Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Economic development in
Switzerland (in %)
10
8
6
4
2
0
2
1994 1995 1996 1997
Economic growth
Inflation rate
Unemployment rate
Growth in insurance
The premium income of Swiss insurers grew markedly overall in
1997; this was mainly due to life insurance. In non-life insurance,
premium stagnated. As competition in this market was also keen, our
premium income declined slightly in the year under review. The result
was again positive, though not as good as in the previous year. In the
current risk period we expect premium to fall further for competitive
reasons. This development will have an adverse effect on the result.
Our Swiss subsidiary, New Reinsurance Company, Geneva,
succeeded in expanding its premium by nearly 50% to Sfr 790m
(532m) in the business year 1997. The substantial capital increase of
around Sfr 400m in November 1996 provided a solid basis for this
satisfying premium development. The company’s reinsurance
underwriting result was better than in the previous year. For the first
time a special allocation was made to provisions for outstanding
claims. The profit for the year was Sfr 5.4m (4.7m).
Austria
The general economic situation in Austria is marked by a mood of
cautious optimism. Economic development shows a split: on the one
hand, respectable growth in exports; on the other, only a gradual
strengthening of domestic demand against a background of high price
stability. Unemployment remained at the previous year’s level.
In 1997 the insurance industry had to record a decline in premium
volume for the first time. Nevertheless, we again managed to increase
our premium income and further consolidate our leading position. We
recorded a break-even overall result, after a profit in the previous year.
For 1998 we are reckoning with a slight decrease in premium
volume, as the increasing competition has put further pressure on
prices here as well. It is likely that this will also have a negative effect
on the result.
Spain/Portugal
Both in Spain, which enjoyed a further economic upswing in 1997,
and in Portugal we were able to extend our leading position for the
third year in succession. Despite the keener competition in these
markets, too, we again achieved pleasing results. We see interesting
potential for growth in both markets, particularly in insurances of the
person.
Central and Eastern Europe
Development was very varied in the economies of Central and
Eastern Europe in the year under review. If one takes the region’s GDP
as a whole, there was an increase for the first time in seven years, with
growth in the insurance markets exceeding this.
Our premium income also increased pleasingly. However, owing to
the flood losses in Poland and the Czech Republic, the result was
worse than in the previous year. For 1998 we are anticipating a further
increase in premium; the result should improve again.
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