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

Interim management report Business experience
Investment mix
1 After elimination of intra-Group transactions across segments.
14 Munich Re Group Quarterly Report 3/2008
The spread of the turbulence to other capital-market-oriented companies such
as American International Group and Washington Mutual will have no notable
impact on our results. A German financial-service provider, Hypo Real Estate,
has also become embroiled in the crisis and had to be bailed out. In addition
to German banks, the insurance sector has agreed to provide guarantees and
liquidity support for the Hypo Real Estate rescue package. The shares of this
which the Munich Re Group might potentially have to assume are each in the
very low three-digit million euro range.
Although the US property crisis has now proliferated beyond subprime mortgage
loans, we do not expect a permanent decrease in the value of our fixedinterest
securities.
Reinsurance Primary insurance Asset Total
Life and health Property–casualty Life and health Property–casualty management
€m1 30.9. 31.12. 30.9. 31.12. 30.9. 31.12. 30.9. 31.12. 30.9. 31.12. 30.9. 31.12.
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
Land and buildings,
including buildings on
third-party land
Investments in affi liated
394 452 690 649 2,483 2,500 93 94 59 58 3,719 3,753
companies 35 39 60 57 46 34 93 73 18 12 252 215
Investments in associates 99 87 179 182 368 389 259 245 51 50 956 953
Loans
Other securities held
231 128 374 163 37,205 33,537 2,163 1,666 1 8 39,974 35,502
to maturity
Other securities available
for sale
– – – – 149 192 5 8 – – 154 200
Fixed-interest 9,369 9,229 36,613 38,143 44,007 42,647 4,722 4,546 23 20 94,734 94,585
Non-fi xed-interest
Other securities held
for trading
1,239 1,917 5,865 9,866 7,955 11,008 1,291 1,651 7 7 16,357 24,449
Fixed–interest 10 8 321 356 556 77 386 281 – – 1,273 722
Non-fi xed-interest 1 – 24 8 2 – 6 7 – – 33 15
Derivatives
Deposits retained on
322 96 561 130 849 303 37 14 – – 1,769 543
assumed reinsurance 4,711 6,216 1,301 1,710 84 276 3 4 – – 6,099 8,206
Other investments
Investments for the benefi t of
life insurance policyholders
446 537 858 1,118 1,012 2,315 501 409 293 454 3,110 4,833
who bear the investment risk – – – – 2,955 2,178 – – – – 2,955 2,178
Total 16,857 18,709 46,846 52,382 97,671 95,456 9,559 8,998 452 609 171,385 176,154
The carrying amount of the Munich Re Group’s investments shows a fall of
2.7% since the beginning of the year, although there was an rise of €5.1bn in
the third quarter. A large portion of the reduction since the beginning of the
year is attributable to our equity portfolio, which was affected both by disposals
and by the marked decline in share prices (e.g. –30.9% in the EURO STOXX
50), with non-fixed-interest securities available for sale and accounted for at
fair value continuing to fall up to the reporting date. A counter-effect was
achieved above all by our higher investments in loans, which are almost all
held by our primary insurers. These items are mainly variable-interest loans.
Besides this, we recorded a slight increase of €0.3bn in foreign exchange gains
in relation to the investment portfolio as a whole, due particularly to the
appreciation in the US dollar compared with the beginning of the year.
In addition, the first-time consolidation (in the third quarter) of our new subsidiary,
BACAV, and its investments totalling €3.8bn lessened the reduction in
our investment portfolio.