistent and uniform our core system architecture is in the three fields of business – reinsurance, primary insurance and asset management – the quicker we can respond to changes in the markets, in client structures, and in patterns of competition. We fully intend to seize the opportunities that present themselves. That is why, organizationally, we have closely intermeshed the development of business strategy and information strategy.
“As a leading risk carrier and provider of financial services operating worldwide, Munich Re acknowledges its responsibility for environmental protection and sustainability. Preserving the natural foundations of life is also a contribution to value-based management, as our economic success is inseparably linked with protection for people, the environment and physical resources.” (Preamble to the environmental guidelines of the Munich Reinsurance Company)
What can a reinsurer, whose operations have comparatively little direct impact on the environment, do to fulfil this responsibility? How can we put into practice in our daily operations the commitment from the preamble to our environmental guidelines, which Munich Re’s Board of Management adopted last year?
These are questions which Munich Re addressed very intensively at its Munich headquarters in the past business year. Besides considering criteria such as the economical use of resources in our office buildings, we took a particularly hard look at the indirect impacts of our business.
Experts in the areas of property and liability insurance, in particular, analysed the environmental aspects of their business operations. In a broad discussion process they then developed ideas and guiding instruments that promise to have a positive influence on ecologically relevant aspects of the risks assumed.
The main emphasis of our work will continue to be on striving to ensure, in close dialogue with our clients, that expertise accumulated at Munich Re finds its way into appropriate measures for loss prevention, to the benefit of the environment: we advise and inform our clients on questions of environmental protection in the various classes of insurance, we actively support our cedants in ecologically related risk assessment, and in the process we assist them in developing innovative products and extensions of cover.
In our asset management operations, we have approached the ecologically related aspects of our investments in the same way. What does this mean in practice? In future, criteria related to environmental protection and sustainable development will play an additional role in our investment decisions besides the classic principles of security, profitability and liquidity. We will intensify research in this area in our asset management. We will also extend our investment guidelines for both active securities trading and our strategic shareholdings to take account of these aspects and thus put our asset management decisions on a broader basis. By investing in companies that operate sustainably, we also safeguard the long-term performance of our investments.
>>_______We do something very similar with the capital provided by our shareholders: we multiply it. Someone who invested the equivalent of one euro in Munich Re in 1990, for example, would get 8.5 times that for the investment today. The Munich Re Group’s financial position at 31st December 2000, and the changes that occurred in 2000, can be seen from our consolidated financial statements.
C. Investments for the benefit of life insurance policyholders who bear the investment risk 581 417
Total income (2–4) 40,796 35,217 5. Net expenses for claims and benefits (28) 29,770 25,241
Total expenses (5–7) 38,181 33,396 8. Result before amortization of goodwill 2,615 1,821 10. Operating result before tax 2,470 1,701 12. Minority interests in earnings (16) 321 185 13. Profit for the year 1,750 1,133
Inflows from the sale and maturities of other investments 47,513 17,420 Outflows for the acquisition of other investments –50,055 –27,956
Inflows from the sale of investments for unit-linked life insurance 2 – Outflows for the acquisition of investments for unit-linked life insurance –174 –268
Cash flows for the business year (I + II + III) 1,791 –98
II. Investments in affiliated enterprises and associated enterprises 4,759 4,074 6,059 5,194
Life and health Property-casualty 31.12.2000 Prev. year 31.12.2000 Prev. year €m €m €m €m
Life and health Property-casualty 2000 Prev. year 2000 Prev. year 2000 Prev. year 2000 Prev. year 2000 Prev. year €m €m €m €m €m €m €m €m €m €m
Latin America * After elimination of intra-Group reinsurance across segments. Presentation of the figures in the management report differs from this (cf. note on page 29).
IAS currently do not contain any standards governing the accounting and valuation of transactions specific to the insurance industry; the relevant items are therefore included and valued in accordance with US GAAP (Generally Accepted Accounting Principles for the United States).
In the business year the Munich Re Group acquired Alte Leipziger Europa Beteiligungsgesellschaft AG, Bad Homburg, and its subsidiaries for a price of €177m. In addition, the ERGO Insurance Group acquired 100% of Bayerische Beamten Versicherung Italia S.p.A., Milan, and its subsidiaries for a price of €813m. Also consolidated for the first time was Mercur Assistance AG Holding, Munich. Apart from this, there were no significant changes in the group of consolidated companies.
The effects of the most important new acquisitions on the consolidated financial statements may be seen from the following overview: Effects on the consolidated financial statements 20001
Alte Leipziger Europa Beteiligungsgesellschaft AG, Bad Homburg, and its subsidiaries 1.1.2000 213 –3 118 6 BBV Italia S.p.A., Milan, and its subsidiaries 1.12.2000 157 1 364 2 1 After elimination of intra-Group transactions across segments. 2 At the date of first consolidation.
The changes among our non-consolidated subsidiaries in the business year were as follows: Germany Other Total
The aggregate shareholders’ equity of the non-consolidated subsidiaries amounted to less than 0.9% (0.5%) of the Group’s shareholders’ equity at 31st December 2000, and their aggregate annual result to 0.2% (0.4%) of the consolidated profit for the year. The enterprises involved are mainly service and management companies.
The balance sheet date of the consolidated companies is generally 31st December. Some of the special funds have other balance sheet dates. These funds are consolidated on the basis of interim accounts as at 31st December.
Amounts relating to intra-Group transactions (receivables and liabilities, expenses and income between consolidated companies) are eliminated unless they are determined as being not material.
GOODWILL resulting from the first-time consolidation of subsidiaries is amortized on a straight-line basis over its useful life – up to 20 years (IAS 22).
OTHER INTANGIBLE ASSETS mainly comprise purchased and internally generated software, and purchased insurance portfolios. The valuation basis is the original cost less straight-line depreciation. The useful life assumed for software is three to five years and for insurance portfolios up to 15 years.
REAL ESTATE is carried at cost. Maintenance expenses and repairs are recognized as an expense. Subsequent expenditure that increases the value of real estate is capitalized if it extends the useful life. The capitalized costs of buildings are amortized over 100 years at most, in accordance with their useful lives. If the recoverable amount of land and buildings falls below its carrying amount and the diminution in value is likely to be permanent, the carrying amount is reduced to the recoverable amount. Any impairment loss is recognized as an investment expense in the income statement, and any increases in value as investment income.
INVESTMENTS IN AFFILIATED ENTERPRISES that we do not consolidate because they are not material are carried at their fair values. If the shares are listed on a stock exchange, we use the share prices at the balance sheet date; for other shares, the fair value is the net asset value based on the German Association of Financial Analysts (DVFA) method or – in the case of new acquisitions – the acquisition cost.
LOANS are stated at amortized cost. Writedowns for impairments are made in cases where the repayment of a loan can no longer be expected.
FIXED-INTEREST SECURITIES HELD TO MATURITY are – like loans – stated at amortized cost. The main investments shown here are registered bonds and promissory notes.
DEPOSITS RETAINED ON ASSUMED REINSURANCE are claims which the reinsurers have on their clients for cash deposits that have been retained under the terms of reinsurance agreements; they are accounted for at face value.
The acquisition costs in health insurance are amortized proportionally to the premium income over the total average policy term. The amortization amount is determined on the basis of the assumptions used for calculating the provision for future policy benefits.
Where unrealized losses on securities available for sale are reflected in shareholders’ equity (see above), the resulting deferred tax assets are recorded but excluded from earnings.
The item ISSUED CAPITAL AND CAPITAL RESERVE contains the amounts that the shareholders of the parent company have paid in on shares. Under REVENUE RESERVES, we show the profits which consolidated companies have earned and retained since becoming a member of the Munich Re Group, and income and expenses resulting from consolidation measures. Unrealized gains and losses resulting from the market valuation of investments are included in the OTHER RESERVES.
UNEARNED PREMIUMS are accrued premiums already written for future risk periods. For primary insurance, these premiums are calculated separately for each insurance policy pro rata temporis; for reinsurance, nominal percentages are used in some cases where the data for a calculation pro rata temporis is not available.
If policyholders participate in surplus, but not by way of the contribution principle, or they are promised fixed benefits without participation in surplus, then safety loadings are included in the calculation of the provision for future policy benefits that are based on the circumstances at the conclusion of the policy (FAS 60). Here, too, the acquisition costs are capitalized and amortized over the terms of the policies (on the basis of the premium income).
D. Gross underwriting provisions for life insurance policies where the investment risk is borne by the policyholders
PROVISIONS FOR TAXES are posted – without discounting – in accordance with the probable tax payments for the year under review or previous years.
OTHER PROVISIONS are posted in the amount of the probable requirement; such amounts are not discounted.
Group companies that write a significant portion of their business in foreign currency generally safeguard themselves against exchange losses by attempting to match assets and liabilities in the same currency. Where exchange gains or losses occur nevertheless in the translation of the balance sheet currencies of the consolidated companies, they are accounted for under “Other income” and “Other expenses” respectively.
– Pension provisions that are valued in accordance with IAS are higher, because this calculation must also take into account the expected increase in wages and salaries, as well as pension entitlements and current pension payments.
Gross amount capitalized 31.12. previous year 2,477 2,309 Accumulated amortization 31.12. previous year 335 215
Carrying amount 31.12. previous year 2,142 2,094 Translation differences 138 305
The goodwill results mainly from the acquisition of American Re in November 1996 and from acquisitions within the ERGO Insurance Group in the years 1998 to 2000.
The figures shown under purchased insurance portfolios mainly comprise the actuarial value of the life insurance portfolios consolidated as a result of the acquisition of Bayerische Vita and CNA Financial Corporation’s life reinsurance business, totalling around €500m.
Land and buildings used by Group companies for their own activities are valued at €1,808m (1,687m).
Real estate pledged as security and other restrictions on title amount to €193m (28m). The expenses for investments under construction amount to €66m (38m) at the balance sheet date. Commitments to acquire real estate totalled €141m (–) at the balance sheet date.
Mortgage loans 6,659 6,644 Loans and advance payments on insurance policies 607 574 Other loans 1,884 1,452
Up to one year 943 461 Over one year and up to 5 years 3,541 3,026 Over 5 years and up to 10 years 4,080 4,409
Up to one year 205 251 206 274 Over one year and up to 5 years 498 618 518 648 Over 5 years and up to 10 years 395 464 406 471
All figures in €m 31.12.2000 Prev. year 31.12.2000 Prev. year 31.12.2000 Prev. year
Disposal proceeds in the business year were as follows: All figures in €m 2000
Gains on disposal 6,274 1,680 – Fixed-interest securities 327 274 – Non-fixed-interest securities 5,947 1,406 Losses on disposal 2,037 253 – Fixed-interest securities 363 94 – Non-fixed-interest securities 1,674 159
The market value of derivatives for fair value hedges totals €1m (2m) and the market value of derivatives for cash flow hedges €506m (114m).
For cash flow hedges open at the balance sheet date, the periods to maturity were as follows: Up to 3 3–6 6–12 1–5 Over 5 Total
Amounts receivable on primary insurance business 765 522 Thereof: – from policyholders 475 276 – from intermediaries 290 246 Accounts receivable on reinsurance business 4,761 4,541 Interest and rent 1,951 1,716 Other receivables 1,668 1,277
Receivables with a remaining term of up to one year total €8,877m (7,533m); those with a remaining term of over one year total €268m (523m).
These mainly comprise property, plant and equipment and inventories totalling €282m (250m).
The restructuring of Munich Re’s share capital through the voluntary conversion of bearer shares – originally totalling three million – into restrictedly transferable registered shares has been concluded: by the middle of the year 99.95% of the bearer sharers had been converted into restrictedly transferable, listed registered shares. In accordance with the resolution of the Annual General Meeting on 22nd July 1999, the remaining 1,480 bearer shares were converted into the equivalent number of unrestrictedly transferable, non-listed registered shares. The bearer share certificates that had not been handed in were cancelled by leave of the local court in Munich.
On 19th July 2000 the Annual General Meeting replaced the amount authorized for capital increases under “Authorized Capital Increase I” with a new amount of €120m.
Allocation to revenue reserves – – 1,128 – –1,128 – Changes in the consolidated group – – 22 –378 – –356 Unrealized gains and losses resulting from valuation at equity – – – 419 – 419 Unrealized gains and losses on other investments – – – 300 – 300 Profit for the year – – – – 1,133 1,133 Dividends – – – – –81 –81 Other changes – – –4 –6 – –10
Profit for the year – – – – 1,750 1,750 Dividends – – – – –168 –168 Other changes – – –52 –3 – –55
Authorized Capital Increase I (until 19th July 2005) 120.0 Authorized Capital Increase II (until 5th November 2003) 25.6 Authorized Capital Increase III (until 5th November 2003) 76.7
The unrealized gains and losses on other investments included in the “Other reserves” changed as follows: All figures in €m 2000 Prev. year
The distribution of the net provision for future policy benefits between the different Group segments is as follows: All figures in €m* 31.12.2000 Prev. year
The following table shows the distribution of the net provision for outstanding claims between the different segments of the Group: All figures in €m* 31.12.2000 Prev. year
– Life and health 1,709 1,029 – Property-casualty 20,813 19,961 Primary insurers 4,292 3,625 – Life and health 1,033 796 – Property-casualty 3,259 2,829 * After elimination of intra-Group transactions across segments.
The net provision for premium refunds is distributed between the segments of the Group as follows: All figures in €m 31.12.2000 Prev. year
The provision for premium refunds showed the following development: All figures in €m 2000 Prev. year a) Amounts allocated on the basis of national regulations (gross) Status 1st January 5,014 4,721 Allocations/withdrawals 965 293
A total of €792m (777m) was credited directly to life insurance policyholders in the business year.
– Life and health 38 22 – Property-casualty 1,331 1,230 Primary insurers 75 69 – Life and health 12 11 – Property-casualty 63 58 * After elimination of intra-Group transactions across segments.
The companies in the Munich Re Group generally give commitments to their employees in the form of defined contribution plans or defined benefit plans. The type and amount of the pension obligations are determined by the conditions of the respective pension plan. In general, they are based on the length of service and salary of the staff member.
Present value of unfunded obligations 857 912 Present value of funded obligations 282 211 Fair value of plan assets –173 –151 Actuarial gains/losses not recognized 44 –24 Past service cost not yet recognized –5 1
The provision for defined benefit plans changed as follows in the business year: All figures in €m 2000 Prev. year
Status 1st January 949 871 Changes in exchange rates 7 14 Expenses (see below) 87 91 Payments –38 –27
Current service cost 59 43 Interest cost 68 70 Expected return on plan assets –16 –13 Net actuarial gains/losses recognized in year –20 –12 Past service cost –4 2 Gains/losses on curtailments and settlements –3 1 Other 3 –
In May 2000 the parent company issued exchangeable bonds on Allianz shares. Creditors are entitled to convert each of their exchangeable bonds into Allianz shares with an equivalent value of €509.44 per share. If all the conversion rights are exercised, the parent company’s shareholding in Allianz will reduce by almost 1%. The annual coupon payment is 1% on the face value. If the bonds are not exchanged or redeemed beforehand, they will be redeemed on 9th June 2005 at 108.5629% of the face value; the creditors’ annual gross yield will then amount to 2.625%.
The remaining terms of liabilities shown under this item are as follows: All figures in €m 31.12.2000 Prev. year
All figures in €m* 2000 Prev. year 2000 Prev. year 2000 Prev. year 2000 Prev. year 2000 Prev. year
In the case of life insurance products where the policyholders bear the investment risk (e.g. unit-linked life insurance), only those parts of the premiums used to cover the risks insured and associated costs are treated as premiums.
All figures in €m* 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year
In addition to foreign currency exchange gains of €118m (302m), the other income mainly includes income from services rendered of €123m (106m), interest and similar income of €54m (91m), and income from the reversal/reduction of miscellaneous provisions and adjustments of values for receivables.
All figures in €m* 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year
In addition to foreign currency exchange losses of €55m (75m), the other expenses mainly include expenses for services rendered of €193m (154m), interest and similar expenses of €348m (380m), and writedowns of €214m (224m).
This item shows the corporation tax and trade earnings tax paid by the German companies (including solidarity surcharge), the comparable taxes on earnings paid by the foreign companies in the Group, and other tax. In accordance with IAS 12, the determination of the tax on earnings includes the calculation of deferred taxes.
The amount for tax on earnings is derived as follows: All figures in €m 2000 Prev. year
All in figures €m* 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year 2000 Pr. year
Derived tax on earnings 980 755 Tax effect of – trade earnings tax –110 57 – non-deductible expenses 90 67 – tax-free income –327 –131 – changes in tax rates –423 –300 – miscellaneous 169 –88
Munich Re holds 24.9% of the voting capital of Allianz AG. Conversely, Allianz holds 24.9% of the voting capital of Munich Re. In addition, Allianz and Munich Re both have shareholdings in Frankfurter Versicherungs-AG, Bayerische Versicherungsbank AG, Allianz Lebensversicherungs-AG and Karlsruher Lebensversicherung AG.
With regard to the planned restructuring of shareholdings between Munich Re and Allianz, reference is made to note (40) and the remarks in Section 05 (Prospects for 2001).
The relations between Munich Re and Allianz are also given documented form in a general agreement. This agreement deals in particular with the question of reciprocal shareholdings, with details of shareholdings in jointly held insurance companies (see above) and with general arrangements regarding reinsurance relations. The earliest possible date of termination is 31st December 2005.
The Munich Re Group assumes and cedes reinsurance and retrocessions from and to the Allianz Group under a large number of reinsurance and retrocession agreements. The following table shows Munich Re’s premiums assumed from and ceded to Allianz as at 31st December: All figures in €m 2000 1999
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 that applying at the start of the plan.
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 at the start of the plan. In addition, Munich Re shares must have outperformed the DAX 30 (Plan 1999) or the Euro STOXX 50 (Plan 2000) 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.
In the year under review a total of 83,681 (110,840) stock appreciation rights were granted, 27,029 (46,371) of these to members of the Board of Management. The expenses incurred for the stock appreciation rights have been determined on the basis of the change in the Munich Re share price. In the year 2000 an amount of €17.0m (1.9m) was set aside pro rata temporis for the stock appreciation rights.
The number of staff employed by the Group at year-end totalled 27,283 (26,121) in Germany and 9,198 (6,575) in other countries.
Reinsurance companies 5,422 5,291 Primary insurance companies 30,569 27,910 Asset management 490 44
On 1st April 2001 Munich Re and Allianz AG announced their intention to continue the restructuring of their shareholdings. Munich Re will sell its directly and indirectly held stakes in Dresdner Bank to Allianz and also make available around 4% of Allianz shares. Besides this, Munich Re intends to sell its 40.6% interest in Allianz Life to Allianz. In return, Munich Re will acquire from Allianz and Dresdner Bank all of their shares in HypoVereinsbank, thus increasing Munich Re’s stake in HypoVereinsbank to 25.7%. In addition, Munich Re is planning to increase its holding in ERGO Versicherungsgruppe AG from the current level of 62.9% to up to 95%. Further details can be found under “Prospects for 2001” in the management report (Section 05).
The auditor’s opinion is worded as follows: We have audited the consolidated financial statements, consisting of the balance sheet, the income statement and the statements of changes in shareholders’ equity and cash flows as well as the notes to the financial statements, prepared by the Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München for the business year from 1st January 2000 to 31st December 2000. The preparation and the content of the consolidated financial statements are the responsibility of the Company’s Board of Management. Our responsibility is to express an opinion on whether the consolidated financial statements are in accordance with International Accounting Standards (IAS) based on our audit.
Our audit, which also extends to the group management report for the business year from 1st January 2000 to 31st December 2000, has not led to any reservations. In our opinion, altogether the group management report provides a suitable understanding of the Group’s position and suitably presents the risks of future development. In addition, we confirm that the consolidated financial statements and group management report for the business year from 1st January 2000 to 31st January 2000 satisfy the conditions required for the Company’s exemption from its duty to prepare consolidated financial statements and group management report in accordance with German accounting law. We conducted our audit of the consistency of the group accounting with the 7th EU Directive, required for the exemption from the duty for consolidated accounting pursuant to commercial law, on the basis of the interpretation of the Directive by the European Commission’s Contact Committee on Accounting Directives.
Further addresses may be obtained from the 2000 annual report of ERGO Versicherungsgruppe AG.
De Amersfoortse Reinsurance Limited, Dublin 25.0000 23,083 3,647 Golden Gate Reinsurance N. V., Amsterdam 26.3333 29,322 8,060 inreon Limited, London 31.2500 31,952 0 Prévoyance Re S. A., Paris 34.0000 13,767 –273
NVS Verzekeringen N. V., Amsterdam 62.9551 47,522 173 NVS Zorgverzekeringen N. V., Amsterdam 62.9551 19,798 –1,063
Allgemeine Kreditversicherung Aktiengesellschaft, Mainz 12.5000 91,336 14,468 Credit Guarantee Insurance Corporation, Johannesburg 6.9000 32,739 160 Fortis (NL) N.V., Utrecht 5.3015 6,522,300 1,103,900 Generali Lloyd Aktiengesellschaft, Munich 12.2145 120,967 4,806 Grupo Hospitalario Quiron, S.A., Saragossa 16.0000 54,876 1,659 Jordan Insurance Company Ltd., Amman 5.3210 16,904 3,221 Mannheimer AG Holding, Mannheim 7.9901 197,837 18,134 Mecklenburgische Leben Versicherungs-Aktiengesellschaft, Hanover 12.5000 10,436 444 Münchener und Magdeburger Hagelversicherung Aktiengesellschaft, Hanover 10.4000 6,273 –3 Nürnberger Beteiligungs-Aktiengesellschaft, Nuremberg 7.5000 377,796 16,141 **** Some of these selected participations are held indirectly. They are calculated proportionally in each case.
**** The amounts are taken from the individual companies’ financial statements. They have been translated using the exchange rates applicable on 31.12.2000.
Accumulation The situation where a significant number of risks insured or reinsured with the same company may be affected simultaneously by a loss event.
E-business Abbreviation for electronic business. Umbrella term for business conducted via electronic media such as the Internet.
Fair value The amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s-length transaction. Where there is an active market, the fair value of an asset is its current market value.
Standards formulated by the IASB with the intention of achieving internationally comparable preparation and presentation of financial statements.
Investments for the benefit of life insurance policyholders who bear the investment risk This mainly involves investments for policyholders under unit-linked life insurances. It also includes investments under index-linked life insurance policies whose performance depends on share or currency indices.
Market value The amount obtainable for an asset in an active market.
Operating result before tax Pre-tax operating profit/loss on the enterprise’s ordinary activities. Any extraordinary income and expenses are not included in this result.
Provision for premium refunds Provisions for premium refunds are made for obligations involving bonuses and rebates – especially in life and health insurance – which are not yet payable at the balance sheet date; the amount posted is based on supervisory or contractual regulations. They also include the unrealized gains and losses from the accounting of certain investments at market value to the extent that policyholders would participate in these gains and losses on realization (provision for deferred premium refunds).
Retrocessionaire Reinsurer that provides retrocession cover for other reinsurers (reinsurer of reinsurers).
Risk The possibility of negative budget variance inherent in any economic activity. In insurance, it is also understood to mean the possibility of a loss being caused by an insured peril. In addition, insured objects or persons are frequently referred to as risks.
Special funds Investment funds with a maximum of ten unit-holders that are not natural persons. As the fund owners pursue specific objectives with their investments, investment policy is geared to individual requirements.
Accounting policies 97 f. Addresses 131 f. Affiliated enterprises 133 ff. Africa, Near and Middle East 35, 42
Marine, aviation, space 33 Market capitalization 2, 13 Minority interests 114 Motor 33 Münchener Rück Italia 37 Munich American Reassurance Company 40 Munich Reinsurance Company of Africa 42 Munich Reinsurance Company of Australasia 42 Munich Reinsurance Company of Canada 40
Natural catastrophe bonds 15, 60 Natural catastrophes 34, 60 New Reinsurance Company 38 North America 35, 39 ff.
Pension reform 75 f. Personal accident 32 Personnel expenses 124 Primary insurance 26, 45 ff., 55 Profit for the year 26
Segment reporting 29, 52, 88 ff. Shareholders 14 Shareholders’ equity 27, 112 f.
Besides this English translation of the official German original (also available from the company), a translation of our annual report is obtainable in Spanish. You will also find our annual reports and interim reports, along with further information about Munich Re, on the Internet
E d it o ri al d ea d lin e: 1t h