Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Economic development in
the UK (in %)
10
8
6
4
2
0
2
4
1994 1995 1996 1997
Economic growth
Inflation rate
Unemployment rate
Growth in insurance
We intend to consolidate our outstanding position in the German
reinsurance market with innovative products and additional services.
We nevertheless expect our premium income to decrease further in
1998 for the same reasons as last year. The result is also likely to
deteriorate owing to the continuing competition with regard to prices
and conditions.
The UK
The development of the British economy was marked by sustained
dynamic growth in 1997; real GDP grew by 3.3% and thus more
strongly than in the previous year. There was a further fall in the
unemployment rate. But the resultant impulses for growth in insurance
were weakened by the pressure of competition on premium rates.
There was a continuation of the trend towards mergers among large
insurance companies and Lloyd’s syndicates and also among brokers.
In the UK, too, insurers are raising their retentions and restructuring
their reinsurance programmes. In international insurance groups,
internal group reinsurance is also gaining in importance. The premium
volume of the reinsurance market is therefore decreasing here as well.
Despite this, we were able to achieve a satisfying increase in
premium income in the year under review. It stemmed in particular
from a sizeable new business connection in motor insurance. However,
as considerable investment was required for this, the overall result was
distinctly less favourable than in the previous year.
We have been represented in London for many years by our Main
Representation Office and by two branch offices that chiefly handle
local UK business. In contrast, our British subsidiary, Great Lakes
Reinsurance Company (UK), writes international business and is also
available for special business segments. In the year under review it
greatly increased its gross premium income from £95m to £164m. Its
profit rose from £3.2m to £5.9m. American Re’s offices in the UK
supplement our local organization and strengthen our market position.
In autumn 1997 we acquired the managing agency Apollo
Underwriting Ltd and Artemis Capital Ltd, a Lloyd’s corporate
member that currently provides 70% of the underwriting capacity of
Lloyd’s Syndicate 457. Apart from know-how in many areas of marine
insurance, the syndicate offers potential for expansion in all market
segments.
For 1998 we are expecting a further marked increase in the premium
income from our UK business. The result should be better than last
year.
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