Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Management report_Reinsurance
opportunities emanating from the run-up to Solvency II in
the next few years.
In eastern, central and southern Europe, Munich Re
was able to develop its business according to plan again
in 2006, with premium income rising by a good 31%. We
worked very closely with our cedants to improve the quality
of the business, so that the profitability still meets our expectations.
The growth was also due to the region’s positive
economic development, which economists predict will
continue in the coming years, not least due to the stabilising
influence of EU expansion. The outstanding measure
taken by Munich Re in 2006 to maintain its involvement in
this development potential was to set up a subsidiary in
Moscow for the reinsurance of life business in the Commonwealth
of Independent States.
In China and India, we expanded our presence further,
deploying our specialists to advise primary insurers in
important areas such as product development and underwriting
and to make new types of risk more transparent
through market studies. Given this close proximity to
clients, we have grown our reinsurance portfolio strongly
as planned, albeit from a modest base. In the medium
term, we expect these markets to have a similar business
significance to that of well-developed European markets.
With the specialised consultancy we offer, we are excellently
positioned. Using the same approach, we have been
able to greatly improve our standing in the promising
Korean market, and see further potential in this field.
Our life reinsurance business in Australia and New
Zealand, which we write via our subsidiary Munich Reinsurance
Company of Australasia (MRA), again performed
well. With premium income of €152m (143m), we achieved
another slight increase, whilst also ensuring the requisite
profit margins. On the basis of our acknowledged competence
in disability and group insurance, the segment with
the highest growth rates in the primary insurance sector,
we will steadily and profitably expand our business in
these markets.
In its life reinsurance business on the African continent,
our subsidiary Munich Re of Africa (MRoA) kept its premium
income stable at €83m (83m). This was mainly due
to its consistently profit-oriented underwriting approach,
as well as the consolidation process in the primary insur-
ance market. Proceeding from its leading position in group
insurance, the plan is to drive future business growth with
product innovations and the profitable expansion of individual
life business.
Health
The global health insurance market with its segments
“financial protection”, “health services” and “provision of
care” offers considerable growth opportunities. Our key
sector “financial protection” is particularly promising. Two
main factors are stimulating higher demand here: healthcare
is gaining in significance, and healthcare systems
worldwide are undergoing further liberalisation and privatisation.
As the world’s leading provider in this field, with a
product portfolio that integrates reinsurance and services,
Munich Re is well prepared for these developments. The
USA remains the largest single market for us. Beyond this,
we expect strong growth in the Gulf region and Asia.
Despite an appreciable decrease in our share of a
major client account, the acquisition of good new business
enabled us to write overall premium income of €1.3bn, thus
maintaining the previous year’s level. At 96.3% (93.0%),
the combined ratio again remained within the target figure
of 97%.
In the USA – with 45% of total premiums, our most
important and strongest-earning health insurance market –
premium income was 17.5% up on the previous year.
New legislation such as the Medicare Modernization
Act will open up new growth areas in the USA for primary
insurers and reinsurers, e.g. in care for the chronically ill.
We are well-positioned in this area with a minority stake
in the disease management company Health Dialog, a
specialist firm for the holistic management of chronic
illnesses. We expect this sector to develop positively.
With premium income of €59m (187m), the United
Kingdom accounted for a significantly smaller share of
overall premium income in 2006, owing to a fall in the volume
of business with one major client. However, we are
confident of increasing premium income appreciably in
2007 through new business.
In Germany, there was a great deal of debate about the
health reform in 2006. The government coalition parties
finally agreed on a compromise, although the specific
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