Munich Re Group Annual Report 2006 (PDF, 1.8

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Munich Re Group Annual Report 2006 Notes_Notes to the consolidated balance sheet – Equity and liabilities The provision for future policy benefits in life reinsurance largely involves contracts where the mortality or morbidity risk predominates. In reinsurance, annuity contracts have a significantly lower weight than in primary insurance. In reinsurance, measurement is carried out partly individually for each risk and partly collectively for reinsured portfolios, using biometric actuarial assumptions based on the tables of the national actuarial associations. These are adjusted for the respective reinsured portfolio, in line with the probabilities observed for the occurrence of an insured event. A discount rate is chosen that is based on a conservative capital-market scenario. In primary insurance, measurement is generally carried out individually for each risk. For German life and health primary insurance, to which approx. 91% of the provision for future policy benefits in Development of gross provision for future policy benefits The item “Change/Other” concerns portfolio entries and withdrawals totalling –€1,290m. Scheduled changes in the provisions for future policy benefits contain the changes deriving from prospective calculation as a result of premium payments, benefit cases and the unwinding of discount in the year under review. 182 primary insurance is apportionable, 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. Essentially the same actuarial assumptions have been used as in the previous year for measuring the provisions for future policy benefits for business in force. Further information on the underwriting risks and discount rates can be found in Note (36) “Risks from insurance contracts in the life and health segment”. All figures in €m 2006 Prev. year Status at 31 Dec. previous year 94,445 101,926 Currency translation differences –334 364 Change in consolidated group/Other Changes –1,440 –10,949 – Scheduled 1,985 3,099 – Unscheduled 4 5 Status at 31 Dec. financial year 94,660 94,445 (21) Provision for outstanding claims Unscheduled changes stem from alterations in the assumptions underlying the calculations, which required an adjustment in the measurement. Reinsurance Primary insurance Total Life and health Property-casualty Life and health Property-casualty All figures in €m * 31.12.2006 Prev. year 31.12.2006 Prev. year 31.12.2006 Prev. year 31.12.2006 Prev. year 31.12.2006 Prev. year Gross 4,370 5,371 35,728 37,253 2,244 1,993 4,734 4,763 47,076 49,380 Ceded share 327 158 3,482 3,744 10 17 424 580 4,243 4,499 Net 4,043 5,213 32,246 33,509 2,234 1,976 4,310 4,183 42,833 44,881 * After elimination of intra-Group transactions across segments.
Munich Re Group Annual Report 2006 Notes_Notes to the consolidated balance sheet – Equity and liabilities Gross provisions by type Reinsurance Primary insurance Total All figures in €m * 31.12.2006 Prev. year 31.12.2006 Prev. year 31.12.2006 Prev. year Life and health segment – Disability claims provision 2,309 3,071 793 751 3,102 3,822 – Provision for other benefit cases 2,061 2,300 1,451 1,242 3,512 3,542 Property-casualty segment (claims reserve) – Case reserve 19,618 20,833 3,747 3,453 23,365 24,286 – IBNR reserve 16,110 16,420 987 1,310 17,097 17,730 Total 40,098 42,624 6,978 6,756 47,076 49,380 * After elimination of intra-Group transactions across segments. In the life and health segment, the provision for outstanding claims consists of a provision for disability cases and a provision for other benefit cases. The disability claims provision involves periodic payments and is usually due long term. It is calculated as the present value of the expected future payments. Discount rates are disclosed in Note (36) “Risks from insurance contracts in the life and health segment”. The biometric actuarial assumptions are selected using appropriate actuarial principles. The provision for other benefit cases is largely measured at face value and is usually due short term. This provision includes an IBNR reserve, whose amounts are estimated with actuarial methods. In the property-casualty segment, the claims reserve consists of the case reserve and the IBNR reserve. The case reserve reflects the amount which is expected to be needed to settle claims which are known and reported at the balance sheet date. The major part of this provision is measured at face value. A smaller part refers to provisions for annuities in personal accident, liability and workers’ compensation insurance. These are calculated as the present value of the expected future payments. The respective discount rates are disclosed in Note (37) “Risks in the property-casualty segment”. The biometric actuarial assumptions are selected using appropriate actuarial principles. The IBNR reserve is calculated using actuarial methods on the basis of current run-off triangles for payments made and reported losses. The expected timing of payments from the provision for outstanding claims naturally involves considerable uncertainty. In reinsurance, we expect some 35% of the provisions to be paid out within a year, about 40% within a period of between one and five years, and a further 15% within a period of between five and ten years. In primary insurance, we expect around 40% of the provisions to be paid out within a year, roughly 35% within a period of between one and five years, and a further 15% within a period of between five and ten years. For about 10% of the provisions in reinsurance and primary insurance, we expect a settlement period over ten years. 183
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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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Quarterly figures Balance sheet 31.
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© 2007 Münchener Rückversicherun
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