Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Overview of the most important direct insurance companies in the
Group
The following information refers to the subsidiaries’ individual or
consolidated accounts for 1997.
ERGO ERGO, created by merging VICTORIA, Hamburg-Mannheimer, DKV
and D. A. S., is the number 2 in the German insurance market.
VICTORIA numbers among the ten largest German companies in life
insurance and in property-casualty insurance; Hamburg-Mannheimer is
the second biggest German life insurer; DKV and D. A. S. Rechtsschutz
are the market leaders in Europe in their respective fields of business.
Munich Re has held substantial participations in all the main ERGO
companies for decades.
A note for better understanding and easier interpretation of the
figures: even though it was not legally formed until 1st August 1997,
ERGO voluntarily published consolidated accounts for the period from
1st January to 31st December 1997.
ERGO’s premium income (including reinsurance) totalled DM 21.3bn,
or DM 170m more than in the previous year. Just under 8% of this –
DM 1.6bn – came from European countries outside Germany, the most
important markets being the Netherlands, Austria and Belgium.
Besides fully realizing its potential in Germany, ERGO wants to
position itself more strongly as a European insurer and significantly
increase the share of its business from outside Germany in the
medium to long-term, with the focus remaining on insurances of the
person.
Around 42% of the premiums of DM 21.3bn derived from life
insurance, 30% from health insurance and 28% from property-casualty
insurance and reinsurance.
Growth in life insurance was adversely affected by the stagnation of
real incomes in Germany, the continuing high unemployment rate and
the discussion regarding the taxation of interest income from life
policies: at DM 8.9bn, premium income was only marginally higher
than last year. New business in Germany sank to DM 1.5bn (1.6bn),
36% of which was apportionable to single-premium business. Total
in-force sums insured increased to DM 250bn (243bn). The life insurers’
unadjusted earnings rose to DM 4.1bn (3.7bn). Over 95% of this was
allocated to the provision for policyholders’ dividends.
Health insurance profited from the continuing cutbacks in benefits
provided under German statutory health insurance. It was ERGO’s
biggest growth contributor in 1997, with premium up 3.2% to
DM 6.3bn (6.1bn); the additional premium derived mainly from new
business. Owing to rising healthcare costs and higher acquisition
expenses, the health insurers’ unadjusted earnings were slightly
down at DM 1.3bn (1.4bn); more than 80% of this profit was allocated
to the provision for policyholders’ dividends and the ageing reserve,
whence it will benefit policyholders in the future.
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