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Munich Re Report of the Board of Management
somewhat, owing to the allocation of considerable funds to the company’s
reserves. It was nevertheless able to record an improved profit for the
year of Sfr 3.5 million (previous year: Sfr 2.5 million). In order to open up
additional business opportunities for the New Re, we will be increasing its
shareholders’ funds by Sfr 400 million to approximately Sfr 500 million.
In Italy our subsidiary, the Münchener Rück Italia S.p.A., Milan, is one of
the country’s leading reinsurance companies. It has been instrumental in
formulating underwriting standards for the engineering classes of insurance
in particular. In 1995 it contributed Lit 336,496 million (previous year:
Lit 308,517 million) to the premium income of the Group. Although its
reinsurance underwriting result deteriorated, the company achieved a profit
for the year of about the same level as in the previous year. We see
opportunities for expanding our Italian business mainly in insurances of
the person. The reform of the state pension system, which is being
accompanied by an increased demand for private provision for old age
and disability, offers considerable development potential for such business.
In the Scandinavian countries the situation was characterized by further
consolidation in the direct insurance markets, with increasing retentions on
the part of direct insurers and a reduction in reinsurance cessions. We
were nevertheless able to maintain our leading position. Despite stronger
competition in the reinsurance market, we managed to increase our
premium volume slightly. In the Scandinavian countries, too, new business
opportunities will arise in the private life and health insurance sectors as a
result of the reduction in social insurance benefits.
Some of the countries of Central and Eastern Europe are experiencing a
considerable degree of economic growth. This, together with the great
pent-up demand that exists, is leading to a strong increase in the overall
demand for insurance protection. In these countries we are therefore
expecting the next few years to bring a considerable increase in premium,
for which we are also well equipped through our offices in Moscow and –
for the growing market in the Turkic states of Central Asia – in Istanbul.
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