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Munich Re Report of the Board of Management
Other classes of business All the other classes of business – that is the other classes of property
insurance (nuclear plant, burglary, omnium, extended coverage, glass, hail,
water damage, contingency, windstorm, livestock and householders’ and
Gross premiums in DM million
homeowners’ comprehensive insurance), as well as business interruption,
credit, fidelity guarantee, aviation, legal expenses, luggage and the specie
2,296 2,247
insurance of private risks – together produced a premium income that was
slightly down on the previous year. The overall result for these classes of
business was again very favourable, the profit being much the same as in
the previous year. Developments in the different classes naturally differed.
1994 1995
1995
Loss ratio 59.9
Expense ratio 32.0
Combined ratio 91.9
Homeowners’ comprehensive, a form of cover which is of particular
importance in the German market and which includes the risk elements
fire, water damage, windstorm and hail, showed a slight premium increase
and another good profit, the latter being mainly attributable to the chance
absence of severe windstorm losses. The same applies to householders’
comprehensive, which provides cover for the burglary risk as well. Although
crimes against property, whose incidence continues to be high, placed a
great strain on the German burglary insurance market in particular, we were
nevertheless able to show a small profit here, also in our commercial
business.
Credit business again brought an increase in premium income. The
unexpectedly large rise in insolvencies in Germany led to a considerable
deterioration in the result, which could not be fully compensated for by
good results from abroad. German fidelity guarantee business also
recorded losses in the year under review. The situation with regard to
German credit insurance continues to be unsatisfactory. The economic
recovery expected in Germany for 1996 has not taken place. On the
contrary, the number of company insolvencies has continued to increase
dramatically, this trend being aggravated by structural problems in
individual branches of industry. We are therefore expecting another very
negative result in 1996 for our German business, which largely determines
our overall result. Our foreign credit insurance business should, on the
other hand, again bring us a satisfactory profit.
The premium income from aviation business decreased slightly, owing to
the effects of changes in exchange rates. Thanks to favourable experience
as regards the incidence of large losses, the result in this class of business
was very good. However, the fortuitous good claims experience of the year
under review has already led to appreciable pressure on premium rates.
Thus our continued concentration on the profitability of the business we
underwrite means that we can only expect modest growth in premium
income in 1996.
In our space business, which is conducted solely by the Munich
Reinsurance Company, the premium income again grew substantially.
Despite a considerable increase in the market capacity available for these
types of risk, we were able to extend our leading position. The result was
again very good. In the current year we are also expecting a significant
increase in our premium volume.
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