Quarterly Report 1/2009 - Munich Re Group

Interim management report Business experience
8 Munich Re Group Quarterly Report 1/2009
Business experience from
1 January to 31 March 2009
Overview
In view of the difficult macroeconomic parameters, the Munich Re Group’s
business performed satisfactorily in the first quarter of 2009, with growth of
5.3% in gross premium income, an operating result of €746m, and a quarterly
profit of €420m. However, the investment result in particular – with an annualised
return of 3.1% on the average market value of our investment portfolio –
suffered appreciably from the financial crisis. The annualised return on riskadjusted
capital (RORAC) totalled 9.8%, whilst the return on equity (RoE)
amounted to 7.8%.
Our 2008/2009 share buy-back programme, which ran until the Annual General
Meeting on 22 April 2009 and had a volume of €1bn, was concluded as
planned in March 2009. In the first quarter of 2009, Munich Reinsurance Company
bought back subordinated liabilities with a nominal volume of €207m.
As from the financial year 2009, we are changing the presentation of our figures
slightly, in line with the new accounting standard IFRS 8, Operating Segments.
Firstly, we are clarifying the sources of the profit shown in the income
statement by splitting the operating result into the two components “technical
result” and “non-technical result”. Furthermore, an interest component is
being allocated to the underwriting business in the form of “income from
technical interest”. This derives from the interest earned on technical provisions
and the entitlement of policyholders to portions of the non-technical
result. Further explanations are provided in the notes to the consolidated
financial statements on page 48.
Secondly, in accordance with IFRS 8, we are gearing the breakdown of our
business segments for the segment reporting more closely to our internal
reporting and management structure. The Munich Re Group’s reinsurance
segment comprises the operations of our business field of reinsurance, which
contains not only property-casualty and life reinsurance but also the companies
with other business models, such as our specialty primary insurers
managed from within the reinsurance organisation and managing general
agents. The segment also includes health reinsurance and our specialised
insurers in international health primary insurance that are managed from
within reinsurance. Together with the international health primary insurance
conducted by ERGO, these operations form our business field of International
Health, which has recently been launched under the brand name of Munich
Health but which we do not disclose as a separate business segment yet
owing to its current relatively small size. Pursuant to IFRS 8, the business of
the Watkins Syndicate is now shown in the reinsurance segment (based on
internal management), rather than in the primary insurance segment, as in
our past segmentation as per IAS 14, Segment Reporting.