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

Interim management report Business experience
entire transition phase up to January 2010. Since the beginning of the year,
new business in comprehensive insurance has declined by 20.7% compared
with the previous year. This development has to be seen in light of the fact that
new business at the beginning of 2007 was brisk, as clients took great advantage
of the last opportunity to switch to private health insurance without having
to satisfy the waiting period requirement.
From July to September 2008, premium volume in the property-casualty
insurance segment climbed to €1.35bn (1.28bn), an increase of 5.2%. For the
period since January, premiums rose to €4.7bn (4.4bn), with international
business continuing to show particularly strong growth of 11.7% to €1.9bn
(1.7bn). Worthy of particular mention with regard to ERGO are the markets of
Poland and Turkey and the South Korean direct insurer ERGO Daum Direct,
which has been consolidated since the second quarter 2008. Without ERGO
Daum Direct, volume strengthened by 7.3%. Achieving profitable growth in
international business is one of ERGO’s declared objectives. Europe and Asia
remain key target regions. In German business, premium income remained
constant at €788m for the third quarter compared with the same period last
year (€788m), but grew by 1.3% year on year in the first nine months. This
development at ERGO has largely been driven by commercial and industrial
business, where we posted a 3.3% increase in premium to around €590m
whilst adhering to our proven, strictly profit-oriented underwriting approach.
Personal lines business remained largely stable. Marginal reductions in motor
business were compensated for by moderate growth rates in personal accident
and legal expenses insurance.
The combined ratio in the property-casualty segment improved to a very good
90.2% (92.9%). In the same period last year, Winter Storm Kyrill had significantly
impacted the loss ratio. However, in the first nine months of 2008, there
were numerous regionally limited natural events such as Winter Storm Emma
and Windstorm Hilal, which in the aggregate had about the same adverse
effect on the net loss ratio as Kyrill did last year. Looked at in isolation, the
combined ratio for the third quarter was 88.7% (92.1%).
At €500m, the primary insurers’ investment result for the third quarter
dropped by 57.5% compared with last year’s exceptionally good third quarter
(€1,176m), and declined by 53.3% to €2,109m (4,512m) for the first nine
months. The reduction is essentially attributable to the lower balance from
gains and losses on disposals and from write-ups and write-downs. Whilst in
the previous year we had achieved gains of €1.5bn from the sale of a major
real estate package and equities, significant price losses on the stock markets
– despite our prudent investment policy – required us to make write-downs of
equities totalling €1.9bn in 2008. These were partially offset by €1.0bn in writeups
of our derivative financial instruments held for economic and balance
sheet hedging purposes.
Munich Re Group Quarterly Report 3/2008
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