Quarterly Report 3/2008 (PDF, 308 KB) - Munich Re

Interim management report Business experience
10 Munich Re Group Quarterly Report 3/2008
Gross premiums by class of insurance Q1–3 2008
Legal expenses 6% (6%)
Health 31% (31%)
Life 33% (34%)
Property-casualty 30% (29%)
Our life insurers posted an overall premium volume of €1.6bn (1.7bn) in the
third quarter of 2008, a 5.6% year-on-year decrease. In the period since January,
premium volume fell marginally by 0.5% to €5.02bn (5.04bn). The satisfying
growth of 6.5% in international business was mainly attributable to the
good business experience in Austria and Belgium. German new business in
the third quarter was down against the previous year, the annual premium
equivalent (APE) – i.e. total regular premium income and one-tenth of singlepremium
volume – declining by 17.9%. From January to September, however,
it was higher than in the same period last year, the key factor behind the 6.6%
increase being the fourth Riester subsidisation stage, which commenced at
the beginning of the year. Many of our clients had agreed automatic adjustment
of their insurance policies to the applicable subsidisation ceiling. Without
the Riester factor, new business was down 13.3%, mainly because of an
initial effect of the German insurance contract law reform, which came into
force in January 2008 and has made the sales process more complicated. This
effect is compounded by a general reluctance among clients to take out longterm
contracts in view of the uncertain economic prospects. International new
business showed a rise of 8.9% since the beginning of the year, with positive
development in particular from our companies in Poland and Austria.
In September, the relevant bodies of ERGO Italia and ERGO Previdenza paved
the way for the restructuring of our Italian business. The main focus of this
restructuring is to increase the profitability of new business and strictly control
costs. To this end, ERGO Previdenza is to be merged into ERGO Italia or
another ERGO company, with a view to enhancing ERGO Previdenza’s integration
within the Italian group. This will reduce complexity, simplify internal
processes and leverage synergies. In the run-up to the merger, ERGO Italia
submitted a takeover bid to all of ERGO Previdenza’s shareholders.
On 30 September 2008, the ERGO Insurance Group acquired a further 61% of
shares in Bank Austria Creditanstalt Versicherung AG (BACAV) for a price of
€416m, thus increasing its stake to 90%. ERGO now ranks third in the Austrian
life insurance market. It is expanding its international business by systematically
using Austria as a platform for tapping the promising central and eastern
European markets.
Our health insurers posted premium of €1.34bn (1.32bn) in the period from
July to September, and recorded an increase in premium volume of 2.3% to
€4.1bn (4.0bn) since the beginning of the year. In international business, we
registered year-on-year growth of 6.4% in the period from January to September,
with particularly robust premium increases in Spain and Belgium. In
Germany, premium volume in the third quarter of 2008 totalled €3.5bn (3.4bn),
representing growth of 1.6% compared with 2007. Premiums written in supplementary
health business rose by 4.0%, whereas in comprehensive health
insurance premium income grew only slightly by 1.0%, reflecting the distinctly
adverse impact of the health reform on new business in this line. The
three-year waiting period is likely to continue to be a factor throughout the