Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Management report_Reinsurance
Premium
Premium income remained steady in 2006 at €22.2bn
(22.3bn). With the euro rising on average against the most
important foreign currencies for our business, we also
recorded a decline in premium income due to changes in
exchange rates (without these currency translation effects,
our premium income would have been 0.1% higher).
Approximately €16bn or 71.9% of premium was written in
foreign currency, of which 48.9% was in US dollars and
15.3% in pounds sterling. 28.1% of our premium volume
was transacted in euros.
The main reason for the decline in premium income
was the continuation of our strictly risk-adequate underwriting
policy. Where prices or conditions were not commensurate
with the risks, we refrained from renewing
treaties or writing new business.
In addition, as part of our portfolio management, we
converted our reinsurance treaties in certain market segments
and for specific clients to non-proportional covers
Gross premiums by segment
if this allowed us to create higher added value. We are
prepared to accept that the premium volume generated in
these cases is lower than under proportional treaty forms
of cover. Nevertheless, we largely offset the lower volume
with the substantial rate increases we achieved in the last
renewals for property and offshore energy risks with natural
catastrophe exposure in the USA and Latin America
(especially oil platforms).
In life and health reinsurance, the unrelenting demand
worldwide for privately financed provision products
largely made up for premium reductions from individual
high-volume treaties. This kept our premium income
stable, despite our selective underwriting policy and our
stringent profitability requirements. About 34.5% of our
total premium income was attributable to life and health
reinsurance and 65.5% to the property-casualty segment.
All figures in €m 2006 2005 2004 2003 2002
Life and health 7,665 7,811 7,540 6,876 6,561
Property-casualty 14,551 14,547 14,857 17,919 18,884
Total 22,216 22,358 22,397 24,795 25,445
Life and Health
Life – Slight decline in premium income with stable
operating result
Health – Premiums at previous year’s level with good
growth opportunities
Favourable result of €561m
Responsible for
Life and health reinsurance worldwide
Life
2006 2005 2004 2003 2002
Gross premiums written
Health
€m 6,356 6,491 6,119 5,461 5,277
Gross premiums written €m 1,309 1,320 1,421 1,415 1,284
Combined ratio * % 96.3 93.0 96.5 96.2 102.8
* Excluding health insurance conducted like life insurance;
previous years’ figures adjusted.
At €7.7bn (7.8bn), gross premiums written in life and health
reinsurance were just below the previous year’s level. Currency
translation had a positive impact on our premium
income in 2006. Adjusted to eliminate effects from changes
in exchange rates, premium declined by 2.8%. The operating
result of €922m (1,105m) and the consolidated result of
€561m (977m) showed a marked decrease, largely owing
to lower income from investments. Expenditure for taxes
on income in the financial year rose to €265m (48m). In the
previous year, tax expenditure had been exceptionally low,
owing to the impact of loss carry-forwards within the
Group.
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