Approximately 35% of the corporate debt securities are covered bonds or government-guaranteed bank issues. 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 €8,760m (8,518m). Of the securities shown, €2,560m (2,389m) had been loaned to third parties. Loaned securities are not derecognised, as the main resultant risks and rewards remain with Munich Re. Of the €17,293m (14,370m) in unrealised gains and losses, €7.874m (6,223m) 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.
Losses on disposal –940 –322 Fixed-interest securities –272 –221 Non-fixed-interest securities –668 –100
Carrying amounts Unrealised gains/losses Amortised cost €m 31.12.2020 Prev. year 31.12.2020 Prev. year 31.12.2020 Prev. year Fixed-interest securities Government bonds
Germany 7,360 6,620 1,257 1,081 6,103 5,539 Rest of EU 28,424 30,013 4,566 3,469 23,858 26,544 USA 18,582 17,524 1,758 910 16,823 16,614 Other 25,529 21,366 1,741 1,170 23,787 20,196
Corporate debt securities 49,103 47,990 3,474 2,873 45,629 45,117 Other 9,407 8,607 1,630 1,236 7,777 7,371 138,404 132,120 14,426 10,738 123,978 121,381 Non-fixed-interest securities Shares 10,485 13,287 2,121 2,837 8,363 10,450 Investment funds
Equity funds 660 453 79 51 581 402 Bond funds 1,677 1,818 69 55 1,608 1,763 Real estate funds 334 328 54 62 280 266 8 Other securities at fair value through profit or loss and insurance-related investments
Rating of fixed-interest securities according to fair values €m 31.12.2020 Prev. year AAA 7 2 AA 39 49 A 67 49 BBB 42 29 Lower 17 2 No rating 154 235 Total 326 367
The insurance-related investments include investments for unit-linked life insurance contracts of €7,544m (7,726m). Other insurance-related investments amounted to €3,489m (1,437m), of which €2,870m (1,236m) were accounted for at fair value through profit or loss and €225m (0m) were accounted for at fair value outside profit or loss.
As at 31 December 2020, Munich Re held collateral for derivatives in the form of cash collateral and securities with a rating of at least AA. The fair value of the securities amounts to €57m (46m), and the cash collateral approximately €749m (563m). The collateral received is subject to a title transfer collateral arrangement, but is not re-sold or pledged.
Disclosure of derivatives by balance sheet item €m 31.12.2020 Prev. year
Although the derivatives used by Munich Re essentially serve to hedge against risks, only an amount of €19m (27m) meets the requirements of IAS 39 for hedge accounting.
Fair value hedges In the case of fair value hedges, the change in the fair value of the hedging instrument and the change in the fair value of the hedged instrument are generally recognised in profit or loss under the item “investment result”. Munich Re regularly uses hedging relationships in the form of fair value hedges to selectively and efficiently mitigate interest-rate and other market risks. The main types of transaction employed for hedging are swaps and forwards. No fair value hedges existed at year-end.
Periods to maturity and amount of the hedged cash flows at the end of the reporting period €m < 1 year 1–2 years 2–3 years 3–4 years 4–5 years > 5 years 31.12.2020 Prev. year Notional amounts of hedged transactions 9 Deposits retained on assumed reinsurance
Other investments comprise deposits with banks totalling €3,441m (3,776m), investments in renewable energies amounting to €605m (646m), physical gold of €409m (409m), and forestry investments of €345m (313m). Deposits with banks include receivables of €0m (156m) from borrowers under repurchase agreements that have been booked by us as the lender.
Development of investments in renewable energies €m 2020 Prev. year Gross carrying amount at 31 Dec. previous year
Development of forestry investments €m 2020 Prev. year Carrying amount at 31 Dec. previous year
Ceded share of technical provisions €m 31.12.2020 Prev. year Unearned premiums 392 443 Provision for future policy benefits 2,064 1,525 Provision for outstanding claims 2,797 2,902 Other technical provisions 67 67 Total 5,321 4,937
Details of the ceded share of technical provisions are shown under (20) Unearned premiums, (21) Provisions for future policy benefits, (22) Provisions for outstanding claims, (23) Other technical provisions, and in the Credit risks section of the risk report in the combined management report.
Breakdown of other receivables €m 31.12.2020 Prev. year Amounts receivable on primary insurance business
Assets pledged as security and other restrictions on title amount to €87m (82m).
The miscellaneous receivables contain cash collateral of €1,584m (679m), mainly for derivative transactions.
As at 31 December 2020, our accounts receivable on ceded reinsurance business were split between the following ratings (based on those of Standard & Poor’s): Rating of accounts receivable €m 31.12.2020 Prev. year AAA 34 34 AA 59 61 A 74 23 BBB and lower 6 9 No external rating 54 42
Development of gross deferred acquisition costs €m 31.12.2020 Prev. year Status at 31 Dec. previous year 9,664 9,466 Currency translation differences –279 132 Change in consolidated group/Other –5 –11 New deferred acquisition costs 4,417 4,047 Changes
The impairment losses resulted from changes in the assumptions underlying the calculations which required an adjustment in the measurement. They were chiefly attributable to the ERGO Life and Health Germany segment, and were driven by changes in interest-rate assumptions.
Total before netting 9,029 11,044 8,264 9,856 Netting amount –8,751 –8,751 –7,948 –7,948 Total 278 2,293 316 1,908
No deferred taxes were posted for temporary differences of €136m (125m) in connection with investments in subsidiaries and associates, also referred to as outside basis differences. Likewise, no deferred tax assets were recognised on deductible temporary differences of €28m (214m) due to lack of recoverability.
For which deferred tax assets are not recognised Total Corporation tax loss carry-forwards
Expiring in up to three years 63 19 82 11 19 30 Expiring in over three years and up to ten years 87 71 158 176 139 315 Expiring in over ten years 152 33 185 186 6 192 Not expiring 1,010 2,350 3,360 871 2,347 3,218 1,312 2,473 3,785 1,244 2,511 3,755 Trade tax loss carry-forwards
Expiring in up to three years 0 0 0 0 0 0 Expiring in over three years and up to ten years 0 0 0 0 0 0 Expiring in over ten years 0 0 0 0 0 0 Not expiring 0 0 0 0 0 0
Development of property, plant and equipment €m Owner-occupied property Operating and office equipment Total 2020 Prev. year 2020 Prev. year 2020 Prev. year Gross carrying amount at 31 Dec. previous year 3,361 3,348 1,012 962 4,373 4,310 Accumulated amortisation and impairment losses at 31 Dec. previous year
Carrying amount at 31 Dec. previous year 2,127 2,178 234 219 2,361 2,397 Currency translation differences –18 6 –6 2 –23 8 Additions
Disposals Loss of control 0 0 0 0 0 0 Other –1 –18 –5 –9 –6 –27
Depreciation –67 –65 –81 –82 –148 –147 Impairment losses –3 –1 0 0 –3 –1
Reclassification –22 5 –3 0 –25 4 Carrying amount at 31 Dec. financial year 2,045 2,127 213 234 2,258 2,361 Accumulated amortisation and impairment losses at 31 Dec. financial year
Gross carrying amount at 31 Dec. financial year 3,328 3,361 991 1,012 4,318 4,373
The fair value of the land and buildings amounts to €3,505m (3,495m). This is allocated to Level 3 of the fair value hierarchy (see Assets – B Investments – Determining fair values). The methodology for determining the fair values is described in (3) Land and buildings, including buildings on third-party land.
As at 31 December 2020, rights of use from leases amount to €395m (375m). These mainly comprise rights to use land and buildings of €373m (352m). Additions to rights of use in the financial year came to €136m (116m). The depreciation expense came to €88m (82m) in the financial year.
Four investment properties of ERGO Versicherung Aktiengesellschaft, Düsseldorf, and one investment property of ERGO Lebensversicherung Aktiengesellschaft, Hamburg, were classified as held for sale at the end of the reporting period. No value adjustments were required as a result of the classification. The properties are expected to be sold in the first half of 2021.
The subsidiary, Closed Joint Stock Company ERGO Insurance Company, Minsk, was sold in Q2 2020. Further information on gains and losses from losing control can be found in the sections Consolidation and Consolidated group.
Since 30 June 2020, the subsidiary ERGO ASIGURARI DE VIATA S.A., Bucharest, has no longer been classified as held for sale. The subsidiaries were reclassified because the requisite conditions were no longer met, which did not result in any material value adjustments.
The other reserves of Group equity include an amount of €4.0m for disposal groups mainly attributable to unrealised gains on fixed-interest securities, and €0.9m in unrealised gains on the currency translation reserve.
Other securities available for sale 87 108 Other investments 0 8 Other assets of the disposal group 72 207 Total assets 215 400 Liabilities Gross technical provisions 105 159 Other liabilities of the disposal group 18 20 Total liabilities 123 179
In the financial year, Munich Re bought back 1,361,667 shares as part of the 2019/2020 share buy-back programme that ended on 9 March 2020.
Composition of the authorised capital €m 31.12.2020 Authorised Capital 2017 (until 25 April 2022) 280 Total 280
Tax effects in the income and expenses recognised directly in equity 2020 Prev. year €m Before tax Tax After tax Before tax Tax After tax Currency translation –1,392 0 –1,392 422 0 422 Unrealised gains and losses on investments 2,261 –607 1,654 4,686 –1,025 3,661 Change resulting from equity method measurement –91 0 –91 –16 0 –15 Change resulting from cash flow hedges –2 0 –2 2 –1 1 Remeasurements of defined benefit plans –289 85 –204 –592 181 –411 Other changes –1 0 –1 4 0 4 Income and expenses recognised directly in equity 485 –522 –36 4,506 –845 3,661
Information on capital management is provided in the combined management report under Financial position – Capital position.
All financial liabilities that are recognised at fair value, and such financial instruments that are not recognised at fair value but for which a fair value is disclosed in the Notes, are allocated to one of the fair value hierarchy levels of IFRS 13.
For information on the valuation models used for measuring derivatives, please see the table and explanations under (4) Hierarchy for the fair value measurement of assets. The measurement 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, we use the market prices provided by price quoters for the corresponding assets. The fair values of our amounts due to banks are determined using the present-value method, in part exclusively using observable market inputs, and partly also taking into account non-observable inputs.
Allocation of financial liabilities to levels of the fair value hierarchy €m Level 1 Level 2 Level 3 Total Liabilities measured at fair value Other liabilities
→ Prev. year €m Level 1 Level 2 Level 3 Total Liabilities measured at fair value Other liabilities
Derivatives 55 939 731 1,726 Total 55 939 731 1,726 Liabilities not measured at fair value Subordinated liabilities 4,288 59 2 4,348 Bonds and notes issued 384 0 0 384 Amounts due to banks 0 265 302 567 Other liabilities from financial transactions 0 1,814 16 1,830 Total 4,671 2,138 320 7,129
The following table presents the reconciliation from the opening balances to the closing balances for these insurancelinked derivatives: Reconciliation for liabilities allocated to Level 3
Acquisitions 859 284 Disposals –203 –66 Transfer to Level 3 0 0 Transfer out of Level 3 0 0 Change in the fair value of derivatives –43 6 Carrying amount at 31 Dec. financial year
Gains (losses) recognised in the consolidated income statement are shown in the insurance-related investment result, while gains (losses) recognised in equity are shown in the statement of recognised income and expense in the item Unrealised gains and losses on investments, Gains (losses) recognised in equity. Gains (losses) recognised in the consolidated income statement that are attributable to liabilities recognised at the end of the financial year are shown in the statement of recognised income and expense
Munich Re Group Annual Report 2020 under Unrealised gains and losses on investments, Recognised in the consolidated income statement.
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 the financial year, these amounted to €190m (171m). Thereafter, the liquidity outflows will vary, depending on the respective interest-rate level. For the registered bonds of ERGO Versicherung Aktiengesellschaft, and for the HSB Group bonds, the annual outflow is variable, depending on the respective interest-rate levels.
Possible bond maturities are determined by the terms of the bond.
ERGO Versicherung Aktiengesellschaft, Vienna, secondary market yield on federal government bonds (Austria) +70 BP, €6m, Registered bonds 2001/perpetual
– – – – 7 7 HSB Group Inc., Delaware, LIBOR +91 BP, US$ 67m, Bonds 1997/2027 20 Unearned premiums
Development of gross unearned premiums €m 31.12.2020 Prev. year Status at 31 Dec. previous year 10,518 9,790 Currency translation effects –655 195 Changes in consolidated group/Other –1 –51 Gross premiums written 54,890 51,457 Earned premiums –53,788 –50,873 Status at 31 Dec. financial year 10,964 10,518
Provision for future policy benefits €m 31.12.2020 Prev. year Gross 112,928 112,302 Ceded share –2,064 –1,525 Net 110,864 110,777
Term life insurance 2,257 3,153 Other life insurance 21,247 22,810 Annuity insurance 36,658 34,826 Disability insurance 1,330 1,300 Contracts with combination of more than one risk
Health 38,366 36,954 Property-casualty 599 652 Reinsurance 0 26 ERGO 599 627 Total 112,928 112,302
Further information on the underwriting risks can be found in the risk report in the combined management report, in the section entitled Significant risks.
Scheduled changes in the provision for future policy benefits contain the changes deriving from prospective calculation as a result of premium payments, claims and the unwinding of discount in the 2020 financial year.
Gross provision by type €m 31.12.2020 Prev. year Annuity claims provision 8,107 7,914 Case reserve 25,938 26,102 IBNR reserve 38,431 36,859 Total 72,475 70,875
Reinsurance ERGO % 31.12.2020 Prev. year 31.12.2020 Prev. year Up to one year 34.1 34.9 30.7 30.7 Over one year and up to five years 45.8 46.0 37.7 37.5 Over five years and up to ten years 12.7 11.9 15.4 15.7 Over ten years and up to fifteen years 3.4 3.3 5.9 5.7 Over fifteen years 4.0 3.9 10.3 10.4
The expected timing of payments from the provisions for outstanding claims may involve considerable uncertainty.
For the year under review 22,561 –768 21,794 19,530 –718 18,812 For previous years –1,361 34 –1,327 –1,780 144 –1,636
For the year under review –5,207 188 –5,019 –4,922 164 –4,758 For previous years –11,969 426 –11,543 –9,813 478 –9,335
In the financial year, most sectors experienced relatively low claims-reporting activity from previous years, which had a positive influence on the ultimate-loss projection.
€m Accident year Calendar year ≤ 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total 2010 12,291 2011 7,670 5,479 2012 3,921 4,009 5,438 2013 2,138 1,918 2,813 5,332 2014 2,367 1,062 1,350 3,088 5,057 2015 1,729 528 434 1,180 2,739 4,757 2016 1,813 423 333 648 1,409 2,586 5,007 2017 593 119 185 436 636 1,272 2,501 4,712 2018 771 148 203 269 358 744 1,586 4,018 5,269 2019 799 94 130 161 226 387 775 1,827 4,424 4,565 2020 594 108 164 165 291 464 464 1,323 2,362 5,104 4,940 15,980
Date ≤ 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total 31 Dec. 2010 39,724 31 Dec. 2011 31,412 11,368 31 Dec. 2012 26,292 7,462 8,406 31 Dec. 2013 23,756 5,282 5,353 8,407 31 Dec. 2014 20,502 3,837 3,822 5,516 8,589 31 Dec. 2015 17,688 3,181 3,193 4,305 5,877 8,170 31 Dec. 2016 15,328 2,307 2,826 3,382 4,462 5,634 8,784 31 Dec. 2017 14,441 2,167 2,541 2,877 3,621 4,165 6,134 11,984 31 Dec. 2018 12,836 1,742 2,091 2,324 3,012 3,213 4,595 7,980 11,710 31 Dec. 2019 10,881 1,389 1,741 2,015 2,605 2,683 3,646 6,041 8,107 13,372 31 Dec. 2020 9,578 1,131 1,390 1,494 2,106 2,108 2,841 4,643 6,100 8,752 16,082 56,227
Provision for deferred premium refunds 12,376 10,957 Thereof resulting from unrealised gains and losses on investments (recognised directly in equity)
6,998 6,168 Thereof resulting from other remeasurements (recognised in profit or loss)
Of the provision for premium refunds based on national regulations, €79m (79m) is apportionable to propertycasualty insurance. The provision for deferred premium refunds is established solely for life and health insurance.
The ceded share of Other technical provisions amounts to €67m (67m), of which €1m (3m) is apportionable to the ceded share of the provision for premium refunds based on national regulations.
Development of provision for premium refunds based on national regulations €m 2020 Prev. year Status at 31 Dec. previous year 9,312 8,549 Changes in consolidated group 0 175 Allocation/Withdrawal –1 588 Status at 31 Dec. financial year 9,311 9,312
These provisions are measured retrospectively. The withdrawal for underwriting risks from the premiums and provision for future policy benefits is made on the basis of prudent assumptions regarding expected mortality and morbidity. Here, as with the provision for future policy benefits for non-unit-linked life insurance, we base the underlying calculation on best estimates, with appropriate provisions for adverse deviation.
Development of the present value of the defined benefit obligations €m 2020 Prev. year Status at 31 Dec. previous year 7,067 5,921 Currency translation differences –109 47 Changes in consolidated group –1 –1 Current service cost 162 124 Past service cost 5 38 Gains and losses from plan settlements 0 –6 Contributions by plan participants 3 3 Interest expense 79 127 Payments –165 –163 Payments from plan settlements –3 –11 Transfer of obligations –15 –2 Actuarial gains/losses: Change in demographic assumptions
Other –1 –1 Status at 31 Dec. financial year 7,742 7,067
The present value of the obligations under defined benefit plans breaks down as follows: Breakdown of the present value of defined benefit obligations
% 2020 Prev. year Discount rate 0.6 1.2 Future increases in entitlement/salary 1.8 1.8 Future pension increases 1.3 1.5 Medical cost trend rate 3.3 3.5
Munich Re uses generally recognised biometric actuarial assumptions, adjusted as a rule to take account of companyspecific circumstances. The average remaining life expectancy of a 65-year-old plan participant is 23.7 years for women and 22.6 years for men.
For the 2021 financial year, capital transfers of €83m (85m) to plan assets are expected.
Development of the reimbursement rights for defined benefit plans €m 2020 Prev. year Balance at 31 Dec. previous year 357 292 Changes in consolidated group 0 0 Interest income 3 5 Return excluding interest income 34 47 Contributions by the employer 19 19 Contributions by plan participants 0 0 Payments –8 –8 Transfer of assets 0 0 Other 0 –1 Balance at 31 Dec. financial year 404 357
Plan assets –4,067 –3,746 Assets from the defined benefit plan 430 412 Effect of asset ceiling 15 17 Other 0 –2
The expenses are distributed between the functional areas and shown mainly under Operating expenses and Expenses for claims and benefits in the consolidated income statement.
An increase or decrease in the following essential actuarial assumptions has an impact on the present value of defined benefit obligations: Sensitivity analysis €m 31.12.2020 Prev. year Increase in actuarial discount rate by 50 BP
Increase in pension trends by 10 BP 83 72 Decrease in pension trends by 10 BP –80 –70 Increase in medical cost trend rate by 100 BP
Increase in mortality rate by 10% –253 –217 Decrease in mortality rate by 10% 273 233
Munich Re Group Annual Report 2020 26 Bonds and notes issued
Breakdown of bonds and notes issued €m A.M. Best Fitch Moody’s S&P 31.12.2020 Prev. year Munich Re America Corporation, Wilmington, 7.45%, US$ 334m, Senior Notes 1996/2026 a A+ A2 A− 272 297 Total 272 297
Outflows of liquidity occur annually in the amount of the interest payments until the notes mature. These totalled US$ 25m (25m) in the financial year. The fair value at the reporting date amounts to €374m (384m).
Breakdown of other liabilities €m 31.12.2020 Prev. year Amounts payable on primary insurance business
Amounts due to banks 1,022 557 Lease liabilities 402 374 Miscellaneous liabilities 15,505 11,430 Total 24,895 19,643
Of the liabilities resulting from reinsurance treaties with non-significant risk transfer, €762m (123m) are shown on a net basis in the balance sheet; a total of €154m (98m) was recognised for derivatives with a negative market value.
The following table provides information on the contractual future cash outflows of the items shown under Other liabilities. The amounts payable on primary insurance business are directly linked to the underlying insurance business, and therefore not taken into account here (see (39) Disclosures on risks from life and health insurance business).
The table shows the cash and non-cash changes in liabilities arising from financing activities between the beginning of the financial year and the balance sheet date. The cash changes are included in the consolidated cash flow statement as item III. Cash flows from financing activities.
Balance at 31 December previous year 557 674 4,136 3,980 374 341 5,067 4,995 Cash changes 465 –118 1,042 0 –82 –86 1,424 –204 Non-cash changes
Currency changes –1 2 –57 36 –13 –3 –71 35 Changes in the fair value 0 0 0 0 0 0 0 0 Changes in consolidated group/other 0 0 199 120 124 122 323 242
Premiums €m 2020 Prev. year Total gross premiums 55,769 52,687 Gross premiums written 54,890 51,457 Change in gross unearned premiums –1,102 –584 Gross earned premiums 53,788 50,873
The total gross premiums include not only the gross premiums written but also savings premiums from unitlinked life insurance and capitalisation products.
In the ERGO Life and Health Germany segment, the income from technical interest for life primary insurance companies comprises the gains and losses from unitlinked life insurance, plus the guaranteed interest rate and profit sharing on the basis of the non-technical result sources. For health primary insurance companies, the income from technical interest corresponds to the allocation of interest to the ageing reserve (actuarial interest) and the allocation to the provision for premium refunds. The latter is based on the allocation of interest to the provision for non-performance-related premium refunds, on the investment result exceeding the actuarial interest rate, and on policyholders’ participation in the other non-technical result components.
In the ERGO International segment, the income from technical interest for life primary insurance companies corresponds to the risk-free interest on the provision for future policy benefits at the relevant national interest rate, the gains and losses from unit-linked life insurance, and profit sharing where there are types of contract providing for this. The income from technical interest for propertycasualty primary insurance companies is calculated analogously to the procedure in the property-casualty reinsurance segment.
Expenses for claims and benefits €m 2020 Prev. year Gross Claims and benefits paid –37,319 –34,843 Change in technical provisions
Ceded share Claims and benefits paid 998 1,058 Change in technical provisions
Other technical result –34 –19 Expenses for claims and benefits – Ceded share
Net Claims and benefits paid –36,321 –33,785 Change in technical provisions
Provision for future policy benefits 169 –342 Provision for outstanding claims –5,081 –3,539 Provision for premium refunds –1,681 –1,875
Other technical result –162 –143 Net expenses for claims and benefits –43,077 –39,685
The change in the provision for future policy benefits (net) contains €41m (1,044m) in unrealised gains/losses from unit-linked life insurance. The change in the provision for outstanding claims includes an increase in the gross IBNR provisions of €3,665m (2,980m), in the gross case reserve of €1,080m (51m), and in the gross annuity claims provision of €430m (416m). Expenses for claims and benefits include expenses for policyholders’ bonuses. Of this, €735m (1,231m) is for the allocation to the provision for premium refunds on the basis of national regulations, €590m (10m) for the change in the provision for deferred premium refunds recognised in the income statement, and €62m (293m) for direct crediting. The other technical result for life primary insurance mainly includes interest on policyholders’ accumulated credit.
Expenses for profit commission in reinsurance are shown under Operating expenses, not under Expenses for claims and benefits.
Gross operating expenses decreased to €13,379m (13,616m); net operating expenses to €12,815m (13,056m). The combined ratio, which is calculated as the percentage ratio of the sum of net expenses for claims and benefits plus net operating expenses to net earned premiums, came to 105.6% (100.2%) in the property-casualty reinsurance segment, 92.4% (92.3%) in the ERGO Property-casualty Germany segment, and 92.7% (94.3%) in the ERGO International segment.
€m 2020 Prev. year Land and buildings, including buildings on third-party land
Held for trading Fixed-interest 0 0 Non-fixed-interest 7 15 Derivatives 172 –595
Impairment losses on non-derivative investments €m 2020 Prev. year Land and buildings, including buildings on third-party land
Investments in affiliated companies –34 –3 Investments in associates and joint ventures
Loans –1 –21 Other securities available for sale1 –1,788 –345 Other securities at fair value through profit or loss
Other investments –64 –41 Total –2,169 –575 1 See (7) Other securities available for sale.
Insurance-related investment result €m 2020 Prev. year Result from investments for unit-linked life insurance contracts
Other operating result €m 2020 Prev. year Other operating income 1,168 1,178
Other operating expenses –2,016 –2,290 Thereof: Interest and similar charges –128 –156 Write-downs of other operating assets –53 –116
Net finance costs by financing instrument €m 2020 Prev. year Subordinated bonds of Munich Reinsurance Company, Munich
Main components of tax expenses/income €m 2020 Prev. year Current tax for financial year –707 –673 Current tax for other periods 373 114 Deferred tax resulting from the occurrence or reversal of temporary differences 87 –3 Deferred tax resulting from the occurrence or utilisation of loss carry-forwards
Reconciliation to effective tax expenses/income €m 2020 Prev. year Result before taxes on income (after “other tax”)
Since risk reporting concerns not only accounting but also the activities of integrated risk management (IRM) at Munich Re, information on risks is provided in the risk report, in the disclosures on risks from insurance contracts and financial instruments, and in the disclosures on technical provisions and financial instruments in the Notes to the financial statements. Where necessary, we refer to the relevant information in the risk report and information on the respective items.
Significant risks from life and health insurance business comprise underwriting risks, market risks and liquidity risks. These risks are described in detail in the risk report in the combined management report.
Of particular importance for the underwriting risks are biometric risks and lapse risks. Biometric risks mainly relate to mortality, disability, morbidity and longevity. The biometric assumptions we use for measuring insurance contracts in our portfolios are regularly reviewed on the basis of updated portfolio information. Especially in primary insurance, this includes considering countryspecific reviews by supervisory authorities. We also take account of market standards when checking the adequacy of biometric actuarial assumptions and the trend assumptions included in them. In reinsurance, a lapse risk also derives from the indirect transfer of lapse risks from cedants. As a rule, both this risk and the financial risk from extraordinary termination of reinsurance contracts are largely ruled out through appropriate contract design. The lapse risk in primary insurance is allowed for by means of appropriate liquidity planning and adequate calculation of the surrender value.
At ERGO, the discount rates relevant for the portfolio in calculating the provision for future policy benefits and the provision for outstanding claims are as follows: Discount rates used for provisions – ERGO (gross)
Besides this, in German health primary insurance, discount rates of 2–3.5% are applied for calculating the provision for premium loadings and the provision for future premium reductions, which are both part of the provision for premium refunds and total €5,819m (5,729m). These discount rates can be altered in the event of a premium adjustment.
The lump-sum option in the case of deferred annuity policies gives policyholders the option of having their annuity paid out in a single payment at a fixed date. As a result, there is a potential risk of an unexpectedly large number of policyholders exercising their option at an interest-rate level markedly higher than the discount rate used for the annuity calculation. But there is no direct interest-rate sensitivity or market sensitivity, since the exercise of the option by the policyholder is determined to a crucial extent by individual factors and relates to the insurance components.
For Munich Re, there could be a liquidity risk if the cash outflow for insurance claims payments and the costs related to the business were to exceed the cash inflow from premiums and investments. For our mainly long-term business, we therefore analyse the expected future balance from cash inflows due to premium payments and outflows for payment of insurance claims and benefits plus costs.
Expected future technical cash flow (gross)1 €m 31.12.2020 Prev. year Up to one year –1,048 –2,597 Over one year and up to five years –9,039 –9,310 Over five years and up to ten years –15,270 –15,835 Over ten years and up to 20 years –32,360 –35,656 Over 20 years –91,952 –97,453 1 Premiums less benefits guaranteed at the balance sheet date and costs (excluding unit-linked products).
Of particular importance for property-casualty insurance contracts is the estimation risk with regard to the amount of the expected claims expenditure for future claims from current insurance contracts (premium risk) and for claims already incurred (reserve risk). There is an interest-rate risk for parts of the portfolio. Liquidity risk also has to be taken into account.
Thereof losses from natural catastrophes –906 –2,053 –1,256 –3,678 –929 Thereof other accumulation losses –3,784 –1,071 –896 –636 –613
Provisions for asbestos and environmental claims 31.12.2020 Prev. year €m1 Gross Net Gross Net Asbestos 1,098 941 1,119 986 Environ- mental 1 The previous year’s figures have been adjusted to eliminate currency translation effects.
The development of our claims reserves and the corresponding run-off results are shown under (22) Provision for outstanding claims.
Economically, an interest-rate risk derives from the need to earn a return on the investments covering the provision that is commensurate with the discount rate used in measuring the provision. In balance sheet terms, the interest-rate risk affects only those parts of the technical provisions that are discounted and for which an inflow of investment income from deposits retained is not secured from cedants in at least the same amount. For discounting technical provisions, we use the interest rates shown in the table below.
Reinsurance ERGO Total €m 31.12.2020 Prev. year 31.12.2020 Prev. year 31.12.2020 Prev. year Discount rate ≤ 2.0% 44 62 617 432 662 494 2.0% < discount rate ≤ 3.0% 163 176 264 381 427 557 3.0% < discount rate ≤ 4.0% 47 52 372 369 419 421 4.0% < discount rate ≤ 5.0% 730 799 0 0 730 799 Discount rate > 5.0% 0 0 0 0 0 0 Total 985 1,090 1,253 1,182 2,237 2,271
Its registered seat is Munich, Germany (Commercial register number: HRB 42039, Registrar of Companies: Local Court [Amtsgericht] in Munich).
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 (25) Other provisions).
For transactions of related parties with Munich Reinsurance Company shares, please refer to (17) Equity.
The following personnel expenses are included in the operating expenses, in the expenses for claims and benefits (for claims adjustment) and in the investment result: Breakdown of personnel expenses €m 2020 Prev. year Wages and salaries –2,740 –2,901 Social security contributions and employee assistance
Expenses for employees’ pensions –260 –270 Total –3,513 –3,674 44 Incentive plans
The mid-term incentive plan at the end of the reporting period is valued indirectly at the fair value of the liabilities. The fair value takes account of the value-based performance target and 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.
In the 2020 financial year, liabilities from the mid-term incentive plans decreased by €17m (+38m). The beneficiaries’ entitlements amounted to €33m (71m) at the end of the reporting period.
Plan 2019 Plan commencement 1.1.2017 1.1.2018 1.1.2019 Plan end 31.12.2019 31.12.2020 31.12.2021 Fair value 2020 for one right €0.00 €709.92 €743.65 Number of rights (for 100% achievement of objectives) on 1 January 2017 0 0 0
Additions 31,268 0 0 Number of rights (for 100% achievement of objectives) on 31 December 2017 31,268 0 0 Number of rights (for 100% achievement of objectives) on 1 January 2018 31,268 0 0
Number of rights (for 100% achievement of objectives) on 31 December 2019 31,241 27,768 26,651 Number of rights (for 100% achievement of objectives) on 1 January 2020 31,241 27,768 26,651
Number of rights (for 100% achievement of objectives) on 31 December 2020 0 27,631 26,157
Payments to retired members of the Board of Management or their surviving dependants totalled €9.2m (12.4m).
Former members of the Board of Management did not accrue any further pension entitlements with an impact on personnel expenses. After deducting plan assets for existing pension commitments held by a separate entity (under a contractual trust agreement), there were no surplus pension provisions or provisions for comparable benefits for retired members of the Board of Management or their surviving dependants.
The number of staff at year-end totalled 18,636 (18,790) in Germany and 21,006 (20,872) in other countries.
Breakdown of auditor’s fees €k 2020 Audit services –10,029 Other assurance and appraisal services –118 Tax consultancy services 0 Other services –2,264 Total –12,411
The auditor’s fees mainly relate to the audits of the consolidated financial statements and the annual financial statements of Munich Reinsurance Company; to various audits of our subsidiaries’ annual financial statements, including statutory extensions of the audit assignment (in particular, the audit of the solvency balance sheet); and to audit services agreed with the Audit Committee. In addition, the following were carried out: reviews of interim financial statements and project-related IT audits, and a contractual review of a service provider’s internal control system.
Other assurance and appraisal services concern statutory, contractual or voluntary audit and consulting services, including the audit of the non-financial statement and the issuance of a comfort letter in 2020.
ERGO companies have assumed unlimited liability for the sale of insurance products by insurance intermediaries acting exclusively on their behalf. In this respect, there is a risk of a claim being made by customers. In case of a claim, there is generally a possibility of recourse against the insurance intermediary or the latter’s fidelity guarantee insurance carrier.
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 €164m (166m) 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.
Individual national regulations require that assets held to cover insurance liabilities be managed separately. Generally there are special supervisory regulations governing access to these assets and their use.
Short-term leases with terms shorter than 12 months (and no purchase option) and leases for which the underlying asset is of low value are not recognised. Instead they are recognised through profit or loss as an expense of €2m (10m).
The number of outstanding shares decreased by 1,361,667 (4,336,780) over the course of the 2020 financial year, due to the share buy-back programme.
Munich Reinsurance Company’s net retained profits for 2020 according to its financial statements prepared on the basis of German GAAP accounting amounted to €1,631,560,651.72. 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 €9.80 per dividend-bearing share, with the amount of €258,591,127.92 being appropriated to other revenue reserves.
List of shareholdings as at 31 December 2020 pursuant to Section 313(2) of the German Commercial Code (HGB)
Consolidated subsidiaries 13th & F Associates Limited Partnership, Washington, D.C. 100.0000 1440 New York Ave. Associates LP, Dover, Delaware 100.0000 330 Madison Associates LLC, Dover, Delaware 100.0000 330 Madison Holdings LLC, Dover, Delaware 100.0000 40 Courcelles SAS, Paris 100.0000 Adelfa Servicios a Instalaciones Fotovoltaicas S.L., Santa Cruz de Tenerife 100.0000 AEVG 2004 GmbH i. L., Frankfurt am Main4 0.0000 AGRA Gesellschaft für landwirtschaftliche Entwicklung und Beteiligung mbH, Berlin 100.0000 ALICE GmbH, Düsseldorf 100.0000 ALLYSCA Assistance GmbH, Munich 100.0000 American Alternative Insurance Corporation, Wilmington, Delaware 100.0000 American Digital Title Insurance Company, Brighton, Colorado 100.0000 American Family Home Insurance Company, Jacksonville, Florida 100.0000 American Modern Home Insurance Company, Amelia, Ohio 100.0000 American Modern Home Service Company, Amelia, Ohio 100.0000 American Modern Insurance Company of Florida Inc., Jacksonville, Florida 100.0000 American Modern Insurance Group Inc., Amelia, Ohio 100.0000 American Modern Lloyds Insurance Company, Dallas, Texas 100.0000 American Modern Property & Casualty Insurance Company, Amelia, Ohio 100.0000 American Modern Select Insurance Company, Amelia, Ohio 100.0000 American Southern Home Insurance Company, Jacksonville, Florida 100.0000 American Western Home Insurance Company, Oklahoma City, Oklahoma 100.0000 Atena Uslugi Informatyczne i Finansowe S.A., Sopot 100.0000 ATU Landbau GmbH & Co. KG, Munich 94.9000 Bagmoor Holdings Limited, London 100.0000 Bagmoor Wind Limited, London 100.0000 Bell & Clements (Bermuda) Ltd., Hamilton, Bermuda 100.0000 Bell & Clements (London) Ltd., London 100.0000 Bell & Clements (USA) Inc., Wilmington, Delaware 100.0000 Bell & Clements Inc., Reston, Virginia 100.0000 Bell & Clements Ltd., London 100.0000 Bridgeway Insurance Company, Dover, Delaware 100.0000 Cannock B.V., Leidschendam 100.0000 Cannock Chase Holding B.V., Amsterdam 100.0000 Cannock Connect Center B.V., Brouwershaven 100.0000
Cannock Outsourcing B.V., The Hague 100.0000 Cannock PurChase B.V., The Hague 100.0000 Cannock-EDR Holding B.V., Amsterdam 100.0000 Ceres Demetra GmbH, Munich 100.0000 Chinook Silva LLC, Wilmington, Delaware 100.0000 Comino Beteiligungen GmbH, Grünwald 100.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2018-17, Wilmington, Delaware 95.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2018-24, Wilmington, Delaware 95.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2018-31, Wilmington, Delaware 95.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2019-05, Wilmington, Delaware 95.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2019-10, Wilmington, Delaware 95.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2019-40, Wilmington, Delaware 95.0000 Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I Series 2019-47, Wilmington, Delaware 95.0000 Corion Pty Ltd, Sydney 100.0000 Cornwall Power (Polmaugan) Limited, London 100.0000 Countryside Renewables (Forest Heath) Limited, London 100.0000 D.A.S. Defensa del Automovilista y de Siniestros – Internacional S.A. de Seguros y Reaseguros, Barcelona 100.0000 D.A.S. Jogvédelmi Biztosíto Részvénytársaság, Budapest 100.0000 D.A.S. Rechtsschutz Aktiengesellschaft, Vienna 100.0000 D.A.S. Société anonyme belge d’assurances de Protection Juridique, Brussels 100.0000 D.A.S. Towarzystwo Ubezpieczen Ochrony Prawnej S.A., Warsaw 100.0000 Daman Health Insurance – Qatar LLC, Doha 100.0000 Dansk Demetra ApS, Frederiksberg C 100.0000 DAS Holding N.V., Amsterdam 51.0000 DAS Law Limited, Bristol 100.0000 DAS Legal Expenses Insurance Co., Ltd., Seoul 100.0000 DAS Legal Expenses Insurance Company Limited, Bristol 100.0000 DAS Legal Finance B.V., Amsterdam 100.0000 DAS MEDICAL ASSIST LIMITED, Bristol 100.0000 DAS Nederlandse Rechtsbijstand Verzekeringmaatschappij N.V., Amsterdam 100.0000 DAS Services Limited, Bristol 100.0000 DAS UK Holdings Limited, Bristol 100.0000 Digital Advantage Insurance Company, Warwick, Rhode Island 100.0000 Digital Affect Insurance Company, New York City, New York 100.0000 Digital Edge Insurance Company, Dover, Delaware 100.0000 DKV Belgium S.A., Brussels 100.0000
Euro-Center Holding SE, Prague 83.3332 Europaeiske Rejseforsikring A/S, Copenhagen 100.0000 Everything Legal Ltd., Bristol 100.0000 Fairance GmbH, Düsseldorf 100.0000 Faunus Silva LLC, Wilmington, Delaware 100.0000 Flexitel Telefonservice GmbH, Berlin 100.0000 Forst Ebnath AG, Ebnath 100.0000 FOTOUNO S.r.l., Brixen 100.0000 FOTOWATIO ITALIA GALATINA S.r.l., Brixen 100.0000 FREE MOUNTAIN SYSTEMS S.L., Madrid 100.0000 FS Louisiana I LLC, Wilmington, Delaware 100.0000 FS Louisiana II LLC, Wilmington, Delaware 100.0000 FS San Augustine LLC, Wilmington, Delaware 100.0000 Fundo Invest Exclusivo referenciado di Munich Re Brasil, São Paulo4 99.7900 FW Żary Sp.z.o.o., Warsaw 100.0000 Gaucheret S.A., Ixelles 100.0000 Global Standards LLC, Dover, Delaware 100.0000 Globality S.A., Munsbach 100.0000 Great Lakes Insurance SE, Munich 100.0000 Groves, John & Westrup Limited, Liverpool 100.0000 Habiriscos – Investimentos Imobiliarios, 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 Hartford Steam Boiler Ireland Limited, Dublin 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 Fund I LP, Dover, Delaware1 100.0000 HSB Group Inc., Dover, Delaware 100.0000 HSB International (India) Private Limited, Vadodara 100.0000 HSB Japan K.K., Minato-KU, Tokyo 100.0000 HSB Secure Services Inc., Hartford, Connecticut 100.0000 HSB Solomon Associates Canada Ltd., Saint John, 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) Co. 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
Munich Holdings Ltd., Toronto, Ontario 100.0000 Munich Holdings of Australasia Pty Ltd, Sydney 100.0000 Munich Life Holding Corporation, Dover, Delaware 100.0000 Munich Life Management Corporation Ltd., Toronto, Ontario 100.0000 Munich Re America Corporation, Dover, Delaware 100.0000 Munich Re America Services Inc., Wilmington, Delaware 100.0000 Munich Re Automation Solutions Limited, Dublin 100.0000 Munich Re Capital Limited, London 100.0000 Munich Re CVC Investment Corp., Dover, Delaware 100.0000 Munich Re Digital Partners US Holding Corporation, Dover, Delaware 100.0000 Munich Re do Brasil Resseguradora SA, São Paulo 100.0000 Munich Re Fund I LP, Dover, Delaware1 100.0000 Munich Re Innovation Systems Inc., Toronto, Ontario 100.0000 Munich Re Life Insurance Company of Vermont, Burlington, Vermont 100.0000 Munich Re New Ventures Inc., Toronto, Ontario 100.0000 Munich Re of Bermuda Ltd., Hamilton, Bermuda 100.0000 Munich Re of Malta Holding Limited, Ta’ Xbiex 100.0000 Munich Re of Malta p.l.c., Ta’ Xbiex 100.0000 Munich Re PCC Limited, Ta’ Xbiex 100.0000 Munich Re Reserve Risk Financing Inc., Dover, Delaware 100.0000 Munich Re Specialty Group Ltd., London 100.0000 Munich Re Specialty Group N.A. Inc., Wilmington, Delaware 100.0000 Munich Re Syndicate Labuan Limited, Labuan 100.0000 Munich Re Syndicate Limited, London 100.0000 Munich Re Syndicate Middle East Ltd., Dubai 100.0000 Munich Re Syndicate Singapore Ltd., Singapore 100.0000 Munich Re Trading LLC, Dover, Delaware 100.0000 Munich Re UK Services Limited, London 100.0000 Munich Re US Life Corporation, Norcross, Georgia 100.0000 Munich Re Ventures Inc., Dover, Delaware 100.0000 Munich Re Ventures LLC, Dover, Delaware 100.0000 Munich Re Weather & Commodity Risk Holding Inc., Dover, Delaware 100.0000 Munich Reinsurance America Inc., Wilmington, Delaware 100.0000 Munich Reinsurance Company of Africa Ltd, Johannesburg 100.0000 Munich Reinsurance Company of Australasia Ltd, Sydney 100.0000 Munich Reinsurance Company of Canada, Toronto, Ontario 100.0000 Munich-American Holding Corporation, Wilmington, Delaware 100.0000 MunichFinancialGroup GmbH, Munich 100.0000 New Reinsurance Company Ltd., Zurich 100.0000 nexible Versicherung AG, Nuremberg 100.0000 NMU (Specialty) Ltd., Manchester 100.0000 OIK Mediclin, Wiesbaden4 70.7073 Pan Estates LLC, Wilmington, Delaware 100.0000 Parachute Digital Solutions Inc., Wilmington, Delaware 100.0000 Parachute Solutions Numériques Inc., Toronto, Ontario 100.0000 Pegasos Holding GmbH, Munich 100.0000 Picus Silva Inc., Wilmington, Delaware 100.0000 Prosper Pass-Thru Trust I Series 2018-1, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2018-2, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2019-01, Wilmington, Delaware 95.0000
Prosper Pass-Thru Trust I Series 2019-02, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2019-03, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2019-04, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2019-05, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2019-06, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2020-01, Wilmington, Delaware 95.0000 Prosper Pass-Thru Trust I Series 2020-02, Wilmington, Delaware 95.0000 PS Louisiana I LLC, Wilmington, Delaware 100.0000 PS Louisiana II LLC, Wilmington, Delaware 100.0000 Relayr GmbH, Pullach i. Isartal 100.0000 Relayr Inc., Dover, Delaware 100.0000 Relayr Limited, Watford 100.0000 Relayr Sp. Z o.o., Katowice 100.0000 Renaissance Hotel Realbesitz GmbH, Vienna 60.0000 Roanoke Insurance Group Inc., Schaumburg, Illinois 100.0000 Roanoke International Brokers Limited, London 100.0000 Scout Moor Group Limited, London 100.0000 Scout Moor Holdings (No. 1) Limited, London 100.0000 Scout Moor Holdings (No. 2) Limited, London 100.0000 Scout Moor Wind Farm Limited, London 100.0000 Silvanus Vermögensverwaltungsges. mbH, Munich3 100.0000 Solarpark Fusion 3 GmbH, Düsseldorf 100.0000 Solomon Associates Limited, Farnborough 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 Sun Energy & Partners S.r.l., Brixen 100.0000 TEDA a.s., Bratislava 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, Amelia, Ohio 100.0000 The Polytechnic Club Inc., Hartford, Connecticut 100.0000 The Princeton Excess and Surplus Lines Insurance Company, Wilmington, Delaware 100.0000 THEC 2019 Zrt. “v.a.”, Budapest 100.0000 Tir Mostyn and Foel Goch Limited, London 100.0000 UAB Agra Aurata, Vilnius 100.0000 UAB Agra Corp., Vilnius 100.0000 UAB Agra Optima, Vilnius 100.0000 UAB Agrofondas, Vilnius 100.0000 UAB Agrolaukai, Vilnius 100.0000 UAB Agrora, Vilnius 100.0000 UAB Agrovalda, Vilnius 100.0000 UAB Agrovesta, Vilnius 100.0000 UAB G.Q.F., Vilnius 100.0000 UAB Lila Holdingas, Vilnius 100.0000 UAB Sietuve, Vilnius 100.0000 UAB Terra Culta, Vilnius 100.0000 UAB Ukelis, Vilnius 100.0000
Unconsolidated subsidiaries Aleama 150015 S.L., Valencia 100.0000 ANOVA GmbH, Rostock 100.0000 Arridabra 130013 S.L., Valencia 100.0000 ARTES Assekuranzservice GmbH, Düsseldorf 100.0000 Badozoc 1001 S.L., Valencia 100.0000 Bank Austria Creditanstalt Versicherungsdienst GmbH, Vienna 100.0000 Baqueda 7007 S.L., Valencia 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 Factoring B.V., Rotterdam 100.0000 Cannock Incasso Rotterdam B.V., Rotterdam 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
ERGO Zehnte Beteiligungsgesellschaft mbH, Düsseldorf 100.0000 ERGO Zwölfte Beteiligungsgesellschaft mbH, Munich 100.0000 ERGO-FESCO Broker Company Limited, Beijing 66.0000 ERV (China) Travel Service and Consulting Ltd., Beijing 100.0000 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 Euro-Center Holding North Asia (HK) Pte. Ltd., Hong Kong 100.0000 Euro-Center Ltda., São Paulo 100.0000 Euro-Center North Asia Consulting Services (Beijing) Co., Ltd., Beijing 100.0000 Euro-Center Prague, s.r.o., Prague 100.0000 EUROCENTER S.A., Palma de Mallorca 100.0000 Euro-Center Sydney Pty Ltd., Sydney 100.0000 Euro-Center USA, Inc., New York City, New York 100.0000 EURO-CENTER YEREL YARDIM HIZMETLERI Ltd. Şti., Istanbul 100.0000 European Assistance Holding GmbH, Munich 100.0000 Evaluación Médica TUW S.L., Barcelona 100.0000 Gamaponti 140014 S.L., Valencia 100.0000 GBG Vogelsanger Straße GmbH, Cologne 94.7826 Gebäude Service Gesellschaft Überseering 35 mbH, Hamburg 100.0000 goDentis – Gesellschaft für Innovation in der Zahnheilkunde mbH, Cologne 100.0000 Great Lakes (Gibraltar) Plc, Gibraltar 100.0000 Guanzu 2002 S.L., Valencia 100.0000 Hamburger Hof Management GmbH, Hamburg 100.0000 Hansekuranz Kontor GmbH, Münster 80.0042 Hartford Steam Boiler Colombia Ltda, Bogotá 100.0000 Hartford Steam Boiler UK Limited, Manchester 100.0000 Hestia Loss Control Sp.z.o.o., Sopot 100.0000 HSB Associates Inc., New York City, New York 100.0000 HSB Sheet Metal EaaS GmbH & Co. KG, Munich 100.0000 HSB Ventures Inc., Dover, Delaware 100.0000 Ideenkapital erste Investoren Service GmbH, Düsseldorf 100.0000 Ideenkapital Fonds Treuhand GmbH, Düsseldorf 100.0000 IDEENKAPITAL Investment GmbH, Düsseldorf 100.0000 Ideenkapital Media Treuhand GmbH, Düsseldorf 100.0000 IDEENKAPITAL Metropolen Europa Verwaltungsgesellschaft mbH, Düsseldorf 100.0000 IDEENKAPITAL PRORENDITA EINS Treuhandgesellschaft mbH, Düsseldorf 100.0000 IDEENKAPITAL Schiffsfonds Treuhand GmbH, Düsseldorf 100.0000 IFS Europe Holding GmbH, Munich 100.0000 IK Einkauf Objektverwaltungsgesellschaft mbH, Düsseldorf 100.0000 IK Einkaufsmärkte Deutschland Verwaltungsgesellschaft mbH, Düsseldorf 100.0000 IK FE Fonds Management GmbH, Düsseldorf 100.0000 IK Komp GmbH, Düsseldorf 100.0000 IK Objekt Bensheim GmbH, Düsseldorf 100.0000 IK Objekt Frankfurt Theodor-Heuss-Allee GmbH i. L., Düsseldorf 100.0000 IK Pflegezentrum Uelzen Verwaltungs-GmbH, Düsseldorf 100.0000 IK Property Eins Verwaltungsgesellschaft mbH, Düsseldorf 100.0000 IK Property Treuhand GmbH, Düsseldorf 100.0000 IoT Financing Services LLC, Dover, Delaware 100.0000
Jogszerviz Kft, Budapest 100.0000 JRP (London) Limited, London 100.0000 JRP Insurance Management Limited, London 100.0000 JRP Underwriting Ltd., London 100.0000 Junos Verwaltungs GmbH, Munich 100.0000 K & P Objekt Hamburg Hamburger Straße GmbH, Düsseldorf 100.0000 K & P Objekt Hamburg Hamburger Straße Immobilienfonds GmbH & Co. KG, Düsseldorf4 36.6889 K & P Objekt München Hufelandstraße GmbH i. L., Düsseldorf 100.0000 KQV Solarpark Franken 1 GmbH & Co. KG, Düsseldorf 100.0000 Larus Vermögensverwaltungsgesellschaft mbH, Munich 100.0000 Legal Net GmbH, Munich 100.0000 m:editerran Power S.a.s. di welivit Solar Italia S.r.l., Bolzano 100.0000 Marbury Agency Inc., Amelia, Ohio 100.0000 MAYFAIR Financing GmbH i. L., Munich 100.0000 MEAG Center House S.A., Ixelles 100.0000 MEAG EM Rent Nachhaltigkeit (A+I Tranche), Munich4 25.2039 MEAG EuroCorpRent, Munich4 74.8339 MEAG FlexConcept – EuroGrowth, Luxembourg4 100.0000 MEAG Global Real Estate Value (A+I Tranche), Munich4 94.0854 MEAG Hong Kong Limited, Hong Kong 100.0000 MEAG Institutional Fund GP S.à.r.l., Luxembourg 100.0000 MEAG Insurance Fund – Tied Assets, Geneva4 100.0000 MEAG Luxembourg S.à r.l., Luxembourg 100.0000 MEAG MultiSmart (A+I), Munich4 95.5000 MEAG Pension Rent, Munich4 100.0000 MEAG Pension Safe, Munich4 100.0000 MEAG Vermögensanlage Komfort, Munich4 40.4904 MEAG Vermögensanlage Return (A+I Tranche), Munich4 56.5907 Mediastream Consulting GmbH i. L., Grünwald 100.0000 Mediastream Dritte Film GmbH i. L., Grünwald 100.0000 Mediastream Film GmbH i. L., Grünwald 100.0000 Mediastream Zweite Film GmbH i. L., Grünwald 100.0000 MedNet Bahrain W.L.L., Manama 100.0000 MedNet Egypt LLC, Cairo 100.0000 MedNet Europa GmbH, Munich 100.0000 MedNet Global Healthcare Solutions LLC, Dubai 100.0000 MedNet Greece S.A., Athens 78.7157 MedNet Jordan Co. W.L.L., Amman 100.0000 MedNet Saudi Arabia LLC, Jeddah 100.0000 MedNet UAE FZ LLC, 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 MPL Claims Management Ltd., London4 50.0000 MR Beteiligungen 2. UK AG & Co. KG, Grünwald 100.0000 MR Beteiligungen 3. GmbH, Munich 100.0000 MR Beteiligungen 15. 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 Group Investment US Inc., Dover, Delaware 100.0000 MR HealthTech Ltd., Nicosia 100.0000 MR Infrastructure Inc., Dover, Delaware 100.0000 MR McQueen LP, Dover, Delaware 100.0000 MR RENT-Management GmbH, Munich 100.0000 MRV Fund IV LP, Dover, Delaware1 100.0000 MU068 MR Placem (FCP), Paris4 100.0000 Münchener de Argentina Servicios Técnicos S.R.L., Buenos Aires 100.0000 Münchener de Mexico S.A., Mexico 100.0000 Münchener de Venezuela C.A. Intermediaria de Reaseguros, Caracas 100.0000 Münchener Finanzgruppe AG Beteiligungen, Munich 100.0000 MÜNCHENER RÜCKVERSICHERUNGS – GESELLSCHAFT AKTIENGESELLSCHAFT IN MÜNCHEN ESCRITÓRIO DE REPRESENTAÇÃO NO BRASIL LTDA, São Paulo 100.0000 Munich American Reassurance Company PAC Inc., Norcross, Georgia4 0.0000 Munich Canada Systems Corporation, Toronto, Ontario 100.0000 Munich Management Pte. Ltd., Singapore 100.0000 Munich Re America Brokers Inc., Dover, 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 K.K., Tokyo 100.0000 Munich Re Automation Solutions Pte. Ltd., Singapore 100.0000 Munich Re Automation Solutions Pty Ltd, Sydney 100.0000 Munich Re Capital Markets GmbH, Munich 100.0000 Munich Re Capital No.2 Limited, London 100.0000 Munich Re Digital Partners Limited, London 100.0000 Munich Re Health Services FZ-LLC, Dubai 100.0000 Munich Re India Services Private Limited, Mumbai 100.0000 Munich Re Investment Partners GmbH, Munich 100.0000 Munich Re Risk Solution Ireland Limited, Dublin 100.0000 Munich Re Service GmbH, Munich 100.0000 Munich Re Specialty Group Insurance Services Inc., Schaumburg, Illinois 100.0000 Munich Re Underwriting Agents (DIFC) Ltd., Dubai 100.0000 Munich ReThink GmbH, Munich 100.0000 Munich-Canada Management Corp. Ltd., Toronto, Ontario 100.0000 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 nexible GmbH, Düsseldorf 100.0000 Orrazipo 110011 S.L., Valencia 100.0000 P.A.N. Verwaltungs GmbH, Grünwald 100.0000 PLATINIA Verwaltungs-GmbH i. L., Munich 100.0000 Ponga Silva Limited, Rotorua 100.0000 PORT Schiffsverwaltungsgesellschaft mbH, Bramstedt 100.0000 PRORENDITA DREI Verwaltungsgesellschaft mbH, Düsseldorf 100.0000 PRORENDITA EINS Verwaltungsgesellschaft mbH i. L., Düsseldorf 100.0000 PRORENDITA FÜNF Verwaltungsgesellschaft mbH, Düsseldorf 100.0000
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 Assistance Partner GmbH & Co. KG, Munich 21.6600 Augury Inc., Wilmington, Delaware5 9.1000 carexpert Kfz-Sachverständigen GmbH, Walluf 25.0000 Cyber Sepio Systems Limited, Tel Aviv5 12.9400 Dayforward Inc., Wilmington, Delaware5 8.5000 Fernkälte Geschäftsstadt Nord Gesellschaft bürgerlichen Rechts, Hamburg1 36.7183 Finsure Investments (Private) Limited, Harare 24.5000 FlexFactory GmbH, Stuttgart 50.0000 GIG City Nord GmbH, Hamburg 20.0000 Hartford Research LLC, Lewes, Delaware 41.7500
High Definition Vehicle Insurance Inc., Dover, Delaware5 9.2679 Inshur Holdings Corp, Wilmington, Delaware5 18.1000 LCM Logistic Center Management GmbH, Hamburg 50.0000 MEAG Pacific Star Asset Management Pte. Ltd., Singapore 50.0000 Orbit Fab Inc., Dover, Delaware5 5.2700 PERILS AG, Zurich5 10.0000 SIP Social Impact Partners GmbH, Munich 50.0000 Span.IO Inc., Dover, Delaware5 9.1700 Spruce Holdings Inc., Wilmington, Delaware5 11.8200 Teko – Technisches Kontor für Versicherungen Gesellschaft mit beschränkter Haftung, Düsseldorf 30.0000 Tianjin Yihe Information Technology Co. Ltd., Tianjin 24.9000 T-Solar Luxembourg GP S.à.r.l., Luxembourg 37.0000 versdiagnose GmbH, Hanover 49.0000 Volksbanken-Versicherungsdienst GmbH, Vienna 25.2319 VV Immobilien Verwaltungs und Beteiligungs GmbH, Munich 30.0000 We Predict Limited, Swansea5 17.5900 Windpark Osterhausen-Mittelhausen Infrastruktur GbR, Bremen1, 7 58.9400
Companies included on a pro-rata basis (joint operation pursuant to IFRS 11) “Pensionsfonds” des Versorgungswerks MetallRente bei der Allianz Pensionsfonds AG, Stuttgart 17.5000
Other shareholdings as defined in Section 271(1) of the German Commercial Code (HGB) Acko Technology & Services Private Limited, Bangalore (equity: €58,606k; result for year: -€39,298k) 5.0000 At-bay Inc., Wilmington, Delaware (equity: €1,414k; result for year: -€5,315k) 4.1800 Autobahn Tank & Rast Gruppe GmbH & Co. KG, Bonn (equity: €194,821k; result for year: -€59,419k) 9.9980 Autobahn Tank & Rast Management GmbH, Bonn (equity: €24k; result for year: €2k) 10.0020 B3i Services AG, Zurich (equity: €18,498k; result for year: -€9,993k) 2.7705 Babylon Holdings Limited, St. Helier (equity: €160,064k; result for year: -€198,191k) 0.3700 Bought by Many Limited “BBM”, London (equity: €9,869k; result for year: -€12,174k) 10.8000 CBRE U.S. Core Partners Parallel Limited Partnership, Wilmington, Delaware6 (equity: €28,583k; result for year: €2,244k) 99.9000 Craigmore Permanent Crop LP, Christchurch6 (equity: €93,794k; result for year: €1,323k) 44.1121 Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern (equity: €22,901k; result for year: €1,539k) 2.5000
Fair Financial Corp., Wilmington, Delaware (equity: €82,293k; result for year: -€246,395k) 1.1100 FIA Timber Partners II LP, Wilmington, Delaware6 (equity: €115,137k; result for year: €1,976k) 39.0800 Forge Global Inc., Wilmington, Delaware (equity: €34,477k; result for year: -€6,462k) 5.3100 Fraugster Services GmbH, Berlin (equity: €2,237k; result for year: -€5,648k) 6.3900 Green Acre LLC, Wilmington, Delaware6 (equity: €45,947k; result for year: €1,887k) 31.9361 Hancock Timberland XII LP, Wilmington, Delaware (equity: €267,267k; result for year: €27,712k) 15.1500 heal.capital I GmbH & Co. KG, Berlin (equity: €0k; result for year: -€1,010k) 17.9371 Helium Systems Inc., Dover, Delaware (equity: €10,770k; result for year: -€7,840k) 5.0300 Hines India Fund LP, Wilmington, Delaware (equity: €38,164k; result for year: €4,042k) 11.8333 Hippo Analytics Inc., Wilmington, Delaware (equity: €114,407k; result for year: -€11,758k) 1.2100 IK Objekt Bensheim Immobilienfonds GmbH & Co. KG, Düsseldorf (equity: €18,020k; result for year: -€464k) 16.2445 M 31 Beteiligungsgesellschaft mbH & Co. Energie KG, Düsseldorf (equity: €1,089,511k; result for year: €71,141k) 18.6246 m:solarPOWER GmbH & Co. KG, Düsseldorf (equity: €500k; result for year: €153k) 0.0000 MS Immobilien-Fonds Objekt Leipzig GmbH & Co. KG, Stuttgart (equity: €28,868k; result for year: €534k) 0.1923 Nürnberger Beteiligungs AG, Nuremberg (equity: €708,247k; result for year: €46,387k) 19.1038 Olivia Holdings LLC, Wilmington, Delaware (equity: €1,320,346k; result for year: -€27,682k) 8.8000 Parametrix Group Holdings Inc., Wilmington, Delaware (equity: €2,920k; result for year: -€211k) 5.0000 PRORENDITA DREI GmbH & Co. KG, Düsseldorf (equity: €3,569k; result for year: -€400k) 0.0260 PRORENDITA FÜNF GmbH & Co. KG, Düsseldorf (equity: €6,673k; result for year: -€62k) 0.0384 PRORENDITA VIER GmbH & Co. KG, Düsseldorf (equity: €4,328k; result for year: -€902k) 0.0029 Ridecell Inc., Wilmington, Delaware (equity: -€1,469k; result for year: -€19,814k) 3.2300 RMS Australian Forests Fund I LP, George Town, Grand Cayman6 (equity: €94,399k; result for year: €29,630k) 37.4257 RMS Forest Growth International LP, George Town, Grand Cayman6 (equity: €82,658k; result for year: €16,161k) 43.4700 Slice Labs Inc., Ottawa, Ontario (equity: €4,246k; result for year: -€9,208k) 8.2000 Solarpark 1000 Jahre Fürth GmbH & Co. KG, Düsseldorf (equity: €693k; result for year: €100k) 0.9091 T&R MLP GmbH, Bonn (equity: €15k; result for year: -€5k) 10.0020 T&R Real Estate GmbH, Bonn (equity: €140,898k; result for year: €85k) 10.0020 Team8 Capital I LP, George Town, Grand Cayman (equity: €16k; result for year: €0k) 3.3300 Team8 Partners II LP, George Town, Grand Cayman (equity: €19,080k; result for year: €628k) 8.5300 Ticker Limited, London (equity: €4k; result for year: -€2,944k) 15.0000 Trov Inc., Dover, Delaware (equity: €4,243k; result for year: -€21,308k) 10.5800
2 This fully consolidated German subsidiary with the legal form of a partnership, as defined in Section 264a of the German Commercial Code (HGB), intends to fulfil the conditions required pursuant to Section 264b of the Commercial Code and, in the 2020 financial year, to avail itself of the relevant provision exempting it from preparing annual financial statements.
6 No control and/or no significant influence, as it is a purely financial investment under the managerial responsibility of an external asset manager.
7 No control, since the articles of association or another agreement bind the relevant operations to a quorum which cannot be achieved by Munich Re.
The auditor’s report reproduced below includes an “Assurance report in accordance with Section 317(3)(b) of the Commercial Code (HGB) on the electronic reproduction of the consolidated financial statements and the combined management report prepared for publication purposes” (“separate report on ESEF compliance”). The subject matter (ESEF documents) to which the separate report on ESEF compliance relates is not attached. The assured ESEF documents can be inspected in, or retrieved from, the Federal Gazette.
Opinions We have audited the consolidated financial statements of Münchener Rückversicherungs-Gesellschaft Aktiengesell- schaft in München, Munich, and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2020, the consolidated income statement, the statement of recognised income and expense, the Group statement of changes in equity and the consolidated cash flow statement for the financial year from 1 January 2020 to 31 December 2020, and notes to the financial statements, including a summary of significant accounting policies. In addition, we have audited the combined management report of Münchener RückversicherungsGesellschaft Aktiengesellschaft in München for the financial year from 1 January 2020 to 31 December 2020. In compliance with German legal requirements, we have not audited the Group statement on corporate governance which is published on the website referenced in the combined management report and is part of the combined management report, or the content of the Group nonfinancial statement included in section “combined nonfinancial statement” of the combined management report. In compliance with German legal requirements, we have not audited corporate information that is not part of the combined management report and is referenced in the Group, Remuneration report and Financial position sections of the combined management report.
− position of the Group as at 31 December 2020 and of its financial performance for the financial year from 1 January 2020 to 31 December 2020, and
− the accompanying combined management report as a whole provides an appropriate view of the Group’s position. In all material respects, this combined management report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. Our opinion on the combined management report does not cover the abovementioned Group non-financial statement or the Group statement on corporate governance.
Basis for the opinions We conducted our audit of the consolidated financial statements and of the combined management report in accordance with Section 317 of the Commercial Code (HGB) and the EU Audit Regulation No. 537/2014 (referred to subsequently as “EU Audit Regulation”) and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirt- schaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements and of the combined management report” section of our auditor’s report. We are independent of the Group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10(2)(f) of the EU Audit Regulation, we declare that we have not provided nonaudit services prohibited under Article 5(1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the consolidated financial statements and on the combined management report.
We assessed the suitability of the actuarial techniques and methods utilised, as well as the derivation and transparency of key assumptions used, including loss ratios and assumptions with regard to claims settlement.
With regard to measurement of the provisions for asbestos and environmental liability claims, we verified the procedures for validating the reserve level and recalculated certain methods. We furthermore reconciled the comparative figures used with market studies available to the general public.
Our audit has not led to any reservations relating to the measurement of the provision for outstanding claims in property-casualty business.
Reasons for the designation as a key audit matter The provisions in life and health business concern the segments life and health reinsurance, ERGO Life and Health Germany, and ERGO International, and mainly comprise the provision for future policy benefits and the provision for outstanding claims. The measurement of the provision for future policy benefits is dependent on a number of assumptions, particularly relating to mortality, disability, morbidity, interest-rate development, lapse rates, costs, administration expenses and discount rates. Particularly because the assumptions are generally not based on observable market inputs, the determination or revision of the assumptions is subject to uncertainty and judgement. Additional uncertainties arise in connection with the Covid-19 pandemic.
A liability adequacy test is used to verify the adequacy of the provision for future policy benefits and the recoverability of deferred acquisition costs. The liability adequacy test is conducted on the basis of updated assumptions.
This has been designated a key audit matter due to the estimations involved and the corresponding judgements in measurement. In addition, the provision for future policy benefits and the provision for outstanding claims in life and health business are material liability items in the consolidated balance sheet. A substantial share of the deferred acquisition costs in the Group is attributable to life and health business.
For provisions for outstanding claims that were measured using statistical methods, we generated our own actuarial projections for selected lines of business and compared them with the carrying amounts of the provisions.
We assessed the assumptions and methods used in the adequacy test.
Our audit has not led to any reservations relating to the measurement of the provision for future policy benefits, the provision for outstanding claims or the deferred acquisition costs in life and health business.
Reasons for the designation as a key audit matter The fair values of unlisted investments are primarily determined by using valuation models or values assessed by third parties. The primary parameters used are observable market inputs, such as duration-based yield curves and credit spreads. This applies particularly to the fair value measurement of unlisted fixed-interest securities, infrastructure loans, other loans, and derivatives. In addition, unobservable inputs are used to measure certain investments – particularly land and buildings, real estate funds, investments in private equity funds, and alternative direct investments (such as infrastructure). The valuation models selected and the assumptions about inputs defined are judgemental. The greater the number of inputs used that are not observable in the market but are instead based on internal estimates, the greater the scope for judgement. There is increased uncertainty with regard to measuring certain investments owing to the impact of the Covid-19 pandemic. This particularly applies to investments of issuers in sectors and countries heavily affected by the pandemic, and also to infrastructure and private equity investments.
The valuation of unlisted investments has been designated a key audit matter due to the judgements used in selecting the valuation models and the assumptions to be made with regard to the significant inputs. Moreover, unlisted investments contribute a substantial share of the investments line item in the consolidated balance sheet.
Auditor’s response As part of our audit, we gained an understanding of the processes of the valuation of unlisted investments. We also tested the effectiveness of the controls implemented within the processes.
In the case of registered bonds and borrowers’ note loans, we verified on the basis of a sample whether the credit spreads relevant to the valuation had been applied consistently within the portfolio and to the remaining term to maturity. We also performed own fair value calculations for a sample of registered bonds and borrowers’ note loans (including embedded derivatives) and compared them with those made by the Company.
Our audit has not led to any reservations relating to the valuation of the unlisted investments.
Other information The Supervisory Board is responsible for the Report of the Supervisory Board. Management and the Supervisory Board are responsible for the Declaration of Conformity with the German Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act (AktG), which is part of the Group Statement on Corporate Governance. Management is otherwise responsible for the other information. The other information comprises the above-mentioned Group Statement on Corporate Governance and Group non-financial statement. In addition, the other information comprises other parts of the annual report of which we received a version before issuing this auditor’s report, in particular: − Munich Re at a glance − Letter to shareholders − Responsibility statement but not the consolidated financial statements, the disclosures in the combined management report covered by our audit, or our auditor’s report.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.
We exercise professional judgment and maintain professional skepticism throughout the audit. We also do the following: − Identify and assess the risks of material misstatement of the consolidated financial statements and of the combined management report, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
− Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e(1) of the Commercial Code (HGB).
− Evaluate the consistency of the combined management report with the consolidated financial statements, its conformity with German law, and the view of the Group’s position it provides.
− Perform audit procedures on the prospective information presented by management in the combined management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these
− assumptions. We do not express a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information.
In our opinion, the reproduction of the consolidated financial statements and the combined management report contained in the above-mentioned electronic file and prepared for publication purposes complies in all material respects with the requirements of Section 328(1) of the Commercial Code (HGB) regarding the electronic reporting format. We do not express any opinion on the information contained in this reproduction nor on any other information contained in the above-mentioned file beyond this reasonable assurance opinion and our audit opinion on the accompanying consolidated financial statements and the accompanying combined management report for the financial year from 1 January 2020 to 31 December 2020 contained in the above “Auditor’s report on the consolidated financial statements and on the combined management report”.
Responsibilities of management and the Supervisory Board regarding the ESEF documents
Company management is responsible for the preparation of the ESEF documents, including the electronic reproduction of the consolidated financial statements and the combined management report in accordance with Section 328(1) sentence 4, no. 1 of the Commercial Code (HGB) and for the tagging of the consolidated financial statements in accordance with Section 328(1) sentence 4, no. 2 of the Commercial Code (HGB).
In addition, company management is responsible for such internal control as they consider necessary to enable the preparation of ESEF documents that are free from material non-compliance – whether intentional or unintentional – with the requirements of Section 328(1) of the Commercial Code (HGB) concerning the electronic reporting format.
Company management is also responsible for submitting the ESEF documents together with the auditor’s report and the attached audited consolidated financial statements and audited combined management report as well as other documents to be submitted to the German Federal Gazette for publication.
The Supervisory Board is responsible for overseeing the preparation of the ESEF documents as part of the financial reporting process.
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material noncompliance – whether intentional or unintentional – with the requirements of Section 328(1) of the Commercial Code (HGB). We exercise professional judgement and maintain professional skepticism throughout the assurance work. We also do the following: − Identify and assess the risks of material non-compliance – whether intentional or unintentional – with the requirements of Section 328(1) of the Commercial Code (HGB); design and perform assurance procedures responsive to those risks; and obtain assurance evidence that is sufficient and appropriate to provide a basis for our assurance opinion.
− Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these controls.
− Evaluate the technical validity of the ESEF documents, i.e. whether the electronic file containing the ESEF documents meets the requirements of the version of Delegated Regulation (EU) 2019/815 on the technical standards for this file in force as at 31 December 2020.
We were elected as Group auditor by the Supervisory Board at its meeting on 17 March 2020. We were engaged by the Chair of the Audit Committee of the Supervisory Board on 30 June 2020. We have been the Group auditor of Münchener Rückversicherungs-Gesellschaft Aktien- gesellschaft in München, Munich, without interruption since the 2020 financial year.
The German Public Auditor responsible for the engagement is Dr. Thomas Kagermeier.
This responsibility includes the selection and application of appropriate methods to prepare the non-financial statement as well as making assumptions and estimates related to individual disclosures, which are reasonable in the circumstances. Furthermore, the legal representatives are responsible for such internal controls that they have considered necessary to enable the preparation of a nonfinancial statement that is free from material misstatement, whether due to fraud or error.
We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance Engagements other than Audits or Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards Board (IAASB). This Standard requires that we plan and perform the assurance engagement to obtain limited assurance about whether the non-financial statement of the Company has been prepared, in all material respects, in accordance with Sections 315c in conjunction with 289c to 289e of the HGB. In a limited assurance engagement, the assurance procedures are less in extent than for a reasonable assurance engagement and therefore a substantially lower level of assurance is obtained. The assurance procedures selected depend on the auditor’s professional judgment.
We issue this report on the basis of the engagement agreed with Munich Re. The assurance engagement has been performed for the purposes of the Company and the report is solely intended to inform the Company as to the results of the assurance engagement and must not be used for purposes other than those intended. The report is not intended to provide third parties with support in making (financial) decisions.
The “General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and Public Audit Firms]” dated 1 January 2017 are applicable to this engagement and also govern our relations with third parties in the context of this engagement (www.de.ey.com/general-engagement-terms). In addition, please refer to the liability provisions contained there in no. 9 and to the exclusion of liability towards third parties. We assume no responsibility, liability or other obligations towards third parties unless we have concluded a written agreement to the contrary with the respective third party or liability cannot effectively be precluded.
Service for media Florian Amberg Tel.: +49 89 38 91-22 99 presse@munichre.com
Quarterly figures 31.12.2020 30.9.2020 30.6.2020 31.3.2020 Balance sheet Investments (incl. insurance-related investments) €m 243,983 242,669 240,184 236,528 Equity €m 29,994 29,641 29,766 29,116 Net technical provisions €m 221,480 220,029 219,104 217,455 Balance sheet total €m 297,946 295,973 294,358 292,554 Shares Share price € 242.80 216.60 231.40 184.10 Munich Reinsurance Company’s market capitalisation €bn 34.0 30.3 32.4 26.6 Other Combined ratio
Reinsurance property-casualty % 104.2 112.2 99.9 106.0 ERGO Property-casualty Germany % 92.8 90.9 92.5 93.4 ERGO International % 93.0 92.5 90.1 95.2 €m Total Q4 2020 Q3 2020 Q2 2020 Q1 2020 Gross premiums written 54,890 13,629 14,150 12,827 14,284 1. Earned premiums Gross 53,788 13,882 13,480 13,198 13,229 Ceded –2,566 –647 –653 –683 –583 Net 51,223 13,235 12,827 12,515 12,646 2. Income from technical interest 5,270 1,819 1,444 1,750 256 3. Expenses for claims and benefits Gross –44,635 –11,979 –11,455 –11,182 –10,019 Ceded share 1,558 354 383 433 388 Net –43,077 –11,625 –11,072 –10,749 –9,632 4. Operating expenses Gross –13,379 –3,566 –3,285 –3,242 –3,285 Ceded share 564 135 149 149 133 Net –12,815 –3,431 –3,137 –3,094 –3,153 5. Technical result (1–4) 600 –1 62 423 117 6. Investment result 7,398 2,090 1,691 1,697 1,920 Thereof: Associates and joint ventures accounted for using the equity method 155 96 31 17 12 7. Insurance-related investment result 105 479 175 596 –1,145 8. Other operating income 1,168 378 314 249 227 9. Other operating expenses –2,016 –646 –445 –459 –466 10. Deduction of income from technical interest –5,270 –1,819 –1,444 –1,750 –256 11. Non-technical result (6–10) 1,386 482 291 333 280 12. Operating result 1,986 481 353 755 397 13. Other non-operating result –83 –34 –31 –6 –11 14. Currency result –200 –266 –100 23 144 15. Net finance costs –223 –59 –54 –55 –55 16. Taxes on income –269 91 32 –138 –255 17. Consolidated result 1,211 212 199 579 221 Thereof: Attributable to Munich Reinsurance Company equity holders 1,211 208 202 580 222 Attributable to non-controlling interests 0 4 –3 –1 –1