Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Reinsurance underwriting result again outstanding
In the previous business years we had succeeded in continually
improving our reinsurance underwriting result, to the point of
recording underwriting profits again in the last two business years.
Despite our continued selective acceptance policy, we were unable to
prevent a deterioration in this result in the year under review. We
showed a deficit of DM 44m (+ 231m). This development mainly
reflects the price reductions and concessions in conditions resulting
from the keener competition. In addition, we recorded somewhat
higher claims costs for natural catastrophes, though compared with
the long-term average they were still relatively low. On the basis of
a comparison over a number of years, however, the reinsurance
underwriting result in the year under review must again be classed
as outstanding.
Development of the underwriting results in the different classes of
reinsurance business varied. In fire we were able to further improve on
the already pleasing profit of the previous year. We also achieved an
increased overall profit in marine/aviation. By contrast, we recorded a
considerable deterioration in the result for personal accident/health.
And in liability the deficit grew again after the appreciable reduction in
the previous year. Engineering showed only a break-even result after
the previous year’s pleasing profit.
Reinsurance 1997 Previous year
underwriting result DM m DM m
Life –43 –3
Personal accident/health –108 –19
Liability –376 –177
Motor –188 –160
Marine/aviation 103 36
Fire 473 329
Engineering –1 87
Other classes 96 138
Total –44 231
The result of the reinsurance companies’ investments improved
further, with the profit rising to DM 4.5bn (3.4bn).
The reinsurance companies’ unadjusted earnings totalled DM 2.6bn
(2.1bn).
At DM 1.2bn, the allocation made by the reinsurers to the claims
equalization provision and similar provisions was of the same
magnitude as in the previous year. There are now total provisions of
more than DM 6bn available to mitigate future fluctuations in annual
results – an impressive amount, but one that is necessary in view of
the volatility of reinsurance business.
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