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 Breakdown of expenses booked in the financial year All figures in €m 2006 Prev. year * Current service cost 95 76 Interest cost Less 92 91 – Expected return on plan assets 18 34 – Expected return on reimbursements 2 2 Past service cost 8 24 Other –8 –3 Total 167 152 * Adjusted owing to first-time application of IAS 19 (rev. 2004). The actual return on plan assets amounts to €24m, and the actual return on reimbursements to €4m. The expenses are shown mainly under “operating expenses” and “expenses for claims and benefits” in the consolidated income statement. Breakdown of plan assets to cover pension obligations 190 Included in the recognised income and expenses are actuarial losses of €18m (175m) for the financial year and €463m (445m) cumulative, taking currency fluctuations into account. All figures in % 31.12.2006 Land and buildings 0.1 Fixed-interest securities and loans 74.5 Non-fixed-interest securities 24.4 Other 1.0 Total 100.0 The fair value of the plan assets includes own shares with a fair value of €21m. The consolidated companies used the following actuarial assumptions (weighted average values) for calculating their pension obligations: All figures in % 31.12.2006 Prev. year Discount rate 4.8 4.4 Expected rate of return on fund assets 4.6 5.5 Expected rate of return on reimbursements 4.3 4.2 Future increases in entitlement/salary 3.8 3.9 Future pension increases 1.7 2.0 Medical cost trend rate 5.7 6.6
Munich Re Group Annual Report 2006 Notes_Notes to the consolidated balance sheet – Equity and liabilities The expected rate of return on plan assets is determined on the basis of anticipated long-term capital yields. For the financial year 2007, capital transfers of €12m to plan assets are expected. A change in the medical cost trend rate by one percentage point would have the following effects on the amount of defined benefit obligations and pension expenses: Increae by one Reduction by one All figures in €m percentage point percentage point Present value of defined benefit obligations 27 –22 Pension expenses 4 –3 Other figures for the current financial year All figures in €m 2006 Present value of defined benefit obligations (excluding medical-care benefits) 2,123 Plan assets –971 Deficit –1,152 Experience adjustments arising on plan liabilities 101 Experience adjustments arising on plan assets – Tax provisions Tax provisions comprise the provisions for current taxes on income and other taxes of the individual companies, based on their respective national taxation. Deferred tax obligations are shown under “deferred tax liabilities”. Other provisions With- Other All figures in €m Prev. year Additions drawals Reversal changes 31.12.2006 Early retirement benefits/semi-retirement 179 99 51 – 2 229 Earned commission 194 106 124 1 1 176 Outstanding invoices 89 140 117 20 – 92 Anniversary benefits 61 6 4 3 – 60 Holiday and overtime pay 41 40 23 2 – 56 Bonuses 39 50 36 2 –1 50 Miscellaneous 986 427 274 78 –201 860 Total 1,589 868 629 106 –199 1,523 The miscellaneous other provisions comprise a large number of different items, including €55m (66m) for reconciliation of interests, €65m (65m) for salary obligations, €32m (28m) for competitions for sales staff, €26m (15m) for insurance tax on outstanding premiums, €24m (22m) for other remuneration for desk and field staff, €11m (10m) for lawsuit risks, and €84m (61m) in connection with long-term incentive plans. The other changes in the miscellaneous provisions totalling €198m involve the reclassification of a written derivative to “other liabilities”, which is hedged by a corresponding opposite position. The provisions for early-retirement benefits/semi-retirement, anniversary benefits and long-term incentive plans are mainly long term, whereas the provisions for earned commission, outstanding invoices, bonuses, holiday and overtime pay, and miscellaneous are essentially short term. 191
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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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Page 144 and 145: Consolidated financial statements a
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Page 238: © 2007 Münchener Rückversicherun
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