Beyond this, the impact of changes in exchange rates is reflected in period-to-period comparisons of all items in the income statement.
The object of our asset-liability management, on which we report on page 99, is to economically minimise excess or insufficient cover in foreign currencies within the Group. Insofar as this is done across Group companies with different functional currencies, it produces economically non-existent fluctuations in the consolidated result.
We have consequently identified six segments to be reported: — Life reinsurance (global life reinsurance business) — Property-casualty reinsurance (global property-casualty reinsurance business) — ERGO Life and Health Germany (German life and health primary insurance business, German property-casualty direct business, and global travel insurance business)
Munich Re uses different performance indicators and measures. The main performance metrics at Group level are economic earnings and the return on risk-adjusted capital after tax (RORAC). Besides this, IFRS result contributions are the basis of planning and strategy in all segments. Therefore the uniform assessment basis used for measuring the segment result is the operating result adjusted to eliminate non-operating components. The operating result is split into a technical result and a non-technical result, with an interest component allocated to the underwriting business in the form of technical interest (see Notes to the consolidated income statement – (30) Income from technical interest). The non-technical result also separately discloses the insurancerelated investment result and the result of other investments.
Life Property-casualty Germany Germany national €m 2015 Prev. year 2015 Prev. year 2015 Prev. year 2015 Prev. year 2015 Prev. year 2015 Prev. year 2015 Prev. year
C. Gross technical provisions for unit-linked life insurance contracts 0 0 0 0 5,157 4,742 0 0 3,044 3,094 1 1 8,201 7,837
I. Land and buildings, including buildings on third-party land 281 252 1,699 1,204 2,081 2,016 155 140 93 110 9 10 4,317 3,732 II. Investments in affiliated companies, associates and joint ventures 7 30 667 892 261 335 54 70 173 143 116 89 1,278 1,559
V. Deposits retained on assumed reinsurance 5,546 7,082 1,341 1,286 31 39 5 8 0 14 331 321 7,253 8,750
D. Ceded share of technical provisions 1,489 1,129 2,031 1,966 19 8 103 76 522 1,940 164 209 4,327 5,328 1 Previous year’s figures adjusted owing to IAS 8; see “Changes in accounting policies and other adjustments”.
B. Gross technical provisions I. Unearned premiums 21 24 6,238 5,973 198 174 495 443 1,446 1,363 444 396 8,841 8,373 II. Provision for future policy benefits 12,924 13,902 26 26 85,867 84,896 429 428 8,209 12,328 1,118 1,068 108,572 112,648 III. Provision for outstanding claims 7,376 6,707 42,060 39,868 2,792 2,653 4,080 3,866 2,233 2,231 1,215 1,037 59,756 56,362
E. Liabilities related to assets held for sale 0 0 0 0 0 0 0 0 6,301 0 0 0 6,301 0
IV. Other securities 1. Available for sale 18,806 16,261 56,781 57,512 46,527 45,591 4,702 4,791 11,268 16,316 3,459 3,372 141,543 143,843 2. At fair value through profit or loss 59 77 340 481 1,519 1,159 63 32 531 416 39 4 2,551 2,169
Investments in non-current assets per segment1 €m 2015 Prev. year Reinsurance life 55 49 Reinsurance property-casualty 637 165 ERGO Life and Health Germany 151 33 ERGO Property-casualty Germany 87 72 ERGO International 71 179 Munich Health 16 35 1 The non-current assets mainly comprise intangible assets (especially goodwill) and our owner-occupied and investment property, as well as investments in renewable energy.
Impairment losses –429 –440 –23 –5 Carrying amount at 31 Dec. financial year 886 1,314 146 167 Accumulated impairment losses at 31 Dec. financial year –869 –440 –437 –414 Gross carrying amount at 31 Dec. financial year 1,755 1,754 583 581
Munich Re Group Annual Report 2015 recognised in profit or loss during the period”, the goodwill is allocated in reinsurance to divisions or groups of divisions, and in primary insurance to the ERGO segment Property-casualty Germany, and to legal entities.
The goodwill from the acquisition of Munich Re America has been allocated to a group of divisions (cash-generating units), the “reinsurance property-casualty segment”. Apart from the goodwill from the acquisition of Munich Re America, the carrying amount shown includes other goodwill that is impairment-tested on the basis of cashgenerating units at the level of divisions or groups of divisions within the segment. This other goodwill is tested for impairment on the basis of the same key assumptions used for the goodwill from the acquisition of Munich Re America. The goodwill from the acquisition of shares in the ERGO Insurance Group was originally allocated to the primary insurance segments ERGO Life and Health Germany, ERGO Property-casualty Germany and ERGO International. The goodwill proportionately allocated to the segment ERGO Life and Health Germany was written off in full in the 2015 financial year after impairment testing (see “Amount of impairment losses recognised in profit or loss during the period”). The goodwill proportionately allocated to the segment ERGO International for the acquisition of shares in ERGO Insurance Group was already written off in 2014.
The calculation of these values in use is based on distributable target results derived from the current market environment and the latest corporate planning approved by management. Prepared in an interactive process involving the operational units, the responsible controlling units and the Board of Management, the corporate plans are reviewed and updated at least every quarter. The aforementioned key assumptions regarding premium income development and combined ratios derive from the aggregation of the company plans of the individual companies of a cash- generating unit or of a group of cash-generating units. The key assumptions regarding developments in the equity market and interest-rate level are uniformly defined within Munich Re (Group) on the basis of the current market environment. After the detailed planning phase, we estimate the target results achievable long term on the basis of the last adjusted planning year and taking into account growth rates and RoI derived from macroeconomic forecasts.
Amount of impairment losses recognised in profit or loss during the period In the 2015 financial year, our impairment testing of goodwill identified impairments totalling €452m. These have been recognised in the item “impairment losses of goodwill” in the income statement and are attributable to the following: The goodwill of €429m from the acquisition of shares in the ERGO Insurance Group, which was proportionally allocated to the segment ERGO Life and Health Germany, was written off in full in the fourth quarter of 2015. This was largely due to the persistently low
Munich Re Group Annual Report 2015 interest-rate environment and the associated deterioration in earnings prospects. The impairment in value was recognised in the ERGO Life and Health Germany segment. The recoverable amount for the segment ERGO Life and Health Germany was determined on the basis of the value in use at €908m. The value-in-use calculation was based on a discount rate before tax of 13.6% (13.2%).
Acquired insurance portfolios Software Self-developed Other €m 2015 Prev. year 2015 Prev. year 2015 Prev. year Gross carrying amount at 31 Dec. previous year 1,320 1,309 367 358 1,049 956 Accumulated amortisation and accumulated impairment losses at 31 Dec. previous year –1,002 –924 –285 –256 –770 –697 Carrying amount at 31 Dec. previous year 318 385 82 102 279 259
The impairment losses are distributed between the following different Group segments: in reinsurance, €0m (1m) is apportionable to life and €0m (27m) to property-casualty; in the ERGO field of business, €0m (6m) is apportionable to Life and Health Germany and €14m (62m) to ERGO International.
Miscellaneous Total Self-developed Other €m 2015 Prev. year 2015 Prev. year 2015 Prev. year Gross carrying amount at 31 Dec. previous year 0 0 87 88 4,037 3,836 Accumulated amortisation and accumulated impairment losses at 31 Dec. previous year 0 0 –47 –34 –2,817 –2,456 Carrying amount at 31 Dec. previous year 0 0 40 54 1,220 1,380
The impairment losses are distributed between the following segments: In reinsurance, €0m (1m) is apportionable to life and €1m (1m) to property-casualty; in the ERGO field of business, €27m (6m) is apportionable to Life and Health Germany and €1m (1m) to Property-casualty Germany.
Munich Re Group Annual Report 2015 value is determined individually per item by discounting the future cash flow as at the measurement date. Depending on the type of property and its individual opportunity/ risk profile, discount rates of 2.75% to 4.0% are used for residential buildings, 3.5% to 7.0% for office buildings, and 3.5% to 7.5% for retail.
Property pledged as security and other restrictions on title amount to €730m (835m). Contractual commitments to acquire property amount to €33m (29m).
Derivatives Pricing method Parameters Pricing model Equity and index risks OTC stock options Theoretical price Listing of underlying shares Black-Scholes (European) Effective volatilities Cox, Ross and Rubinstein Money-market interest rate (American) Dividend yield Monte Carlo simulation Equity forwards Theoretical price Listing of underlying shares Present value method Money-market interest rate Dividend yield Interest-rate risks Interest-rate swaps Theoretical price Swap curve Present value method Money-market interest-rate curve Swaptions/interest-rate Theoretical price At-the-money volatility index and Bachelier/ guarantee skew swap curve Normal Black Money-market interest-rate curve Interest-rate currency swaps Theoretical price Swap curve Present value method Money-market interest-rate curve Currency spot rates Inflation swaps Theoretical price Zero-coupon inflation swap rates Present value method Swap curve Money-market interest-rate curve Bond forwards (forward transactions) Theoretical price Listing of underlying Present value method Swap curve Money-market interest-rate curve Currency risks Currency options Theoretical price At-the-money volatility Garman-Kohlhagen Currency spot rates (European) Money-market interest-rate curve Currency forwards Theoretical price Currency spot rates Present value method Money-market interest-rate curve Other transactions Insurance derivatives Theoretical price Market values of cat bonds Present value method (excluding variable annuities) Historical event data Interest-rate curve Insurance derivatives Theoretical price Biometric and lapse rates Present value method (variable annuities) Volatilities Interest-rate curve Currency spot rates Catastrophe swaps Theoretical price Market values of catastrophe bonds Present value method Interest-rate curve Credit default swaps Theoretical price Credit spreads Present value method Recovery rates ISDA CDS Standard Model Interest-rate curve Total return swaps on Theoretical price Listing of underlying index Index ratio calculation commodities Commodity options Theoretical price Listing of underlying shares Black-Scholes (European) Effective volatilities Cox, Ross and Rubinstein Money-market interest rate (American)
Other Pricing method Parameters Pricing model Real estate Theoretical market value Interest-rate curve Present value method or Market rents valuation Alternative direct investments Theoretical market value Interest-rate curve (among others) Present value method or (e.g. infrastructure, forestry) Electricity price forecast and valuation inflation forecast Bank borrowing Theoretical market value Interest-rate curve Present value method
1 Including hedging derivatives of €141m (204m) accounted for under “other assets”.
Prev. year €m Level 1 Level 2 Level 3 Total Investments measured at fair value Investments in affiliated companies measured at fair value 0 0 274 274 Investments in associates and joint ventures measured at fair value 0 0 5 5 Other securities available for sale
Investments not measured at fair value Loans 0 68,178 673 68,851
Other securities available for sale Fixed-interest Non-fixed-interest €m 2015 Prev. year 2015 Prev. year Carrying amount at 31 Dec. previous year 2,547 2,777 2,395 2,107
Gains (losses) recognised in the income statement –4 11 –9 1 Gains (losses) recognised in equity 108 152 191 172
Munich Re Group Annual Report 2015 5 Investments in affiliated companies, associates and joint ventures 8015 C-D
Transfer out of Level 3 0 0 –153 –28 Changes in the market value of derivatives 0 0 0 0 Carrying amount at 31 Dec. financial year 1,052 109 6,198 5,330 Gains (losses) recognised in the income statement that are attributable to investments shown at the end of the financial year 65 39 49 39
Accounted for at fair value 145 274 Investments in associates and joint ventures
Held for trading, Other and hedging derivates investments €m 2015 Prev. year 2015 Prev. year Carrying amount at 31 Dec. previous year 0 0 0 0
Change in the market value of derivatives 0 0 0 0 Carrying amount at 31 Dec. financial year 0 0 30 0 Gains (losses) recognised in the income statement that are attributable to investments shown at the end of the financial year 0 0 0 0
The fair value of investments in associates and joint ventures accounted for using the equity method amounted to €1,678m (1,796m) at the balance sheet date. Of these, 13% are allocated to Level 1, 38% to Level 2 and 49% to Level 3 of the fair value hierarchy; see Assets – B Investments – Determining fair values. The fair value is determined individually per item; see Assets – B Investments – Investments in associates and joint ventures. In the financial year, shares of losses of associates and joint ventures amounting to €0m (0m) were not recognised in the balance sheet. Altogether, the losses not recognised in the balance sheet totalled €0m (0m).
At the balance sheet date, there were contingent liabilities of €27m (26m) from our investments in associates and joint ventures. These concerned a payment obligation in the event of an associate’s over-indebtedness.
There are also other financial commitments in the amount of €98m (104m) from our investments in joint ventures. These comprised investment obligations for financing.
These contingent liabilities and other financial commitments are also shown under “Other information (49) Contingent liabilities, other financial commitments”.
The total carrying amounts of the holdings (investments) in associates and joint ventures amounted to €1,132m (1,285m) in the period under review.
Further information about associates and joint ventures can be found in the section “List of shareholdings as at 31 December 2015 in accordance with Section 313 (2) of the German Commercial Code (HGB)”.
Aggregated financial information on investments in associates and joint ventures: €m 31.12.2015 Prev. year Overall result for the year after tax from continued operations 131 109 Result after tax from discontinued operations 0 0 Income and expenses recognised directly in equity 7 –12 Total recognised income and expenses 138 97
Carrying amounts €m 31.12.2015 Prev. year Mortgage loans 5,128 4,440 Loans and advance payments on insurance policies 331 519 Other loans 48,057 49,591
Carrying amounts €m 31.12.2015 Prev. year Up to one year 1,540 2,722 Over one year and up to two years 2,308 1,852 Over two years and up to three years 1,921 2,427 Over three years and up to four years 2,750 2,059 Over four years and up to five years 2,375 2,885 Over five years and up to ten years 14,517 13,537 Over ten years 28,105 29,068
About half the corporate debt securities are covered bonds or issues by development banks and comparable institutions. The remaining portfolio is composed of securities issued by companies outside the banking sector, with each individual risk making up less than 1%, bonds issued by banks and state central savings banks, and asset-backed securities/mortgage-backed securities. The asset-backed securities/mortgage-backed securities are largely rated A or better. Assets pledged as security and other restrictions on title amount to €8,115m (7,327m). Some €1,710m (2,073m) of the securities shown are loaned to third parties. These securities are not derecognised, as the main resultant risks and rewards remain with Munich Re. Of the €10,332m (14,237m) in unrealised gains and losses, €4,040m (5,773m) has been recognised in equity (“other reserves”), after deduction of provisions for deferred premium refunds, deferred taxes, non- controlling interests, and consolidation and currency translation effects.
Non-fixed-interest securities Shares 9,381 9,786 1,844 1,776 7,537 8,010 Investment funds
Disposal proceeds in the financial year €m 2015 Prev. year Fixed-interest securities 49,476 40,798 Non-fixed-interest securities
Losses on disposal –848 –327 Fixed-interest securities –306 –123 Non-fixed-interest securities –542 –204
Derivative financial instruments are used by Munich Re to manage and hedge against interest-rate, currency, and other market risks. This is done at the Group companies within the framework of individual supervisory regulations and additional internal company guidelines. The risk of default is practically non-existent in the case of products traded on the stock exchange. Over-the-counter products, on the other hand, harbour a theoretical risk in the amount of the replacement costs. Therefore, Munich Re selects only high-quality counterparties for such transactions.
As at 31 December 2015, Munich Re held collateral for derivatives in the form of securities with a rating of at least AA. The fair value of this collateral amounts to €1,100m (867m).
The following table shows the fair values and the related notional amounts of all our open positions, broken down according to risk types. Positive and negative fair values have been netted. At 31 December 2015, the open positions amounted to €1,333m (1,019m), or 0.5% (0.4%) of the balance sheet total.
No Insurance-related investments 899 839 Yes Other assets 141 204 No Negative
Over-the-counter Fair values 50 145 17 –25 87 603 877 698
Over-the-counter Fair values 247 0 0 0 0 14 262 29
Total currency risks Fair values 248 0 0 0 –1 14 261 29
Over-the-counter Fair values 19 0 0 0 0 0 19 0
Total equity and index risks Fair values 78 0 0 0 0 0 78 120
Over-the-counter Fair values –82 0 0 0 0 0 –82 –32
Over-the-counter Fair values 1 –6 –3 –2 –1 0 –11 2
Total of all risks Fair values 300 157 51 3 182 641 1,333 1,019
Under the risk type “insurance risks”, we essentially subsume the derivative portions of the line item “other insurance-related investments”. This excludes derivatives that fall under the risk types “weather or commodity risks”. Information about other insurance-related investments can be found under Assets – C Insurance-related investments.
Cash flow hedges play a role in countering fluctuations that may be caused, for example, by variable interest payments. Munich Re uses cash flow hedges chiefly to hedge against interest-rate risks, with interest-rate swaps being the main instruments employed. Changes in the fair value of the hedging instrument are recognised directly in equity for this purpose.
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 31.12.2015 Prev. year Notional amounts of hedged transactions 76 25 0 150 100 0 351 380
Other investments comprise deposits with banks totalling €3,775m (3,513m), tangible assets in renewable energies amounting to €496m (470m), physical gold of €324m (331m), and forestry investments of €40m (10m). Deposits with banks include receivables of €202m (347m) from borrowers under repurchase agreements that have been booked by us as the lender.
Of the amounts held on deposit with banks, €3,747m (3,473m) is due within one year. With these deposits, the fair values largely correspond to the carrying amounts. Assets pledged as security and other restrictions on title amount to €15m (16m) for deposits with banks.
The tangible assets in renewable energies include items pledged as security and other restrictions on title amounting to €235m (245m).
Munich Re Group Annual Report 2015 11 Ceded share of technical provisions
Assets pledged as security and other restrictions on title amount to €52m (47m).
Munich Re Group Annual Report 2015 13 Deferred acquisition costs 8075 A-C
Reinsurance Life Property-casualty €m 31.12.2015 Prev. year 31.12.2015 Prev. year Status at 31 Dec. previous year 2,466 2,365 1,336 1,327
ERGO Life and Health Property-casualty Germany Germany International €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year Status at 31 Dec. previous year 4,166 4,362 344 367 1,138 1,090
In the ERGO Life and Health Germany and ERGO International segments, assumptions regarding future mortality, lapses and administration expenses, and regarding longterm interest-rate levels were adjusted in 2015 on the basis of the non-current regular return on investments. Overall, these adjustments led to impairment losses of deferred acquisition costs.
Change in consolidated group/Other –9 0 –80 11 New deferred acquisition costs 191 188 2,667 2,705 Changes
Amortisation –193 –179 –2,696 –2,761 Impairment losses 0 1 –134 –221
Equity and liabilities C. Net technical provisions 2,401 4,605 2,237 4,292
Corporation tax loss carry-forwards 450 –15 57 –185 307 Trade tax loss carry-forwards 339 –2 176 –4 509 Loss carry-forwards from capital losses 0 7 0 –5 2
These mainly comprise owner-occupied property totalling €2,402m (2,424m), operating and office equipment of €289m (274m), advance payments on insurance amounting to €384m (384m), derivatives totalling €141m (204m), miscellaneous deferred items of €169m (162m), and recoveries from policyholders totalling €42m (38m).
Disposals Loss of control 0 –1 0 –1 Other –6 –13 –2 –22
Depreciation –64 –98 –4 –166 Impairment losses –11 –1 0 –12
Reclassification –20 –2 –3 –25 Carrying amount at 31 Dec. financial year 2,402 289 8 2,699 Accumulated amortisation and accumulated impairment losses at 31 Dec. financial year –1,178 –760 –25 –1,963 Gross carrying amount at 31 Dec. financial year 3,580 1,049 33 4,662
Depreciation –61 –96 –3 –160 Impairment losses –5 –1 0 –6
Carrying amount at 31 Dec. financial year 2,424 274 8 2,706 Accumulated amortisation and accumulated impairment losses at 31 Dec. financial year –1,137 –758 –34 –1,929 Gross carrying amount at 31 Dec. financial year 3,561 1,032 42 4,635
In the fourth quarter of 2014, MEAG MUNICH ERGO AssetManagement GmbH sold its shares in its associate PICC Asset Management Company Limited, Shanghai, with economic effect in June 2015. We posted a moderately positive result overall from the disposal of this shareholding, which we accounted for using the equity method.
In November 2015, via its subsidiary ERGO International AG, Düsseldorf, Munich Re reached an agreement to sell its Italian subsidiary ERGO Italia along with the insurance companies ERGO Previdenza and ERGO Assicurazioni to private-equity investor Cinven. Via its subsidiaries, ERGO Italia operates in the areas of property-casualty business and in life and health insurance. ERGO International sold the group, because the Italian market is no longer part of its strategic core business.
Transactions between the disposal group and the Group’s continuing operations continued to be fully eliminated. The assets and matching liabilities of the disposal group are shown in the table below.
The following table shows the allocation of the investments to levels of the fair value hierarchy for the disposal group: The investments of the disposal group have only been subject to a change in disclosure in accordance with IFRS 5. Valuation is still made in accordance with IAS 39.
Other securities at fair value through profit or loss Held for trading, and hedging derivatives 4 3 0 7
The total share capital of €587,725,396.48 at 31 December 2015 is divided into 166,843,961 no-par-value registered shares, each fully paid up and entitled to one vote. In the year under review, the number of shares in circulation developed as follows: On 31 December 2015, a total of 4,061,370 Munich Reinsurance Company shares with a calculated nominal value of around €14.3m were held by Group companies. This represents around 2.4% of the share capital.
On 11 March 2015, Munich Reinsurance Company’s Board of Management decided on another share buy-back programme. The share buy-back will be restricted to a total purchase price (excluding incidental expenses) of €1bn up to the 2016 Annual General Meeting. Munich Reinsurance Company’s Board of Management thus availed itself of the authorisation granted by the Annual General Meeting on 23 April 2015, in accordance with Section 71 (1) no. 8 of the Stock Corporation Act (AktG). From 1 June 2015 to 31 December 2015, a total of 4,060,699 shares were acquired at an average price of €171.75 as part of this new programme.
Number of shares 2015 Prev. year Status at 31 Dec. previous year 168,515,007 177,421,900 Additions
Disposals from hedging stock appreciation rights under long-term incentive plans 1,859 10,944
Reductions Acquisition of shares for retirement (share buy-back programme) –5,734,275 –8,917,837
The “other reserves” include €1,848m (434m) from currency translation and –€1m (–2m) resulting from valuation of cash flow hedges. In addition, “other reserves” contain unrealised gains and losses distributed between the different items as follows: Composition of the capital authorised for capital increases €m 31.12.2015 Authorised Capital Increase 2013 (until 24 April 2018) 280 Authorised Capital Increase 2015 (until 22 April 2020) 10 Total 290
Composition of equity €m 31.12.2015 Prev. year Issued capital 573 572 Capital reserve 6,845 6,845 Retained earnings 14,110 12,991 Other reserves 6,032 6,458 Consolidated result attributable to Munich Reinsurance Company equity holders 3,107 3,152 Non-controlling interests 298 271 Total equity 30,966 30,289
Less Provision for deferred premium refunds recognised in equity –4,868 –6,384 Deferred taxes recognised in equity –1,406 –1,986 Non-controlling interests –19 –24 Consolidation and currency translation effects –168 –98
The taxes of €467m (–931m) recognised directly in equity comprise current taxes on unrealised gains and losses of €11m (–94m) on assets, and an amount of €456m (–837m) being deferred tax assets.
The non-controlling interests are mainly minority interests in individual companies of the primary insurance group. We disclose direct minority interests in special funds and in partnerships under “other liabilities”. In the financial year 2015, there were no significant changes in the percentage interest held in consolidated subsidiaries.
For information on the valuation models used for measuring derivatives, please see the table and explanations in the Notes to the consolidated balance sheet – Assets (4) Hierarchy for the fair value measurement of investments. The valuation of subordinated bonds for which no market prices are available is conducted using the present value method and taking observable market inputs into account. For the bonds we have issued,
Unrealised gains and losses on investments –2,401 580 –1,821 3,851 –1,190 2,661 Change resulting from valuation at equity –40 0 –40 9 0 9 Change resulting from cash flow hedges 1 0 1 1 0 1 Remeasurements of defined benefit plans 379 –113 266 –780 259 –521
In the case of Munich Reinsurance Company bonds, annual outflows of liquidity amounting to the respective interest payments occur until the first possible call dates in 2022, 2021, 2017 and 2018. In the financial year, these amounted to €268m. Thereafter, the liquidity outflows will vary, depending on the respective interest-rate level. For the registered bonds of ERGO Versicherung Aktiengesellschaft from 2001 and 1998, and for the HSB Group bonds, the annual outflow is variable, depending on the respective interest-rate levels.
Reinsurance Life Property-casualty €m 31.12.2015 Prev. year 31.12.2015 Prev. year Status at 31 Dec. previous year 24 28 5,973 5,587
Munich Health Total €m 31.12.2015 Prev. year 31.12.2015 Prev. year Status at 31 Dec. previous year 396 484 8,373 7,994
Munich Re Group Annual Report 2015 21 Provision for future policy benefits
Essentially the same actuarial assumptions have been used as in the previous year for measuring the provisions for future policy benefits for business in force. For German primary insurance, to which approx. 91% of the provisions for future policy benefits are apportionable, biometric actuarial assumptions based on the tables of the German Association of Actuaries (Deutsche Aktuarvereinigung e.V.) are used.
Gross provision for future policy benefits according to type of insurance cover €m 31.12.2015 Prev. year
Term life insurance 3,293 3,046 Other life insurance 28,343 32,734 Annuity insurance 31,277 31,654 Disability insurance 1,281 1,299 Contracts with combination of more than one risk 25 24
In the ERGO Life and Health Germany segment, assumptions regarding future mortality, lapses and profit participation, and regarding long-term interest-rate levels were adjusted in 2015 on the basis of the long-term regular return on investments.
ERGO Life and Health Property-casualty Germany Germany International €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year 8212 A–C
Reinsurance ERGO % 31.12.2015 Prev. year 31.12.2015 Prev. year Up to one year 31.6 31.9 34.8 35.1 Over one year and up to five years 43.1 43.0 38.8 39.4 Over five years and up to ten years 13.7 13.6 15.0 14.3 Over ten years and up to fifteen years 5.2 5.4 5.9 5.6
Development of the claims reserve in the property-casualty segment1 2015 Prev. year Ceded Ceded €m Gross share Net Gross share Net Status at 31 Dec. previous year 45,752 –2,109 43,643 43,494 –2,121 41,373
Changes in consolidated group/Other –148 15 –133 0 0 0 Claims expenses
For the year under review 15,159 –644 14,515 14,415 –387 14,028 For previous years –1,707 108 –1,599 –1,358 88 –1,270
Total payments –13,136 525 –12,611 –13,541 457 –13,084 Status at 31 Dec. financial year 48,218 –2,208 46,009 45,752 –2,109 43,643
The ultimate loss of an accident year comprises all payments made for that accident year up to the reporting date, plus the claims reserve at the reporting date. Given complete information regarding all losses incurred up to the balance sheet date, the ultimate-loss status for each accident-year period would remain the same. In practice, however, it may be assumed that the ultimate-loss status (based on estimates) is exposed to fluctuations that reflect the growth in knowledge about the claims cases. Changes in the consolidated group, especially new acquisitions or the composition of segments to be reported, can also have an influence on the ultimate-loss status.
The ceded share of “other technical provisions” amounts to €1m (6m), of which €1m (0m) is apportionable to the ceded share of the provision for premium refunds based on national regulations.
Reinsurance ERGO Munich Health Total €m 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year 31.12.2015 Prev. year Provision for premium refunds based on national regulations 3 4 7,727 7,553 0 0 7,730 7,557 Provision for deferred premium refunds 0 0 9,181 10,609 9 13 9,190 10,622
Thereof resulting from unrealised gains and losses on investments (recognised directly in equity) 0 0 4,820 6,325 21 25 4,841 6,350 Thereof resulting from other revaluations (recognised in profit or loss) 0 0 4,361 4,284 –12 –12 4,349 4,272
The item “Changes in consolidated group/Other” includes technical provisions for unitlinked life insurance of the disposal group amounting to €28m.
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. Special regional economic, legal and tax features are taken into account. The type and amount of the pension obligations are determined by the conditions of the respective pension plan. The pension commitments comprise obligations towards active members or deferred members with vested benefits, and current pension payments. Defined benefit plans are funded internally through provisions for post-employment benefits and externally through funds and insurance contracts concluded to cover the benefit obligations.
Expenses for defined contribution plans in the year under review totalled €74m (72m), with €111m (114m) for contributions to state plans.
The pension obligations of the ERGO Insurance Group account for €2,547m (2,779m) of the present value of obligations under defined benefit plans and €290m (285m) of plan assets. The obligations include disability and old-age pensions, and pensions for surviving dependants. The amount of the pensions generally depends on salary and length of service. The commitments are generally funded through pension provisions. New members receive pension commitments in the form of defined contribution plans financed by means of intra-Group insurance contracts securing the obligations under pension schemes. There are medical-care benefit obligations.
The present value of medical-care benefit obligations amounted to €274m (285m) at the balance sheet date.
% 31.12.2015 Prev. year Active members 50 53 Deferred members 14 13
% 2015 Prev. year Discount rate 2.5 2.1 Future increases in entitlement/salary 1.9 1.9 Future pension increases 1.4 1.5 Medical cost trend rate 4.0 3.9
For the financial year 2016, capital transfers of €89m (78m) to plan assets are expected.
% 31.12.2015 Prev. year Quoted market price in an active market Cash or cash equivalents 1 1 Equity instruments 8 9 Debt instruments 51 51 Real estate 1 0
Securities funds 18 18 Asset-backed securities 0 0 Structured debt 0 0 Insurance contracts 19 20
Change in the reimbursement rights for defined benefit plans €m 2015 Prev. year Status at 31 Dec. previous year 247 177 Interest income 4 6 Return excluding interest income –17 46 Contributions by the employer 17 16 Contributions by plan participants 1 0 Payments –8 –5 Transfer of assets 0 0
Funded status of defined benefit plans €m 31.12.2015 Prev. year Obligations funded through provisions
An increase or decrease in the following essential actuarial assumptions has an impact on the present value of defined benefit obligations: Change in the provision for defined benefit plans €m 2015 Prev. year Status at 31 Dec. previous year 2,965 2,140 Currency translation differences 38 41 Changes in consolidated group 0 0
Contractual period to maturity of pension obligations €m 31.12.2015 Prev. year Up to one year 147 133 Over one year and up to five years 666 599 Over five years and up to ten years 947 867 Over ten years and up to twenty years 2,397 2,257 Over twenty years 6,501 6,585
Breakdown of expenses booked in the financial year €m 2015 Prev. year Net interest income or expense 49 59 Service cost 171 125 Other 0 –11
Salary obligations and other remuneration for desk and field staff 119 117 –102 –2 –10 122
Early retirement benefits/semi-retirement 66 14 –21 0 3 63 Medium- and long-term incentive plans 65 30 –37 –5 0 52
The amounts payable on primary insurance business mainly contain liabilities towards policyholders resulting from accumulated participation in surplus, premium deposits and insurance contracts without significant risk transfer.
The miscellaneous liabilities contain liabilities of €394m (500m) resulting from reinsurance contracts without significant risk transfer, derivative financial instruments with a negative fair value of €1,085m (1,228m), and negative fair values totalling €733m (675m) for insurance-linked derivatives and hedging derivatives of variable annuities. The miscellaneous liabilities also include €22m (28m) for social security and €183m (190m) for interest and rent.
Breakdown of other liabilities €m 31.12.2015 Prev. year Amounts payable on primary insurance business 2,902 3,086 Accounts payable on reinsurance business 5,274 5,462 Amounts due to banks 428 443 Miscellaneous liabilities 5,457 5,646
The following table provides information on the remaining contractual maturities of the items shown under “other liabilities”. Since the amounts payable on primary insurance business are directly linked to the underlying insurance business, we analyse the liquidity risk arising from these together with the corresponding insurance contracts. This currently also applies to the derivatives embedded in variable annuity business; see Disclosures on risks from insurance contracts and financial instruments (38) Risks from life and health insurance business and (39) Risks from property- casualty insurance business. The derivatives listed below are recognised at market value.
Carrying amounts €m 31.12.2015 Prev. year Up to one year 8,293 8,713 Over one year and up to two years 91 106 Over two years and up to three years 54 31 Over three years and up to four years 259 45 Over four years and up to five years 35 267 Over five years and up to ten years 640 856 Over ten years 1,025 837
Ceded premiums written –562 –420 –892 –731 Change in unearned premiums – Ceded share 0 0 25 31 Earned premiums ceded –562 –420 –867 –700
Ceded premiums written –124 –155 –1,869 –1,623 Change in unearned premiums – Ceded share –38 –8 –41 20 Earned premiums ceded –162 –163 –1,910 –1,603
ERGO Life and Health Property-casualty Germany Germany International €m 2015 Prev. year 2015 Prev. year 2015 Prev. year
Change in unearned premiums – Gross –23 –16 –51 5 –120 –85
Ceded premiums written –22 –27 –53 –39 –216 –251 Change in unearned premiums – Ceded share 1 –8 1 –1 –30 6 Earned premiums ceded –21 –35 –52 –40 –246 –245
Of the gross premiums written from short-term insurance business, the portions attributable to periods after the balance sheet date are posted as unearned premiums; see Notes to the consolidated balance sheet – Equity and liabilities under (20) Unearned premiums. Over the duration of the contracts, unearned premiums are reversed in accordance with the reduction in risk.
In the ERGO Life and Health Germany segment, the income from technical interest for 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 health primary insurance companies, the income from
Munich Health Total €m 2015 Prev. year 2015 Prev. year Income from technical interest 39 37 6,803 7,503
In the Munich Health segment, income from technical interest for primary insurance business is based on the interest on other technical provisions at the relevant national risk-free interest rate and, where applicable, on the interest allocated to the provision for future policy benefits. In the case of long-term reinsurance treaties, the interest corresponds to the contractually agreed allocations of interest. For short-term reinsurance business, the income from technical interest is calculated on the basis of the risk-free interest on technical provisions at the relevant national interest rate.
Provision for future policy benefits –87 –36 0 0 Provision for outstanding claims 96 –22 –81 –140 Provision for premium refunds 0 0 0 0
Net Claims and benefits paid –7,515 –7,271 –9,591 –10,204 Change in technical provisions
Provision for future policy benefits –58 –250 0 1 Provision for outstanding claims –406 –340 –32 484 Provision for premium refunds 0 0 –4 –6
Other technical result –46 –34 –4 –3 Net expenses for claims and benefits –8,025 –7,896 –9,631 –9,728 8306 A
ERGO Life and Health Property-casualty Germany Germany International €m 2015 Prev. year 2015 Prev. year 2015 Prev. year Gross Claims and benefits paid –9,540 –9,591 –1,815 –1,825 –2,794 –2,386 Change in technical provisions
Other technical result –118 –129 –6 –7 18 11 Gross expenses for claims and benefits –11,661 –12,945 –2,051 –1,951 –3,047 –2,965
Ceded share Claims and benefits paid 9 28 15 16 306 280 Change in technical provisions
Provision for future policy benefits 0 8 0 0 –129 –98 Provision for outstanding claims 10 –8 30 –35 110 32
Provision for future policy benefits –434 –577 –1 –1 –178 –508 Provision for outstanding claims –127 –64 –181 –134 –201 –101 Provision for premium refunds –1,432 –2,584 –17 –21 89 –47
Munich Health Total €m 2015 Prev. year 2015 Prev. year Gross Claims and benefits paid –4,427 –4,216 –36,473 –36,201 Change in technical provisions
Provision for future policy benefits –96 –93 –552 –1,302 Provision for outstanding claims –141 –146 –1,252 –128 Provision for premium refunds 0 0 –1,366 –2,656
Other technical result 0 0 –113 –107 Expenses for claims and benefits – Ceded share 67 99 1,025 722
Provision for future policy benefits –91 –93 –762 –1.428 Provision for outstanding claims –159 –113 –1,106 –268 Provision for premium refunds 0 0 –1,364 –2,658
Other technical result –3 –4 –225 –236 Net expenses for claims and benefits –4,601 –4,360 –38,731 –39,694
Reinsurance Life Property-casualty €m 2015 Prev. year 2015 Prev. year Gross Acquisition costs, profit commission and reinsurance commission paid –2,153 –2,160 –4,062 –4,185 Administrative expenses –349 –289 –1,373 –1,211 Change in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios –98 169 –212 83 Gross operating expenses –2,601 –2,280 –5,646 –5,313
Ceded share Acquisition costs, profit commission and reinsurance commission paid 231 144 145 86 Change in deferred acquisition costs and contingent commissions 3 1 –9 –12 Operating expenses – Ceded share 234 145 136 74
ERGO Life and Health Property-casualty Germany Germany International €m 2015 Prev. year 2015 Prev. year 2015 Prev. year Gross Acquisition costs, profit commission and reinsurance commission paid –937 –931 –549 –482 –993 –975 Administrative expenses –369 –369 –492 –492 –290 –271 Change in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios –149 –223 23 –23 58 32 Gross operating expenses –1,455 –1,523 –1,018 –997 –1,225 –1,214
Ceded share Acquisition costs, profit commission and reinsurance commission paid 7 5 3 3 38 37 Change in deferred acquisition costs and contingent commissions –1 1 0 0 –2 –2
Munich Health Total €m 2015 Prev. year 2015 Prev. year Gross Acquisition costs, profit commission and reinsurance commission paid –751 –761 –9,445 –9,494 Administrative expenses –117 –105 –2,990 –2,737 Change in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios –32 –71 –410 –33 Gross operating expenses –901 –937 –12,846 –12,264
Ceded share Acquisition costs, profit commission and reinsurance commission paid 56 48 480 323 Change in deferred acquisition costs and contingent commissions 8 2 –2 –10 Operating expenses – Ceded share 64 50 478 313
Reinsurance Life Property-casualty €m 2015 Prev. year 2015 Prev. year Land and buildings, including buildings on third-party land 24 19 126 98 Investments in affiliated companies 0 –1 3 10 Investments in associates and joint ventures 0 0 287 54
Designated at fair value through profit or loss Fixed-interest 0 0 0 0
Designated at fair value through profit or loss Fixed-interest 0 0 0 0 –8 46
The result for land and buildings includes rental income of €393m (349m). The expenses for the management of investments include running costs and expenses for repair and maintenance of property totalling €65m (62m). We earned interest income of €2,098m (2,190m) on loans. Other securities available for sale produced regular income of €4,145m (4,067m), while derivatives generated €137m (68m).
Designated at fair value through profit or loss Fixed-interest 0 0 –8 46
Deposits retained on assumed reinsurance, and other investments 1 1 326 367 Expenses for the management of investments, other expenses –5 –6 –506 –489
Write-ups of non-derivative investments 6 3 33 31 Gains on the disposal of non-derivative investments 372 351 1,900 1,751 Write-ups and gains on the disposal of derivatives 314 303 1,415 1,519
Write-downs of non-derivative investments €m 2015 Prev. year Land and buildings, including buildings on third-party land –113 –87 Investments in affiliated companies –2 –11 Investments in associates and joint ventures –22 –34 Loans –59 –23 Other securities available for sale –553 –169 Other securities at fair value through profit or loss –20 –3 Other investments –78 –39 Total –848 –366
Munich Re Group Annual Report 2015 34 Insurance-related investment result 35 Other operating result
Other operating income mainly comprises income of €533m (483m) from services rendered, interest and similar income of €103m (105m), income of €123m (76m) from the release/reduction of miscellaneous provisions and provisions for bad and doubtful debts, and income of €47m (36m) from owner-occupied property, some of which is also leased out.
Result from insurance-related investments €m 2015 Prev. year Result from investments for unit-linked life insurance contracts 259 495 Result from other insurance-related investments –119 –81
Thereof: Interest income 82 75 6 13 Write-ups of other operating assets 6 4 27 9
Other operating expenses –73 –69 –941 –875 Thereof: Interest charges –6 –12 –97 –130 Write-downs of other operating assets –12 –3 –69 –78
Other operating expenses –147 –157 –91 –84 –165 –167 Thereof: Interest charges –34 –52 –9 –15 –10 –15 Write-downs of other operating assets –6 –15 –17 –12 –17 –35 8323 A–C
Besides foreign currency exchange gains of €4,246m (2,572m), the other non- operating income contains other non-technical income of €144m (151m).
The other non-operating expenses comprise foreign-currency exchange losses of €4,459m (2,707m), write-downs of €79m (145m) on other intangible assets, and other non-technical expenses of €386m (372m), such as other amounts that cannot be allocated elsewhere and restructuring expenses.
Reinsurance Life Property-casualty €m 2015 Prev. year 2015 Prev. year Other non-operating income 739 540 2,048 1,361 Other non-operating expenses –798 –599 –2,221 –1,477 Impairment losses of goodwill 0 0 0 0 Net finance costs –38 –36 –126 –119
This item shows the corporation tax and municipal trade earnings tax paid by the German consolidated companies (including solidarity surcharge and interest on back tax) and the comparable taxes on earnings paid by the foreign consolidated companies in the Group. In accordance with IAS 12, the determination of taxes on income includes the calculation of deferred taxes.
Net finance costs by financing instrument €m 2015 Prev. year Subordinated bonds of Munich Reinsurance Company, Munich –211 –205 Senior notes of Munich Re America Corporation, Wilmington –23 –19 Subordinated bonds of HSB Group Inc., Delaware –2 –2 Other –2 –2 Total –238 –228
Deferred tax –416 –166 Germany –90 15 Other countries –326 –181
The effective tax burden is the ratio between the “taxes on income shown” and the “result before taxes on income (after “other tax”)”. In the year under review, there was a tax burden of 13.2% (in the previous year, tax relief of 10.9%).
The non-deductible expenses mainly comprise non-tax-deductible write-downs of goodwill, non-tax-deductible allocations to provisions for premium refunds and expenses in connection with tax-free income.
Reconciliation to effective tax expenses/income €m 2015 Prev. year Result before taxes on income (after “other tax”) 3,598 2,858 Group tax rate in % 33 33 Derived taxes on income –1,187 –943 Tax effect of: Tax rate differences 275 320 Tax-free income 17 245 Non-deductible expenses –495 –586 Valuation allowances for deferred taxes/loss carry-forwards –99 –48 Change in tax rates and tax legislation 1 3 Tax for prior years 956 1,341 Trade tax adjustments 14 14 Other 42 –34
Disclosures on risks from insurance contracts and financial instruments 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 (2) no. 2 of the German Commercial Code (HGB) prescribes disclosures in the management report on risk management objectives and methods, hedging and risks in connection with financial instruments. These requirements are specified in more detail in German Accounting Standard No. 20 (DRS 20) for management reports.
In the notes to the financial statements, we describe in detail the uncertainties involved in measuring insurance contracts. For risks from financial instruments, IFRS 7 stipulates that the disclosures must comprise information on the remaining terms, the rating, and a sensitivity analysis regarding the market risk.
Munich Re Group Annual Report 2015 38 Disclosures on risks from life and health insurance business
Underwriting risk Of importance for the underwriting risks are biometric risks and lapse risks.
Market risk With regard to our technical provisions, we are particularly exposed to interest-rate risk. 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. Economically, however, an interest-rate risk derives in principle from the need to earn a return on the investments covering the provision that is commensurate with the discount rate used in measuring the provision.
Some primary insurance and reinsurance contracts contain derivative components of variable annuities. These are measured separately from the underlying contract and their changes in value are recognised in the investment result. The valuation of these embedded derivatives is sensitive to share prices, exchange rates and interest rates, but the sensitivities are nearly fully compensated for by the fact that such derivatives are for the most part directly matched by financial derivatives for hedging purposes.
Munich Re Group Annual Report 2015 39 Disclosures on risks from property-casualty insurance business
A particular sensitivity to reserve risks exists in the case of contracts with long run-off periods. This characteristic applies especially to casualty insurance, where liabilities may manifest themselves with a considerable time lag. Particularly with regard to asbestos insurance liabilities, we cover losses from policies which were taken out decades ago and manifest themselves after a latency period of as long as 30–50 years. In response, we have posted provisions for claims under long-cancelled general liability policies which provided coverage according to the legal environment applicable at that time.
Claims payments for financial year –5,659 –5,495 –5,617 –5,968 –5,930 Claims payments for previous years –7,619 –8,193 –7,388 –8,898 –8,096 Costs –7,501 –7,298 –7,024 –6,839 –6,808
The sensitivity analysis shows the effect of capital market events on the value of investments and the corresponding impact on equity and on the consolidated income statement. Sensitivities of investments to share prices and interest rates are analysed independently of one another, i.e. ceteris paribus, with the change in market value being determined under selected capital market scenarios as follows: To analyse equities and equity derivatives, the change in market value of ±10% and ±30% is calculated on the basis of the portfolio’s delta. Non-linear effects of equity options or other asymmetrical strategies are not taken into account in this presentation. For interest-rate-sensitive instruments, on the other hand, the change in market value resulting from a global change in interest rates of +100 BP, ±50 BP and –25 BP is determined using duration and convexity. The currently low level of interest rates in the capital markets is responsible for the asymmetrical selection of scenarios for presenting the market risk of investments sensitive to interest rates. The reaction of interest-rate derivatives to the change in market value of the underlying investment is taken into account using the delta of the derivative. Alternative investments (private equity, hedge funds and commodities) are analysed together with the equities.
Market risk – Interest rates The change in the market value of investments sensitive to interest rates is calculated using a parallel shift of the interest-rate curve and a revaluation of the fixed-interest securities and interest-rate derivatives on the basis of their duration and convexity. Cash and other derivatives are not included in the calculation.
The impact of the interest-rate sensitivity of Munich Re’s investments on equity and on the consolidated income statement increased marginally in the year under review. Restructurings of the investments for which changes in market value are not shown in the balance sheet contribute to the impact on the total market value changes shown.
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 balance sheet or income statement.
Change in interest rates 31.12.2015 Prev. year Impact on Total change Impact on Total change profit Impact on in market profit Impact on in market €bn or loss1 equity1 value or loss1 equity1 value Increase of 100 BP –0.295 –8.262 –15.394 –0.244 –8.138 –14.460 Increase of 50 BP –0.162 –4.285 –7.867 –0.129 –4.214 –7.604
Market values 199.000 203.339 1 Gross before tax and policyholder participation in surplus.
Munich Reinsurance Company has established a contractual trust agreement in the form of a two-way trust for its unfunded company pension obligations. The Munich Re pension scheme is considered a related party in accordance with IAS 24. Contributions to the pension scheme are recognised as expenses for defined contribution plans; see Notes to the consolidated balance sheet – Equity and liabilities (25) Other accrued liabilities. For transactions of related parties with Munich Reinsurance Company shares, please refer to Notes to the consolidated balance sheet – Equity and liabilities (17) Equity.
Every year from 1999 to 2010, Munich Reinsurance Company set up long-term incentive plans, each with a term of seven years. From 1999 to 2009, the members of the Board of Management and senior management in Munich, and the top executives in Munich Re’s international organisation, were participants in the scheme. In 2010, this share-price-related remuneration plan was provided only for senior management members and selected top executives in the international organisation.
Breakdown of personnel expenses €m 2015 Prev. year Wages and salaries –2,804 –2,728 Social security contributions and employee assistance –516 –510 Expenses for employees’ pensions –288 –225 Total –3,608 –3,463
Intrinsic value 2015 for one right 64.41 € 88.68 € 77.14 € Fair value 2015 for one right 0.00 € 88.68 € 77.14 € Number of rights on 31 Dec. 2008 441,041 0 0
From 2002 to 2009, ERGO Versicherungsgruppe AG and some of its subsidiaries, as well as the MEAG companies, also set up long-term incentive plans at yearly intervals and with terms of seven years each. The persons eligible for participation – Board of Management members, managing directors and, in individual cases, also top executives – were granted a defined number of stock appreciation rights in respect of Munich Re shares. In 2010, these share-price-related remuneration plans were provided only for senior management at the MEAG companies and for the managing directors of MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH. The design of the plans is identical to that of Munich Re’s long-term incentive plans, and they are accounted for in the same way. The obligations arising from the long-term incentive plans are covered by options on Munich Reinsurance Company shares. In the year under review, provisions of €0.1m (0.2m) had to be posted for the ERGO and MEAG companies. The personnel expense/ income recognised in the income statement corresponds to the change in the provision in the year under review, taking into consideration any rights exercised. In 2015, this resulted in expense of €0m (0m). The weighted average share price for the stock appreciation rights exercised in 2015 was €159.00 for plan year 2008, €164.09 for plan year 2009, and €183.05 for plan year 2010. The intrinsic value of the exercisable stock appreciation rights amounted to €0.1m at the balance sheet date.
Intrinsic value 2015 for one right 64.41 € 88.68 € 77.14 € Fair value 2015 for one right 0.00 € 88.68 € 77.14 € Number of rights on 31 Dec. 2008 172,552 0 0
The Mid-Term Incentive Plan at the reporting date is valued indirectly at the fair value of the liabilities. The fair value takes account of the value-based performance target and the total shareholder return (TSR) during the performance period. To this end, the TSR index value observable in the market is updated with the current dividend yield of Munich Re shares at the termination date and discounted with appropriate market interest rates.
The members of Munich Reinsurance Company’s Board of Management received remuneration totalling €23.4m (24.1m). The total remuneration of Munich Reinsurance Company’s Supervisory Board amounted to €2.6m (2.6m); not included in this figure is €0.2m (0.2m) for membership of supervisory boards at other Group companies, so that the overall amount came to €2.8m (2.8m).
No personnel expenses for pension commitments were 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.
Incentive Incentive Incentive Incentive Plan 2012 Plan 2013 Plan 2014 Plan 2015
Number of rights (for 100% achievement of objectives) on 31 December 2015 0 50,442 41,649 38,217
The number of staff employed by the Group at year-end totalled 21,812 (21,899) in Germany and 21,742 (21,417) in other countries.
For services rendered to the parent and consolidated subsidiaries by the Group auditor (KPMG Bayerische Treuhandgesellschaft AG Wirtschaftsprüfungsgesellschaft Steuer- beratungsgesellschaft, Munich, and its affiliated companies within the meaning of Section 271 (2) of the German Commercial Code – HGB), the following fees have been recognised as an expense in the financial year: The certified public accountant responsible for carrying out the audit within the meaning of Section 24a (2) of the Professional Statutes of German Accountants/ Certified Auditors (Berufssatzung WP/vBP) is Dr. Frank Ellenbürger. He first took charge of the audit of the Company and Group financial statements for the financial year ending 31 December 2013.
Munich Re enters into contingent liabilities in connection with its normal business operations. In this context, the obligations from guarantees total €1m (0m), those from legal disputes €42m (7m) and those from letters of support €0m (0m). There are other financial commitments amounting to €12m (3m). Additionally, Munich Re has entered into a payment commitment of £20m towards an associate, the amount being payable in the event of over-indebtedness. Further information on risks arising from legal disputes can be found on page 133 f. in the risk report.
Munich Health 2,485 3,007 1 Thereof fees totalling €6,376k for KPMG Bayerische Treuhandgesellschaft AG Wirtschaftsprüfungs gesellschaft Steuerberatungsgesellschaft.
In accordance with the German Insurance Supervision 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 €146m (135m) 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.
As at 31 December 2015, there were no protective rights of non-controlling interests restricting Munich Re’s transfer of assets.
The carrying amounts of Group assets with restrictions on title can be found in the Notes to the consolidated balance sheet – Assets. The restrictions primarily result from contractual agreements, including pledged securities deposits to collateralise payment obligations from insurance business, the collateralisation of derivative transactions with securities or of bank liabilities with non-financial assets.
Our subsidiary Munich American Reassurance Company shows a negative earned surplus in its local financial statements as at 31 December 2015 (Statutory Accounting Principles). For this reason, the company can only pay dividends or transfer capital to the parent company with the approval of the competent US regulatory authority.
Munich Re as lessee At the balance sheet date, future minimum lease payments under non-cancellable operating leases totalled €480m (440m).
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 €1,135m (845m).
Due dates €m 31.12.2015 Prev. year Not later than one year 87 84 Later than one year and not later than five years 233 212 Later than five years 160 144
On 1 January 2016, via its subsidiary MR RENT-Investment GmbH, Munich, Munich Re acquired 100% of the voting shares in the solar park company Lynt Farm Solar Ltd, London, England, from Solarpark Lynt GmbH, Gräfelfing, Germany. The solar park has an installed peak capacity of 26.9 megawatts.
Due dates 31.12.2015 Prev. year Gross Interest Net Gross Interest Net €m investment element investment investment element investment Minimum lease payments not later than one year 0 0 0 0 0 0 Minimum lease payments later than one year and not later than five years 2 0 2 2 0 2 Minimum lease payments later than five years 72 56 16 73 57 16
There were no diluting effects to be disclosed for the calculation of earnings per share either in the financial year or in the previous year. Earnings per share can be potentially diluted in future through the issue of shares or subscription rights from amounts authorised for increasing the share capital and from contingent capital.
Munich Reinsurance Company’s net retained profits for 2015 according to its financial statements prepared on the basis of German GAAP accounting amount to €1,376,462,678.25. 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 €8.25 per dividend-bearing share, with the remaining amount being carried forward to new account.
List of shareholdings as at 31 December 2015 pursuant to Section 313 (2) of the German Commercial Code (HGB)
ERGO Zivotno osiguranje d.d., Zagreb 100.0000 ERV Evropská pojišťovna, a. s., Prague 90.0000 ERV Försäkringsaktiebolag (publ), Stockholm 100.0000 Europaeiske Rejseforsikring A/S, Copenhagen 100.0000 EUROPÄISCHE Reiseversicherung Aktiengesellschaft, Munich 100.0000 Everything Legal Ltd., Bristol 100.0000 FAIRANCE GmbH, Düsseldorf 100.0000 Flexitel Telefonservice GmbH, Berlin 100.0000 FLEXKONZEPT – EUROBOND, Munich4 100.0000 Forst Ebnath AG, Ebnath 100.0000 FOTOUNO S.r.l., Bressanone 100.0000 FOTOWATIO ITALIA GALATINA S.r.l., Bressanone 100.0000 GF 65, Vienna4 100.0000 Global Standards, LLC, Dover, Delaware 100.0000 Globality S.A., Luxembourg 100.0000 Great Lakes Reinsurance (UK) SE, London 100.0000 Group Risk Services Limited, London 100.0000 Groves, John & Westrup Limited, London 100.0000 Habiriscos – Investimentos Imobiliarios e Turísticos, S.A., Lisbon 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 GmbH, Rheine 100.0000 HMV GFKL Beteiligungs GmbH, Düsseldorf 100.0000 HSB Brasil Servicos de Engenharia e Inspecao, Ltda., São Paulo 100.0000 HSB Engineering Finance Corporation, Dover, Delaware 100.0000 HSB Engineering Insurance Limited, London 100.0000 HSB Engineering Insurance Services Limited, London 100.0000 HSB Group, Inc., Dover, Delaware 100.0000 HSB International (India) Private Limited, Gujarat 100.0000 HSB Japan KK, Minato-KU, Tokyo 100.0000 HSB Solomon Associates Canada Ltd., Saint John, Providence of New Brunswick 100.0000 HSB Solomon Associates LLC, Dover, Delaware 100.0000 HSB Specialty Insurance Company, Hartford, Connecticut 100.0000 HSB Technical Consulting & Service (Shanghai) Company, Ltd, Shanghai 100.0000 Ibero Property Portugal – Investimentos Imobiliarios S.A., Lisbon 100.0000 Ibero Property Trust S.A., Madrid 100.0000 IDEENKAPITAL Financial Engineering GmbH, Düsseldorf 100.0000 IDEENKAPITAL Financial Service GmbH i. L., Düsseldorf 100.0000 IDEENKAPITAL GmbH, Düsseldorf 100.0000 IDEENKAPITAL Media Finance GmbH, Düsseldorf 50.1000 IDEENKAPITAL Metropolen Europa GmbH & Co. KG, Düsseldorf 72.3477 iii, Munich4 100.0000 IK Einkauf Objekt Eins gmbH & Co. KG, Düsseldorf 100.0000 IK Einkauf Objektmanagement GmbH, Düsseldorf 100.0000 IK Einkaufsmärkte Deutschland GmbH & Co. KG, Düsseldorf 52.0387 IK Premium Fonds GmbH & Co. KG, Düsseldorf 100.0000 IK Premium Fonds zwei GmbH & Co. KG, Düsseldorf 100.0000 IKFE Properties I AG, Zurich 63.5708 Imofloresmira – Investimentos Imobiliarios S.A., Lisbon 100.0000 Insurance Company “ERGO Life” Ltd., Moscow 100.0000
MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH, Munich 100.0000 MEAG Munich Re Placement, Grünwald4 100.0000 MEAG New York Corporation, Wilmington, Delaware 100.0000 MEAG PEGASUS, Munich4 100.0000 MEAG PK-NORD, Munich4 100.0000 MEAG PK-WEST, Munich4 100.0000 MEAG Premium, Munich4 100.0000 MEAG Prof III Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 MEAG Property Fund I, Munich4 100.0000 MEAG Property Fund III, Munich4 100.0000 MEAG RenditePlus, Munich4 100.0000 MEAG REVO, Munich4 100.0000 MEAG SAG 1, Munich4 100.0000 Meag Tandem (Spezialfonds), Munich4 100.0000 MEAG US Reserve Fund II, Munich4 100.0000 MEAG Venus, Munich4 100.0000 MEAG Vidas 4, Munich4 100.0000 MEAG Vidas Rent 3, Munich4 100.0000 MEAG Vigifonds, Munich4 100.0000 MEAG VLA, Munich4 100.0000 MedNet Holding GmbH, Munich 100.0000 MedWell Gesundheits-AG, Cologne 100.0000 Merkur Grundstücks- und Beteiligungs-Gesellschaft mit beschränkter Haftung, Düsseldorf 100.0000 MFI Munich Finance and Investment Holding Ltd., Ta´ Xbiex 100.0000 MFI Munich Finance and Investment Ltd., Ta´ Xbiex 100.0000 Midland-Guardian Co., Amelia, Ohio 100.0000 Midwest Enterprises, Inc., Miami, Florida 100.0000 MR Beteiligungen 1. GmbH, Munich3 100.0000 MR Beteiligungen 18. GmbH & Co. Immobilien KG, Grünwald2 100.0000 MR Beteiligungen 19. GmbH, Munich 100.0000 MR Beteiligungen 2. EUR AG & Co. KG, Grünwald2 100.0000 MR Beteiligungen 3. EUR AG & Co. KG, Grünwald2 100.0000 MR Beteiligungen EUR AG & Co. KG, Grünwald2 100.0000 MR Beteiligungen GBP AG & Co. KG, Grünwald2 100.0000 MR Beteiligungen USD AG & Co. KG, Grünwald2 100.0000 MR ERGO Beteiligungen GmbH, Grünwald 100.0000 MR Infrastructure Investment GmbH, Grünwald 100.0000 MR RENT UK Investment Limited, London 100.0000 MR RENT-Investment GmbH, Munich 100.0000 MR Solar GmbH & Co. KG, Nuremberg 100.0000 MR SOLAR SAS DER WELIVIT SOLAR ITALIA SRL, Bolzano 100.0000 MSP Underwriting Ltd., London 100.0000 MU068 MR Placem (FCP), Munich4 100.0000 Munich American Holding Corporation, Wilmington, Delaware 100.0000 Munich American Life Reinsurance Company, Atlanta, Georgia 100.0000 Munich American Reassurance Company, Atlanta, Georgia 100.0000 Munich Atlanta Financial Corporation, Atlanta, Georgia 100.0000 Munich Health Alpha GmbH, Munich3 100.0000 Munich Health Daman Holding Ltd., Abu Dhabi 51.0000 Munich Health Holding AG, Munich3 100.0000 Munich Health North America, Inc., Wilmington, Delaware 100.0000 Munich Holdings Ltd., Toronto, Ontario 100.0000
IRIS Capital Fund II German Investors GmbH & Co. KG, Düsseldorf 85.7143 ITERGO Informationstechnologie GmbH, Düsseldorf 100.0000 Joint Stock Insurance Company ERGO, Minsk 92.3114 JSC “ERV Travel Insurance”, Moscow 100.0000 K & P Pflegezentrum Uelzen IMMAC Renditefonds GmbH & Co. KG, Düsseldorf 84.8445 KA Köln Assekuranz.Agentur GmbH, Cologne 100.0000 Kapdom-Invest GmbH, Moscow 100.0000 KS SPV 23 Limited, London 100.0000 Landelijke Associatie van Gerechtsdeurwaarders B.V., Groningen4 89.7640 LEGIAL AG, Munich 100.0000 Lietuva Demetra GmbH, Munich 100.0000 LifePlans Inc., Waltham, Massachusetts 100.0000 LifePlans LTC Services, Inc., Toronto, Ontario 100.0000 Lloyds Modern Corporation, Dallas, Texas 100.0000 Longial GmbH, Düsseldorf 100.0000 MAGAZ FOTOVOLTAICA S.L.U., Alcobendas 100.0000 Mandaat B.V., Druten 100.0000 Marina Salud S.A., Alicante 65.0000 Marina Sp.z.o.o., Sopot 100.0000 MEAG ANGLO CELTIC Fund, Munich4 100.0000 MEAG ATLAS, Munich4 100.0000 MEAG Benedict, Munich4 100.0000 MEAG Cash Management GmbH, Munich 100.0000 MEAG EDL CurryGov, Munich4 100.0000 MEAG EDL EuroValue, Munich4 100.0000 MEAG EDS AGIL, Munich4 100.0000 MEAG ERGO Belgium Equities, Munich4 100.0000 MEAG ESUS 1, Munich4 100.0000 MEAG EUR Global 1, Munich4 100.0000 MEAG Euro 1, Munich4 100.0000 MEAG Euro 2, Munich4 100.0000 MEAG EURO-FONDS, Munich4 100.0000 Meag Eurostar (Spezialfonds), Munich4 100.0000 MEAG EURO-Yield, Munich4 100.0000 MEAG GBP-Global-STAR, Munich4 100.0000 MEAG German Prime Opportunities (GPO), Munich4 100.0000 MEAG Golf 1, Munich4 100.0000 MEAG HBG 1, Munich4 100.0000 MEAG HM Sach 1, Munich4 100.0000 MEAG HM Sach Rent 1, Munich4 100.0000 MEAG HMR1, Munich4 100.0000 MEAG HMR2, Munich4 100.0000 MEAG IREN, Munich4 100.0000 MEAG Janus4 100.0000 MEAG Kapital 2, Munich4 100.0000 MEAG Kapital 5, Munich4 100.0000 MEAG Lambda EUR 2, Grünwald4 100.0000 MEAG Lambda EUR EM Local, Munich4 100.0000 MEAG Lambda EUR, Grünwald4 100.0000 MEAG Lambda GBP, Grünwald4 100.0000 MEAG Lambda USD, Grünwald4 100.0000 MEAG Lambda USD-COP, Grünwald4 100.0000 MEAG Multi Life, Munich4 100.0000 MEAG Multi Sach 1, Munich4 100.0000 MEAG MUNICH ERGO AssetManagement GmbH, Munich 100.0000 293Consolidated financial statements Notes
Sopocki Instytut Ubezpieczeń S.A., Sopot 100.0000 Sopockie Towarzystwo Ubezpieczen Ergo Hestia Spolka Akcyjna, Sopot 100.0000 Sopockie Towarzystwo Ubezpieczen na Zycie Ergo Hestia Spolka Akcyjna, Sopot 100.0000 Specialty Insurance Services Corp., Amelia, Ohio 100.0000 SunEnergy & Partners S.r.l., Bressanone 100.0000 Temple Insurance Company, Toronto, Ontario 100.0000 The Atlas Insurance Agency, Inc., Amelia, Ohio 100.0000 The Boiler Inspection and Insurance Company of Canada, Toronto, Ontario 100.0000 The Hartford Steam Boiler Inspection and Insurance Company of Connecticut, Hartford, Connecticut 100.0000 The Hartford Steam Boiler Inspection and Insurance Company, Hartford, Connecticut 100.0000 The Midland Company, Cincinnati, Ohio 100.0000 The Polytechnic Club, Inc., Hartford, Connecticut 100.0000 The Princeton Excess and Surplus Lines Insurance Company, Wilmington, Delaware 100.0000 Tir Mostyn and Foel Goch Limited, London 100.0000 UAB VL Investment Vilnius 5, Vilnius 100.0000 UAB VL Investment Vilnius 6, Vilnius 100.0000 UAB VL Investment Vilnius 7, Vilnius 100.0000 UAB VL Investment Vilnius 8, Vilnius 100.0000 UAB VL Investment Vilnius 9, Vilnius 100.0000 UAB VL Investment Vilnius 1, Vilnius 100.0000 UAB VL Investment Vilnius 10, Vilnius 100.0000 UAB VL Investment Vilnius 2, Vilnius 100.0000 UAB VL Investment Vilnius 3, Vilnius 100.0000 UAB VL Investment Vilnius 4, Vilnius 100.0000 UAB VL Investment Vilnius, Vilnius 100.0000 UK Wind Holdings Ltd, London 100.0000 Union Beteiligungsholding GmbH, Vienna 100.0000 Unión Médica la Fuencisla, S.A., Compañía de Seguros, Saragossa 100.0000 US PROPERTIES VA GmbH & Co. KG, Düsseldorf4 46.0939 Van Arkel Gerechtsdeurwaarders B.V., Leiden4 100.0000 VHDK Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 VICTORIA Asien Immobilienbeteiligungs GmbH & Co. KG, Munich 100.0000 Victoria Investment Properties Two L.P., Atlanta, Georgia 100.0000 VICTORIA Italy Property GmbH, Düsseldorf 100.0000 VICTORIA Lebensversicherung Aktiengesellschaft, Düsseldorf 100.0000 Victoria US Holdings, Inc., Wilmington, Delaware 100.0000 VICTORIA US Property Investment GmbH, Düsseldorf 100.0000 VICTORIA US Property Zwei GmbH, Munich 100.0000 VICTORIA Vierte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 Victoria Vierter Bauabschnitt GmbH & Co. KG, Düsseldorf 100.0000 Vorsorge Lebensversicherung Aktiengesellschaft, Düsseldorf 100.0000 VORSORGE Luxemburg Lebensversicherung S.A., Grevenmacher 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 GmbH, Düsseldorf 100.0000
Cotatrillo 100010 S.L., Valencia 100.0000 D.A.S. Prawo i Finanse Sp. z o.o., Warsaw 100.0000 D.A.S. Rechtsschutz Leistungs-GmbH, Munich 100.0000 D.A.S., Tomasz Niedzinski Kancelaria Prawna Spolka komandytowa, Warsaw 95.0000 DAS America Legal Protection Insurance Agency Ltd., Wilmington, Delaware 100.0000 DAS Financial Services B.V., Amsterdam 51.0000 DAS Incasso Arnhem B.V., Elst 100.0000 DAS Incasso Eindhoven B.V., Eindhoven 100.0000 DAS Incasso Rotterdam B.V., Rotterdam 80.0000 DAS Legal Protection Ireland Limited, Dublin 100.0000 DAS Legal Protection Limited, Christchurch, New Zealand 100.0000 DAS Legal Protection Limited, Vancouver 100.0000 DAS Legal Protection Pty. Ltd., Sydney 100.0000 DAS Legal Services B.V., Breda 100.0000 DAS Lex Assistance, S.L., L´Hospitalet de Llobregat 100.0000 DKV – Beta Vermögensverwaltungs GmbH, Cologne 100.0000 DKV Gesundheits Service GmbH, Cologne 100.0000 DKV Servicios, S.A., Saragossa 100.0000 DKV-Residenz am Tibusplatz gGmbH, Münster 100.0000 DKV-Residenz in der Contrescarpe GmbH, Bremen 100.0000 DRA Debt Recovery Agency B.V., The Hague 100.0000 E&S Claims Management Inc., Reston, Virginia4 0.0000 EDR Resources B.V., The Hague 100.0000 ERGO Alpha GmbH, Düsseldorf 100.0000 ERGO Asia Management Pte. Ltd., Singapore 100.0000 ERGO GmbH, Herisau 100.0000 ERGO Gourmet GmbH, Düsseldorf 100.0000 ERGO Immobilien-GmbH 15. Victoria & Co. KG, Kreien 100.0000 ERGO Immobilien-GmbH 4. DKV & Co. KG, Kreien 100.0000 ERGO Immobilien-GmbH 7. Hamburg-Mannheimer & Co. KG, Kreien 100.0000 ERGO Immobilien-Verwaltungs-GmbH, Kreien 100.0000 ERGO Infrastructure Investment Gesundheit GmbH, Düsseldorf 100.0000 ERGO Infrastructure Investment Komposit GmbH, Düsseldorf 100.0000 ERGO Leben Asien Verwaltungs GmbH, Munich 100.0000 ERGO PORTFÖY YÖNETIMI A.S., Istanbul 100.0000 ERGO Private Capital GmbH, Düsseldorf 100.0000 ERGO PRO S.r.l., Verona 100.0000 ERGO Pro Sp. z o.o., Warsaw 100.0000 ERGO Pro, spol. s r.o., Prague 100.0000 ERGO Specialty GmbH, Hamburg 100.0000 ERGO Versicherungs- und FinanzierungsVermittlung GmbH, Hamburg 100.0000 ERGO Zehnte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 ERGO Zwölfte Beteiligungsgesellschaft mbH, Munich 100.0000 ERV (China) Travel Service and Consulting Ltd., Beijing 100.0000 ERV (India) Travel Service and Consulting Private Limited, Mumbai 99.9999 ERV Seyahat Sigorta Aracilik Hizmetleri ve Danismanlik Ltd.Sti., Istanbul 99.9980 Etics, s.r.o., Prague 100.0000 Etoblete 160016 S.L., Valencia 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 welivit Solarfonds GmbH & Co. KG, Düsseldorf 100.0000 welivit Solarfonds S.a.s. di welivit Solar Italia S.r.l., Bolzano 100.0000 WFB Stockholm Management AB, Stockholm4 50.0000 Wind Farms Götaland Svealand AB, Hässleholm 100.0000 Windpark MR-B GmbH & Co. KG, Bremen2 100.0000 Windpark MR-D GmbH & Co. KG, Bremen2 100.0000 Windpark MR-N gmbH & Co. KG, Bremen2 100.0000 Windpark MR-S GmbH & Co. KG, Bremen2 100.0000 Windpark MR-T GmbH & Co.KG, Bremen2 100.0000 wse Solarpark Spanien 1 GmbH & Co. KG, Düsseldorf 75.1243 X-Pact B.V., The Hague 62.5000
Non-consolidated subsidiaries 80e LIMITED, Bristol 100.0000 ADVIA NV, Schoten 80.0000 Aleama 150015 S.L., Valencia 100.0000 Amicus Ltd., Bristol 100.0000 ANOVA GmbH, Rostock 100.0000 Arridabra 130013 S.L., Valencia 100.0000 ARTES Assekuranzservice GmbH, Düsseldorf 100.0000 B&D Business Solutions B.V., Utrecht 100.0000 Badozoc 1001 S.L., Valencia 100.0000 Bank Austria Creditanstalt Versicherungsdienst GmbH, Vienna 100.0000 Baqueda 7007 S.L., Valencia 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 Bobasbe 6006 S.L., Valencia 100.0000 Botedazo 8008 S.L., Valencia 100.0000 Callopio 5005 S.L., Valencia 100.0000 Camcichu 9009 S.L., Valencia 100.0000 Cannock Chase Incasso II B.V., The Hague 100.0000 CAPITAL PLAZA Holding GmbH, Düsseldorf 100.0000 Caracuel Solar Catorce S.L., Valencia 100.0000 Caracuel Solar Cinco S.L., Valencia 100.0000 Caracuel Solar Cuatro S.L., Valencia 100.0000 Caracuel Solar Dieciocho S.L., Valencia 100.0000 Caracuel Solar Dieciseis S.L., Valencia 100.0000 Caracuel Solar Diecisiete S.L., Valencia 100.0000 Caracuel Solar Diez S.L., Valencia 100.0000 Caracuel Solar Doce S.L., Valencia 100.0000 Caracuel Solar Dos S.L., Valencia 100.0000 Caracuel Solar Nueve S.L., Valencia 100.0000 Caracuel Solar Ocho S.L., Valencia 100.0000 Caracuel Solar Once S.L., Valencia 100.0000 Caracuel Solar Quince S.L., Valencia 100.0000 Caracuel Solar Seis S.L., Valencia 100.0000 Caracuel Solar Siete S.L., Valencia 100.0000 Caracuel Solar Trece S.L., Valencia 100.0000 Caracuel Solar Tres S.L., Valencia 100.0000 Caracuel Solar Uno S.L., Valencia 100.0000 CarePlus Gesellschaft für Versorgungsmanagement mbH, Cologne 100.0000 Centrum Pomocy Osobom Poszkodowanym Sp. z o.o., Danzig 100.0000 Copper Leaf Research, Bingham Farms, Michigan 100.0000 295Consolidated financial statements Notes
MunichFinancialGroup AG Holding, Munich 100.0000 MunichFinancialServices AG Holding, Munich 100.0000 Munichre Service Limited, Hong Kong 100.0000 Naretoblera 170017 S.L., Valencia 100.0000 Nerruze 120012 S.L., Valencia 100.0000 One State Street Intermediaries, Inc., Hartford, Connecticut 100.0000 Orrazipo 110011 S.L., Valencia 100.0000 P.A.N. Verwaltungs GmbH, Grünwald 99.0000 PLATINIA Verwaltungs-GmbH, Munich 100.0000 ProContact Sp. z o.o., Danzig 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 i.L., Düsseldorf4 50.0000 Reaseguradora de las Américas S. A., La Habana 100.0000 Roanoke Trade Insurance Inc., Schaumburg, Illinois 100.0000 SAINT LEON ENERGIE S.A.R.L., Saargemünd 100.0000 Schloss Hohenkammer GmbH, Hohenkammer 100.0000 Schrömbgens & Stephan GmbH, Versicherungsmakler, Düsseldorf 100.0000 Sensus Group B.V., Stadskanaal 100.0000 Sopockie Towarzystwo Doradcze Sp. z o.o., Sopot 100.0000 Stichting Aandelen Beheer D.A.S. Holding, Amsterdam 100.0000 Sydney Euro-Center Pty. Ltd., Sydney 100.0000 Synkronos Italia SRL, Milan 59.3500 TAS Assekuranz Service GmbH, Frankfurt/Main 100.0000 TAS Touristik Assekuranz Service International GmbH i. L., Frankfurt/Main 100.0000 TAS Touristik Assekuranzmakler und Service GmbH, Frankfurt/Main 100.0000 Three Lions Underwriting Ltd., London 100.0000 Tillobesta 180018 S.L., Valencia 100.0000 Triple IP B.V., Amsterdam 100.0000 US PROPERTIES VA Verwaltungs-GmbH, Düsseldorf 100.0000 VB VICTORIA Zastupanje u Osiguranju d.o.o., Zagreb 74.9000 Vectis Claims Services Ltd., Tel Aviv 75.0000 VFG Vorsorge-Finanzierungsconsulting GmbH, Vienna 100.0000 VICTORIA Erste Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 VICTORIA Immobilien Management GmbH, Munich 100.0000 VICTORIA Immobilien-Fonds GmbH, Düsseldorf 100.0000 Victoria Vierter Bauabschnitt Management GmbH, Düsseldorf 100.0000 Victoria VIP II, Inc., Wilmington, Delaware 100.0000 Viwis GmbH, Munich 100.0000 Vorsorge Service GmbH, Düsseldorf 100.0000 VV-Consulting Gesellschaft für Risikoanalyse, Vorsorgeberatung und Versicherungsvermittlung GmbH, Vienna 100.0000 VV-Consulting Többesügynöki Kft., Budapest 100.0000 welivit New Energy GmbH, Düsseldorf 100.0000 welivit Solar España GmbH, Düsseldorf 100.0000
MedNet Bahrain W.L.L., Manama 100.0000 MedNet Egypt LLC, Cairo 100.0000 MedNet Europa GmbH, Munich 100.0000 MedNet Greece S.A., Athens 78.1419 MedNet International Ltd., Nicosia 100.0000 Mednet Jordan C. W.L.L., Amman 100.0000 MedNet Saudi Arabia LLC, Riyadh 100.0000 MedNet UAE FZ L.L.C., Dubai 100.0000 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 i. L., 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 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 Financial Group GmbH, Munich 100.0000 MR Forest GmbH, Munich 100.0000 MR Infrastructure, Inc., Dover, Delaware 100.0000 MR RENT-Management GmbH, Munich 100.0000 MR Solar Beneixama GmbH i.L., 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 México S. A., Mexico 100.0000 Münchener de Venezuela C.A. Intermediaria de Reaseguros, Caracas 100.0000 Münchener Finanzgruppe AG Beteiligungen, Munich 100.0000 Münchener Vermögensverwaltung GmbH, Munich 100.0000 Münchener, ESCRITÓRIO DE REPRESENTACAO DO BRASIL LTDA, São Paulo 100.0000 Munich Canada Systems Corporation, Toronto, Ontario 100.0000 Munich Columbia Square Corp., Wilmington, Delaware 100.0000 Munich Management Pte. Ltd., Singapore 100.0000 Munich Re America Brokers, Inc., Wilmington, Delaware 100.0000 Munich Re America Management Ltd., London 100.0000 Munich Re Automation Solutions GmbH, Munich 100.0000 Munich Re Automation Solutions Inc., Wilmington, Delaware 100.0000 Munich Re Automation Solutions KK, Tokyo 100.0000 Munich Re Automation Solutions Pte. Ltd., Singapore 100.0000 Munich Re Automation Solutions Pty Limited, Sydney 100.0000 Munich Re Capital Markets GmbH, Munich 100.0000 Munich Re India Services Private Limited, Mumbai 100.0000 Munich Re Japan Services K. K., Tokyo 100.0000 Munich Re Underwriting Limited, London 100.0000 Munich Re Underwriting Agents (DIFC) Limited, Dubai 100.0000 Munich American Reassurance Company PAC, Inc., Atlanta, Georgia4 0.0000 Munich-American Risk Partners GmbH, Munich 100.0000 Munich-Canada Management Corp. Ltd., Toronto, Ontario 100.0000 297Consolidated financial statements Notes
Saudi National Insurance Company B.S.C.(c), Manama 22.5000 SEBA Beteiligungsgesellschaft mbH, Nuremberg 48.9966 Storebrand Helseforsikring AS, Oslo 50.0000 Suramericana S.A., Medellín5 18.8672 Taunus Holding B.V., Rotterdam 23.1913 T-Solar Global Operating Assets S.L., Madrid 37.0000 U.S. Property Fund IV GmbH & Co. KG, Munich 21.7286 U.S. Property Management III L.P., Atlanta 20.0000 Vier Gas Investments S.à r.l., Luxembourg 43.7516 VV Immobilien GmbH & Co. United States KG i. L., Munich 28.9515 VV Immobilien GmbH & Co. US City KG i. L., Munich 23.0999 VV Immobilien Verwaltungs GmbH & Co. Zentraleuropa KG i. L., Munich 20.4082 WISMA ATRIA Holding GmbH & Co. Singapur KG, Düsseldorf9 65.0000
Associates and joint ventures accounted for at fair value “PORT ELISABETH” GmbH & Co. KG, Bramstedt 31.9660 “PORT LOUIS” GmbH & Co. KG, Bramstedt 26.0495 “REISEGARANT” Gesellschaft für die Vermittlung von Insolvenzversicherungen mbH, Hamburg 24.0000 Agricultural Management Services S.r.l., Verona 33.3333 Allianz Pegasus Fonds, Frankfurt/Main 46.0000 Assistance Partner GmbH & Co. KG, Munich 21.6600 BF.direkt AG, Stuttgart 27.2000 carexpert Kfz-Sachverständigen GmbH, Walluf 25.0000 Energie Kapital GmbH & Co. Solarfonds 2 KG, Stadecken-Elsheim 34.4234 Famous Insurance Agency Pty Limited, Sydney 20.0000 Fernkälte Geschäftsstadt Nord Gesellschaft bürgerlichen Rechts, Hamburg 39.3354 Finsure Investments (Private) Limited, Harare 24.5000 GIG City Nord GmbH, Hamburg 20.0000 Hannover Finanz-Umwelt Beteiligungsgesellschaft mbH i. L., Hillerse 20.0000 Hartford Research, LLC, Lewes, Delaware 41.7500 IK Objektgesellschaft Frankfurt Theodor-Heuss-Allee GmbH & Co. KG, Düsseldorf 47.4000 LCM Logistic Center Management GmbH, Hamburg 50.0000 MCAF Management GmbH, Düsseldorf 50.0000 PERILS AG, Zurich5 10.0000 POOL Sp. z o.o., Warsaw 33.7500 Residential Builders Underwriting Agency Pty Ltd., Sydney 20.0000 Rural Affinity Insurance Agency Pty Limited, Sydney 50.0000 Sekundi CVBA, Brussels 33.3333 Teko – Technisches Kontor für Versicherungen Gesellschaft mit beschränkter Haftung, Düsseldorf 30.0000 Verwaltungsgesellschaft “PORT ELISABETH” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT KELANG” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT LOUIS” GmbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT MAUBERT” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT MELBOURNE” mbH, Bramstedt 50.0000 Verwaltungsgesellschaft “PORT MENIER” mbH, Bramstedt 50.0000
9 Significant influence owing to reduced voting power. 10 Not currently utilised.
11 No significant influence because, under the articles of association, statutes or other agreement all key decisions regarding the company‘s financial and operating policy are subject to a quorum which cannot be attained by the majority shareholder without the non-controlling shareholders.
(equity: €153,722k; result for year: €30,473k) 27.3400 FIA Timber Partners II L.P., Wilmington, Delaware6
(equity: €49,740k; result for year: €11,528k) 31.9361 HRJ Capital Global Buy-Out III (U.S.), L.P., Woodside, California11
(equity: €118,098k; result for year: –€333k) 39.1000 RMS Australian Forests Fund I, L.P., Cayman Islands8
We have audited the consolidated financial statements prepared by Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, Munich, comprising the consolidated balance sheet, the consolidated income statement, the statement of recognised income and expense, the Group statement of changes in equity, the consolidated cash flow statement and the notes to the consolidated financial statements, together with the combined management report for the financial year from 1 January to 31 December 2015. The preparation of the consolidated financial statements and the combined management report in accordance with IFRS, as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (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 combined management report based on our audit.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS, as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The combined management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.
Credit equivalent exposure (CEE) Reference figure used to combine and compare 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 counter- party’s default and reflects the estimated loss amount in the event of a default.
Deposits retained on assumed reinsurance and ceded business Receivables which reinsurers have vis-à-vis 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.
Facultative reinsurance Reinsurance of selected individual risks. The primary insurer can offer an individual risk in reinsurance, which the reinsurer for its part can either accept or decline (see obligatory reinsurance).
Provision for future policy benefits Technical provision calculated using actuarial methods to cover future benefits to which policyholders are entitled, especially in life, health and personal accident insurance. It amounts to the balance of the present value of future obligations less the present value of future premiums.
Retrocessionaire Company that reinsures reinsurance business assumed by other insurance companies. Retrocession enables the reinsurer to lay off part of its risk to other insurance companies.
Risk exposure Extent of a risk in terms of its potential deviation from the expected value under certain probability assumptions. In connection with accounting, the term is also used to quantify the potential loss resulting for a company from certain assets.
Tail dependencies The result of risk drivers interacting in exceptional situations, i.e. different lines of business, geographies and risk types being affected by extreme events at the same time. Compared with a situation where the risks are assumed to be independent, this results in a lesser diversification effect, which is reflected in a higher capital requirement.
Unearned premium Portion of premium income in the financial year that is attribut- able to periods after the balance sheet date. It is accounted for in the item “unearned premium“ within the technical provisions on the liabilities side of the balance sheet.
Temple Insurance Company Munich Re Centre 390 Bay Street, 21st Floor Toronto, Ontario M5H 2Y2 www.templeinsurance.ca
Switzerland New Reinsurance Company Ltd. Zollikerstrasse 226 8008 Zürich Tel.: +41 58 226 65 00 www.newre.com
South Africa Munich Reinsurance Company of Africa Limited Munich Re Centre 47 Empire Road, Parktown Johannesburg 2193
ERGO Versicherungsgruppe AG Victoriaplatz 2 40198 Düsseldorf Germany Tel.: 0800 37 46-0 00 Tel.: +49 2 11 4 77-71 00 (from outside Germany) www.ergo.com
ERGO Lebensversicherung AG Überseering 45 22297 Hamburg Tel.: 0800 37 46-2 22 Tel.: +49 2 11 4 77-71 00 (from outside Germany) www.ergo.de
© 2016 Münchener Rückversicherungs-Gesellschaft Königinstrasse 107 80802 München Germany www.munichre.com www.twitter.com/munichre www.munichre.com/facebook
Editorial deadline: 2 March 2016 Online publication date: 16 March 2016 Print publication date: 4 April 2016
The diagram provides a general overview of our Group and makes no claim to completeness. For further details, please see the list of shareholdings on page 291 ff.
Ceded –1,910 –763 –419 –406 –323 3. Expenses for claims and benefits Gross –39,756 –9,555 –9,881 –9,940 –10,380
Thereof: Attributable to Munich Reinsurance Company equity holders 3,107 728 520 1,070 790 Attributable to non-controlling interests 15 3 5 6 0
Balance sheet Investments (incl. insurance-related investments) €m 224,256 228,357 230,269 240,526
Munich Reinsurance Company’s market capitalisation €bn 30.8 27.8 26.5 34.7 Other Combined ratio