Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Gross premiums in DM bn
19.1 18.8 18.5 19.3
24.9
1993 1994 1995 1996 1997
Reinsurance
As leading international reinsurers, we work together with insurance
companies in around 160 different countries. We operate on the one
hand directly from our head office in Munich, Germany. On the other
hand we are represented at over 60 locations worldwide through
reinsurance subsidiaries, branch offices, service companies and liaison
offices.
Deterioration in the general business environment
Overall, we are satisfied with the reinsurance result for the year
1997, despite the deterioration in the general environment for our
business. Thus competition among direct insurers has intensified and
original rates have fallen further. This has had a negative impact above
all on premium income in proportional reinsurance. The business
volume that is ceded in reinsurance has also been reduced as a result
of the concentration process in direct insurance and distinct increases
in retentions on the part of cedants, who after several very good
business years are carrying increasingly large shares of risks
themselves.
Whereas demand for reinsurance has been decreasing, the supply
of cover has grown. In nearly all sectors there is more than enough
capacity available in the reinsurance markets. This has led to further –
sometimes pronounced – price reductions and deteriorations in
conditions.
Market shares increased in important markets
We have not been able to exclude ourselves from the above
developments, but we have reacted to them flexibly. In many
important markets we have been able not only to maintain but even
to strengthen our market position.
On a consolidated basis the reinsurance group recorded a gross
premium income of DM 24.9bn (19.3bn). This represents an increase
of around 29%, which is mainly due to the changes in the group of
consolidated companies. Without these changes the increase would
have been about 11%. Besides this, changes in exchange rates
significantly affected the development of premium income. The
generally lower valuation of the D-mark produced an increase of
DM 599m (542m) in our premium volume. Without these influences,
premium income in the year under review would have shown an
increase of 4.3%.
Gross premiums 1993 1994 1995 1996 1997
written by reinsurers DM m % DM m % DM m % DM m % DM m %
Life 3,414 17.9 3,446 18.3 3,539 19.1 3,860 20.0 4,217 16.9
Non-life 15,645 82.1 15,402 81.7 14,968 80.9 15,469 80.0 20,727 83.1
Total 19,059 100.0 18,848 100.0 18,507 100.0 19,329 100.0 24,944 100.0
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