Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006
implications for private health insurance are not yet fully
clear. The division of the German health insurance market
into statutory health insurance and private health insurance
is to remain in principle, thus preserving comprehensive
health cover as a field of business for private health
insurers. One of the main advantages of private health
insurance is the presence of ageing reserves to absorb
demographically related cost increases. It is envisaged that
ageing reserves will to some extent have to be transferred
between private health insurance companies. We assume
that this will have only a small impact on reinsurance.
Increasing expenditure for healthcare is to be expected
in both statutory and private health insurance. In this environment,
we continue to see a strong demand for reinsurance
solutions for individual high-cost cases.
Owing to the reduction in premium from a high-volume
treaty, premium income fell somewhat to €243m (258m).
In China, premiums increased to €6m (3m) in 2006,
thus more than doubling compared with 2005, albeit at a
still moderate level. Given the economic boom and the rise
in private incomes, we expect health insurance to grow
dynamically. In other words, China remains one of our
priority target markets – one that is increasingly opening
up and becoming more differentiated. We were able to
establish relations with the new specialist health insurers
formed in 2005, supporting these treaty partners in nearly
all sections of the value chain. Given the distribution possibilities
of the individual insurance groups, we expect business
to develop dynamically in the coming years. We are
working very closely with the supervisory authorities to
help achieve suitable regulatory parameters. An example
of our good cooperation can be seen in the health insurance
regulations that have applied since 2006 and which
we had a hand in designing.
Also in other Asian countries, the health insurance
market offers many companies growth opportunities.
However, these insurers often do not have the specialist
know-how to actively manage health risks. Here we have
positioned ourselves as a partner and risk carrier with our
new business model Consultative Reinsurance (CRI) and
support our clients holistically in their business development.
Premium income in these countries totalled €91m
in 2006.
The Gulf states are another growth region for health
insurance. Munich Re has been active in this market for
several years now, with managed care service companies
that assist our clients in risk management and the accept-
74
Management report_Reinsurance
ance of insurance risks. In 2005, we won a commission
from the Emirate of Abu Dhabi to set up a specialist health
primary insurer (DAMAN Health Insurance). The basis of
this was a consultancy agreement, in which we were able
to draw on all our competence in managed care. DAMAN
started operating in mid-2006 and had a total of over
250,000 policyholders as at 31 December 2006. We are
the exclusive reinsurer and reckon with very positive
development. What is more, we expect other countries in
the region to privatise their healthcare markets as well,
which will give a further boost to our growth in the health
reinsurance sector. In 2006, we were already able to increase
our premium in the Gulf states to €49m, growth
of 60% compared with 2005, which brought this region’s
share of our health insurance segment’s premium volume
to 3.7% (2.3%).
Other markets such as the Netherlands and Italy also
contributed to the health segment’s good performance in
2006. Since premium volume and result are fed by many
regions, the political and economic risks of our business
are adequately spread.
Property-casualty
Profit-oriented underwriting policy continued
Exceptionally low burden from natural catastrophes
Outstanding combined ratio of 92.6%
Record result of €2.1bn
In the year under review, we benefited from exceptionally
favourable claims experience, especially in lines of insurance
with natural catastrophe exposure, as well as from
the improvements in our basic business that we had
achieved in the last few years’ renewals. This led to an
excellent result in our property-casualty reinsurance
segment.
Result
In the previous year’s figures, the improvements in our basic
business had been masked by the unusually high number
of severe natural catastrophes. In 2006, we incurred no
comparable burdens in property-casualty business. With
the support of a solid investment result, we thus achieved
an outstanding operating result of €3,486m (1,284m) and
a consolidated result of €2,134m (420m). Expenditure for
taxes on income in the financial year rose to €1,191m
(652m). The exceptionally positive result is also reflected in