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
The provision for deferred premium refunds has to be established if
the future participation of policyholders in realised gains is provided
for in the case of valuation differences between local GAAP and IFRS
basis. The above change resulting from unrealised gains and losses
on investments reflects the proportional allocation to expected
future policyholders’ bonuses of the change in fair values that has
occurred in the past year. Changes in the provision for deferred premium
refunds are only recognised in the income statement to the
extent that they result from valuation differences recognised in profit
or loss. To determine the portion of the valuation differences alloca-
(23) Gross technical provisions for life insurance policies where the
investment risk is borne by the policyholders
ble to the provision for deferred premium refunds, rates of between
85.0% and 92.5% after tax were generally used.
Of the carrying amount of the gross provision for deferred premium
refunds totalling €5,391m at 31 December 2006, –€169m (–)
concerns disposal groups held for sale; cf. (16) “Non-current assets
and disposal groups held for sale”.
All figures in €m 2006 Prev. year
Status at 31 Dec. previous year 1,516 1,328
Change in consolidated group and other influences 17 –339
Savings premiums 423 461
Unrealised gains/losses on fund assets 100 170
Withdrawal for expenses and risk 24 27
Withdrawal for benefits 102 77
Status at 31 Dec. financial year 1,930 1,516
These provisions are valued retrospectively. The withdrawal for
underwriting risks from the premiums and provision for future policy
benefits is made on the basis of prudent assumptions regarding
expected mortality and morbidity. Here, as with the provision for
future policy benefits for non-unit-linked life insurance, the underlying
calculation is based on best estimates with appropriate provisions
for adverse deviation.
(24) Other accrued liabilities
All figures in €m 2006 Prev. year *
Provisions for post-employment benefits 1,298 1,305
Tax provisions 2,044 2,032
Other provisions 1,523 1,589
Total 4,865 4,926
* Adjusted owing to first-time application of IAS 19 (rev. 2004).
The provisions are directly covered by the investments for the benefit
of life insurance policyholders who bear the investment risk. Small
differences in relation to these investments arise as a result of including
unearned revenue liability in these provisions.
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