Quarterly Report 1/2009 - Munich Re Group

Interim management report Business experience
14 Munich Re Group Quarterly Report 1/2009
Total premium income across all lines of business increased by 3.3% to €5.0bn
(4.9bn). Growth was especially apparent in international business, in particular
in life insurance. Although over 90% of our primary insurance volume
stems from the eurozone, the strong declines in foreign exchange rates, especially
the Polish zloty and Turkish lira, adversely affected growth by 1.6%.
Gross premiums written rose to €4.7bn (4.6bn), a figure that does not include
the savings premiums from unit-linked life insurance and capitalisation products
such as “Riester” pensions in Germany.
Gross premiums by division Q1 2009 1
Legal expenses 5% (5%)
Health 34% (34%)
Property-casualty 29% (30%)
Life 32% (31%)
1 Previous year’s figures adjusted owing to first-time application of IFRS 8.
In the first quarter of 2009, the total premium income of our life insurers
amounted to €1.8bn (1.7bn), with German business showing a decrease of
1.7% to €1.36bn (1.38bn). As expected, German new business was down year
on year, the annual premium equivalent (APE) 1 of €165m falling by 32.8%.
The strong decline was largely due to a “basis effect“, i.e. a major boost to new
business in early 2008 as a result of the fourth and last subsidisation stage for
Riester policies. Without this factor, new German business would have
declined by 9.5% year on year. From a marketing and sales point of view, the
first three months of 2009 were better than the same quarter last year, with
more new business concluded in particular via the bancassurance and broker
sales channels. Single-premium business developed positively, especially in
the area of traditional annuity insurance. In international business, we posted
a rise in premium by 44.0% to €363m (252m), not least because we increased
our stake in the Austrian insurer BACAV to a majority holding as at 30 September
2008, so that BACAV’s premiums are now included in our financial statements.
In the first quarter of 2009, ERGO and the Indian HERO Group announced that
the plan for their joint-venture company for life insurance in India would be
discontinued by mutual consent. The HERO Group has postponed its planned
activities in this area indefinitely. Notwithstanding the global economic crisis,
we have confidence in the long-term potential of the Indian life insurance market
and will pursue our plans to enter the market.
¹ The annual premium equivalent corresponds to regular premium income plus 10% of
single-premium volume.