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

Interim management report Business experience
6 Munich Re Group Quarterly Report 3/2008
Business experience
from 1 January to 30 September 2008
Reinsurance
– Satisfactory treaty renewals at 1 July 2008
– High cost burden of €1.2bn from major losses for January to September;
combined ratio of 100.2%
– Investment result of €3.0bn marked by financial market crisis
– Result of €2.0bn for the first three quarters
Key reinsurance fi gures
Q1–3 2008 Q1–3 2007 Q3 2008 Q3 2007
Gross premiums written €bn 16.1 16.5 5.5 5.5
Loss ratio property-casualty % 71.4 69.8 71.5 69.7
Expense ratio property-casualty % 28.8 28.2 29.8 27.4
Combined ratio property-casualty % 100.2 98.0 101.3 97.1
Thereof natural catastrophes Percentage points 7.8 6.9¹ 10.0 4.7¹
Investment result² €m 2,979 3,511 245 863
Operating result² €m 2,700 3,215 132 798
Consolidated result³ €m 1,983 2,779 –35 857
Thereof attributable to minority interests €m – – – –
30.9.2008 31.12.2007
Investments €bn 75.8 81.9
Net technical provisions
1 Adjusted owing to a change in methodology.
² Including ERGO dividend of €947m (114m).
³ Including ERGO dividend of €931m (112m).
€bn 56.9 55.5
The Munich Re Group’s reinsurance segment mainly comprises the operations
of the Group’s reinsurance companies, including property-casualty, life
and health reinsurance. The latter, together with non-German health insurance
business (part of which is written by our primary insurance companies)
makes up our International Health segment. By the second quarter of 2009,
this segment will become a fully integrated organisational unit within Munich
Re. The reinsurance segment also includes a number of specialist insurers.
In the third quarter and first nine months of the year, reinsurance business
was impacted by exceptionally high burdens, especially the turbulent developments
on the financial markets but also recent events like Hurricanes Ike
and Gustav, which contributed to the above-average costs for major losses.
The operating result for July to September, which also includes the reinsurance
investment result, fell by 83.5% to €132m (798m) compared with the
same period last year and totalled €2,700m (3,215m) for the first nine months.
Included in the nine-month figure is an intra-Group dividend payment of
€947m (114m) from ERGO to Munich Re in the second quarter of the year.
Since this income is reversed after the elimination of intra-Group transactions
across segments, it is not mirrored in the consolidated result. Our operating
result for the first nine months, adjusted for the ERGO dividend, amounted to
€1,753m (3,101m). The consolidated result in reinsurance was down to –€35m
(857m) in the third quarter, and totalled €1,983m (2,779m) for the first nine
months. Without the ERGO dividend, the consolidated result for January to
September was €1,052m (2,667m). The decrease is mainly attributable to the
significant reduction in the investment result, which in the previous year had
benefited from high gains on disposals in a very favourable capital market
environment. This year, by contrast, sharp falls in share prices on the world’s
stock markets necessitated substantial write-downs in our equities portfolio.