Download PDF version - Munich Re

Munich Re Report of the Board of Management
Overall our premium income from motor insurance declined in the year
under review. After a marked deficit in the previous year, we managed to
achieve a break-even result. For 1996 we are expecting slower growth, but
with still satisfactory results.
Marine In the year under review our premium volume from marine business
decreased slightly. The result was again highly satisfactory, the previous
year’s gratifying profit even being surpassed.
Gross premiums in DM million
707
683
1994 1995
1995
Loss ratio 65.3
Expense ratio 25.7
Combined ratio 91.0
The massive influx of new reinsurance capacity observable in some of
the important marine insurance markets has led to an intensification of
competition. As a consequence there is considerable pressure on hull
and cargo premium rates, which remedial measures on the part of insurers
and reinsurers had succeeded in raising to a risk-commensurate level over
the past three years.
In view of the interdependence of the international marine insurance
markets, it is to be feared that, following the favourable development of
results over the past three years in marine insurance worldwide, 1996 will
probably already bring a drop in profits. For this reason, and because of
our profit-oriented risk selection policy, we will be able to increase our
premium income in 1996 only in some sectors of marine insurance; the
result, however, should again be satisfactory.
Fire Our premium income from fire business declined in the year under review.
Whereas facultative acceptances of individual risks brought a pleasing
increase in premium, the premium from obligatory reinsurance treaties
continued to decrease. This further decline was due partly to the trend
Gross premiums in DM million
towards a lowering of premiums for industrial fire insurance covers in
3,727 3,623
most of the large industrial markets, which had a negative effect on our
premium income from proportional reinsurance treaties. In addition,
changes in exchange rates had a negative effect on premium income
from our foreign portfolio.
1994 1995
1995
Loss ratio 60.5
Expense ratio 31.8
Combined ratio 92.3
Our business experience was very satisfactory, however, the previous
year’s large profit even being exceeded. When evaluating the result for
1995 it is nevertheless important to bear in mind that our business in the
year under review was largely spared major losses from individual risks
and natural catastrophes. Particularly in fire business, subject as it is to
strong fluctuations, it is important for us to achieve good earnings in years
in which the claims burden is, by chance, relatively light, so as to be
prepared for the exceptional costs that may occur in other years. We
regard the overall prices and conditions of our fire business at present as
adequate to meet the risks involved.
30