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Munich Re Report of the Board of Management
No claims costs resulted for our Group, on the other hand, from the
spectacular failure of Ariane 5 on 4th June 1996. Ariane 5 is, in nearly all
its essential elements, a new development. Since the operating conditions
of a launch vehicle cannot be simulated (or fully simulated) on the ground,
test flights have to be made; failures are thus virtually inevitable. Test
flights of this kind are not insured by the space insurance industry, and the
same applies to any payloads carried on such occasions. In the present
case, the payload consisted of four scientific research satellites, which are
not normally insured anyway.
On 11th April 1996 a fire destroyed large sections of Düsseldorf airport; a
number of people were killed and a considerable number injured. One
consequence of the fire was widespread contamination of the disaster area
with toxic residues. On the basis of the latest figures available to us, the
fire caused an overall loss of several hundred million marks. We currently
estimate our possible own loss from this event to be in the region of
DM 55 million.
Despite differing developments in the individual classes of business, the
overall claims burden from natural catastrophes and other major losses is
slightly higher than in the comparable period of the previous year. The
weight of these losses abroad has been heavier than in our domestic
business.
The development of our results has varied from one class of business to
the next. Whereas we are anticipating another improvement in the result of
liability business, the competitive situation in motor insurance leads us to
expect that our results in this class will deteriorate. For a discussion of the
various factors involved, please refer to the section headed “Classes of
business”.
The result picture for the Munich Reinsurance Company so far is similar to
that of the previous year. We nevertheless cannot yet forecast whether the
underwriting profit we achieved last year will be attained again this time.
The decisive factor will be the extent to which we are affected by natural
catastrophes and other major losses before the end of the present risk
period, which includes both the rest of the hurricane season in America
and the start of the winter storm season in western Europe.
Firm predictions are not possible either at this stage regarding the Munich
Reinsurance Company’s investment result on our next balance sheet date,
for only a few months have passed in the present reporting period. With a
further increase in the volume of our investments, our investment result will
also be decisively influenced by the way in which the capital markets of
importance for us – i.e. especially the stock markets in Europe, in the USA,
and also in Japan – develop up to the end of our business year.
The business development of our consolidated reinsurance subsidiaries
has varied. As a whole, they will probably not manage to achieve such an
exceptionally good result as in the past business year.
The composition of our direct insurance group has been substantially
altered through our exchange of shareholdings; the individual companies
are developing according to plan in the current year.
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