Annual Report 1997/1998 - Munich Re

Munich Re Group Notes on the accounts
Accounting and valuation methods
Basic principle The assets and liabilities shown in the consolidated accounts are
included and valued uniformly according to the regulations applicable
to the annual accounts of the parent company.
Intangible assets Capitalized goodwill is offset over a period of 15 years against the
revenue reserves.
Other intangible assets are valued at the acquisition cost less
straight-line depreciations.
Investments Our real estate is valued at the acquisition or construction cost less
straight-line or reducing-balance depreciations admissible under
German commercial and tax law. The useful economic life of the
items concerned ranges from 25 to 50 years.
Shareholdings in non-consolidated affiliated companies and
participations are valued at the acquisition cost; all admissible
writedowns are made. Shares in associated companies are valued
at equity. In the case of additions to this category, the acquisition
costs are used for the first-time application of this method. Uniform
valuation principles are not applied for the companies valued at equity.
Loans to affiliated companies and to companies in which
participations are held, mortgage loans, registered bonds, loans
and promissory notes, and miscellaneous loans are included in the
balance sheet at their nominal values or at their acquisition costs;
in the case of inclusion at the nominal values, the relevant premiums
and discounts are placed to account pro rata temporis.
Shares, investment fund certificates, bearer bonds and other fixedinterest
and variable-yield securities are valued at the acquisition cost
or at the market price at the balance sheet date, whichever is the
lower; lower valuations from previous years are maintained even if the
reason for these lower valuations no longer applies.
Loans and advance payments on insurance policies, as well as
deposits retained on assumed reinsurance business, are stated at the
nominal value of the amount outstanding.
The other investments are valued at their acquisition costs less
admissible writedowns.
Investments for the benefit of life insurance policyholders who bear
the policy risk are included at their market values, with due regard to
the principle of prudent valuation.
81