Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 General information_Glossary
R – S
Rating
Standardised assessment of the credit standing of debt instruments
and companies by specialised independent rating agencies.
Recoverable amount
Under IFRSs, the recoverable amount of an asset is the higher of net
sales price (i.e. sales price less sales costs) and the value in use (i.e.
present value of the future cash flows). The recoverable amount
plays a part especially in connection with impairments in the value of
real estate, where an impairment loss has to be recognised if the
recoverable amount is lower than the carrying amount.
Registered shares
Shares registered in the owner’s name. They are entered in the company’s
share register with the shareholder’s personal data and the
number of shares held.
Reinsurer
Insurance company that assumes the insurance risks of other insurance
companies without itself having any direct contractual relationship
with the policyholder.
Reinsurance capacity
Amount of cover that a reinsurance company or the market as a
whole can make available.
Renewals
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. In such cases, the treaty conditions are usually
adjusted in renewal negotiations each year, and the treaties
renewed.
Retention
That part of the risk assumed which the insurer/reinsurer does not
reinsure/retrocede, i.e. retains net for own account.
Retrocessionaire
Reinsurer that reinsures reinsurance business assumed by other
insurance companies. Retrocession enables the reinsurer to lay off
part of its risk to other insurance companies.
Return on equity (ROE)
Indicator for measuring a company’s financial performance. It is calculated
as a percentage ratio of the result for the period to the average
equity employed.
Risk
The possibility of negative factors influencing the future economic
situation of company. In insurance, it is also understood to mean the
possibility of a loss being caused by an insured peril. In addition,
insured objects or persons are frequently referred to as risks.
Risk capital
The amount of capital hypothetically assigned for the conducting of
insurance or reinsurance business to ensure that the probability of
default in respect of the portion of the business exposed to risk is
kept to a minimum. The capital required for this purpose is calculated
using mathematical risk and financing models.
Risk controlling
Ongoing monitoring and control of risks and measures, including
methodological development and risk analysis/reporting, by a neutral,
independent unit that also proposes and initiates additional
measures.
Risk management
Systematic and continual identification, analysis, evaluation and
control of potential risks that may jeopardise the assets, liabilities,
financial position and results of a company in the medium to long
term. The aim is to safeguard the existence of the company and its
objectives against disruptive influences by means of suitable measures,
and to increase corporate value.
Risk trading
Trading of risks on the capital markets.
Run-off triangle
Also known as “loss triangle”, this is a tabular representation of
claims-related data (such as payment, claims reserve, ultimate
loss) in two, time-related dimensions. One of these is the calendar
year, while the other is usually the accident year (year of the loss
occurrence).
Run-off triangles – as the basis for measuring claims reserves – make
clear how the claims reserve changes over the course of time due to
payments made and new estimates of the expected ultimate loss at
the respective balance sheet date.
Scenario analysis
Type of analysis used to investigate how certain key figures (market
values or carrying amounts) change in the event that predefined
market developments occur. Scenario analyses usually take the form
of average if-then analyses.
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