Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Management report_Reinsurance
pate in mass business. Rounding off our range of activities
are the special segments workers’ compensation and customised
portfolio solutions.
The high-volume treaties in the portfolio can give rise
to significant fluctuations in the portfolio’s size, which had
a substantial influence on premium level in previous years.
The premium growth in 2006 was attributable to a variety
of factors and involved virtually all lines of business. First
and foremost, capacity shortages in sectors exposed to
natural catastrophes caused premiums to rise in both original
and reinsured business. Then there was additional
revenue from previously agreed reinstatement premiums
under treaties that had been affected by the hurricanes in
2005. Lastly, we expanded our agricultural business in the
USA. Premium volume thus climbed by 5.9% to €3.6bn
(3.4bn), even though currency translation had an unfavourable
effect.
The 2006 result was not impacted by any exceptional
loss events, so that the combined ratio fell to a gratifying
88.1% (126.0%).
In liability business, the ongoing concentration of our
global clients’ reinsurance is resulting in a growing share
of highly exposed and more volatile industrial business
and of specific segments like professional indemnity and
D&O. This reflects our clients’ needs, to which we have
responded with our specialist know-how and with our
analysis and service tools. As there is only a limited
amount of capacity available, particularly for large international
programmes, the market environment in this
segment is largely stable.
Accident reinsurance is experiencing further demand
for catastrophe covers for accumulation events. Our personal
lines business chiefly comprises motor reinsurance.
The results of these classes of business were positive.
In marine reinsurance, the lion’s share of the premium
volume is generated by our Watkins Syndicate at Lloyd’s in
London (see page 51), which also writes policies for oil
platforms (offshore energy insurances).
In property reinsurance, we provide protection mainly
for high exposures to natural catastrophes such as windstorm
and earthquake. Following the hurricanes in the
previous year, the prices for such reinsurance covers rose
significantly, and reinsurance capacity in the markets
became decidedly scarcer. Given the lack of major losses
in the USA and Europe in 2006, pressure on capacity will
reduce somewhat. We nevertheless expect the rate level to
remain adequate.
In agricultural reinsurance, we extended our leading position.
The business we wrote mainly comprised state-supported
crop insurance programmes, with a large portion
stemming from the USA. Apart from this, we work closely
with selected cedants in applying our global experience
and competence to individual segments and regions with
high growth potential.
The result we achieved in the year under review was
also good. A notable example of our cooperation with clients
is a product we developed with Royal & SunAlliance in the
area of aquaculture, which was nominated International
Initiative of the Year at the 2006 British Insurance Awards.
In workers’ compensation reinsurance, the consolidation
of our portfolio led to a reduction in premium volume.
With a view to exploiting business potentials, we actively
support international reform processes at international
level, in particular with regard to adjusting national legal
parameters for workers’ compensation insurance.
In the highly specialised segment of customised portfolio
solutions, we provide our international clients with
tailor-made reinsurance solutions for loss portfolios. We
continue to see attractive long-term business opportunities
in this area.
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