Annual Report 1997/1998 - Munich Re

Munich Re Group Notes on the accounts
Receivables Amounts receivable on direct insurance business, accounts
receivable on reinsurance business and other receivables are included
at the nominal values; all necessary adjustments of value are made.
Other assets Inventories are valued at acquisition cost. Office furniture and
equipment is valued at the acquisition cost less admissible depreciations.
The purchase price of assets classifying as low-value goods
is fully written off in the year of acquisition.
Shareholders’ funds The subscribed capital and the capital reserve show the amounts
paid in by the shareholders of the parent company: the paid-up
nominal amounts of their shares in the one case and share premiums
in the other. The revenue reserves comprise the earned surplus of the
Group companies and the results of profit-affecting consolidation
methods. The balance sheet profit is the amount at the disposal of the
AGM of the parent company. Consolidated subsidiaries’ shareholders’
funds apportionable to shareholders that are not members of the
Group are shown under the item “Minority interests”.
Underwriting funds The underwriting funds and provisions of the parent company
and provisions and the German subsidiaries are calculated in accordance with the
requirements of German commercial law. The underwriting funds and
provisions of the foreign subsidiaries are set up in accordance with the
respective legal regulations of their countries. We generally include
these funds and provisions unaltered in the consolidated accounts. In
fact, in the case of every subsidiary the calculation of underwriting
funds and provisions is based on methods which are comparable with
those of the parent company.
The unearned premiums are accrued premiums already written for
future risk periods. They are calculated pro rata temporis or using
nominal percentages based on many years of experience and the latest
knowledge we have.
The premium funds are the actuarial reserves calculated for life,
health and personal accident insurance.
Claims not yet paid at the balance sheet date are shown as provisions
for outstanding claims. These provisions are calculated on
an individual basis. For claims that have been incurred but not yet
reported, provisions are calculated on the basis of statistical methods.
The provision for premium refunds and policyholders’ dividends
contains the amounts payable to insureds or insurers by law or by
contractual agreement insofar as they are not yet payable at the
balance sheet date. In particular, this item contains the amounts for
profit-related policyholders’ dividends in life business with a savings
element and in health insurance.
The item “Claims equalization provision and similar provisions”
contains the amounts required in accordance with commercial law to
mitigate fluctuations in claims experience, plus the provisions for
major risks (nuclear facilities and pharmaceutical products liability) and
for earthquake risks; these provisions mostly involve the parent
company.
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