Download PDF version - Munich Re

Munich Re Report of the Board of Management
Investment mix
Real estate 6 %
Loans 46 %
Participations
Fixed-interest securities,
5 %
fixed deposits
Shares, investment fund
12 %
certificates
Deposits retained on
17 %
assumed reinsurance 14 %
In the period under review, against the background of developments in
the USA and the rather subdued economic situation in the world as a
whole, interest rates again fluctuated considerably. At the end of 1995
and beginning of 1996 interest rates in the most important world trading
countries had reached an almost historical low. Recovering only slowly
and to a very limited extent, they remained at a comparatively low level
right up to the end of the business year. During the period under review
new investments were therefore possible only at relatively low interest
rates as compared with the long term. On the other hand, the largely
favourable development of share prices, with all-time highs in many
important markets, gave us opportunities to realize accumulated capital
gains.
The structure of our investment portfolio did not change substantially in the
year under review. Loans account for by far the largest part (46 %). We
again increased our investment fund shares appreciably. This flexible form
of investment makes it easier for us to use the increasing volatility of the
capital markets to the advantage of our operative investments.
In the real estate sector, we continued to invest in the scheduled
continuation of our building programme, although to a much smaller
extent than in the previous years.
Our investment income, which was augmented in the previous years by
tax-related extraordinary dividends, increased again this time owing to the
overall increase in our investments. It grew by DM 296 million, or 3.5 %, to
DM 8,801 million and thus developed satisfactorily in view of the prevailing
situation on the capital markets.
Owing to the capital market developments, writedowns on our investments
were considerably reduced. All in all, our investment expenses are within
reasonable bounds considering the investment volume.
The profit from our investments amounted to DM 7,935 million as compared
with DM 7,322 million in the previous year. In accordance with accounting
regulations, DM 5,685 million of this has been incorporated in the
underwriting result.
38