Munich Re Group Annual Report 2006 (PDF, 1.8
Munich Re Group Annual Report 2006 (PDF, 1.8
Munich Re Group Annual Report 2006 (PDF, 1.8
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<strong>Munich</strong> <strong>Re</strong> <strong>Group</strong> <strong>Annual</strong> <strong>Re</strong>port <strong>2006</strong><br />
Life<br />
With a gross premium volume of €6,356m (6,491m),<br />
premium revenue in life reinsurance decreased slightly<br />
compared with the previous year (–2.1%). This was mainly<br />
due to adjustments of our portfolio aimed at optimising<br />
our cost of capital. We expect fundamental growth impulses<br />
for our new business in future from such developments<br />
as the restructuring of the European solvency<br />
regime (Solvency II), the continuing privatisation trend in<br />
old-age and disability provision, and the dynamic expansion<br />
of the insurance markets in Asia and eastern Europe.<br />
In Germany, our premium income totalled €1.3bn (1.5bn),<br />
the decline being primarily linked to the reduction – begun<br />
in 2005 – of a reinsurance treaty with a large premium volume.<br />
Demand in the life primary insurance market stagnated,<br />
with new business remaining at around the level of<br />
2005. Following the change in German fiscal parameters<br />
with effect from 1 January 2005, the trend away from<br />
endowment insurance towards private and company pension<br />
products continued in <strong>2006</strong>. The low amount of new<br />
business with endowment insurance products, together<br />
with the fact that old-age pension products have, so far, not<br />
normally been reinsured in Germany, also had an impact<br />
on premium income in reinsurance. Besides the still high<br />
demand for disability insurance policies – for which we are<br />
the market leader in providing reinsurance – the increasing<br />
product innovations are positive factors. Our competence<br />
as an international reinsurer is especially in demand for<br />
the many new products developed for term insurance<br />
(where preferred lives products are on the advance) and<br />
long term care annuity insurance. Particularly with our outstanding<br />
expertise in biometrics, we are well positioned<br />
to take advantage of the good business opportunities we<br />
expect to come our way.<br />
In the USA, our subsidiary <strong>Munich</strong> American <strong>Re</strong>assurance<br />
Company (MARC) increased its premium volume<br />
slightly to US$ 1.6bn (1.4bn) in a generally contracting life<br />
reinsurance market, thus maintaining its position among<br />
the leading life reinsurers. Given our cedants’ cession<br />
quotas, which in many cases are declining in the segment<br />
of pure mortality covers, our strategy of diversifying into<br />
products for disability and long term care is paying off.<br />
72<br />
Management report_<strong>Re</strong>insurance<br />
The markedly improved result for the year of US$ 37.0m<br />
(28.5m) partly reflects the improved profit margins we<br />
achieved in the last round of price increases and despite a<br />
negative fluctuation in mortality experience.<br />
<strong>Munich</strong> American <strong>Re</strong>assurance Company<br />
All figures in US$ m <strong>2006</strong> Prev. year<br />
Gross premiums written 1,571 1,416<br />
Net earned premiums 907 807<br />
<strong>Re</strong>sult MuACompany<br />
for the year 37.0 28.5<br />
Investments 3,964 3,539<br />
Our branch in Canada, <strong>Munich</strong> <strong>Re</strong>insurance Company<br />
Canada Branch (Life), continues to lead the life reinsurance<br />
market by a wide margin, with a strong presence not only<br />
in individual and group life but also in disability and long<br />
term care business. Its gross premium income of €1.50bn<br />
(1.48bn) also makes it one of our largest life reinsurance<br />
units. Claims experience across the whole portfolio was<br />
again distinctly better than expected, and we thus look forward<br />
to very satisfactory results in the future as well. We<br />
recently launched a web-based manual on the Canadian<br />
market with the latest medical knowledge for underwriting<br />
and rating life insurance policies, which will support the<br />
development of our business.<br />
With a gross premium volume of €1.01bn (1.04bn),<br />
our branch in the United Kingdom kept its premium more<br />
or less stable compared with the previous year. Despite the<br />
continuing pressure on prices in the high-volume segment<br />
of pure mortality covers, we succeeded in writing similar<br />
new business volumes to the previous year, whilst maintaining<br />
strong margins. This was particularly thanks to<br />
services designed to help clients effectively structure<br />
processes for new business, above all in risk selection,<br />
where we can profitably offer our in-depth knowledge.<br />
In the rest of western Europe, interest is growing in<br />
reinsurance solutions that have a positive effect on primary<br />
insurers’ capital and solvency position. Altogether,<br />
premium income in these countries rose to €482m (474m).<br />
We offer expertise and individually tailored solutions, and<br />
expect life reinsurance in particular to enjoy new business
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