Munich Re Group Annual Report 2006 (PDF, 1.8

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Munich Re Group Annual Report 2006 Notes_Foreign currency translation Foreign currency translation Munich Re’s presentation currency is the euro (€). The balance sheets of foreign subsidiaries whose national currency is not the euro are translated in accordance with the functional currency principle using the year-end exchange rates, and their income statements using quarterly average exchange rates. Any exchange differences arising in the process are recognised in equity (“other reserves”). Foreigncurrency transactions are essentially translated into the Group companies’ respective national currencies in accordance with IAS 21. In the case of reinsurance, the principle of currency matching also applies. This means that Group companies which write a significant Currency translation rates 164 portion of their business in foreign currency generally safeguard themselves against exchange losses by attempting to match assets and liabilities in the same currency. Where exchange gains or losses occur nevertheless in the translation of foreign-currency transactions into the national currencies of the consolidated companies, they are accounted for under “other income” and “other expenses” respectively. The following table shows the exchange rates of the most important currencies for our business: Balance sheet Income statement Rate for €1 31.12.2006 Prev. year Q4 2006 Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Australian dollar 1.67300 1.60800 1.67463 1.68366 1.68371 1.62793 1.59865 1.60501 1.63782 1.68700 Canadian dollar 1.53450 1.37790 1.46882 1.42841 1.41098 1.38917 1.39511 1.46595 1.56661 1.60773 Pound sterling 0.67375 0.68710 0.67323 0.67980 0.68804 0.68640 0.68021 0.68331 0.67843 0.69373 Rand 9.29750 7.48125 9.43203 9.10997 8.12931 7.40214 7.76097 7.93395 8.07194 7.87516 Swiss franc 1.60965 1.55460 1.59306 1.57688 1.56350 1.55929 1.54767 1.55348 1.54375 1.54902 US dollar 1.31865 1.17955 1.28942 1.27441 1.25700 1.20220 1.18880 1.21973 1.25887 1.31156 Yen 157.1240 139.2220 151.8450 148.0810 143.7610 140.5450 139.3170 135.6200 135.3510 137.0570
Munich Re Group Annual Report 2006 Notes_Notes to the consolidated balance sheet – Assets Notes to the consolidated balance sheet – Assets (1) Goodwill All figures in €m 2006 Prev. year Gross carrying amount at 31 Dec. previous year 3,271 3,144 Accumulated impairment losses at 31 Dec. previous year 7 – Carrying amount at 31 Dec. previous year 3,264 3,144 Currency translation differences –125 170 Additions 121 2 Disposals – 45 Impairment losses 4 7 Carrying amount at 31 Dec. financial year 3,256 3,264 Accumulated impairment losses at 31 Dec. financial year 11 7 Gross carrying amount at 31 Dec. financial year 3,267 3,271 The goodwill results mainly from the acquisition of Munich Re America (formerly American Re) in November 1996 and from the acquisition of the additional shares in the ERGO Insurance Group in 2001 and 2002. The additions of €121m derive mainly from the purchase of a 75% stake in the share capital of the I . sviçre Insurance Group, described in detail in our notes on the consolidated companies Impairment test for the main items of goodwill For the purpose of impairment testing, IFRS 3 in conjunction with IAS 36 requires that the goodwill be allocated to the cash-generating units expected to derive benefit (in the form of cash flows) from the business combination. To ascertain whether there is any impairment, the carrying amount (including allocated goodwill) of a cash-generating unit is compared with that unit’s recoverable amount. The recoverable amount is the higher of – its fair value less costs to sell and – its value in use (present value of the future cash flows expected to be derived from a cash-generating unit). The future cash flows used for determining the value in use are based on management’s most recent financial plans/forecasts. Beyond the period covered by these financial plans/forecasts, the future cash flows are estimated by extrapolating the prognoses on which the financial plans/forecasts are based, applying constant growth rates for the subsequent years. The goodwill from the acquisition of Munich Re America (carrying amount of €1,046m) and from the acquisition of shares in the ERGO Insurance Group (carrying amount of €1,754m) was allocated to the cash generating units “reinsurance property-casualty segment” and “ERGO” respectively. The recoverable amount of these units was determined on the basis of the value in use. During the financial year 2006, the impairment test did not give rise to any need for writedowns of goodwill for these cash-generating units. 165
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Munich Re Group Annual Report 2006
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The Munich Re Group Our operations
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Munich Re Group in 2006 Tireless an
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Notable events in 2006 / Letter to
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Glossary / Index of key terms / Imp
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Quarterly figures Balance sheet 31.
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© 2007 Münchener Rückversicherun
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