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