Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Notes
Number of consolidated subsidiaries *
Germany Other
countries
Total
31 Dec. previous year 74 138 212
Additions 3 18 21
Reductions 7 8 15
31 Dec. financial year 70 148 218
* In addition, 69 German and 9 non-German investment funds were
included in the consolidated group.
Number of unconsolidated subsidiaries
Germany Other
countries
Total
31 Dec. previous year 206 76 282
Additions 17 9 26
Reductions 21 12 33
31 Dec. financial year 202 73 275
Consolidation principles
The balance sheet date of the consolidated companies is generally
31 December. Some of the special funds have other balance sheet
dates. These funds are consolidated on the basis of interim accounts
as at 31 December.
We generally consolidate subsidiaries and special funds as soon
as the Group holds the majority of the voting shares or has the factual
ability to exercise control. Acquisitions are accounted for by the
purchase method. In order to determine the equity capital at the time
of acquisition, we measure the assets and liabilities of the subsidiary
or special fund at fair value. The acquisition costs of the shares are
netted against the equity capital apportionable to the Group at the
time of acquisition. Any residual positive amount is capitalised as
goodwill.
Profits earned by the subsidiaries or special funds after their first
consolidation are included in Group equity. Amounts relating to
intra-Group transactions (receivables and liabilities, expenses and
income between consolidated companies) are eliminated unless
they are determined as not being material.
Associates
Pursuant to IAS 28, associates are generally all entities which are not
subsidiaries but on whose financial and operating policies the
investors can exercise a significant influence.
In the case of shareholdings amounting to between 20% and 50%
of the voting rights, the entities in question are deemed to be associates.
Investments in associates are valued at equity unless they are
not material for assessing the Group’s financial position.
Number of companies valued at equity
Germany Other
countries
Total
31 Dec. previous year 30 40 70
Additions – 5 5
Reductions 2 6 8
31 Dec. financial year 28 39 67
Number of other associates
(not valued at equity)
Germany Other
countries
Total
31 Dec. previous year 24 19 43
Additions 1 7 8
Reductions 2 4 6
31 Dec. financial year 23 22 45
Recognition and measurement
The annual financial statements of the consolidated subsidiaries and
special funds are subject to uniform accounting policies. For the
annual financial statements of significant associates we have, in
accordance with IAS 28.27, made appropriate adjustments for the
purposes of the consolidated financial statements. Valuations used
in the financial statements of associates not classified as significant
are maintained.
Changes in accounting policies
Application of the recognition, measurement and disclosure
methods follows the principle that a method once chosen should
be applied consistently. Changes have become necessary as a result
of new or revised IFRSs. We have complied with all new and revised
IFRSs whose application is compulsory for the first time for periods
beginning on 1 January 2006. The following standard is of significance
in this context:
IAS 19, Employee Benefits, was amended in December 2004 and
now provides the option of recognising actuarial gains and losses on
defined benefit plans directly in equity, outside profit or loss. We
have taken advantage of this option as from 1 January 2006, replacing
the previously used corridor method.
In accordance with IAS 8 and the transitional provisions of IAS 19
(rev 2004), we have adjusted the figures for the previous year retrospectively.
This has the following effects on the consolidated balance
sheet as at 31 December 2005:
157