Although the derivatives used by Munich Re essentially serve to hedge against risks, only an amount of €296m (254m) meets the requirements of IAS 39 for hedge accounting.
Fair value hedges In the case of fair value hedges, the change in the fair value of the hedging instrument and the change in the fair value of the hedged instrument are generally recognised in profit or loss under the items “investment income” and “investment expenses” in the income statement. With Munich Reinsurance Company’s hedged subordinated bond, this information is shown under net finance costs. Munich Re uses hedging relationships in the form of fair value hedges to selectively and efficiently mitigate interest-rate and other market risks. The main types of transaction employed for hedging are swaps and forwards. The fair value of the subordinated liabilities (stock market value) at the balance sheet date amounted to €249m (215m). In 2012, the following changes in value were recognised in the consolidated income statement: €34m for the hedging instruments and –€33m for the relevant underlyings.
Cash flow hedges play a role in countering fluctuations that may be caused, for ex ample, by variable interest payments. Munich Re uses cash flow hedges chiefly to hedge against interest-rate risks, with interest-rate swaps the main instruments employed. Changes in the fair value of the hedging instrument are recognised directly in equity for this purpose. Only when the actual cash inflow or outflow takes place, as a result of the hedged circumstance, is the relevant equity item reversed with recognition in profit or loss.
At the balance sheet date, there is an equity item of –€4m (4m) from cash flow hedges. The net fair value of the derivatives falling into this category amounted to €47m (39m) at the balance sheet date.
Periods to maturity and amount of the hedged cash flows at the balance sheet date €m < 1 year 1–2 years 2–3 years 3–4 years 4–5 years > 5 years 31.12.2012 Prev. year Notional amounts of hedged transactions – 25 – 25 25 314 389 389
Munich Re Group Annual Report 2012 10 Deposits retained on assumed reinsurance
Deposits retained on assumed reinsurance serve directly as collateral for technical provisions covering business assumed from cedants in reinsurance. They do not trigger any cash flows and may not be used by the cedant independently. The credit risk is therefore limited. The amount of and changes in deposits retained on assumed reinsurance in the financial year generally derive from the values for the changes in the related technical provisions for the reinsured business. Deposits retained on assumed reinsurance business thus do not have a fixed maturity date, their release generally being dependent on the run-off of the corresponding provisions.
Other investments comprise deposits with banks totalling €2,461m (2,392m), our tangible assets in renewable energies amounting to €500m (260m), and forestry investments of €3m (3m). Deposits with banks include receivables of €142m (104m) from borrowers under repurchase agreements that have been booked by us as the lender.
Development of tangible assets in renewable energies €m 2012 Prev. year Gross carrying amount at 31 Dec. previous year 282 55 Accumulated depreciation and accumulated impairment losses at 31 Dec. previous year 22 9 Carrying amount at 31 Dec. previous year 260 46 Changes due to currency translation – – Additions
Details of the ceded share of technical provisions are shown in (20) Unearned premiums, (21) Provisions for future policy benefits, (22) Provisions for outstanding claims, (23) Other technical provisions and (39) Credit risks from ceded reinsurance business.
13 Other receivables €460m (672m) of the amounts receivable on primary insurance business is apportionable to receivables from insurance agents. The miscellaneous receivables contain receivables of €708m (519m) resulting from reinsurance contracts without significant risk transfer, which do not fall within the scope of IFRS 4.
Reinsurance Life Property-casualty €m 31.12.2012 Prev. year 31.12.2012 Prev. year Unearned premiums – – 124 134 Provision for future policy benefits 743 645 – – Provision for outstanding claims 387 278 2,053 2,383 Other technical provisions 10 6 9 –
Provision for future policy benefits 7 7 2,595 2,458 Provision for outstanding claims 78 35 2,808 2,934
Primary insurance Life Health Property-casualty €m 31.12.2012 Prev. year 31.12.2012 Prev. year 31.12.2012 Prev. year
Carrying amounts €m 31.12.2012 Prev. year Up to one year 10,474 10,578 Over one year and up to two years 109 50 Over two years and up to three years 272 233 Over three years and up to four years 136 84 Over four years and up to five years 77 28 Over five years and up to ten years 69 88 Over ten years 338 231 8077 Rating of accounts receivable €m 31.12.2012 Prev. year AAA – 9
Munich Re Group Annual Report 2012 14 Deferred acquisition costs 8080 A–C Deferred acquisition costs
Munich Health Total €m 31.12.2012 Prev. year 31.12.2012 Prev. year Status at 31 Dec. previous year 125 126 9,386 9,165 Currency translation differences –14 3 32 53 Change in consolidated group/Other – – –9 –7 New deferred acquisition costs 277 176 3,564 3,334 Changes
Primary insurance Life Health Property-casualty €m 31.12.2012 Prev. year 31.12.2012 Prev. year 31.12.2012 Prev. year Status at 31 Dec. previous year 3,502 3,623 1,679 1,583 702 663 Currency translation differences 4 –4 – – 21 –25 Change in consolidated group/Other – –4 – –1 –2 –2
The deferred tax assets and liabilities recognised in the consolidated balance sheet concern the following balance sheet items: The deferred taxes for technical provisions include the deferred taxes for deferred acquisition costs and €1,916m (1,888m) for claims equalisation provisions, which are not posted under IFRS.
The excess of deferred tax liabilities over deferred tax assets amounts to €2,565m (2,296m). The change of –€269m (804m) was recognised as follows: –€579m (–367m) without impact on profit or loss and €358m (1,184m) in earnings. The remaining change is due to obtaining or losing control and to currency translation.
C. Investments for the benefit of life insurance policyholders who bear the investment risk – 3 – 2
Equity and liabilities C. Net technical provisions 1,836 3,480 2,024 3,525
Tax loss carry-forwards and tax credits 31.12.2012 Prev. year For which For which For which For which deferred deferred deferred deferred tax assets tax assets tax assets tax assets are are not are are not €m recognised recognised Total recognised recognised Total Corporation tax loss carry-forwards
Expiring in up to three years 9 – 9 – – – Expiring in over three years and up to ten years – – – – – – Expiring in over ten years – – – – – – Not expiring – – – – – –
Impairment losses reversed 27 – – 27 Depreciation and impairment losses
Reclassification –23 5 – –18 Carrying amount at 31 Dec. financial year 2,385 294 27 2,706 Accumulated amortisation and accumulated impairment losses at 31 Dec. financial year 1,000 682 30 1,712 Gross carrying amount at 31 Dec. financial year 3,385 976 57 4,418
The impairment losses are distributed between the following different Group segments: in reinsurance €5m (8m) is apportionable to life and €6m (14m) to property-casualty; in primary insurance, the impairment losses amount to €2m (1m) in life, – (€7m) in health, – (€2m) in property-casualty, and €2m (4m) in Munich Health.
The fair value of the property amounts to €2,698m (2,689m). The methodology for determining the fair values is described in (3) Land and buildings, including buildings on third-party land.
17 Non-current assets and disposal groups held for sale and sold during the reporting period
We decided in the second quarter of 2011 to sell our fully consolidated subsidiaries American Modern Life Insurance Company, Amelia, Ohio, and Southern Pioneer Life Insurance Company, Jonesboro, Arkansas. A contract regarding the sale of these companies, with economic effect from January 2012, was signed in the third quarter of 2011; the sales price was around €26m.
In the second quarter of 2012, with economic effect in October 2012, the ERGO Insurance Group sold its shares in the fully consolidated subsidiary ERGO Daum Direct General Insurance Co. Ltd., Seoul.
How the non-current assets held for sale and disposal groups are allocated between the segments is shown in the segment reporting.
One subsidiary, which at the beginning of the year held 1,423,055 shares to hedge stock appreciation rights granted to the Board of Management and top Munich Reinsurance Company executives since 1999, assigned its full portfolio of Munich Re shares to Munich Reinsurance Company in the 2012 calendar year. Munich Reinsurance Company, in turn, did not acquire further shares for hedging obligations arising from longterm incentive plans but began to sell shares to the market as part of the release of these hedges. In the year under review, it consequently sold a total of 711,055 shares at an average price of €130.59. The proceeds of the sale amounting to €92.9m were used to strengthen liquid funds. At 31 December 2012, there were 712,000 shares remaining.
Number of shares 2012 Prev. year Status at 31 Dec. previous year 177,588,750 180,378,583 Additions
MEAG MUNICH ERGO AssetManagement GmbH acquired 81,563 shares at an average price of €124.46 in the financial year 2012 to safeguard obligations from its longterm incentive plan, and sold 153,395 shares at an average price of €124.52, leaving it with a portfolio of 80,107 Munich Re shares. The sale produced proceeds of €19.1m, which were used to strengthen liquid funds.
After taking into account tax effects, externally generated costs directly connected with equity capital measures and deducted from the capital reserve amount to €31m.
Composition of contingent capital €m 31.12.2012 Contingent Capital Increase 2010 (until 27 April 2015) 117 Total 117
Composition of equity €m 31.12.2012 Prev. year Issued capital 585 588 Capital reserve 6,805 6,800 Retained earnings 10,946 11,588 Other reserves 5,650 3,384 Consolidated result attributable to Munich Reinsurance Company equity holders 3,195 702 Non-controlling interests 242 247 Total equity 27,423 23,309
The non-controlling interests are mainly minority interests in individual companies of the primary insurance group. We disclose direct minority interests in special funds and in partnerships under “other liabilities”. In the financial year 2012, we acquired a further stake of 25.4% in ERGO Versicherung Aktiengesellschaft, Vienna (formerly VICTORIAVOLKSBANKEN Versicherungsaktiengesellschaft, Vienna).
Information on capital management and minimum capital requirements is provided in the sections on those items under “Financial position – Capital management” and “Financial position – Group solvency”.
Unrealised gains and losses €m 31.12.2012 Prev. year Non-consolidated affiliated companies and associates not accounted for using the equity method 175 143 Associates accounted for using the equity method 79 72 Other securities available for sale
Less Provision for deferred premium refunds recognised in equity 3,696 847 Deferred taxes recognised in equity 2,005 1,276 Non-controlling interests 20 10 Consolidation and currency translation effects 70 64
Non-controlling interests €m 31.12.2012 Prev. year Unrealised gains and losses 20 10 Consolidated result 16 10 Other equity 206 227
The fair value of the subordinated liabilities at the balance sheet date amounted to €5,953m (4,254m). For the Munich Reinsurance Company bonds, we take the stock market prices as fair values. For the other subordinated liabilities, we determine the fair values using net present value methods with observable market parameters.
Status at 31 Dec. financial year 452 443 8,134 8,391 1 Previous year’s figures adjusted pursuant to IAS 8; see “Changes in accounting policies and other adjustments”.
Term life insurance 2,937 2,889 Other life insurance 36,331 37,530 Annuity insurance 29,027 27,763 Disability insurance 1,194 1,138 Contracts with combination of more than one risk 19 14
Munich Health 908 836 Primary insurance 25,544 24,216 Property-casualty 457 409 Reinsurance 32 – Primary insurance 425 409
In 2012, the German Federal Court of Justice reached a decision regarding issues of fundamental importance for the termination of life insurance contracts. Central points of the decision concern the offsetting of acquisition costs and the amount of surrender values. On the basis of this judgement, our provision for future policy benefits in German life primary insurance was increased.
The change under “Other” contains €453m in savings premiums for capitalisation products and €170m for portfolio entries and withdrawals. Scheduled changes in the provision for future policy benefits contain the changes deriving from prospective calculation as a result of premium payments, benefit cases and the unwinding of discount in the year under review.
The provision for annuity claims involves periodic payments for disability cases and is usually due long term. A major part of this provision is established in the life reinsurance and life primary insurance segment for future annuity payments; a small part refers to provisions for annuities in personal accident, liability and workers’ compensation insurance. The biometric actuarial assumptions are selected using appropriate actuarial principles. Provisions for annuity claims are calculated as the present value of the expected future payments. The discount rates used are shown under (37) Risks from life and health insurance business and (38) Risks from property-casualty insurance business.
Reinsurance Primary insurance % 31.12.2012 Prev. year 31.12.2012 Prev. year Up to one year 30.6 31.4 36.5 39.2 Over one year and up to five years 44.2 44.1 39.6 38.6 Over five years and up to ten years 13.7 13.2 14.1 13.0 Over ten years and up to fifteen years 5.3 5.0 5.9 5.2
The claims expenses for the year under review show both payments made for the year under review and expenses for posting the claims reserve in that year. The provisions set up for claims from previous years are regularly updated using best estimates based on exposure and claims information and past claims experience. The respective change is shown under claims expenses for previous years.
For the year under review 14,898 365 14,533 17,931 895 17,036 For previous years –1,019 –15 –1,004 –809 41 –850
For the year under review 6,120 110 6,010 5,930 172 5,758
Status at 31 Dec. financial year 44,580 2,317 42,263 45,704 2,603 43,101
€m Accident year Calendar year ≤ 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
Ultimate loss for the individual accident years at the respective reporting dates (net)
The ceded share of “other technical provisions” amounts to €23m (29m), of which €1m (1m) is apportionable to the ceded share of the provision for premium refunds based on national regulations.
1 Previous year’s figures adjusted owing to transfer between segments; see “Segment reporting”.
Reinsurance Primary insurance1 Munich Health1 Total €m 31.12.2012 Prev. year 31.12.2012 Prev. year 31.12.2012 Prev. year 31.12.2012 Prev. year Provision for premium refunds based on national regulations 3 – 6,400 5,711 – – 6,403 5,711 Provision for deferred premium refunds – – 6,817 3,709 7 3 6,824 3,712
Thereof resulting from unrealised gains and losses on investments (recognised directly in equity) – – 3,687 873 15 3 3,702 876 Thereof resulting from other revaluations (recognised in profit or loss) – – 3,130 2,836 –8 – 3,122 2,836
24 Gross technical provisions for life insurance policies where the investment risk is borne by the policyholders
Development of provision for deferred premium refunds €m 2012 Prev. year Status at 31 Dec. previous year 3,712 3,557 Change in consolidated group – –8 Change resulting from unrealised gains and losses on investments (recognised directly in equity) 2,826 258 Change resulting from other revaluations (recognised in profit or loss) 286 –95 Status at 31 Dec. financial year 6,824 3,712
Provisions for post-employment benefits Munich Re companies generally give pension 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.
Expenses for defined contribution plans in the year under review totalled €66m (56m), while expenses for contributions to state plans totalled €122m.
Breakdown of other accrued liabilities €m 31.12.2012 Prev. year Provisions for post-employment benefits 2,324 1,691 Other provisions 2,101 1,831
Change in the plan assets for defined benefit plans €m 2012 Prev. year Status at 31 Dec. previous year 1,725 1,449 Currency translation differences 1 18 Change in consolidated group – –4 Expected return 74 73 Actuarial gains/losses 174 26 Capital transfer to plan assets 96 214 Paid pension benefits –41 –48 Other –29 –3 Status at 31 Dec. financial year 2,000 1,725
Funded status of defined benefit plans €m 31.12.2012 Prev. year Unfunded obligations
Present value 2,032 1,445 Past service cost not yet recognised 10 12 Net balance sheet liability 2,042 1,457
Included in the recognised income and expenses are actuarial losses amounting to €585m (211m) in the financial year and €1,397m (812m) cumulative, taking currency fluctuations into account.
The fair value of the plan assets does not include any own shares.
The consolidated companies used the following actuarial assumptions (weighted average values) for calculating their pension obligations: Change in the provision for defined benefit plans €m 2012 Prev. year Status at 31 Dec. previous year 1,691 1,562 Currency translation differences –7 15 Change in consolidated group – 2
Payments –70 –53 Capital transfer to plan assets –96 –214 Transfer to other receivables 21 13 Actuarial gains/losses recognised in equity 597 196
Expected return on plan assets –74 –73 Expected return on reimbursements –7 –6
For the financial year 2013, capital transfers of €57m (72m) to plan assets are expected.
% 2012 Prev. year Discount rate 3.1 4.2 Expected rate of return on fund assets 4.2 4.9 Expected rate of return on reimbursements 3.5 4.9 Future increases in entitlement/salary 2.3 2.3 Future pension increases 1.6 1.5 Medical cost trend rate 4.1 4.4
Present value of defined benefit obligations (excluding medical-care benefits) 4,011 3,182 2,807 2,489 2,178 Plan assets –2,000 –1,725 –1,449 –1,229 –989 Not covered by plan assets 2,011 1,457 1,358 1,260 1,189 Experience adjustments arising on the plan liabilities 23 14 –3 –44 7 Experience adjustments arising on the plan assets 177 20 52 20 –100
The provisions for restructuring also included in this item mainly concern €219m (244m) for the ERGO Group’s “Continuous improvement of our competitive position” project and €258m (–) for the comprehensive restructuring of its sales organisation. The miscellaneous other provisions comprise a large number of different items, including €91m (50m) for medium- and long-term incentive plans, €106m (61m) for salary obligations, €57m (44m) for other remuneration for desk and field staff, €17m (21m) for competitions for sales staff, and €46m (28m) for litigation risks.
Identification A.M. Prev. €m number Best Fitch Moody’s S&P 31.12.2012 year Munich Re America Corporation, CUSIP-Nr.: 029163AD4 Wilmington, 7.45%, US$ 342m, ISIN, Reuters: – Senior Notes 1996/2026 Bloomberg: AMER RE CORP MUNRE a– A+ A2 A– 259 263
Breakdown of other liabilities €m 31.12.2012 Prev. year Amounts payable on primary insurance business 3,648 3,788 Accounts payable on reinsurance business 5,097 4,146 Amounts due to banks 493 616 Miscellaneous liabilities 4,002 4,501
€174m of the amounts owed to banks are attributable to bank borrowing by Group companies acquired by Munich Re under its RENT (Renewable Energy and New Technologies) programme.
The miscellaneous liabilities contain liabilities of €415m (312m) resulting from reinsurance contracts without significant risk transfer, derivative financial instruments with a negative fair value of €508m (871m), insurance derivatives and derivative components separated from the host insurance contract and hedging derivatives for variable annuities with a negative fair value totalling €461m (473m). The miscellaneous liabil ities also include €14m (15m) for social security and €250m (227m) for interest and rent.
The major portion of the liabilities up to one year involve interest-free items, where the carrying amounts and the undiscounted cash flows are identical. €42m (258m) of the amounts owed to banks and €537m (648m) of the liabilities from derivatives are due within one year. Any deviations in the liabilities with remaining terms of over one year from the undiscounted cash flows are not material for the presentation and significance of the financial liabilities for our financial position and performance.
The following table shows the allocation of the other liabilities measured at fair value to levels of the fair value hierarchy.
In the other liabilities, only derivatives with a negative market value are currently recognised at fair value. Of these, we allocated the derivative portions of catastrophe bonds, weather derivatives and the derivative components of variable annuities to Level 3 of the fair value hierarchy.
Transfer to/out of Level 3 – 211 Change in the market value of derivatives – 14 Carrying amount at 31 Dec. financial year 191 243 Gains (losses) recognised in the income statement that are attributable to investments shown at the end of the financial year 49 –36
Change in unearned premiums – Ceded share – – – –160
Change in unearned premiums – Ceded share 87 2 105 –146
Primary insurance Life Health Property-casualty €m 2012 Prev. year 2012 Prev. year 2012 Prev. year
Change in unearned premiums – Gross 7 1 3 14 40 145
Change in unearned premiums – Ceded share – – 10 1 8 11 1 Previous year’s figures adjusted pursuant to IAS 8; see “Changes in accounting policies and other adjustments”.
The total gross premiums include not only the gross premiums written but also savings premiums from unit-linked life insurances and capitalisation products. Premiums from long-term insurance business, especially in the life primary insurance segment, are recognised in full as earned premiums and income when they become due. Under gross premiums written, only those parts of the premium from unit-linked life business are included that are used to cover the risks and associated costs.
The income from technical interest is the amount earned by assumed insurance business from the mainly risk-free investment of assets covering the technical provisions. In the primary insurance segments, the deposits retained on ceded business are also taken into account as a basis for the technical interest. Thus the portion of investment income corresponding to the deposit interest expense is included as a component in the calculation of the technical interest and reallocated to the technical result.
For the life primary insurance segment, the income from technical interest for German life primary insurance companies comprises the gains and losses from unit-linked life insurance plus the guaranteed interest rate and profit sharing on the basis of the nontechnical result sources. For the companies outside Germany, the income from technical interest corresponds to the risk-free interest on the provision for future policy benefits at the relevant national interest rate, the gains and losses from unit-linked life insurance, and profit sharing where there are types of contract providing for this.
Provision for future policy benefits –45 179 – –5 Provision for outstanding claims 581 511 –1,364 2,931 Provision for premium refunds – – 6 10
Ceded share Claims and benefits paid 272 298 497 560 Change in technical provisions
Provision for future policy benefits –67 –38 – – Provision for outstanding claims 108 –9 –304 261 Provision for premium refunds – – – –
Provision for future policy benefits 327 –689 1,074 1,068 16 2
Ceded share Claims and benefits paid 117 108 22 6 125 108 Change in technical provisions
Provision for future policy benefits 287 –751 1,074 1,068 16 2
Munich Health Total €m 2012 Prev. year 2012 Prev. year Gross Claims and benefits paid 5,400 4,707 38,539 36,153 Change in technical provisions
Provision for future policy benefits 72 78 1,444 633 Provision for outstanding claims –112 18 –421 3,798 Provision for premium refunds – –1 1,967 1,414
Provision for future policy benefits 72 78 1,471 609 Provision for outstanding claims –155 –9 –311 3,513 Provision for premium refunds – –1 1,969 1,413
The change in the provision for future policy benefits (net) contains €603m (−259m) in unrealised gains/losses from unit-linked life insurance. Expenses for claims and benefits include expenses for policyholders’ bonuses. Of this, €966m (972m) is for the allocation to the provision for premium refunds on the basis of national regulations, €286m (42m) for the change in the provision for deferred premium refunds recognised in the income statement, and €251m (397m) for direct crediting. The “other technical result” for life primary insurance mainly includes interest on policyholders’ accumulated credit.
Ceded share of acquisition costs, profit commission and reinsurance commission paid 152 139 65 86 Ceded share of changes in deferred acquisition costs and contingent commissions 2 –6 12 30 Operating expenses – Ceded share 154 133 77 116
Changes in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios 128 170 –37 –93 –47 –65
Munich Health Total €m 2012 Prev. year 2012 Prev. year Acquisition costs, profit commission and reinsurance commission paid 1,023 959 10,002 9,765
Investment result by type of investment and segment (before deduction of income from technical interest)
Deposits retained on assumed reinsurance, and other investments 265 285 42 –46 Investments for the benefit of life insurance policyholders who bear the investment risk – – – – Expenses for the management of investments, other expenses 51 34 176 165
Other securities held to maturity – – – – – 1 Other securities available for sale Fixed-interest 107 118 5 5 4,575 3,931 Non-fixed-interest – 10 – – 685 338 Other securities at fair value through profit or loss Held for trading
Fixed-interest – – – – 20 22 Non-fixed-interest – – – – 3 –
Deposits retained on assumed reinsurance, and other investments 1 1 1 4 326 229 Investments for the benefit of life insurance policyholders who bear the investment risk – – – – 603 –263 Expenses for the management of investments, other expenses 6 9 – 1 484 453
Designated at fair value through profit or loss Fixed-interest 22 –7 – – – – Non-fixed-interest – –3 – – – –
Deposits retained on assumed reinsurance, and other investments 9 –8 1 –5 7 –2 Investments for the benefit of life insurance policyholders who bear the investment risk 603 –263 – – – – Expenses for the management of investments, other expenses 172 162 54 55 25 27
Gains on the disposal of investments 54 96 2 1 3,419 5,438
Reinsurance Life Property-casualty €m 2012 Prev. year 2012 Prev. year Write-downs of investments 636 892 1,107 1,684 Losses on the disposal of investments 325 684 1,599 2,613 Management expenses, interest charges and other expenses 92 64 223 271
Losses on the disposal of investments 42 78 – – 2,767 4,194 Management expenses, interest charges and other expenses 7 11 – –1 633 1,043
Losses on the disposal of investments 504 242 209 267 88 310 Management expenses, interest charges and other expenses 223 590 65 74 23 34
In addition to expenses of €356m (335m) for services rendered, other operating expenses chiefly include interest charges and similar expenses of €207m (136m), other write-downs of €60m (63m), and other tax of €43m (47m). They also contain expenses of €17m (44m) for owner-occupied property, some of which is also leased out.
Munich Re Group Annual Report 2012 35 Other non-operating result, impairment losses of goodwill and net finance costs
The other non-operating expenses comprise foreign currency exchange losses of €3,229m (2,812m), write-downs of €154m (110m) on other intangible assets, and other non-technical expenses of €637m (521m), such as expenses unrelated to the accounting period, project costs and other amounts that cannot be allocated elsewhere and restructuring expenses.
Reinsurance Life Property-casualty €m 2012 Prev. year 2012 Prev. year Other non-operating income 826 587 1,056 1,034 Other non-operating expenses 882 676 1,242 1,273 Impairment losses of goodwill 4 1 20 4 Net finance costs1 –66 –58 –138 –140
Impairment losses of goodwill 116 – – – 140 25 Net finance costs1 –14 –14 –5 –4 –297 –288 1 Previous year’s figures adjusted pursuant to IAS 8; see “Changes in accounting policies and other adjustments”.
Net finance costs by financing instrument €m 2012 Prev. year Subordinated bonds of Munich Reinsurance Company, Munich –266 –241 Senior notes of Munich Re America Corporation, Wilmington –20 –26 Subordinated bonds of BACAV AG, Vienna –6 –6 Bank borrowing of Munich Reinsurance Company, Munich –1 –12 Other –4 –3 Total –297 –288
Recognised tax expenses/income broken down according to Germany and other countries €m 2012 Prev. year Current tax 1,224 631
Deferred tax –358 –1,183 Germany –210 –965 Other countries –148 –218
The non-deductible expenses mainly comprise losses on the disposal of equities, goodwill impairments and interest on back tax payments.
Reconciliation to effective tax expenses/income €m 2012 Prev. year Result before taxes on income (after “other tax”) 4,077 160 Group tax rate in % 33.0 33.0 Derived taxes on income 1,346 53 Tax effect of: Tax rate differences –188 –129 Tax-free income –466 –59 Non-deductible expenses 330 253 Valuation allowances for deferred taxes/loss carry-forwards –111 –462 Change in tax rates and tax legislation –5 1 Tax for prior years –114 –250 Trade tax adjustments 28 1
Munich Re’s reporting is based on various legal regulations governing risks it is exposed to as a result of its business operations: IFRS 4 prescribes disclosures on the type and extent of risks from insurance contracts. Under IFRS 7, analogous disclosures on risks from financial instruments are required. Besides this, Section 315 para. 2 item 2 of the German Commercial Code prescribes disclosures in the management report on risk management objectives and methods, hedging and risks in connection with financial instruments. These requirements are specified in more detail in the German Accounting Standard No. 15 (DRS 15) for management reports as well as DRS 5 and DRS 5-20 for risk reporting and risk reporting at insurance companies.
Of primary importance for these insurance contracts are biometric risks, interest-rate risks and lapse risks. The measurement of technical provisions and deferred acquisition costs is based on biometric calculation tables, i.e. on assumptions with regard to mortality, disablement and morbidity, and on the respective contract- or plan-specific discount rates and actuarial interest rates. Besides this, measurement includes assumptions regarding the lapse rate and profit sharing. In addition, other market risks from unit-linked contracts and risks from embedded derivatives, as well as the liquidity risk, have to be taken into account.
Biometric risks Our portfolios’ degree of exposure to biometric risks depends on the type of insurance contracts:
– Largely long-term contracts under which mainly mortality, longevity and disability risks are assumed from cedants
– Variable actuarial assumptions; premium adjustment generally possible if there are sustained changes in the cost structure
Mortality (short term): – Increase in claims expenditure due to exceptional, one-off circumstances (e.g. pandemics) Mortality (long term): – Increase in claims expenditure due to sustained rise in mortality in the portfolio Longevity: – Increase in expected expenditure for annuities due to sustained rise in life expectancy in the portfolio
Mortality (short term): – Increase in claims expenditure due to exceptional, one-off circumstances (e.g. pandemics) Mortality (long term): – Increase in claims expenditure due to sustained rise in mortality in cedants’ portfolios Disablement: – Increased expenditure for disability insurances in cedants’
portfolios Longevity: – Increase in expected expenditure for annuities due to a sustained rise in life expectancy in cedants’ portfolios.
We also take account of market standards when checking the adequacy of biometric actuarial assumptions and the trend assumptions included in them. This may result in a change in the provision for adverse deviation allowed for in the actuarial assumptions. The amount of the technical provisions or the deferred acquisition costs is not directly affected as long as there is provision for adverse deviation. In the view of the appointed actuaries, the biometric actuarial assumptions used by us are deemed sufficient. However, in long-term health insurance, we are proceeding on the assumption that there will be further advances in medical treatment, potentially giving rise to higher costs. For this business, it is generally possible to modify the actuarial assumptions by means of a premium adjustment to reflect the changes.
We measure sensitivity to changes in biometric assumptions in life insurance and for long-term contracts in health insurance using an embedded value analysis; cf. page 257 f.
Interest-rate risks A distinction must be made between risks of changes in interest rates on the one hand and interest-rate guarantee risks on the other. Risks of changes in interest rates would result from the discounting of the provision for future policy benefits and of parts of the provision for outstanding claims. In accordance with accounting valuation rules, the discount rate is fixed at contract commencement and will generally not be adjusted during the term of the contract. To this extent, the accounting valuation of these technical provisions does not depend directly on the level of the market interest rates.
Life Health Total €m 31.12.2012 Prev. year 31.12.2012 Prev. year 31.12.2012 Prev. year
For the unit-linked insurance contracts in our portfolios, the investments are held for the benefit of life insurance policyholders who bear the investment risk, meaning that there is no direct market risk. Appropriate product design ensures that the necessary premium portions for payment of a guaranteed minimum benefit on occurrence of death are based on the current fund assets.
The lump-sum option in the case of deferred annuity policies gives policyholders the option of having their annuity paid out in a single payment at a fixed date. As a result, there is a potential risk if an unexpectedly large number of policyholders exercise their option at an interest-rate level markedly higher than the discount rate used for the annuity calculation. But there is no direct interest-rate sensitivity or market sensitivity, since the exercise of the option by the policyholder is determined to a crucial extent by individual factors and relates to the insurance components. This option is specifically taken into account when applying the liability adequacy test prescribed by IFRS 4 to technical provisions.
In primary insurance, there is substantial risk minimisation through product design. For the most part, prudent actuarial assumptions are used in fixing the guaranteed benefits, in addition to which policyholders are granted a performance-related participation in surplus. More than 97% (98%) of the amounts shown under (21) Provision for future policy benefits is apportionable to such contracts. Given the relevant margins in the actuarial assumptions, it is also possible to fulfil the future guaranteed obligations without adjusting the provisions in the case of moderate changes in assumptions. Of great significance for risk-balancing in the case of adverse developments are parts of the provision for premium refunds based on national regulations, parts of the provision for deferred premium refunds resulting from other revaluations, and unrealised gains and losses on investments taken as a basis for posting the provision for deferred premium refunds. Reference is made to (23) Other technical provisions.
1 Premiums less benefits guaranteed at the balance sheet date and costs (excluding unit-linked products). 2 The reduction in this estimate between 2011 and 2012 is due to an adjustment in the underlying assumptions.
Expected future technical cash flow (gross)1 €m 31.12.2012 Prev. year Up to one year –2,088 –1,485 Over one year and up to five years –11,264 –10,336 Over five years and up to ten years –18,094 –17,828 Over ten years and up to 20 years –41,988 –39,712 Over 20 years2 –96,065 –120,086
In health primary insurance, there is the additional possibility of adjusting premiums for most long-term contracts. If it is foreseeable that the assumptions behind the cal culation are permanently inadequate to cover expenses for claims or the actual mortal ities deviate significantly from the calculated ones, premiums can be raised accordingly, thus closely limiting the financial and balance sheet effects of cost increases in healthcare and permanent changes in morbidity.
Impact on equity and the consolidated income statement In the liability adequacy test pursuant to IFRS 4, the technical provisions and deferred acquisition costs are regu larly tested to ensure they are appropriate. An adjustment is made if such tests show that, as a whole, the amounts calculated using the previous assumptions for biometric actuarial rates, for discounting provisions and for lapses are no longer sufficient. Par ticularly in primary insurance, the possibilities of adjusting participation in surplus are taken into account.
Munich Re continues to adhere to the strict rules of market-consistent evaluation as at the end of the year. The low interest-rate level and high volatility at the reporting date of 31 December 2012 result in distortions in life primary insurance in particular, owing to the long-term interest-rate guarantees. Further details are provided in the management report, pages 40 and 81 f.
The estimation of technological, social and demographic parameters plays an important part in assessing and pricing risks assumed in all classes of business. Beyond this, in liability insurance, workers’ compensation insurance, credit insurance and sections of motor insurance, the development of economic and legal parameters can be significant, whereas especially in the lines of business accident, fire and marine, and also in sections of engineering business and primary insurance, there is a high degree of sensitivity regarding the underlying assumptions about natural catastrophes. In the latter area, we include expected trends in our considerations when assessing the risks, with special importance given to a precise analysis of climate-related changes in the risk profile. The following table shows Munich Re’s combined ratios for the reinsurance property-casualty segment including and excluding natural catastrophes: 1 In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year have been adjusted accordingly. Comparability with the years up to and including 2010 is thus limited.
2 Previous year’s figures adjusted pursuant to IAS 8; see “Changes in accounting policies and other adjustments”. 3 The figure for 2011 is not adjusted for relief of 4.9 percentage points from economic risk transfer to the capital markets.
Premiums, loss ratios and combined ratios by class of business1, 2
Further information on risks from large and accumulation losses can be found in the risk report on page 126–128.
Thereof losses from natural catastrophes 1,284 4,538 1,564 196 832 1 In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year have been adjusted accordingly. Comparability with the years up to and including 2010 is thus limited. 2 Special impact for 2009: In credit and surety business, defaults triggered by the financial crisis led to a claims burden of €510m.
In the area of bodily injury losses, Munich Re carries a significant amount of reserves for individual claims where the claimant is severely injured and is in need of a high degree of individual, specialised medical treatment and care. US workers’ compensation business and motor liability business in some European countries are particularly affected by such claims. In both instances, coverage is provided for permanent disability cases where the claimant is expected to live for a considerable length of time and requires significant medical attention. Accordingly, the loss provisions are highly sensitive especially to inflation of medical care costs and to the trend with regard to general life expectancy. Owing to unexpectedly high price inflation, we have repeatedly had to increase these provisions in the past. Actual claims reported are compared with projected amounts to check whether the loss development patterns used are still appro priate for projecting future claims payments.
Another important measure for controlling underwriting risks is the cession of a portion of our risks to other carriers via external reinsurance or retrocession; cf. (12) Ceded share of technical provisions and (29) Premiums. All our companies have intra-Group 1 The previous year’s figures have been adjusted to eliminate currency translation effects.
For information on our risk management processes, reference is made to the risk report, pages 115–120.
The discounting of the provisions in primary insurance is also largely governed by supervisory law. An interest-rate risk arises for us here primarily for annuity insurance claims. However, as only around 14.2% (15.0%) of the actuarial and claims reserves to be considered in this connection in our property-casualty primary insurance are discounted, this risk can be assessed as small. If the investment income failed to cover the expenses arising from the discounting, this would result in losses not included in the calculations. In such a case, a reserve adjustment might be necessary. Conversely, if the investment income were higher, this would result in unforeseen gains.
The following table shows that in the past calendar years the liquidity situation has always been positive. Not explicitly considered in the data below is the fact that owing to our far-reaching asset-liability management for payments of claims incurred in prior years, even extremely large losses (from natural-catastrophe and non-natural-catastrophe scenarios) are covered by our liquidity position. Besides this, we pursue a consistent asset-liability management approach in our investment strategy. The structure and characteristics of the payment obligations from insurance business determine the investments selected. This also applies to our ability to respond to shock scenarios. To this end, we regularly simulate the impact of major shock scenarios on our liquidity situation. The losses simulated in these scenarios exceed the demands of very large claims burdens sustained in the past (e.g. from earthquakes, hurricanes or the attack on the World Trade Center) in terms of both absolute amount and speed of settlement.
The credit ratings of our retrocessionaires and reinsurers for the externally ceded share of our provisions are given on page 129 of the risk report, which also includes further information on credit risks on page 122.
Claims payments for financial year 5,968 5,930 5,213 4,378 4,393 Claims payments for previous years 8,898 8,096 8,613 7,589 7,675
The effects of the capital market events listed in the following table do not take account of tax or the provision for premium refunds (gross disclosure), i.e. the analysis does not take into account the effects resulting from policyholders’ participation in surplus in insurances of the person. The impact on the results and equity shown below would be substantially reduced if these effects were considered. It is also assumed that changes in the capital markets occur instantaneously, preventing our limit systems and active counter-measures from taking effect. The analysis considers around 99% of Munich Re’s investments.
Market risk – Share prices The impact of a change on the stock markets in terms of absolute amounts increased in the year under review. This is due to a rise in investments sensitive to share prices and the reduction of derivative hedging measures. A change in the stock market by 10% has an impact of 10.8% (8.2%) on the market value of the equity portfolio.
The impact on the consolidated income statement is small compared with the impact on equity, as most of the changes in the value of fixed-interest investments are accounted for in equity, with no effect on profit or loss. Also, around a third of the investments considered in this analysis are measured at amortised cost, so that changes in market value have no effect on the financial statements.
Change in share prices 31.12.2012 Prev. year Impact on Total change Impact on Total change profit Impact on in market profit Impact on in market €bn or loss1 equity1 value or loss1 equity1 value
Market values 190.024 171.288 1 Gross before tax and policyholder participation in surplus.
The relevant initial share price for the stock appreciation rights was calculated from the average of closing prices for Munich Re shares in Frankfurt Xetra trading over the last three months prior to the respective plan commencement. The obligations arising from the long-term incentive plans are partly covered by Munich Reinsurance Company shares.
Incentive Incentive Incentive Incentive Incentive Incentive Plan 2005 Plan 2006 Plan 2007 Plan 2008 Plan 2009 Plan 2010
Intrinsic value 2012 for one right €46.30 €25.53 €0.33 €12.56 €36.83 €25.29 Fair value 2012 for one right – €25.53 €7.06 €12.99 €36.83 €25.29 Number of rights on 31 Dec. 2005 485,527 – – – – –
Additions – 443,609 – – – – Forfeited – 1,019 – – – –
Number of rights on 31 Dec. 2006 485,527 442,590 – – – –
Number of rights on 31 Dec. 2008 365,590 434,811 339,399 441,041 – –
Number of rights on 31 Dec. 2009 345,662 431,907 336,595 437,310 459,271 – Additions – – – – – 675,029 Exercised 72,662 – – – – –
Number of rights on 31 Dec. 2010 271,064 430,254 335,216 435,848 457,984 675,029 Additions – – – – – 6,546 Exercised 122,681 – – – – –
Number of rights on 31 Dec. 2008 125,360 162,233 109,802 172,552 – – Additions – – – – 148,834 – Exercised 14,851 – – – – –
Number of rights on 31 Dec. 2011 28,358 159,665 106,192 167,968 148,579 39,046
Number of rights on 31 Dec. 2012 – 6,671 101,207 166,170 20,299 19,112
At plan commencement, the PSUs are granted on the basis of the set target amount for 100% achievement of objectives and the initial TSR value. The total return index of the Xetra listing of Munich Re shares, starting on 22 January 1996, is used for the TSR. The basis for the full and partial allocation of the PSUs is the first plan year.
Personnel expenses were not incurred for retired members of the Board of Management. After deduction of plan assets held by a separate entity (under a contractual trust agreement), there were no pension provisions or provisions for comparable benefits for retired members of the Board of Management or their surviving dependants.
The members of the Supervisory Board and Board of Management did not receive any cash advances or loans in the year under review. Neither were there any significant notifiable transactions between Board members and Munich Re. Nor, apart from the above- mentioned remuneration for membership of supervisory boards at other Group com panies, were any payments made or advantages extended to members of the Supervisory Board for services provided internally within the meaning of item 5.4.6 para. 3 of the German Corporate Governance Code.
Incentive Incentive Incentive Incentive Plan 2009 Plan 2010 Plan 2011 Plan 2012
Number of rights (for 100% achievement of objectives) on 31 December 2011 86,349 37,441 63,769 – Number of rights (for 100% achievement of objectives) on 1 January 2012 86,349 37,441 63,769 78,568
Number of rights (for 100% achievement of objectives) on 31 December 2012 – 37,257 63,530 78,568
The reduction is mainly due to the sale of ERGO Daum Direct General Insurance.
For services rendered to the parent and consolidated subsidiaries by the Group auditor (KPMG Bayerische Treuhandgesellschaft AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Munich, and its affiliated companies within the meaning of Section 271 para. 2 of the German Commercial Code), the following fees have been recognised as an expense in the financial year: The affiliated companies of KPMG Bayerische Treuhandgesellschaft AG comprise the following entities: KPMG Germany, KPMG Spain, KPMG Switzerland, KPMG LLP (UK), KPMG Belgium, KPMG Netherlands, KPMG Luxembourg, KPMG Turkey, KPMG Russia, KPMG Georgia, KPMG Ukraine, KPMG Armenia, KPMG Kazakhstan, KPMG Kyrgyzstan, KPMG Norway, KPMG Kuwait, KPMG Jordan, and KPMG Saudi Arabia.
The application of fiscal regulations may yet be unresolved at the time of calculation of tax refund claims and tax liabilities. The calculation of tax items is based on the regulations most likely to be applied in each case. Regardless of this, the fiscal authorities may be of a deviating opinion in this area, which may give rise to additional tax liabil ities.
Breakdown of auditor’s fees €k 2012 Prev. year Audits of financial statements1 8,343 7,374 Other assurance and appraisal services1 2,477 2,767 Tax consultancy services 1,324 1,368 Other services 1,599 918
In accordance with the German Insurance Control Act (VAG), all German life and health insurers of our Group are obliged to be members of a protection fund. For life insurers, the protection fund can levy special contributions of up to one per mille of total net technical provisions, in addition to a regular contribution of 0.2 per mille of total net technical provisions. For the health insurers, there is no pre-financing, but the fund may levy special contributions of up to two per mille of net technical provisions to fulfil its functions. This could give rise to a potential payment obligation of €114m (111m) at Group level. The functions and powers of the statutory protection fund for life insurance rest with Protektor Lebensversicherungs-AG, and those of the statutory protection fund for health insurance with Medicator AG.
The finance leases concern in particular rents for offices and business premises of the Group. They include extension options as well as restrictions regarding the agreement of subleases. The following table shows the future minimum lease payments and their present value for finance leases at 31 December 2012.
The total of future minimum sublease payments expected to be received under non-cancellable subleases was €1m (1m) at the reporting date.
Munich Re as lessor Operating leases mainly involve leased property. The total of future minimum lease payments under non-cancellable leases at the balance sheet date was €957m (974m).
Due dates €m 31.12.2012 Prev. year Not later than one year 177 175 Later than one year and not later than five years 501 474 Later than five years 279 325
Due dates 31.12.2012 Prev. year Gross Interest Net Gross Interest Net €m investment element investment investment element investment Minimum lease payments not later than one year – – – 1 1 – Minimum lease payments later than one year and not later than five years 2 – 2 2 – 2 Minimum lease payments later than five years 74 57 17 74 57 17
Munich Re Group Annual Report 2012 52 Events after the balance sheet date
Munich Reinsurance Company’s net retained profits for 2012 according to its financial statements prepared on the basis of the German Commercial Code amount to €1,255,388,484.00. The Board of Management will propose to shareholders at the Annual General Meeting that these net retained profits be used for payment of a dividend of €7.00 per dividend-bearing share, with the remaining amount apportionable being carried forward to new account.
Consolidated subsidiaries 40, Rue Courcelles SAS, Paris 100.0000 ADB ERGO Lietuva, Vilnius 100.0000 Adelfa Servicios a Instalaciones Fotovoltaicas, S.L., Santa Cruz de Tenerife 100.0000 AEVG 2004 GmbH, Frankfurt/Main4 0.0000 aktiva Vermittlung von Versicherungen und Finanz-Dienstleistungen GmbH, Cologne 100.0000 ALICE GmbH, Düsseldorf 100.0000 almeda GmbH, Munich 100.0000 almeda Versicherungs-Aktiengesellschaft, Munich 100.0000 American Alternative Insurance Corporation, Wilmington, Delaware 100.0000 American Family Home Insurance Company, Jacksonville, Florida 100.0000 American Modern Home Insurance Company, Amelia, Ohio 100.0000 American Modern Home Service Company, Amelia, Ohio 100.0000 American Modern Insurance Company of Florida, Inc., Jacksonville, Florida 100.0000 American Modern Insurance Group, Inc., Amelia, Ohio 100.0000 American Modern Lloyds Insurance Company, Dallas, Texas 100.0000 American Modern Select Insurance Company, Amelia, Ohio 100.0000 American Modern Surplus Lines Insurance Company, Amelia, Ohio 100.0000 American Southern Home Insurance Company, Jacksonville, Florida 100.0000 American Western Home Insurance Company, Oklahoma City, Oklahoma 100.0000 Amicus Legal Ltd., Bristol 100.0000 Arkansas Life Insurance Company, Phoenix, Arizona 100.0000 avanturo GmbH, Düsseldorf 100.0000 B&C International Insurance, Hamilton, Bermuda 100.0000 Bagmoor Holdings Limited, London 100.0000 Bagmoor Wind Limited, Bristol 100.0000 Bank Austria Creditanstalt Versicherung AG, Vienna 90.0000 Beaufort Dedicated No. 1 Ltd, London 100.0000 Beaufort Dedicated No. 2 Ltd, London 100.0000 Beaufort Dedicated No. 5 Ltd, London 100.0000 Beaufort Underwriting Agency Limited, London 100.0000 Bell & Clements (Bermuda) Ltd., Hamilton, Bermuda 100.0000 Bell & Clements (London) Ltd, London 100.0000 Bell & Clements (USA) Inc, Reston, Virginia 100.0000 Bell & Clements Inc, Reston, Virginia 100.0000 Bell & Clements Ltd, London 100.0000
The following disclosures relate to companies in which our directly and indirectly held shareholdings (as defined in Section 16 paras. 2 and 4 of the German Stock Companies Act) add up to 20% or more of the share capital, and large companies (as defined in Section 267 para. 3 of the German Commercial Code) in which our directly and in directly held shareholdings add up to more than 5% of the voting rights.
DKV Seguros y Reaseguros, Sociedad Anónima Española, Saragossa 100.0000 EIG, Co., Wilmington, Delaware 100.0000 Einzelanlage Hohenseefeld GmbH & Co KG, Bremen 100.0000 ERGO ASIGURARI DE VIATA SA, Bucharest 100.0000 ERGO Assicurazioni S.p.A., Milan 100.0000 ERGO Austria International AG, Vienna 100.0000 ERGO DIREKT Krankenversicherung AG, Fürth 100.0000 ERGO DIREKT Lebensversicherung AG, Fürth 100.0000 ERGO Direkt Lebensversicherung AG, Schwechat 100.0000 ERGO DIREKT Versicherung AG, Fürth 100.0000 ERGO Élétbiztosító Zrt., Budapest 100.0000 ERGO Elfte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 ERGO Emeklilik ve Hayat A.S., Istanbul 100.0000 ERGO Eurosolar GmbH & Co. KG, Nuremberg 100.0000 ERGO Eurosolar S.a.s. di welivit Solar Italia S.r.l., Bolzano 100.0000 ERGO Funds AS, Tallinn 100.0000 ERGO General Insurance Company S.A., Athens 99.9999 ERGO Generales Seguros y Reaseguros, S.A., Madrid 100.0000 ERGO Grubu Holding A.S., Istanbul 100.0000 ERGO Grundstücksverwaltung GbR, Düsseldorf 100.0000 ERGO Immobilien-GmbH 14. Victoria & Co. KG, Kreien 100.0000 ERGO Immobilien-GmbH 5. Hamburg-Mannheimer & Co.KG, Kreien 100.0000 ERGO Insurance N.V., Brussels 99.9999 ERGO International Aktiengesellschaft, Düsseldorf 100.0000 ERGO International Services GmbH, Düsseldorf 100.0000 ERGO Invest SIA, Riga 95.0000 ERGO Italia Business Solutions S.c.r.l., Milan 100.0000 ERGO Italia Direct Network s.r.l., Milan 100.0000 ERGO Italia S.p.A., Milan 100.0000 ERGO Kindlustuse AS, Tallinn 100.0000 ERGO Latvija Versicherung AG (ERGO Latvija Apdrošināšanas akciju sabiedrība), Riga 100.0000 ERGO Lebensversicherung Aktiengesellschaft, Hamburg 100.0000 ERGO Life Insurance Company S.A., Thessaloniki 100.0000 ERGO Life Insurance SE, Vilnius 100.0000 ERGO Neunte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 ERGO osiguranje d.d., Zagreb 100.0000 ERGO Partners N.V., Brussels 100.0000 ERGO Pensionsfonds Aktiengesellschaft, Düsseldorf 100.0000 ERGO Pensionskasse AG, Düsseldorf 100.0000 ERGO pojišťovna, a.s., Prague 100.0000 ERGO Previdenza S.p.A., Milan 100.0000 ERGO Private Capital Gesundheit GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Capital Leben GmbH & Co. KG, Düsseldorf 100.0000 ERGO Private Equity Gesundheit GmbH, Düsseldorf 100.0000 ERGO Private Equity Komposit GmbH, Düsseldorf 100.0000 ERGO Private Equity Leben GmbH, Düsseldorf 100.0000 ERGO RUSS Versicherung AG, St. Petersburg 100.0000 ERGO Shisn, Moscow 100.0000 ERGO SIGORTA A.S., Istanbul 100.0000 ERGO Versicherung Aktiengesellschaft, Düsseldorf 100.0000 ERGO Versicherung Aktiengesellschaft, Vienna 100.0000 ERGO Versicherungsgruppe AG, Düsseldorf 100.0000 ERGO Vida Seguros y Reaseguros, Sociedad Anónima, Saragossa 100.0000
ERGO Zivljenjska zavarovalnica d.d., Ljubljana 100.0000 ERGO životná poisťovňa, a.s., Bratislava 100.0000 ERGO Zivotno osiguranje d.d., Zagreb 100.0000 ERGO Zweite Beteiligungsgesellschaft mbH, Düsseldorf 99.9999 ERV Försäkringsaktiebolag (publ), Stockholm 100.0000 ERV pojišťovna, a.s., Prague 90.0000 Europæiske Rejseforsikring A/S, Copenhagen 100.0000 EUROPÄISCHE Reiseversicherung Aktiengesellschaft, Munich 100.0000 European International Holding A/S, Copenhagen 100.0000 Everything Legal Ltd., Bristol 100.0000 FAIRANCE GmbH, Düsseldorf 100.0000 First Marine Insurance Company, Amelia, Ohio 100.0000 Flexitel Telefonservice GmbH, Berlin 100.0000 FOTOUNO S.r.l., Turin 100.0000 FOTOWATIO ITALIA GALATINA S.r.l., Turin 100.0000 Geschlossene Aktiengesellschaft Europäische Reiseversicherung, Kiev 99.9999 GF 65, Vienna4 100.0000 Global Standards LLC, Dover, Delaware 100.0000 Globality S.A., Luxembourg 100.0000 Great Lakes Reinsurance (UK) Plc., London 100.0000 Great Lakes Services Ltd., London 100.0000 Group Risk Services Limited, London 100.0000 Groves, John & Westrup Limited, London 100.0000 Habiriscos-Investimentos Imobiliários e Turísticos, S.A., Lisbon 100.0000 Hamburg-Mannheimer Pensionskasse AG, Hamburg 100.0000 Hartford Steam Boiler (M) Sdn. Bhd., Kuala Lumpur 100.0000 Hartford Steam Boiler (Singapore), PTE Ltd., Singapore 100.0000 Hartford Steam Boiler International India Pyt Ltd., Kolkata 100.0000 Hartford Steam Boiler International-GmbH, Rheine 100.0000 HMV GFKL Beteiligungs GmbH, Düsseldorf 100.0000 HSB Engineering Finance Corporations, Dover, Delaware 100.0000 HSB Engineering Insurance Limited, London 100.0000 HSB Engineering Insurance Services Limited, Oldham 100.0000 HSB Group, Inc., Dover, Delaware 100.0000 HSB Japan KK, Minato-KU, Tokyo 100.0000 HSB Professional Loss Control, Inc., Lenoir City, Tennessee 100.0000 HSB Solomon Associates LLC, Dover, Delaware 100.0000 HSB Specialty Insurance Company, Hartford, Connecticut 100.0000 HSB Technical Consulting & Services (Shanghai) Company, Ltd., Shanghai 100.0000 Hyneman Life Corporation, Jonesboro, Arkansas 100.0000 Ibero Property Portugal – Investimentos Imobiliários S.A., Lisbon 100.0000 Ibero Property Trust S.A., Madrid 100.0000 IDEENKAPITAL Financial Engineering GmbH, Düsseldorf 100.0000 IDEENKAPITAL Financial Service GmbH, Düsseldorf 100.0000 IDEENKAPITAL GmbH, Düsseldorf 100.0000 IDEENKAPITAL Media Finance GmbH, Düsseldorf 50.1000 IDEENKAPITAL Metropolen Europa GmbH & Co. KG, Düsseldorf 72.3477 iii, Munich4 100.0000 IK Einkauf Objekt Eins GmbH & Co. KG, Düsseldorf 100.0000 IK Einkauf Objektmanagement GmbH, Düsseldorf 100.0000 277Consolidated financial statements Notes
OIK Mediclin, Wiesbaden4 66.6672 Olympic Health Management Services Inc., Atlanta, Georgia 100.0000 Olympic Health Management Systems, Inc., Atlanta, Georgia 100.0000 P.A.N. GmbH & Co. KG, Grünwald2 99.0000 Princeton Eagle Holding (Bermuda) Limited, Hamilton, Bermuda 100.0000 Princeton Eagle Insurance Company Limited, Hamilton, Bermuda 100.0000 Princeton Eagle West (Holding) Inc., Wilmington, Delaware 100.0000 Princeton Eagle West Insurance Company Ltd., Hamilton, Bermuda 100.0000 Queensley Holdings Limited, Singapore4 100.0000 Renaissance Hotel Realbesitz GmbH, Vienna 60.0000 Roanoke International Brokers Limited, London 100.0000 Roanoke Real Estate Holdings Inc., Schaumburg, Illinois 100.0000 Roanoke Trade Services Inc., Schaumburg, Illinois 100.0000 Scout Moor Group Limited, Manchester 100.0000 Scout Moor Holdings (No.1) Limited, Manchester 100.0000 Scout Moor Holdings (No.2) Limited, Manchester 100.0000 Scout Moor Wind Farm (No.2) Limited, Manchester 100.0000 Scout Moor Wind Farm Limited, Manchester 100.0000 Seminaris Hotel- und KongreßstättenBetriebsgesellschaft mbH, Lüneburg 100.0000 Silvanus Vermögensverwaltungsges.mbH, Munich 100.0000 Solomon Associates Limited, London 100.0000 Sopocki Instytut Ubezpieczeń S.A., Sopot 100.0000 Sopockie Towarzystwo Ubezpieczeń Ergo Hestia Spółka Akcyjna, Sopot 100.0000 Sopockie Towarzystwo Ubezpieczeń na Życie Ergo Hestia Spółka Akcyjna, Sopot 100.0000 Specialty Insurance Services Corp., Amelia, Ohio 100.0000 Sterling Life Insurance Company, Atlanta, Georgia 100.0000 SunEnergy & Partners S.r.l., Brindisi 100.0000 Temple Insurance Company, Toronto, Ontario 100.0000 The Atlas Insurance Agency, Inc., Amelia, Ohio 100.0000 The Boiler Inspection and Insurance Company of Canada, Toronto 100.0000 The Hartford Steam Boiler Inspection and Insurance Company of Connecticut, Hartford, Connecticut 100.0000 The Hartford Steam Boiler Inspection and Insurance Company, Hartford, Connecticut 100.0000 The Midland Company, Cincinnati, Ohio 100.0000 The Polytechnic Club, Inc., Hartford, Connecticut 100.0000 The Princeton Excess and Surplus Lines Insurance Company, Wilmington, Delaware 100.0000 The Roanoke Companies Inc., Schaumburg, Illinois 100.0000 Tir Mostyn and Foel Goch Limited, London 100.0000 UK Wind Holdings Ltd, London 100.0000 Union Beteiligungsholding GmbH, Vienna 100.0000 Union Life Insurance Company, Jonesboro, Arkansas 100.0000 Unión Médica la Fuencisla, S.A., Compañía de Seguros, Saragossa 100.0000 Van Arkel Gerechtsdeurwaarders B.V., Leiden12 79.0000 Venus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 VHDK Beteiligungsgesellschaft mbH, Düsseldorf 100.0000
Aitesacho 5005 S.L., Playa del Inglés 100.0000 Albulzaga 8008 S.L., Playa del Inglés 100.0000 Aleama 150015 S.L., Madrid 100.0000 Amicus Ltd., Bristol 100.0000 Amladeza 7007 S.L., Playa del Inglés 100.0000 Arridabra 130013 S.L., Madrid 100.0000 ARTES Assekuranzservice GmbH, Düsseldorf 100.0000 ArztPartner almeda AG, Munich 100.0000 Associated Asset Management Corporation B.V., ’s-Hertogenbosch 51.0000 B&D Acquisition B.V., Amsterdam 80.0000 B&D Business Solutions B.V., Utrecht 100.0000 Badozoc 1001 S.L., Madrid 100.0000 Bank Austria Creditanstalt Versicherungsdienst GmbH, Vienna 100.0000 Baqueda 7007 S.L., Madrid 100.0000 Beaufort Dedicated No. 3 Ltd, London 100.0000 Beaufort Dedicated No. 4 Ltd, London 100.0000 Beaufort Dedicated No. 6 Ltd, London 100.0000 Beaufort Underwriting Services Limited, London 100.0000 Bell & Clements Underwriting Managers Ltd, London 100.0000 BioEnergie Elbe-Elster GmbH & Co. KG, Elsterwerda 100.0000 BioEnergie Verwaltungs-GmbH, Elsterwerda 100.0000 Blitz 01-807 GmbH, Munich 100.0000 Bobasbe 6006 S.L., Madrid 100.0000 Botedazo 8008 S.L., Madrid 100.0000 Bureau voor kredietinformaties Janssen B.V., The Hague 100.0000 Bureau voor kredietinformaties Janssen Holding B.V., The Hague 100.0000 Callopio 5005 S.L., Madrid 100.0000 Camcichu 9009 S.L., Madrid 100.0000 CAPITAL PLAZA Holding GmbH, Düsseldorf 100.0000 Caracuel Solar Catorce S.L., Madrid 100.0000 Caracuel Solar Cinco S.L., Madrid 100.0000 Caracuel Solar Cuatro S.L., Madrid 100.0000 Caracuel Solar Dieciocho S.L., Madrid 100.0000 Caracuel Solar Dieciseis S.L., Madrid 100.0000 Caracuel Solar Diecisiete S.L., Madrid 100.0000 Caracuel Solar Diez S.L., Madrid 100.0000 Caracuel Solar Doce S.L., Madrid 100.0000 Caracuel Solar Dos S.L., Madrid 100.0000 Caracuel Solar Nueve S.L., Madrid 100.0000 Caracuel Solar Ocho S.L., Madrid 100.0000 Caracuel Solar Once S.L., Madrid 100.0000 Caracuel Solar Quince S.L., Madrid 100.0000 Caracuel Solar Seis S.L., Madrid 100.0000 Caracuel Solar Siete S.L., Madrid 100.0000 Caracuel Solar Trece S.L., Madrid 100.0000 Caracuel Solar Tres S.L., Madrid 100.0000 Caracuel Solar Uno S.L., Madrid 100.0000 CarePlus Gesellschaft für Versorgungsmanagement mbH, Cologne 100.0000 Chobocuga 150015 S.L., Playa del Inglés 100.0000 Ciborum GmbH, Munich 100.0000 Comino Beteiligungen GmbH, Grünwald 100.0000 Copper Leaf Research, Bingham Farms, Michigan 100.0000
VICTORIA Asien Immobilienbeteiligungs GmbH & Co. KG, Munich 100.0000 VICTORIA Investment Properties Two L.P., Atlanta, Georgia 100.0000 VICTORIA Italy Property GmbH, Düsseldorf 100.0000 VICTORIA Lebensversicherung Aktiengesellschaft, Düsseldorf 100.0000 Victoria US Holdings, Inc., Wilmington, Delaware 100.0000 VICTORIA US Property Investment GmbH, Düsseldorf 100.0000 VICTORIA US Property Zwei GmbH, Düsseldorf 100.0000 VICTORIA Vierte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 Victoria Vierter Bauabschnitt GmbH & Co. KG, Düsseldorf 100.0000 VICTORIA-VOLKSBANKEN Eletbiztosító Zrt., Budapest 100.0000 VICTORIA-VOLKSBANKEN Poisťovňa, a.s., Bratislava 100.0000 VICTORIA-VOLKSBANKEN Biztosító Zrt., Budapest 100.0000 Vorsorge Lebensversicherung Aktiengesellschaft, Düsseldorf 100.0000 Vorsorge Luxemburg Lebensversicherung S.A., Munsbach 100.0000 Watkins Syndicate Hong Kong Limited, Hong Kong 67.0000 Watkins Syndicate Labuan Limited (WSLAB), Labuan 100.0000 Watkins Syndicate Middle East Limited, Dubai 100.0000 Watkins Syndicate Singapore Pte. Limited, Singapore 100.0000 welivit AG, Nuremberg 100.0000 WFB Stockholm Management AB, Stockholm4 50.0000 Windpark Borghorst-Laer GmbH & Co.KG, Bremen 100.0000 Windpark Dargelütz GmbH & Co. KG, Bremen 100.0000 Windpark Frauenmark GmbH & Co., Bremen 100.0000 Windpark Geisleiden GmbH & Co KG, Bremen 100.0000 Windpark Großberendten 2 GmbH & Co KG, Bremen 100.0000 Windpark Hilmersdorf GmbH & Co KG, Bremen 100.0000 Windpark Kladrum-Zölkow GmbH & Co.KG, Bremen 100.0000 Windpark Klein Bünzow GmbH & Co KG, Bremen 100.0000 Windpark Kruge GmbH & Co KG, Bremen 100.0000 Windpark Langengrassau GmbH & Co KG, Bremen 100.0000 Windpark Markee 6 GmbH & Co. KG, Bremen 100.0000 Windpark Marwitz GmbH & Co KG, Bremen 100.0000 Windpark Mittelhausen GmbH & Co KG, Bremen 100.0000 Windpark Sassenberg GmbH & Co KG, Bremen 100.0000 Windpark Westeregeln GmbH & Co. KG, Bremen 100.0000 Windsor Health Group, Inc., Atlanta, Georgia 100.0000 Windsor Health Plan of Georgia, Inc., Atlanta, Georgia 100.0000 Windsor Health Plan of Louisiana, Inc., Lafayette, Louisiana 100.0000 Windsor Health Plan, Inc., Atlanta, Georgia 100.0000 Windsor HomeCare Network, LLC, Atlanta, Georgia 100.0000 Windsor Management Services, Inc., Atlanta, Georgia 100.0000 wpd Windpark Wergzahna GmbH & Co KG, Bremen 100.0000 wse Solarpark Spanien 1 GmbH & Co. KG, Fürth 75.1243
ERV Seyahat Sigorta Aracilik Hizmetleri ve Danismanlik Ltd.Sti., Istanbul 99.0000 Esoleme 120012 S.L., Playa del Inglés 100.0000 Etics, s.r.o., Prague 100.0000 Etoblete 160016 S.L., Madrid 100.0000 Etogibon 100010 S.L., Playa del Inglés 100.0000 Etolede 6006 S.L., Playa del Inglés 100.0000 EUREKA GmbH, Düsseldorf 99.9999 Euro Alarm Assistance Prague, Prague 100.0000 Euro-Center (Cyprus) Ltd., Larnaca 100.0000 Euro-Center (Thailand) Co. Ltd., Bangkok 100.0000 Euro-Center Cape Town (Pty.) Ltd., Cape Town 100.0000 Euro-Center China (HK) Co., Ltd., Peking 100.0000 Euro-Center Holding A/S, Copenhagen 83.3330 Euro-Center Holding North Asia (HK) Pte. Ltd., Hong Kong 100.0000 Euro-Center Ltda., Rio de Janeiro 100.0000 Euro-Center USA, Inc., New York, New York 100.0000 Euro-Center Yerel Yardim, Istanbul 100.0000 Euro-Center, S.A. (Spain), Palma de Mallorca 100.0000 Europäische (UK) Ltd., London 100.0000 European Assistance Holding GmbH, Munich 100.0000 Evaluación Médica TUW, S.L., Barcelona 100.0000 EVV Logistik Management GmbH, Düsseldorf 100.0000 Exolvo GmbH, Hamburg 100.0000 First Legal Protection Limited, Bristol 100.0000 First Marine Financial Services, Amelia, Ohio 100.0000 Forst Ebnath AG, Ebnath 96.7315 Gamaponti 140014 S.L., Madrid 100.0000 GBG Vogelsanger Straße GmbH, Cologne 94.0000 Gebäude Service Gesellschaft Überseering 35 mbH, Hamburg 100.0000 GEMEDA Gesellschaft für medizinische Datenerfassung und Auswertung sowie Serviceleistungen für freie Berufe mbH, Cologne 100.0000 goDentis – Gesellschaft für Innovation in der Zahnheilkunde mbH, Cologne 100.0000 goMedus Gesellschaft für Qualität in der Medizin mbH, Cologne 100.0000 goMedus GmbH & Co. KG, Cologne 100.0000 GRANCAN Sun-Line S.L., Madrid 100.0000 Great Lakes Marine Insurance Agency Pty Ltd i.L., Sydney 100.0000 Great Lakes Re Management Company (Belgium) S.A., Brussels 100.0000 Guanzu 2002 S.L., Madrid 100.0000 Hamburger Hof Management GmbH, Hamburg 100.0000 Hamburg-Mannheimer ForsikringService A/S, Copenhagen 100.0000 Hamburg-Mannheimer Rechtsschutz Schaden-Service GmbH, Hamburg 100.0000 Hartford Steam Boiler Colombia Ltda., Bogotá 100.0000 Health OÜ, Tallinn 100.0000 Hestia Advanced Risk Solutions Sp. z o.o., Sopot 100.0000 Hestia Loss Control Sp. z o.o., Sopot 100.0000 HMI S.r.l., Verona 100.0000 Horbach GmbH Versicherungsvermittlung und Finanzdienstleistungen, Düsseldorf 70.1000
Legal Net GmbH, Munich 100.0000 m:editerran POWER FRANCE GmbH, Nuremberg 100.0000 m:editerran POWER GmbH & Co. KG, Nuremberg 100.0000 m:editerran Power S.a.s. di welivit Solar Italia S.r.l., Bolzano 100.0000 MAM Munich Asset Management GmbH, Munich 100.0000 Marbury Agency, Inc., Amelia, Ohio 100.0000 MAYFAIR Financing GmbH, Munich 100.0000 MAYFAIR Holding GmbH, Düsseldorf 100.0000 MEAG Hong Kong Limited, Hong Kong 100.0000 MEAG Luxembourg S.à r.l., Luxembourg 100.0000 MEAG Property Management GmbH, Munich 100.0000 MEAG Real Estate Erste Beteiligungsgesellschaft, Munich 100.0000 Mediastream Consulting GmbH, Grünwald 100.0000 Mediastream Dritte Film GmbH, Grünwald 100.0000 Mediastream Film GmbH, Grünwald 100.0000 Mediastream Vierte Medien GmbH, Grünwald 100.0000 Mediastream Zweite Film GmbH, Grünwald 100.0000 MedNet Europa GmbH, Munich 100.0000 MedNet Gulf E.C., Manama 100.0000 MedNet International Offshore SAL, Beirut 99.6700 MedWell Gesundheits-AG, Cologne 100.0000 MESA ASISTENCIA, S.A., Madrid 99.9000 MFI Munich Finance and Investment Holding Ltd., Ta’ Xbiex 99.9999 MFI Munich Finance and Investment Ltd., Ta’ Xbiex 99.9999 miCura Pflegedienste Berlin GmbH, Berlin 100.0000 miCura Pflegedienste Bremen GmbH, Bremen 100.0000 miCura Pflegedienste Düsseldorf GmbH, Düsseldorf 100.0000 miCura Pflegedienste GmbH, Cologne 100.0000 miCura Pflegedienste Hamburg GmbH, Hamburg 100.0000 miCura Pflegedienste Krefeld GmbH, Krefeld 100.0000 miCura Pflegedienste München / Dachau GmbH, Dachau 51.0000 miCura Pflegedienste München GmbH, Munich 100.0000 miCura Pflegedienste München Ost GmbH, Munich 65.0000 miCura Pflegedienste Münster GmbH, Münster 100.0000 miCura Pflegedienste Nürnberg GmbH, Nuremberg 51.0000 MR Beteiligungen 14. GmbH, Munich 100.0000 MR Beteiligungen 15. GmbH, Munich 100.0000 MR Beteiligungen 16. GmbH, Munich 100.0000 MR Beteiligungen 18. GmbH, Grünwald 100.0000 MR Beteiligungen AG, Grünwald 100.0000 MR ERGO Beteiligungen GmbH, Munich 100.0000 MR Parkview Holding Corporation, Wilmington, Delaware 100.0000 MR RENT-Management GmbH, Munich 100.0000 MR Solar Beneixama GmbH, Nuremberg 100.0000 Münchener Consultora Internacional S.R.L., Santiago de Chile 100.0000 Münchener de Argentina Servicios Técnicos S. R. L., Buenos Aires 100.0000 Münchener de Colombia S.A. Corredores de Reaseguros, Bogotá 100.0000 Münchener de Mexico S. A., Mexico 100.0000 Münchener de Venezuela C.A. Intermediaria de Reaseguros, Caracas 100.0000
Münchener Ecoconsult GmbH i.L., Munich 100.0000 Münchener Finanzgruppe AG Beteiligungen, Munich 100.0000 Münchener Vermögensverwaltung GmbH, Munich 100.0000 Munich American Reassurance Company PAC, Inc., Atlanta, Georgia4 0.0000 Munich Canada Systems Corporation, Toronto, Ontario 100.0000 Munich Columbia Square Corp., Wilmington, Delaware 100.0000 Munich Management Pte. Ltd., Singapore 100.0000 Munich Re America Brokers, Inc., Wilmington, Delaware 100.0000 Munich Re America Management Ltd., London 100.0000 Munich Re Automation Solutions GmbH, Grünwald 100.0000 Munich Re Automation Solutions Inc., Wilmington, Delaware 100.0000 Munich Re Automation Solutions KK, Tokyo 100.0000 Munich Re Automation Solutions Pty Limited, Sydney 100.0000 Munich Re Capital Markets GmbH, Munich 100.0000 Munich Re General (UK) Limited i.L., London 100.0000 Munich Re India Services Private Limited, Mumbai 100.0000 Munich Re Japan Services K. K., Tokyo 100.0000 Munich Re Life and Health (UK) Plc., London 100.0000 Munich Re Underwriting Agents (DIFC) Limited, Dubai 100.0000 Munich-American Global Services (Munich) GmbH i.L., Munich 100.0000 Munich-American Risk Partners GmbH, Munich 100.0000 Munich-Canada Management Corp. Ltd., Toronto, Ontario 100.0000 MunichFinancialGroup AG Holding, Munich 100.0000 MunichFinancialGroup GmbH, Munich 100.0000 MunichFinancialServices AG Holding, Munich 100.0000 Munichre Service Limited, Hong Kong 100.0000 Naretoblera 170017 S.L., Madrid 100.0000 Nassau Incasso Services Den Haag B.V., The Hague 100.0000 Nerruze 120012 S.L., Madrid 100.0000 Nicamballo 1001 S.L., Playa del Inglés 100.0000 OHM Services of Texas, Inc., Atlanta, Georgia 100.0000 Olbodeca 4004 S.L., Playa del Inglés 100.0000 One State Street Intermediaries, Hartford, Connecticut 100.0000 Oracuet 160016 S.L., Playa del Inglés 100.0000 Oragulno 9009 S.L., Playa del Inglés 100.0000 Oraunte 130013 S.L., Playa del Inglés 100.0000 Orrazipo 110011 S.L., Madrid 100.0000 Otusleme 3003 S.L., Playa del Inglés 100.0000 P.A.N. Verwaltungs GmbH, Grünwald 99.0000 PLATINIA Verwaltungs-GmbH, Munich 100.0000 ProContact Sp. z o.o., Gdansk 100.0000 PRORENDITA DREI Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA EINS Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA Fünf Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA VIER Verwaltungsgesellschaft mbH, Hamburg 100.0000 PRORENDITA ZWEI Verwaltungsgesellschaft mbH, Hamburg 100.0000 ProVictor Immobilien GmbH, Düsseldorf7 50.0000 ProVictor Property Fund IV Management, Inc., Atlanta, Georgia 51.0000 283Consolidated financial statements Notes
(MC €197m) 35.0042 MEGA 4 GbR, Berlin 34.2569 Millennium Entertainment Partners II L.P., New York, New York 42.2992 Millennium Entertainment Partners L.P., New York, New York 27.5400 Millennium Partners LLC, New York, New York 20.3039 PICC Asset Management Company Ltd., Shanghai5 19.0000 Property Finance France S.A., Luxembourg 45.4605 Rendite Partner Gesellschaft für Vermögensverwaltung mbH, Frankfurt/Main 33.3333 RP Vilbeler Fondsgesellschaft mbH, Frankfurt/Main 40.0000 Sana Kliniken AG, Munich 21.7025 SAS Le Point du Jour, Paris 50.0000 Saudi National Insurance Company B.S.C.(c), Manama 22.5000 SEBA Beteiligungsgesellschaft mbH, Nuremberg 48.9931 Storebrand Helseforsikring AS, Oslo 50.0000 Suramericana S.A., Medellín5 18.8669 TERTIANUM Besitzgesellschaft Berlin Passauer Strasse 5–7 mbH, Munich 25.0000 TERTIANUM Besitzgesellschaft Konstanz Marktstätte 2–6 und Sigismundstrasse 5–9 mbH, Munich 25.0000 TERTIANUM Besitzgesellschaft Munich Jahnstrasse 45 mbH, Munich 33.3333 T-Solar Global Operating Assets S.L.U., Madrid 37.0000 U.S. Property Fund IV GmbH & Co. KG, Munich 21.7286 U.S. Property Management II L.P., Atlanta, Georgia 33.3333 U.S. Property Management III L.P., Atlanta, Georgia 20.0000 Uelzener Lebensversicherungs-AG, Uelzen 23.9750 US PROPERTIES VA GmbH & Co. KG, Düsseldorf 46.0939 VICTORIA-VOLKSBANKEN Pensionskassen Aktiengesellschaft, Vienna 47.5028 VICTORIA-VOLKSBANKEN Vorsorgekasse AG, Vienna 50.0000 Vier Gas Investments S.à r.l., Luxembourg 43.7516 VV Immobilien GmbH & Co. United States KG, Munich 28.9514 VV Immobilien GmbH & Co. US City KG, Munich 23.0999 VV Immobilien Verwaltungs GmbH & Co. Zentraleuropa KG, Munich 20.4082 WISMA ATRIA Holding GmbH & Co. Singapur KG, Düsseldorf 65.0000
Associates accounted for at fair value “PORT ELISABETH” GmbH & Co. KG, Hamburg 31.9658 “PORT LOUIS” GmbH & Co. KG, Hamburg 25.8178 Agricultural Management Services S.r.l., Verona 33.3333 Assistance Partner GmbH & Co. KG, Munich 21.6600 BF.direkt AG, Stuttgart 27.2000 carexpert Kfz-Sachverständigen GmbH, Walluf 25.0000 Fernkälte Geschäftsstadt Nord Gesellschaft bürgerlichen Rechts, Hamburg 39.3354 Finsure Investments (Private) Limited, Harare 24.5000 Hannover Finanz-Umwelt Beteiligungsgesellschaft mbH, Hillerse 20.0000 Hartford Research LLC, Wilmington, Delaware 41.7500
VV-Consulting Gesellschaft für Risikoanalyse, Vorsorge- beratung und Versicherungsvermittlung GmbH, Vienna 100.0000 VV-Consulting Többesügynöki Kft., Budapest 100.0000 welivit New Energy GmbH, Fürth 100.0000 welivit Solar España GmbH, Nuremberg 100.0000 Welivit Solar Italia s.r.l., Bolzano 100.0000 Windpark Langengrassau Infrastruktur GbR, Bremen 83.3300 Windsor DME Operations, Inc., Atlanta, GA 100.0000 Windsor Long Term Care, LLC, Atlanta, GA 100.0000 WNE Solarfonds Süddeutschland 2 GmbH & Co. KG, Nuremberg 100.0000 Wohnungsgesellschaft Brela mbH, Hamburg 100.0000 Zacobu 110011 S.L., Madrid 100.0000 Zacuba 6006 S.L., Madrid 100.0000 Zacubacon 150015 S.L., Madrid 100.0000 Zafacesbe 120012 S.L., Madrid 100.0000 Zagacobi 180018 S.L., Playa del Inglés 100.0000 Zapaceba 170017 S.L., Playa del Inglés 100.0000 Zapacubi 8008 S.L., Madrid 100.0000 Zarzucolumbu 100010 S.L., Madrid 100.0000 Zetaza 4004 S.L., Madrid 100.0000 Zicobucar 140014 S.L., Madrid 100.0000 Zucaelo 130013 S.L., Madrid 100.0000 Zucampobi 3003 S.L., Madrid 100.0000 Zucarrobiso 2002 S.L., Madrid 100.0000 Zucobaco 7007 S.L., Madrid 100.0000 Zulazor 3003 S.L., Madrid 100.0000 Zumbicobi 5005 S.L., Madrid 100.0000 Zumcasba 1001 S.L., Madrid 100.0000 Zuncabu 4004 S.L., Madrid 100.0000 Zuncolubo 9009 S.L., Madrid 100.0000
(equity: €1,881k; result for year: –€804k) 21.6000 Capital Dynamics Champion Ventures VI, L.P., Woodside, California11 (equity: €68,480k; result for year: €7,359k) 27.3400 FIA Timber Partners II L.P., Wilmington, Delaware6
IK Objektgesellschaft Frankfurt Theodor-Heuss-Allee GmbH & Co. KG, Düsseldorf 47.4000 K & P Objekt Hamburg Hamburger Straße Immobilienfonds GmbH & Co.KG, Düsseldorf 36.6889 LCM Logistic Center Management GmbH, Hamburg 50.0000 MCAF Management GmbH, Düsseldorf 50.0000 MSMR Parkview LLC, Dover, Delaware 38.4600 PERILS AG, Zurich5 11.1100 POOL Sp. z o.o., Warsaw 33.7500 Reisegarant, Vermittler von Insolvenzversicherungen mbH, Hamburg 24.0000 RM 2264 Vermögensverwaltungs GmbH, Munich 25.0000 Rumba GmbH & Co. KG, Munich 25.0000 Rural Affinity Insurance Agency Pty Limited, Sydney 50.0000 Teko – Technisches Kontor für Versicherungen Gesellschaft mit beschränkter Haftung, Düsseldorf 30.0000 TERTIANUM Seniorenresidenz Betriebsgesellschaft München mbH, Munich 33.3333 TERTIANUM Seniorenresidenzen Betriebsgesellschaft mbH, Constance 25.0000 Trend Capital GmbH & Co. Solarfonds 2 KG, Mainz 34.4234 Triple IP B.V., Amsterdam 50.0000 Verwaltungsgesellschaft “PORT ELISABETH” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “Port Hedland” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT KELANG” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “Port Lincoln” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT LOUIS” GmbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT MAUBERT” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT MELBOURNE” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT MENIER” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT MOODY” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT MORESBY” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT MOUTON” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT NELSON” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT RUSSEL” GmbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT SAID” GmbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT STANLEY” GmbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT STEWART” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “PORT UNION” mbH, Hamburg 50.0000 Verwaltungsgesellschaft “Port Williams” mbH, Hamburg 50.0000 VisEq GmbH, Grünwald 34.0000 Volksbanken-Versicherungsdienst GmbH, Vienna 25.2319 VV Immobilien GmbH & Co. GB KG, Düsseldorf 40.9241 VV Immobilien Verwaltungs GmbH, Munich 30.0000 VV Immobilien Verwaltungs und Beteiligungs GmbH, Munich 30.0000 WISMA ATRIA Holding GmbH, Düsseldorf 50.0000 285Consolidated financial statements Notes
We have audited the consolidated financial statements prepared by the Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, Munich, comprising the consolidated balance sheet, the consolidated income statement, the statement of recognised income and expense, the Group statement of changes in equity, the consolidated cash flow statement and the notes to the consolidated financial statements, together with the Group management report for the business year from 1 January to 31 December 2012. The preparation of the consolidated financial statements and the Group management report in accordance with IFRS, as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a para. 1 of the German Commercial Code (HGB) are the responsibility of the parent company’s management. Our responsibility is to express an opinion on the consolidated financial statements and on the Group management report based on our audit.
Actuary Qualified expert who analyses problems from the area of insurance, home loans, investments and pensions using methods of probability theory and financial mathematics, and develops solutions with due regard to legal and economic param­ eters.
Asset-liability management Management of a business in a way that coordinates decisions on assets and liabilities. Specifically, it is the ongoing process of formulating, implementing, monitoring, and revising strategies related to assets and liabilities in an attempt to achieve financial objectives for a given set of risk tolerances and constraints.
Available financial resources IFRS equity adjusted for various economically appro­ priate factors, plus hybrid capital (subordinated bonds).
Biometric actuarial assumptions Parameters that describe insured risks such as mor­ tality, morbidity and disability. Presented in tables (e.g. mortality tables), they usually depend on age attained and gender.
Capital Asset Pricing Model (CAPM) Capital market model used to evaluate secur­ ities, based on the portfolio theory. The CAPM expands the portfolio theory to include the question of which part of a security’s overall risk cannot be eliminated by means of risk diversification and explains how investment opportunities entailing risk are assessed in the capital markets. Accordingly, in efficient markets where prices already incorporate all the information available, a greater return can only be achieved by assuming more risk.
Chain ladder method Standard (multiplicative) actuarial method used to estimate the reserves needed for future claims expenditure. It assumes that the cumulative loss rises by the same factor in all accident years. With this method, the overall loss expected is determined exclusively on the basis of historical data on the run­off of losses in the insurer’s portfolio.
Convexity A volatility measure to describe how a bond’s price will change as interest rates rise or fall. As with duration, the concept of convexity is based on an estimate of the bond’s present value. A customary bond with regular coupon payments and com­ plete repayment of the principal on maturity will rise in price more strongly if interest rates decline than it will fall in price if interest rates rise. This phenomenon of convexity is caused by a change in the bond’s duration when interest rates change. Falling inter­ est rates result in an increase in the bond’s duration and thus in its interest­rate sensi­ tivity, so that if interest rates continue to fall, the price rise accelerates. In the case of rising interest rates, the converse occurs.
Credit Risk Equivalent Exposure (CEE) A reference figure used to combine and com­ pare the credit exposure from various product types involving credit risk under a common counterparty limit. The CEE is calculated regardless of the likelihood of a counterparty’s default and reflects the estimated loss amount in the event of a default.
Cycle management Continuously analysing and managing the course of a cycle. Insurance, reinsurance and retrocession markets are subject to global and regional cycles that may have external (interest­rate development, economic development, major losses, etc.) and internal causes (price competition, premium calculation methods, etc.). Managing the cycle means – on the basis of an analysis – taking pro­ active strategic measures and ensuring risk­commensurate terms (prices, scope of cover, and conditions) in every phase.
Deferred acquisition costs Costs incurred for the acquisition or the renewal of insur­ ance policies (e.g. commission, cost of processing applications) which are capitalised and amortised over the term of the contracts.
Deposits retained on assumed reinsurance and ceded business Receivables which reinsurers have vis­à­vis their cedants for collateral (cash deposits) that has been retained by the cedants as a security to cover future reinsurance claims. The cedants show the retained funds as deposits withheld on ceded business.
Duration The average term of an interest­sensitive investment (or portfolio) in years. The modified duration (in per cent) indicates how much a bond’s overall yield rises or falls when there is a change in interest rate in the market.
Economic capital buffer The amount by which the available financial resources exceed the economic risk capital.
Guaranteed interest Interest rate to be paid out by the insurer on the savings com­ ponent of the insurance premium under an endowment insurance policy. This mini­ mum interest rate is contractually guaranteed.
Longevity The insurer’s risk that an insured person lives longer than expected or that life expectancy within an insured portfolio rises as a whole.
Managing general agency business Insurance business where the insurer transfers the underwriting authority for a specific portfolio to a managing general agent or man­ aging general agency (MGA) that acts on its behalf. Depending on the arrangement involved, the agent/agency may be assigned additional responsibilities such as claims handling or administrative tasks.
Market Consistent Embedded Value (MCEV) A valuation measure for long­term insurance business. Embedded value is the total of a company’s equity (at market price) and the value of its in­force covered business. The latter is the present value of net future profits (where profits are post­taxation shareholder cash flows from the in­ force covered business, and the assets backing the associated liabilities) calculated using actuarial methods. The value of in­force covered business additionally takes into consideration the time value of the financial options and guarantees, the explicitly determined cost of holding capital for the whole term of the portfolio, and the costs for non­hedgeable risks. Munich Re calculates embedded value in accordance with the MCEV Principles.
Mortality The ratio of deaths to the entire population or to a particular age group. It is globally expressed in numbers or rates and set out in mortality tables.
Non-proportional reinsurance Form of reinsurance under which the reinsurer assumes payment of the primary insurer’s losses above a certain amount. The calcula­ tion of the reinsurance premium is based on claims experience with the type of busi­ ness concerned.
Obligatory reinsurance Type of reinsurance in which the primary insurer is obliged to cede all risks specified in the contract to the reinsurer within a certain scope. The rein­ surer accepts these risks without assessing them on a case­by­case basis. Although obligatory reinsurance agreements contain agreed periods of notice, they are generally concluded for an unlimited duration. These treaties between insurers and reinsurers may therefore run for long periods (cf. facultative reinsurance).
Pandemic The spread of a disease or – in the narrower sense – infectious disease across national borders and continents. Unlike an epidemic, which is a disease occur­ ring in a limited area and time, a pandemic is not restricted to a certain geographical area.
Policyholders’ bonuses Appropriate share of the surplus earned by insurers in life and health insurance to which policyholders are entitled contractually and by law. The amount of this bonus is fixed anew each year. As a rule, in life insurance these bonuses increase the benefit payable on maturity of the policy or on occurrence of the insured event; in health insurance, they are paid by way of premium refunds.
Premium Amount that has to be paid for insurance cover. It may be paid as a regular or single premium. Premiums written means all premium income that has become pay­ able in the financial year. The portion of this premium income that constitutes payment for insurance cover in the financial year is referred to as earned premiums. In the case of products that are largely of an investment nature (e.g. financing treaties and unit­ linked life insurance), it only includes – under IFRSs – the amount serving to cover the risk and costs. However, under statutory accounting rules in the insurance company’s home country, premium income may also include the policyholders’ savings premiums from unit­linked life insurance and capitalisation products.
Proportional reinsurance Form of reinsurance in which the sum insured written by the primary insurer is divided proportionally between the primary insurer and the rein­ surer. The reinsurer is allocated a corresponding share of the premiums and claims.
Provision for outstanding claims Provision for claims that have already been incurred at the balance sheet date but have either not yet been reported or not yet fully settled.
Provision for premium refund Provision made for obligations involving bonuses and rebates – especially in life and health insurance – which are not yet payable at the bal­ ance sheet date; the amount posted is based on supervisory or contractual regulations. It also includes the policyholders’ share of accumulated valuation differences between IFRSs and the German Commercial Code (provision for deferred premium refunds).
Public-private partnership Long­term arrangement between private companies and public bodies with the aim of providing public services in a more economical manner.
Run-off triangle Also known as “loss triangle”. A tabular representation of claims­ related parameters (such as payment, claims reserve, ultimate loss) in two, time­related dimensions. One of these is the calendar year, while the other is usually the accident year (year of the loss occurrence). Run­off triangles – as the basis for measuring claims reserves – make clear how the claims reserve changes over the course of time due to payments made and new estimates of the expected ultimate loss at the respective bal­ ance sheet date.
Solvency II Project of the European Commission to fundamentally reform and har­ monise European insurance supervisory regulations. Solvency II follows the three­pillar approach: minimum capital requirements (quantitative), supervisory review processes (qualitative) and market discipline (disclosure).
Value at risk Method of quantifying risk which measures the potential future losses that may not be exceeded within a specified period and with a specified probability.
Balance sheet total 99, 205 Board of Management 8 f., 21 ff., 27, 42 ff., 46 ff., 101 ff., 267 ff., 275
Corporate Climate Centre 132 Corporate governance 22 ff., 26 ff. Corporate governance report 26 ff. Corporate responsibility 112 ff. Credit and bonding 179
Investment result 72 ff., 98 ff., 141, 254 ff. Investments 5 f., 69 ff., 90 ff., 99 ff., 116 ff., 147 f., 167,
Report of the Supervisory Board 21 ff. Return on equity 38, 48, 69 Return on risk­adjusted capital (RORAC) 16, 37 f., 60, 69, 131, 140 f., 148
Write­downs 73, 81, 83, 85, 88, 90 ff., 142, 147 f., 171 ff., 176, 196 f., 212 ff., 245 ff., 247 f.
Munich American Reassurance Company 56 Perimeter Center East, N.E. Suite 500 Atlanta, GA 30346-2290 info@marclife.com www.marclife.com
Tel.: +49 89 62 75-71 01 (from outside Germany) Fax: +49 89 62 75-16 50 kundenservice@das.de www.das.de
DKV Deutsche Krankenversicherung AG Aachener Strasse 300 50933 Köln service@dkv.com www.dkv.com
Northern/Eastern/Central Europe Munich Health Northern/Eastern/Central Europe Königinstrasse 107 80802 München Germany
Southern Europe and Latin America Munich Health Southern Europe and Latin America Königinstrasse 107 80802 München Germany
Asia Pacific Munich Reinsurance Singapore Branch 20 Collyer Quay #13-01 Tung Centre Singapore 049319 Republic of Singapore
Picture credits pp. 3, 8, 9, 21: Andreas Pohlmann p. 7 left: Plainpicture p. 7 right: Jens Küsters
Greenhouse gas emissions from paper productions for this annual report are offset through Munich Re’s carbon-neutral strategy.
3. Expenses for claims and benefits Gross 41,837 10,407 10,528 10,449 10,453
Munich Reinsurance Company’s market capitalisation €bn 24.4 21.8 19.9 20.3 Other Combined ratio 1 Previous year‘s figures adjusted owing to IAS 8; see “Changes in accounting policies and other adjustments”.