Munich Re Group Annual Report 2006 (PDF, 1.8

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Munich Re Group Annual Report 2006 In 2002, we determined that our investments in shares and corporate bonds should meet sustainability requirements. One of our goals is to ensure that 80% of our equities and corporate bonds are included in recognised sustainability indices or satisfy the sustainability criteria of renowned sustainability rating agencies. We have already surpassed this target. In the case of government bonds, we have achieved a rate of around 95% compliance in terms of the aforementioned criteria. Munich Re also considers sustainability factors in its long-term investments. We use an appropriate set of criteria when acquiring participations and take sustainability aspects into account when performing regular analyses of our shareholdings. In April 2006, Munich Re became the first German company to sign the UN Principles for Responsible Investment (PRI), which it had played a prominent role in helping establish. The PRI offer institutional investors with guidelines for incorporating social and ecological criteria in their investments. This includes observing such criteria in investment decisions, promoting sustainable investment approaches in the financial sector, and reporting regularly on the implementation of the criteria. Development and structure of investments As at 31 December 2006, the Group’s own investments totalled €176.9bn (177.2bn). In the year under review, our assets decreased by €0.3bn or 0.2%. Our portfolio predominantly consists of interest-bearing investments. We invested the inflows from our excellent underwriting business and from sale proceeds realised in the year under review largely in fixed-interest investments. The amount of interest-sensitive items “fixed-interest securities” and “loans” rose by €2.1bn to €127.5bn in the course of the year and made up 72.1% of our total investments at the end of the year. Our portfolio of equities and shareholdings grew by €0.9bn in the course of the year, primarily owing to increases in the market value of our non-fixed-interest securities available for sale. Investments and shareholdings in affiliated companies and associates totalled €25.8bn (24.9bn) at the end of the year and constituted 14.6% of our investments at carrying value. In the final quarter of the year, we commenced the disposal of a German real estate package, reducing our real estate portfolio through sales and changes in the segregated fund portfolio by €983m overall in 2006. At the balance sheet date, the carrying amount for land and build- 92 Management report_Asset management ings was €4.7bn (5.8bn). Our ratio of real estate investments to total investments at carrying amounts sank to 2.7%, compared with 3.3% at the start of the year. We use derivatives (see notes to the consolidated financial statements on page 171 ff.) to hedge our share portfolios against possible price losses. In addition, the life insurers in the ERGO Insurance Group use interest-rate derivatives to cover their guaranteed interest-rate liabilities, thus hedging their reinvestment risk against falling interest rates in the long term.
Munich Re Group Annual Report 2006 Management report_Asset management Investment mix Distribution of investments by type Status 31 December 2006 (prev. year) Miscellaneous investments 10.6% (11.9%) Shares and equity funds 13.9% (13.3%) Fixed-interest securities 55.4% (56.8%) Real estate Our objective is to ensure a high and predictable earnings contribution from our investments in real estate. To this end, we continually monitor existing items with regard to their long-term profitability and future exposure to risks. We have been selling directly held property in Germany for Reinsurance Primary insurance Asset management Total Life and health Property-casualty Life and health Property-casualty 31.12. Prev. 31.12. Prev. 31.12. Prev. 31.12. Prev. 31.12. Prev. 31.12. Prev. All figures in €m * Land and buildings, including 2006 year 2006 year 2006 year 2006 year 2006 year 2006 year buildings on third-party land Investments in affiliated 585 663 766 759 3,188 4,169 114 179 67 28 4,720 5,798 companies 24 18 28 20 43 34 75 101 8 11 178 184 Investments in associates 65 64 175 175 537 451 286 400 62 38 1,125 1,128 Loans Other securities held to 103 74 117 68 27,791 23,192 1,508 1,444 9 17 29,528 24,795 maturity Other securities available for sale – – – – 242 432 10 13 – – 252 445 – Fixed-interest 17,514 17,478 28,698 27,487 46,292 50,106 4,350 4,010 27 25 96,881 99,106 – Non-fixed-interest Other securities held for trading 5,327 5,883 7,732 6,912 11,091 10,198 1,877 2,345 7 8 26,034 25,346 – Fixed-interest 10 13 455 545 97 32 274 310 – – 836 900 – Non-fixed-interest – – 6 4 – – 7 5 – – 13 9 – Derivatives Deposits retained on assumed 107 133 134 151 247 685 6 1 – – 494 970 reinsurance 5,038 6,740 6,638 7,610 250 225 5 6 – – 11,931 14,581 Other investments Investments for the benefit of life insurance policyholders 230 321 612 539 1,775 638 251 276 192 705 3,060 2,479 who bear the investment risk – – – – 1,820 1,430 – – – – 1,820 1,430 Total 29,003 31,387 45,361 44,270 93,373 91,592 8,763 9,090 372 832 176,872 177,171 * After elimination of intra-Group transactions across segments. Real estate 2.7% (3.3%) Loans 16.7% (14.0%) Participting interests 0.7% (0.7%) many years. In 2006, we took a further step in improving the structural and regional composition of our real estate portfolio. In the fourth quarter, we contractually committed to sell commercial and residential buildings in Germany with a total value of approximately €1.5bn, of which some €1.3bn was attributable to property used by third parties. 93
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Munich Re Group Annual Report 2006
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The Munich Re Group Our operations
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Munich Re Group in 2006 Tireless an
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Quarterly figures Balance sheet 31.
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© 2007 Münchener Rückversicherun
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