Annual Report 1997/1998 - Munich Re

Munich Re Group Notes on the accounts
The “Other underwriting provisions” mainly comprise provisions for
anticipated losses, which are calculated on the basis of many years’
experience and current developments.
Underwriting provisions apportionable to business ceded in
reinsurance are calculated in accordance with the terms of the
reinsurance agreements.
Other provisions The provisions for employees’ pensions are calculated according to
the entry age normal method on the basis of the actuarial interest rate
of 6% provided for under German tax law.
The other provisions are posted in accordance with the probable
requirements.
Liabilities Liabilities are stated at the amount repayable.
Deferred taxes After revaluation of assets and liabilities in accordance with German
accounting regulations, deferred taxes are newly calculated for the
consolidated accounts. In addition, deferred taxes are posted for
consolidation measures affecting the profit and loss account.
Currency translation For the translation of foreign currencies, the exchange rates at the
year-end are used in each case.
Realized exchange gains and realized and unrealized exchange
losses are included under “Other income” and “Other expenditure”
respectively; unrealized exchange gains are eliminated through the
formation of an appropriate provision.
The exchange rates of the most important currencies for us
developed as follows:
83
31.12.1997 Previous year
DM DM
Australian dollar 1.17 1.24
Canadian dollar 1.24 1.14
Dutch guilder 0.89 0.89
French franc 0.30 0.30
Italian lira 0.001 0.001
Pound sterling 2.98 2.63
Rand 0.37 0.33
Swiss franc 1.23 1.15
US dollar 1.79 1.55
Yen 0.014 0.013