All of this has required a huge eff ort from ergO. Some 28,000 internet and intranet webpages had to be altered, eight million clients written to, and 16.2 million brochures printed and distributed. 130 billboards on roofs and facades had to be replaced, and 1,700 local off ices and 1,000 agencies of Victoria and hamburg-Mannheimer had to be equipped with illuminated advertising and signs with the new eRGO look. At times, more than 1,200 staff plus external service providers were occupied with implementing the new eRGO project.
In the space of just a few years, the Polish company ERGO Hestia has grown from a start-up operation into the country’s second-largest property-casualty insurer. Piotr Sliwicki, President of the ERGO subsidiary, explains the background to the boom that has made Poland the new European economic wunderkind. //
Where do you think your company will be in 40 years’ time? everything is possible. As long as we can carry on getting the best people to work for us, i don’t see any reason why eRGO hestia should not be number one in the Polish market one day. “The future,” said Victor hugo, “has many names. For the weak it is the unattainable. For the fearful it is the unknown. For the bold it is opportunity.” i hope that, in 40 years, eRGO hestia will still be one of the bold.
Munich Re 2010Thinking furTher until recently, 100-year-olds were regarded as absolute rarities, whose birthdays were reported in the papers. But thanks to medical progress and improved living conditions, those born today stand a fair chance of living to be a hundred. What is a welcome prospect for people like huafei Philip Xu (born on 19 October 2010) means an extreme stress test for state social security systems. in china, Munich Re is therefore helping primary insurers to design insurance solutions that enable people like huafei Xu to make provision so that they are well cared for in old age.
With its approximately 1.3 billion people, china is the most populous country in the world. in the course of its history, overpopulation and its associated problems have been the cause of deep political and economic crises, including famines. The People’s Republic therefore embarked on its globally unique “one-child policy“. however, coupled with rising life expectancy, this policy is set to produce a marked rise in the average age in coming decades. At the same time, the proportion of the population in paid work will fall.
1 percentage of share capital at 31 december 2010. source: Munich Re share register
Regional distribution 1 28.6 % Rest of europe 29.9 % north america 0.6% Other countries
Ladies and Gentlemen, in the 2010 financial year, the Supervisory Board fulfilled all the tasks and duties incumbent upon it under the law, the articles of association and its rules of procedure. We regularly advised the Board of Management in its running of the company and supervised its activities. inspection measures in accordance with Section 111 para. 2 sentence 1 of the german Stock companies act were at no time required.
Between the meetings, the Board of Management reported to us on an ad-hoc basis concerning important matters in the group – for example, the claims burden from Winter Storm Xynthia and the earthquake in chile, the share buy-back programme and a court ruling on a substantial uS asbestos-related claim.
Munich Reinsurance company’s corporate governance statement comprises (1) the declaration in accordance with Section 161 of the german Stock companies act and (2) the report of the Board of Management and Supervisory Board on the company’s cor porate governance within the meaning of item 3.10 of the german corporate governance code, including the remuneration report in accordance with item 4.2.5 of that code and the disclosures as per Section 289a para. 2 items 2 and 3 of the german commercial code.
in this connection, employees have the option of contacting an external and independent ombudsman, who reports cases of suspected fraud to the Fraud prevention committee, comprising the Fraud prevention officer and the compliance officer, thus supporting Munich Re’s anti-fraud management.
Board of Management the Board of Management is responsible for managing the company, setting objectives and determining strategy. in doing so, it is obliged to safeguard company interests and endeavour to achieve a long-term increase in the company’s value. the Board of Management must ensure compliance with statutory requirements and internal company directives, and is responsible for effecting adequate risk management and risk control in the company. the chairman of the Board of Management provides for homogeneous management of the company, which he represents vis-à-vis the authorities, the media and associations.
Whether the stock appreciation rights can be exercised and, if so, when, is not certain. the exercising and proceeds depend on the development of the share price and on fulfilment of the exercise conditions. the amount of income is limited. up to now, it has only been possible to exercise stock appreciation rights under the plans set up in 1999 and 2003 to 2005. Further information on the long-term incentive plan can be found in the notes to the financial statements under (44) long-term incentive plan.
continued payment of remuneration in the case of incapacity to work in the case of temporary incapacity to work due to illness or for other cause beyond the Board member’s control, the remuneration is paid until the end of the contract of employment. the company may terminate the contract prematurely if the Board member is incapacitated for a period of longer than 12 months and it is probable that he will be permanently unable to fully perform the duties conferred on him (permanent incapacity to work). in this event, the Board member will receive a disability pension.
Members of the Supervisory Board committees receive an additional amount of 50% of their fixed remuneration, with the chairmen of the committees receiving 100%. this takes account of the substantial workload involved.
the total remuneration of each Supervisory Board member is limited to three times the fixed remuneration, thus ensuring that the overall remuneration of individual Supervisory Board members remains appropriate even if further committees are set up.
We compare the result adjusted in this way with the requisite cost of equity. a significant factor in calculating the cost of equity is the risk-based capital, which we determine using our internal model. For property-casualty business and health reinsurance business, value is added to the extent that, measured on the basis of one calendar year, the adjusted result exceeds the cost of equity.
Munich Re operates in virtually all classes of reinsurance. We offer a full range of products, from traditional reinsurance to innovative solutions for risk assumption. We increasingly use our extensive risk knowledge to develop customised solutions for our clients to meet their diverse needs.
With premium income of almost €1.0bn (0.6bn), the Asian life insurance markets became one of the main premium and result drivers in life reinsurance business in 2010. We introduced forward-looking product concepts in the living benefits segments and other consulting services geared to client requirements. We were thus able to significantly advance our clients’ business development and participate in this via reinsurance. in addition, we have had particular success in asia with transactions aimed primarily at strengthening client solvency. our global transfer of know-how provides us with a competitive advantage in the developing markets. in 2010, we continued to expand our involvement in the region, converting our representative office in tokyo into a branch in July. We will thus be even more successful in exploiting the special business opportunities resulting for us as reinsurers from the structural transformation of Japanese life insurance.
Munich Re’s primary insurance segment comprises all the activities of the eRgo insurance group (eRgo) with the exception of health insurance business outside germany, which is handled by Munich health. eRgo operates in nearly all branches of life, health and property-casualty insurance. some 75% of gross premiums written derive from germany, and the remaining 25% mainly from other european countries. overall, around 90% is transacted in euros.
We return surplus capital to equity holders primarily through attractive dividends, within the scope permitted by munich reinsurance company’s revenue reserves as determined under german commercial law, and provided this does not impair our strategic flexibility or overall capital strength. in addition to dividend payments, we use share buy-backs as a further instrument for returning capital.
management report // Financial position munich re group annual report 2010 the above-mentioned authorisations to issue or buy back shares are within the range of what is customary in the market and allow the company to engage in active capital management. they enable it to cover any capital needs, even at short notice, for taking swift and flexible advantage of market opportunities in different fields of business. as demonstrated by the company’s share buy-backs, the authorisations also offer the opportunity to return to the equity holders capital that is no longer required.
With our unique, combined focus on risk carrying and risk management in health, munich health delivers individual, sustainable solutions. the special combination of resources provides the basis for the success and security of our clients in their respective markets.
in many countries, we also work closely with governments and specialist insurance providers to set up catastrophe funds for insuring the agricultural sector against extreme weather events such as windstorm, drought, flood, and late frost.
Overall staff turnover at main Group companies in Germany munich reinsurance company ergo meag
Percentage of females in management positions at main Group companies in Germany munich reinsurance company ergo meag
the group committee meets quarterly as the Group Risk Committee, the membership of which additionally includes further specialists from our insurance and reinsurance operations, to deal with risk issues affecting the group as a whole.
Quantitative risk monitoring based on indicators is carried out both centrally and within units, e.g. at meag for investments or at ergo irm, and then centrally conflated. We monitor qualitative risks on a decentralised or centralised basis, depending on their significance and classification.
management report // risK report munich re group annual report 2010 significant risks according to our classification, significant risks are risks that could have a long-term adverse effect on the assets, liabilities, financial position or results of munich re. We have applied this definition consistently to the individual business units and legal en tities, taking account of their individual risk tolerance. the competent risk management units are responsible for assessing whether a risk is significant for a unit within the meaning of the above definition. specifically, we have identified the following categories from which significant risks can arise.
Underwriting risk: Property-casualty insurance this is defined as the risk of insured losses in property-casualty business being higher than our expectations.
We also optimise the availability of liquidity in the group by means of internal funding and a cash pool fed by group companies. guaranteeing compliance with supervisory regulations, we ensure through strict availability requirements that every entity is in a position to meet its payment obligations.
Reputational risk We define reputational risk as the risk of a loss resulting from damage to the group’s public image (for example with clients, shareholders or other parties).
the table shows munich re’s economic risk capital and risk categories as at 31 December 2010. over the past year, the economic risk capital rose by €3.3bn. the following factors contributed to this development: // the economic risk capital for the property-casualty risk category, which includes credit reinsurance and surety business, increased by €1.3bn. significant factors were higher exposure in nearly all natural catastrophe scenarios than in the previous year, partly due to the weaker euro, and a change in the placement of external retrocessions.
Life and health in life and health business, the risk modelling takes account of adverse developments with both short- and long-term effects on the risk drivers that influence the value of our business.
management report // risK report munich re group annual report 2010 however, particularly the products of life primary insurance, and a large part of our health primary insurance business, are characterised by their long-term nature and the distribution of results over the duration of the policies. We show the value of business in force and value sensitivities for such long-term portfolios in the notes to the consolidated financial statements under (37) risks in life and health insurance business. the adverse development of risk drivers with a long-term impact, such as changes in the forecast mortality and disablement trends in the insured portfolio, would be most likely to cause a fall in value (trend risks). in the notes to the consolidated financial statements (37), we show the effect on the values if they are calculated for individual risk drivers using specific modified assumptions. the risk modelling then attributes probabilities to each modified assumption and produces a complete stochastic profit and loss distribution.
legal and supervisory risks as a result of our global activities, we are subject to a large number of supervisory regulations in different countries. these may give rise to legal and regulatory risks. in 2004, new York state attorney general eliot spitzer started an investigation into the use of placement or market service agreements (psas) in the insurance industry. several other us state regulators subsequently commenced similar probes into this matter, as have regulators in other countries. munich re has received requests to provide information in connection with these investigations and has cooperated fully with the authorities.
management report // prospects munich re group annual report 2010 risks two years after the peak of the crisis, the outlook remains clouded by uncertainty. a repeated slump or even an extended period of stagnation with deflationary consequences cannot be completely ruled out in some countries. a prolonged low-interestrate environment would significantly impair the situation of life insurance companies. the high levels of debt in many countries created a great deal of uncertainty among invest ors in 2010 and could destabilise the financial system again to the detriment of the insurance industry. if the economic recovery continues, the substantial interventions of the central banks and related expansion of the money supply may result in higher inflation, with corresponding inflation in claims costs for insurers. Besides this, the industry could be affected by protectionist restrictions and foreign exchange interventions. potential geopolitical upheavals, for instance in the middle or Far east, are also still a significant risk for the global economy and thus the insurance industry – a risk that is already becoming reality in the arab world.
We do not anticipate any rapid and significant increase in capital market interest rates; regular income from our investments is therefore likely to be relatively low – at just under 4% overall – for the financial years 2011 and 2012.
Notes to the consolidated balance sheet – Assets 02 // other intangible assets 187 03 // land and buildings, including buildings on third-party land 188 04 // investments in affiliated companies and associates 189 notes to the consolidated financial statements munich Re GRouP annual RePoRt 2010
Notes to the consolidated income statement 30 // income from technical interest 228 31 // expenses for claims and benefits 229 32 // operating expenses 231 33 // investment result 232 34 // other operating result 236 35 // other non-operating result, impairment losses of goodwill and finance costs 237 36 // taxes on income 238
figures for previous years the previous-year figures have been calculated on the same basis as the figures for the financial year 2010.
there is no significant impact on our financial statements from the manda tory firsttime application, on the basis of european commission Regulation (ec) no. 1606/ 2002, of the following interpretations: ifRic 12, service concession arrangements; ifRic 15, agreements for the construction of Real estate; ifRic 16, hedges of a net investment in a foreign operation; or ifRic 18, transfers of assets from customers. the same applies to the iasB-mandated first-time application of ifRic 17, distributions of non-cash assets to owners.
Standards or changes in standards not yet entered into foce the changes to IAS 32 (rev. 10/2009), Financial Instruments: Presentation, are to be applied for the first time for financial years beginning on or after 1 february 2010. the amendment provides for certain subscription rights (as well as options or warrants) denominated in a foreign currency (i.e. a currency other than the entity’s functional currency ) to be classified as equity and not as a liability by the issuer to whose equity instruments these rights apply.
application of the following amended standards is mandatory for financial years beginning on or after 1 January 2011: the amendment to IAS 24 (rev. 11/2009), Related Party Disclosures, simplifies the disclosure requirements for state-controlled entities. certain related parties that result from the participation of the state in private companies are exempted from some of the disclosure requirements of ias 24 specified in the amended standard. in addition, the overall definition of related parties has been revised. these changes are of subordinate importance for munich Re.
application of the following standards is mandatory after 1 January 2011. they have not yet been taken over into eu accounting legislation.
ifRs 9 (11/2009 and rev. 10/2010), financial instruments, is intended to replace the current rules of ias 39 on the recognition and measurement of financial instruments. owing to its complexity, the overall project has been subdivided into three phases. the new rules in ifRs 9 so far adopted from the first phase of the project mainly concern the measurement of financial instruments. according to these rules, for financial assets there will generally only be a distinction in future between measurement at amortised cost or measurement at fair value with value changes being recognised in profit or loss. the distinction is to be made on the basis of the reporting entity’s business model and the contractual cash flows of the assets. in addition, for equity instruments there will be the option of measurement at fair value without recognition in the income statement, although then it will not be permissible for value changes not recognised in profit or loss to be subsequently transferred to profit or loss. there also remains the possibility of voluntary measurement at fair value (fair value option). for financial liabilities, there are no changes in the measurement rules except that if the fair value option is applied, value changes attributable to a change in the entity’s credit risk must be recognised without impact on profit or loss in future. the two other phases are concerned with rules for recognising impairments and for hedge accounting. these rules are still under discussion and are to be integrated into ifRs 9 after conclusion of the whole project.
securities that we lend by way of securities lending continue to be recognised in our balance sheet, as the main risks and rewards remain with munich Re; securities that we have borrowed are accounted for by the lender. fees from securities lending are shown in the investment result.
h // deferred tax assets under ias 12, deferred tax assets must be recognised in cases where asset items have to be valued lower, or liability items higher, in the consolidated balance sheet than in the tax accounts of the group company concerned and these differences will be eliminated at a later date with a corresponding effect on taxable income (temporary differences ). also included are tax assets deriving from tax loss carry-forwards. We take into account the tax rates of the countries concerned and the consolidated company’s respective tax situation; in some cases, for purposes of simplification, we use uniform tax rates for individual circumstances or subsidiaries. changes in tax rates and tax le gislation that have already been adopted by the government at the balance sheet date are taken into account. deferred tax assets are recognised if a realisation is probable.
Other reserves contain unrealised gains and losses resulting from the recognition of other securities available for sale at fair value and from investments in non-consolidated affiliated companies and in associates that we do not value at equity. these reserves also include unrealised gains and losses from the valuation of associates at equity, differences resulting from the currency translation of foreign subsidiaries’ figures, and the valuation result from the hedging of cash flows. Write-ups of equity investments avail able for sale are also recognised in this equity item.
in primary insurance, measurement is generally carried out individually for each risk. for german life primary insurance, biometric actuarial assumptions based on the tables of the german association of actuaries are used. We also largely use the tables of the national actuarial associations for the rest of the primary insurance business. the actuarial interest rate employed for discounting is limited by the respective maximum actuarial interest rate prescribed by the supervisory authorities.
the measurement of the provision for future policy benefits in accordance with fasB accounting standards codification subtopic 944-40 depends on the type of contract: for life primary insurance without performance-related participation in surplus, health primary insurance and the bulk of reinsurance contracts (formerly fas 60), the provision for future policy benefits is calculated from the present value of the estimated future policy benefits (including claims adjustment expenses) less the present value of the future net level premiums. net level premium is that part of the gross premium that is needed to finance future policy benefits. life primary insurance contracts with limited premium payment are generally valued in the same way.
Besides this, there are provisions for deferred premium refunds, which are posted for the amounts apportionable to policyholders from the valuation differences between ifRs and local gaap on the basis of the expected future participation quotas. for unrealised gains and losses on investments available for sale, which are recognised directly in equity (see assets item B), the resultant provision for deferred premium refunds is also posted without impact on profit or loss; otherwise, changes in the provision for deferred premium refunds are recognised in the income statement.
Reinsurance Cash-generating unit or group of property-casualty cash-generating units segment ERGO method for calculating the Value in use Value in use recoverable amount Key assumptions regarding in the detailed planning phase, we expect a for the detailed planning, growth in results cash flow planning (at the time of more or less stable premium income with a is expected on average. the planning) reduction in the loss ratios. our general assumption was that there will our general assumption was that there will be moderate upward movement on the be moderate upward movement on the equity equity markets and a stable interest-rate markets and a stable interest-rate level. level. growth rates used for extrapolating 0–1.5% beyond the cash flow planning based 1.5% as maximum growth factor as per circular 2108/2003 of the on financial plans/forecasts german insurance association discount rates 8.6% 8.3%
the rating categories are based on those of the leading international rating agencies. in deviation from the purely economic view, the carrying amount of the loans represents the maximum exposure to credit risk at the balance sheet date, in accordance with ifRs 7. Virtually no credit risk exists in respect of the mortgage loans or the loans and advance payments on insurance policies.
to support hypo Real estate (hRe), the german federal government adopted a rescue package in october 2008, backed by the deutsche Bundesbank and also the german financial services industry. munich Re participated in this rescue package and also in its follow-up financing at the end of 2009. for the further remediation of hRe, nonstrategic business units and risk positions were transferred to the wind-down entity fms Wertmanagement in october 2010. the follow-up financing from 2009, which had expired, was replaced in december by a new bond issued by fms Wertmanagement, with a total volume of €16bn. its term is again one year. there is no legally enforceable government guarantee for this bond, but the german financial market stabilisation fund (soffin) is obligated by law and statute to compensate fms Wertmanagement for losses. munich Reinsurance company has taken up €49.4m of this bond, and eRgo a further €26m. the bond is recognised under corporate debt instruments.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2010 the derivative components from securitisations of mortality and morbidity risks and of variable annuities are shown under “other risks”.
at the balance sheet date, there is an equity item of –€2m (1m) from cash flow hedges. the net fair value of the derivatives falling into this category amounted to €29m (22m) at the balance sheet date.
consolidated financial statements // notes munich Re gRoup annual RepoRt 2010 13 // other receivables €632m (622m) of the amounts receivable on primary insurance business is apportionable to receivables from insurance agents. the miscellaneous receivables contain receivables of €305m (400m) resulting from reinsurance contracts without significant risk transfer, which do not fall within the scope of ifRs 4. in deviation from the purely economic view, the carrying amount of the receivables represents the maximum ex posure to credit risk at the balance sheet date, in accordance with ifRs 7.
Status at 31 Dec. financial year 3,623 3,642 1,583 1,513 663 553 1 after elimination of intra-group transactions across segments.
Primary insurance Life Health Property-casualty €m1 31.12.2010 Prev. year 31.12.2010 Prev. year 31.12.2010 Prev. year
defined benefit obligations include medical-care benefits. the present value of defined benefit obligations for these items amounted to €145m (129m) at the balance sheet date.
Change in the present value of obligations under defined benefit plans €m 2010 Prev. year status at 31 dec. previous year 2,618 2,319 currency translation differences 59 6 change in consolidated group – 90 current service cost 101 90 interest cost 131 123 actuarial gains/losses 131 150 paid pension benefits –94 –92 plan curtailments –2 –45 past service cost 5 –25
Other figures for the current financial year and previous years present value of defined benefit obligations (excluding medical-care benefits) 2,807 2,489 2,178 2,053 2,123 plan assets –1,449 –1,229 –989 –965 –971 not covered by plan assets 1,358 1,260 1,189 1,088 1,152 experience adjustments arising on the plan liabilities –3 –44 7 –24 101 experience adjustments arising on the plan assets 52 20 –100 –7 –
Breakdown of other liabilities €m 31.12.2010 Prev. year amounts payable on primary insurance business 3,848 3,763 accounts payable on reinsurance business 3,634 2,532 amounts due to banks 1,843 873 miscellaneous liabilities 3,778 2,946
Reinsurance Life Property-casualty €m 2010 Prev. year 2010 Prev. year acquisition costs, profit commission and reinsurance commission paid 2,306 1,526 3,588 3,261 changes in deferred acquisition costs and contingent commissions, amortisation and impairment losses of acquired insurance portfolios –245 126 –114 –88 ceded share of acquisition costs, profit commission and reinsurance commission paid 193 91 209 220 ceded share of changes in deferred acquisition costs and contingent commissions –35 29 7 3 Operating expenses – Ceded share 158 120 216 223
consolidated financial statements // notes munich Re gRoup annual RepoRt 2010 33 // investment result 1 after elimination of intra-group transactions across segments.
Primary insurance Life Health Property-casualty €m 2010 Prev. year 2010 Prev. year 2010 Prev. year losses on the disposal of investments 263 606 228 201 147 108 management expenses, interest charges and other expenses 282 254 62 65 46 35 1 after elimination of intra-group transactions across segments.
of primary importance for these insurance contracts are biometric risks, interest-rate risks and lapse risks. the measurement of technical provisions and deferred acquisition costs is based on biometric calculation tables, i.e. on assumptions with regard to mortality, disablement and morbidity, and on the respective contract- or plan-specific discount rates and actuarial interest rates. Besides this, measurement includes assumptions regarding the lapse rate and profit sharing. in addition, other market risks from unit-linked contracts and risks from embedded derivatives, as well as the liquidity risk, have to be taken into account.
We also take account of market standards when checking the adequacy of biometric actuarial assumptions and the trend assumptions included in them. this may result in a change in the provision for adverse deviation allowed for in the actuarial assumptions. the amount of the technical provisions or the deferred acquisition costs is not directly affected as long as there is provision for adverse deviation. in the view of the appointed actuaries, the biometric actuarial assumptions used by us are deemed sufficient. however, in long-term health insurance, we are proceeding on the assumption that there will be further advances in medical treatment, potentially giving rise to higher costs. for this business, it is generally possible to modify the actuarial assumptions by means of a premium adjustment to reflect the changes.
Other market risks and embedded derivatives in reinsurance, other market risks are generally ruled out through suitable treaty design. some reinsurance contracts contain derivative components of variable annuities. these are measured separately and their changes in value are recognised in the investment result. the valuation of these embedded derivatives is sensitive to share prices and interest rates, but these sensitivities are nearly fully compensated for by the fact that such derivatives are for the most part directly matched by financial derivatives for hedging purposes.
We measure sensitivity to changes in the lapse rate in life insurance and for long-term contracts in health insurance using an embedded value analysis; cf. page 247 f.
the effects of the capital market events listed in the following table do not take account of tax or the provision for premium refunds (gross disclosure), i.e. the analysis does not take into account the effects resulting from policyholders’ participation in surplus in insurances of the person. the impact on the results and equity shown below would be substantially reduced if these effects were considered. it is also assumed that changes in the capital markets occur instantaneously, preventing our limit systems and active counter-measures from taking effect. the analysis considers around 98% of munich Re’s investments.
Change in share prices 31.12.2010 Prev. year Impact on Total change Impact on Total change profit Impact on in market profit Impact on in market €bn or loss1 equity1 value or loss1 equity1 value decrease of 10% –0.393 –0.489 –1.014 –0.150 –0.331 –0.587 decrease of 30% –1.560 –1.085 –3.040 –0.583 –0.856 –1.760 market values 9.057 5.605 1 gross before tax and policyholder participation in surplus.
number of rights on 31 dec. 2007 23,823 60,297 149,579 166,199 111,399 – – – additions – – – – – 173,153 – –
When the stock appreciation rights are exercised, the cash payment is made (in the respective national currency) by the company that granted the rights. stock appreciation rights not exercised on the last trading day of the plan term are exercised on the participant’s behalf insofar as the prerequisites for this are met. if the prerequisites are not met, the stock appreciation rights are forfeited. if another company acquires control of munich Reinsurance company or if the latter’s group of shareholders changes significantly due to a merger or comparable transaction or intended business combination (“change of control”), all plan participants from munich Re may exercise their stock appreciation rights within 60 days after the change of control becomes effective, even if the prerequisites for exercising the rights are not yet met at that juncture.
Munich Re as lessee at the balance sheet date, future minimum lease payments under non-cancellable operating leases totalled €455m (397m).
payments from operating leases concern in particular rents for offices and business premises of the group.
Windsor’s combined opening balance sheet at the time of acquisition, after elimination of its intra-group business, also includes the following provisional ifRs figures: investments of €9.0m, cash at banks, cheques and cash in hand of €29.5m, receivables of €21.8m, other assets of €13.4m, technical provisions of €29.4m, and other provisions, liabilities and deferred taxes of €38.7m. Windsor’s equity at the time of acquisition amounted to €23.4m.
Associates accounted for at fair value “poRt elisaBeth” Gmbh & co. KG, hamburg 31.9658 “poRt louis” Gmbh & co. KG, hamburg 26.4129 acm-compagnie mercur aG, Bremen 50.0000 agricultural management services s.r.l., Verona 33.3333
% share Company and registered seat of capitalAuditor’s report the following is a translation of the auditor’s opinion in respect of the original German consolidated financial statements and Group management report: We have audited the consolidated financial statements prepared by the münchener Rückversicherungs -Gesellschaft aktiengesellschaft in münchen, munich, comprising the consolidated balance sheet, the consolidated income statement, the statement of recognised income and expense, the Group statement of changes in equity, the consolidated cash flow statement and the notes to the consolidated financial statements, together with the Group management report for the business year from 1 January to 31 december 2010. the preparation of the consolidated financial statements and the Group management report in accordance with ifRs, as adopted by the eu, and the additional requirements of German commercial law pursuant to section 315a para. 1 of the German commercial code (hGB) are the responsibility of the legal representatives of the company. our responsibility is to express an opinion on the consolidated financial statements and on the Group management report based on our audit.
Capital Asset Pricing Model (CAPM) // capital market model based on the portfolio theory, used to evaluate securities. the capm expands the portfolio theory to include the question of which part of a security’s overall risk cannot be eliminated by means of risk diversification and explains how investment opportunities entailing risk are assessed in the capital markets. accordingly, in efficient markets where prices already incorporate all the information, a greater return can only be achieved by assuming more risk.
Risk exposure // essentially, the 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.
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