Munich Re Group Annual Report 2006 (PDF, 1.8

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Munich Re Group Annual Report 2006 General information_Glossary S – U Securities lending The transfer (assignment) of fixed-interest securities or shares from the portfolio of a lender to a borrower for a given period of time. The borrower undertakes to retransfer securities with the same reference number and in the same amount to the lender after expiry of the lending period. In return, the lender is paid a lending fee. Security Ability (and willingness) of a reinsurer to meet its financial obligations from reinsurance agreements in full and at all times. Security depends on such factors as earnings capacity, quality of investments, capitalisation and liquidity. Segment reporting Presentation of the items in the annual financial statements according to classes of business and regions. Solvency An insurance company’s capitalisation. Solvency II Project of the European Commission to revise European insurance supervisory regulations to protect policyholders against loss. The project’s main objectives are further harmonisation of the financial services sector, creation of a level playing field, risk-based determination of capital-adequacy requirements, inclusion of qualitative factors in the supervisory process, promotion of active internal risk management, and enhancement of risk transparency for supervisory authorities and the public. Solvency II follows the three-pillar approach used in Basel II: minimum capital requirements (quantitative), supervisory review process (qualitative) and market discipline (disclosure). Special fund Investment fund with a maximum of 30 unit-holders that are not natural persons. As the fund owners pursue specific objectives with their investments, investment policy is geared to individual requirements. Statutory surplus Surplus recorded in the balance sheet of US insurance companies on the basis of the statutory accounting regulations used by US state supervisory authorities. Stress test A special form of scenario analysis. The aim is to make a quantitative statement on the loss potential of portfolios in the event of extreme market fluctuations. 226 Structured product In the case of structured products, a derivative financial instrument (e.g. an option) is combined with a non-derivative instrument (e.g. a bond). Structured products are also referred to as hybrid products. Sublimit Specific upper limit of liability, e.g. for certain risk classes or geographical scopes of cover under a (re)insurance contract. Subordinated bond In the event of liquidation, dissolution or insolvency of the loan debtor or in the event of debt composition proceedings or other processes to avoid insolvency being taken against the loan debtor, the claims of holders of subordinated bonds are satisfied after the claims of all other non-subordinated creditors. In other words, payments on subordinated bonds are not made until claims of third parties against the bond debtor arising from non-subordinated liabilities have been fully satisfied. Swap Agreement between two counterparties to exchange payment flows over a specified period in order to profit from relative cost benefits that one party enjoys on a particular financial market. In the case of an interest-rate swap, payment obligations in the same currency but with different interest rate conditions (e.g. fixed/variable) are exchanged. In the case of currency swaps, the payment obligations exchanged are in different currencies. Technical provisions Uncertain liabilities directly connected with insurance business. These provisions are made to ensure that obligations under insurance contracts can always be met. Termination rate Basis for measuring technical provisions in life and health insurance and pension obligations. It measures the probability of a policy being terminated because of death, lapse or other circumstances, leading to the payment of policy benefits or the cessation of annuity payments. Ultimate loss As calculated at the end of the calendar year under consideration, the ultimate loss for an accident year indicates the estimated aggregate claims expenditure that will have to be paid to finally settle the claim(s). It comprises the claims payments already made for the accident year in question and the remaining claims reserve posted for payments in future years. Since claims reserves are based on estimates, the ultimate loss changes from one calendar year to the next. Reference may therefore also be made to the ultimate loss position or the ultimate loss estimate.
Munich Re Group Annual Report 2006 General information_Glossary U – V Underwriter Member of an insurance or reinsurance company that acts on behalf of his or her employer to negotiate, accept or reject the terms of a (re)insurance contract. Underwriting result Balance of income and expenses apportionable to (re)insurance business. Unearned premium The portion of premium income in the financial year that is attributable to periods after the balance sheet date is accounted for in the technical provisions as unearned premiums. Unit-linked life insurance A type of life insurance with a savings component, where the benefits payable depend on the performance of the assets invested in a fund. The investment risk is borne by the policyholder. Universal life Contracts in life primary insurance where the amount of the premiums or benefits is not guaranteed or fixed, and the policyholder can vary the premium payments within certain limits. US Generally Accepted Accounting Principles (US GAAP) The principles of US accounting that are stipulated as compulsory for quoted companies in the USA. The individual accounting standards are referred to as Financial Accounting Standards (FASs). Value at risk Method of quantifying risk, which measures the potential future losses that may not be exceeded within a specified period and with a specified probability. Value-based management Concept geared to increasing the value of a company on a long-term basis. Value is only created long term if a company regularly earns a profit that exceeds the costs of the equity capital invested. Voting right Every shareholder has a legal right to vote at the Annual General Meeting. The number of votes that a shareholder has depends on the number of shares with voting rights held. Shareholders can arrange for their voting rights to be exercised by a third party, e.g. a bank or a shareholders’ association (proxy). 227
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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 236 and 237: Quarterly figures Balance sheet 31.
Page 238: © 2007 Münchener Rückversicherun
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