The Standing Committee met three times in 2000. Its work included matters for which the Supervisory Board’s approval was required under the internal rules of procedure. The Board of Management Committee also met three times in order to deal with personnel matters involving members of the Board of Management. No meeting of the Conference Committee was required.
Among the world’s major economies, growth remained low only in Japan
In the business year 2000 we succeeded in substantially expanding our premium volume and increasing our profit for the year. However, the development of the reinsurance underwriting result was considerably worse than we had anticipated in the first few months of the year.
Our subsidiaries currently assessed also received excellent ratings: A.M. Best S&P Moody’s
All in all, for 2001 we expect a strong increase in premium from new business, but also from higher shares in existing treaties. The result should again be satisfactory.
As a reinsurer, Munich Re is present throughout the world: we work with insurance companies in around 150 countries. Germany remains our most important market, but 71.8% (67.3%) of our reinsurance premium income now comes from outside Germany.
The rating level in both insurance and reinsurance is rising, but results have remained poor and led to some players withdrawing from the market. Despite this, reinsurance capacity is still high and prices for insurance and reinsurance continue to be inadequate in some sectors.
Owing to some extensive remedial measures (including the termination of loss-producing treaties), our business volume will only develop moderately in 2001; but the result should be more gratifying, unless we are hit by natural catastrophe losses.
Gross premiums Can$ m 255 253 Net premiums Can$ m 95 101 Loss ratio non-life % 79.2 69.0 Expense ratio non-life % 27.9 32.0 Profit for the year Can$ m 11.8 14.5 Investments Can$ m 356 381
In our business region Asia and Australasia our premium income again showed a disproportionately large increase, this time of 25.9% (9.7%) to €1.2bn (1.0bn). The strength of the yen and the revival of some other currencies contributed to this growth.
Our premiums from primary insurance in the year under review were up 6.8% (6.5%) to €14.4bn (13.5bn), representing 46% (49%) of Group premium income.
At the end of 2000 the ERGO Group employed 27,489 (24,692) staff; the increase resulted mainly from the addition of further foreign subsidiaries.
There was scarcely any movement in the bond markets in 2000. The main emphasis of our investments continues to be on European government bonds. In the course of 2000 we selectively established positions in the emerging European corporate bond market.
Our investments grew in the year under review by over 5% to more than €159bn (151bn).
>>_______We have built up our business along similar lines: flexible and growth-oriented, we are prepared for all eventualities.
In a first step in the year 2000, the shareholdings were lowered to just under 25%. Following this, in June 2000 Munich Re successfully placed a €1.15bn bond exchangeable into Allianz shares.
The accumulation budgets are based on worst-case scenarios per loss zone, which have been defined by Munich Re’s meteorologists and geoscientists. The whole range of our scientific expertise is used in determining these scenarios, which are constantly monitored and validated by comparison with the relevant findings of scientific institutes and other professional organizations.
When selecting our retrocessionaires, we adhere to strict guidelines regarding their security and claims-paying ability, which effectively reduces these risks. The same applies in principle to insurance intermediaries, whose creditworthiness we check prior to collaborating with them, as well as checking their monthly accounting of commission on an ongoing basis.
Possible market price risks in our investments are measured using scenario analyses (known as “stress tests”), which enable us to simulate unexpected market fluctuations. Here we apply the following assumptions: – for our equity holdings, index fluctuations of +/–10% or +/–20% – for our investments in fixed-interest securities, a change in the respective interest rate curve of +/–100 or +/–200 basis points – and for our cash positions, a change in the exchange rate vis-à-vis the euro of +/–10%.
We completed the concept for value-based management at Munich Re last year and successfully tested it. This year will see it launched Groupwide.
We are putting greater emphasis on measures for identifying internal senior management potential and providing the relevant qualification programmes. We have increased the number of training places throughout the Group and devote special attention to ongoing staff training beyond the initial phase.
In accordance with IAS 27, the consolidated financial statements include the Munich Reinsurance Company (the parent company) and all the enterprises in which Munich Re owns, directly or indirectly, the majority of the voting shares (subsidiaries). The only exceptions are subsidiaries which are determined as being not material for assessing the Group’s financial position; insurance and reinsurance companies are consolidated regardless of their size. An overview of the group of consolidated companies and other important shareholdings is provided in Section 08.
Under IAS 12, deferred tax assets must be accounted for in cases where asset items have to be valued lower, or liabilities items higher, in the consolidated balance sheet than in the tax balance sheet of the Group company concerned and these differences are temporary. We take into account the tax rates of the countries concerned and the company’s respective tax situation; in some cases, for purposes of simplification, we use uniform tax rates for individual circumstances or subsidiaries.
Provisions for premium refunds are made for obligations involving bonuses and rebates in life and health insurance that are not yet payable at the balance sheet date; the amount posted is based on supervisory or contractual regulations. The item “Other underwriting provisions” also includes amounts apportionable to policyholders from the accumulated valuation differences between IAS and German Commercial Code (provision for deferred premium refunds).
The following table shows the exchange rates of the most important currencies for our business (exchange rate for €1 in each case): Balance sheet Income statement 31.12.2000 Prev. year 2000 Prev. year 07 CONSOLIDATED FINANCIAL STATEMENTS 2000
AAA 47,684 AA 14,178 A 5,400 BBB 627 Lower 160 No rating 4,000
Of this, –€5m (€26m) is apportionable to changes in exchange rates and €2m (–346m) to changes in the consolidated group.
The following table shows the distribution of net unearned premiums between the different Group segments: All figures in €m* 31.12.2000 Prev. year
The provision for outstanding claims includes gross provisions for annuity obligations arising from motor, personal accident and liability insurance totalling €162m (99m). These annuity provisions have been calculated using actuarial assumptions.
Primary insurers – Life and health 20,036 20,257 – Property-casualty 45 53
Cession The reinsuring of risks by a primary insurer with a reinsurer.
American Re 39 f. Asia and Australasia 35, 41 f. Asset management 51 ff. Associated enterprises 98, 133 ff. Auditor’s opinion 128 f.
Interim report as at 30th September 2002 28th November 2002 08 FURTHER INFORMATION
C o m m u n ic at io n s K