Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
The North American markets continue to be characterized by
vigorous activity in the area of mergers and acquisitions. In order to
procure better access to the capital markets, some large mutuals are
converting themselves into stock companies. The situation in the insurance
and reinsurance markets will continue to be marked by hard
price competition in future. Crucial factors for success remain the
distribution system and achieving economies of scale.
In Asia the financial crisis will probably curb growth in the relevant
life insurance markets in the next few years. Nevertheless, we continue
to regard the medium- to long-term growth potential as significant. In
the coming year we will strengthen our local presence in Singapore in
order to serve our clients in the region even better.
The further improvement in the general economic situation in
the most important Latin American markets is favourable for the
development of life insurance. We see good opportunities for
expanding our portfolio there.
Altogether, we expect to record premium growth again in 1998 and
an improved result. For the future, too, we consider life insurance a
class with great potential for growth and have taken the necessary
steps to realize this potential. We continue to see financing business,
designed to support direct insurers’ growth, as an attractive field. We
offer tailor-made concepts to cover temporary financing requirements
that may arise from an existing portfolio or from the development of
new market segments. Our financing business will have a favourable
effect on our result in the long term.
Personal accident/health Our premium in personal accident business has been boosted by the
first-time consolidation of American Re. The result deteriorated slightly.
Gross premiums in DM m
1,367 1,209 1,229
1,746
1994 1995 1996 1997
1995 1996 1997
Loss ratio 64.4 67.5 69.9
Expense ratio 30.6 34.2 37.6
Combined ratio 95.0 101.7 107.5
Private personal accident insurance continues to produce very good
results worldwide. The demand for reinsurance is therefore basically
limited to cover for peak risks and accumulation situations. In addition,
there is also strong price competition among reinsurers in this class of
business.
We continue to see good opportunities for expansion in workers’
compensation insurance, especially where state carriers are replaced
by private ones.
Despite this, we are only reckoning with an unchanged premium
income for 1998. The result should be similar to last year’s.
In health business our premium income is down on the previous
year. This is due solely to the full consolidation of DKV in the
Group accounts, where the business ceded by DKV to the Munich
Reinsurance Company has to be eliminated from the reinsurance
figures. The result deteriorated considerably.
34