Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Management report_Financial situation
ing decline in policy terminations and to portfolio development
and strong new business production, particularly at
recently established companies abroad. Conversely, these
provisions fell at our reinsurance companies as a result of
our planned reduction in a high-volume quota share reinsurance
treaty. The loss reserves at the reinsurers in the
Munich Re Group declined primarily because of the settlement
of a large number of claims from prior years in
respect of which we had posted reserves, and the reduced
need for new reserves due to the absence of severe natural
catastrophes. The positive cash flow generated by the
fall in the balance of other receivables and liabilities of
€1,303m resulted from rearrangements of the investment
portfolio. The net gains on the disposal of investments –
which in adjusting the consolidated profit have to be
deducted from the cash flows from operating activities –
are essentially attributable to the disposal of securities
available for sale.
The cash outflows for investing activities were determined
by payments for the acquisition of investments.
These exceeded the inflows from the sale/maturity of
investments by €4,157m. The inflows from the sale of consolidated
companies include the ADA-HAS Group. The
sales consideration of €10m was received in cash. In the
financial year 2006, we acquired a 75% stake in the I . sviçre
Insurance Group. We paid €211m of the purchase price in
cash and offset this in the cash flow statement against the
cash of €21m held by the subsidiaries acquired. The
Munich Re Group additionally assumed a total of €124m in
investments and €191m in technical provisions through
acquisitions.
The cash outflows for financing activities stem primarily
from the dividend payment for 2005 of €723m and
that part of the redemption of the ERGO International AG
exchangeable bonds with impact on cash flow totalling
€335m. The share buy-back resulted in a cash outflow of
€259m.
Overall, in the year under review cash – which includes
cash at bank, cheques and cash in hand – fell slightly by
€106m to €2,172m.
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