Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Classes of business
Life In life business we were able to increase our premium income
further. The result was affected by considerably higher financing costs,
however, so that overall the deficit grew bigger.
Gross premiums in DM m
3,446 3,539
3,860 4,217
1994 1995 1996 1997
Life insurance portfolios
in DM bn
377
406
512
613
1994 1995 1996 1997
Our German business developed pleasingly in the year under review;
the increase in our premium income corresponded more or less to the
growth in direct insurance. The debate on the future form of state
pension insurance continues. This especially has made people more
inclined to make personal provision for old age and other risks of life
such as occupational disability and need for long-term care. The
German government has decided to replace the state occupational
disability and general disability pensions with a two-tier pension for
reduction in earning capacity. This gives the German life insurance
industry the chance to provide cover for the resultant gaps with an
appropriate complementary product. We expect this market development
to give rise to an increasing demand for reinsurance and specialist
advice. In addition to assuming the traditional insurance risks
of death, disability, accident and illness, we offer our clients solutions
for the interest and investment risk. This activity will become more
and more significant in future.
In the many other markets, too, demographic developments and the
financial problems of state social security systems are presenting the
private insurance industry with good business opportunities: insurers
have much greater scope than hitherto for offering alternative and
supplementary solutions, be it for making provision for old age and
surviving dependants or for cover against the risks of disability and
need for long-term care. These opportunities for growth on the direct
insurance side are having a positive effect on life reinsurance.
In the European insurance industry, however, the continuing
consolidation in the market is restricting our opportunities for growth.
Large insurance groups tend to require less reinsurance. On the other
hand the keener competition, also internationally, is compelling
insurers to engage in a process of continual innovation. The resulting
need for individual advice and special reinsurance concepts is
providing new areas of activity for reinsurers. With our worldwide
expertise and financial strength we are well equipped to satisfy the
requirements of even large insurance groups. In the UK and France
we intend to substantially strengthen our activities in the field of
insurances of the person.
The Eastern European life insurance markets are making slow but
steady progress. Although the economic and state parameters for
making personal provision for old age through life insurance are not
yet ideal, we see a very significant business potential for insurers and
reinsurers in this area in the future.
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