Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 General information_Glossary
L – O
Life and health
One of the segments in our segment reporting, containing the
classes life (re)insurance and health (re)insurance.
Loss ratio
Percentage ratio of claims expenses to earned premiums.
Marine
The insurance of ships and their cargoes.
Market value
The publicly listed market price obtainable for an asset in an active
market (especially stock market price).
Medicator
Medicator AG is the German private health insurers’ fund for the protection
of policyholders. It guarantees that a health insurance company’s
contractual obligations will be fulfilled in the event that the
company encounters financial difficulties.
Minority interests in equity and earnings
That part of the equity and earnings of subsidiaries that is attributable
to shareholders outside the Group.
Mortality table
Table developed using methods of probability theory for estimating
the expected mortality of policyholders in a portfolio of life or health
insurance contracts. It shows the probability of future mortality on a
differentiated basis according to age and other factors, often taking
into account demographic trends. Mortality tables with provision for
adverse deviation are generally used for measuring technical provisions.
Net
Gross/net
Net asset value
Measurement of the fair value of companies. The starting point is
the proportional equity capital of the company to be valued, plus the
valuation reserves.
Net expenses for claims and benefits
These include the expenses for claims (claims payments and the
change in the provision for outstanding claims), expenses for premium
refunds and the change in the remaining technical provisions
(provision for future policy benefits and other), in each case after
deduction of the ceded share.
Net operating expenses
Commission, personnel costs and general expenses for the acquisition
and ongoing administration of insurance contracts, less any
commission reimbursed by reinsurers, including profit commission,
plus expenses from amortisation of PVFP.
Net premium
Amount relevant for determining the provision for future policy
benefits as per FAS 120. The net premium derives from the gross
premium less the premium portions used to amortise the acquisition
costs.
Non-proportional reinsurance
Under this form of reinsurance, the reinsurer assumes payment of
the primary insurer’s loss above a defined amount. The calculation of
the reinsurance premium is based on claims experience with the
type of business concerned.
Obligatory reinsurance
Although obligatory reinsurance agreements contain agreed periods
of notice, they are generally concluded for an unlimited duration.
These treaties between insurers and reinsurers may therefore run for
long periods (cf. facultative reinsurance).
Offshore energy insurance
Umbrella term for the insurance of risks such as oil platforms and
production facilities at sea, plus the related technical equipment.
Operating result before taxes on income
Consolidated result from ordinary activities, before finance costs and
taxes on income.
Option
Derivative financial instrument where the holder is entitled – but not
obliged – to buy (in the case of a call option) or sell (in the case of a
put option) the underlying asset at a predetermined price within a
certain period. The writer of the option is obliged to transfer or buy
the asset and receives a premium for granting the option to the purchaser.
OTC derivative
Derivative financial instrument which is not standardised and is
traded not on an exchange but directly between two counterparties
via over-the-counter (OTC) transactions.
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