Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Notes_Notes to the consolidated balance sheet – Equity and liabilities
Development of the claims reserve in the property-casualty segment
2006 Prev. year
Gross Ceded Net Gross Ceded Net
All figures in €m share share
Status at 31 Dec. previous year 42,016 4,324 37,692 35,761 3,554 32,207
Currency translation differences –1,911 –231 –1,680 3,137 312 2,825
Change in consolidated group 89 30 59 –351 –41 –310
Claims expenses
– For the year under review 11,165 588 10,577 14,321 1,499 12,822
– For previous years 225 70 155 491 164 327
Total 11,390 658 10,732 14,812 1,663 13,149
Unwinding of discount 93 1 92 104 4 100
Less payments
– For the year under review 3,493 163 3,330 3734 106 3,628
– For previous years 7,722 713 7,009 7,713 1,062 6,651
Total 11,215 876 10,339 11,447 1,168 10,279
Status at 31 Dec. financial year 40,462 3,906 36,556 42,016 4,324 37,692
Changes in the consolidated group result mainly from the acquisition
of I . sviçre Sigorta A.S¸.
The claims expenses for the year under review show both payments
made for the year under review and expenses for posting the
claims reserve in that year. The provisions set up for claims from previous
years are regularly updated using best estimates based on
claims information and past claims experience. The respective
change is shown under claims expenses for previous years.
This change was mainly due to the following factors:
In the year under review, reserves for Continental European
motor excess-of-loss business and workers´ compensation claims
in the US and Europe were increased, as assumptions regarding
reporting and payment patterns were adjusted in response to a continued
high level of claims activity. These portfolios are subject to
future medical inflation and increased life expectancy among the
claimants, which will have a leveraged effect on the expected future
claims payments.
Claims payments for the individual accident years (per calendar year, net)
184
Portions of the reserves associated with short-tail property lines of
business for the accident years after 2001 were reduced. This action
was in response to the consistently favourable development in lines
of business where the risk of change was deemed to be minimal. The
estimated ultimate losses associated with parts of the motor quota
share business were also reduced owing to continued favourable
experience.
The increase in the provision for asbestos-related claims at
Munich Re America did not have any run-off impact since unallocated
risk margins at Munich Re Group level were released by
an equal amount.
Net run-off results in property-casualty business
The values in the following four run-off triangles cover more than
99% of our Group’s portfolio of property-casualty business.
All figures in €m Accident year
Calendar year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Total
1996 6,321
1997 4,489 2,802
1998 2,034 2,297 2,961
1999 1,561 861 2,311 3,402
2000 1,463 533 768 3,096 3,403
2001 837 302 680 1,391 2,637 3,371
2002 848 258 495 959 1,227 3,098 3,802
2003 619 134 233 508 779 1,590 2,919 3,920
2004 643 312 383 469 549 885 1,266 2,253 3,730
2005 448 –43 194 347 519 623 687 929 2,762 3,366
2006 397 100 163 159 318 463 384 428 929 3,479 3,245 10,065