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<strong>Munich</strong> <strong>Re</strong> Group Notes on the accounts<br />
Consolidation methods As regards the consolidation of investment in subsidiaries, the book value<br />
method has been used for all the subsidiaries, with the acquisition<br />
values of the participations being eliminated against the amount of the<br />
subsidiary’s shareholders’ funds apportionable to members of the Group at<br />
the time of acquisition. As far as differences resulting from the first-time<br />
consolidation are concerned, to the extent that they did not represent<br />
understated values of the underlying assets and were therefore added to<br />
the asset values, they have been included in the revenue reserves.<br />
The profits earned by the subsidiaries after the first consolidation – insofar<br />
as they were not distributed – are allocated to the Group’s revenue<br />
reserves. This item also includes the effects of consolidation measures on<br />
profits, so that the balance sheet profit shown for the Group corresponds to<br />
the balance sheet profit of the <strong>Munich</strong> <strong>Re</strong>insurance Company.<br />
For valuation of shares in associated companies at equity, the same<br />
principles have been applied as for consolidation of investment in<br />
subsidiaries.<br />
Amounts relating to intercompany transactions (receivables, liabilities,<br />
expenses and income between consolidated companies) have generally<br />
been eliminated; the same applies to profits and losses which result from<br />
intercompany sales and purchases of assets. Insofar as income from<br />
intercompany transactions involving life insurers has flowed into a provision<br />
for policyholders’ dividends, this income has not been consolidated, in<br />
accordance with the option provided for under German commercial law.<br />
An adjustment item is included for payments made between the balance<br />
sheet dates of the consolidated subsidiaries or the companies valued at<br />
equity and the balance sheet date of the parent company (consolidated<br />
balance sheet date).<br />
Accounting and valuation methods<br />
Basic principle The assets and liabilities shown in the consolidated accounts are included<br />
and valued uniformly according to the regulations applicable to the annual<br />
accounts of the <strong>Munich</strong> <strong>Re</strong>insurance Company.<br />
Intangible assets Intangible assets are valued at the acquisition cost less admissible<br />
depreciations.<br />
Investments Our real estate is valued at the acquisition or construction cost less<br />
admissible depreciations.<br />
Shareholdings in non-consolidated affiliated companies and participations<br />
are valued at the acquisition cost; all admissible writedowns are made.<br />
Shares in associated companies are valued at equity.<br />
Loans to affiliated companies and to companies in which participations are<br />
held, mortgage loans, registered bonds, loans and promissory notes, and<br />
miscellaneous loans are included in the balance sheet at their nominal<br />
values or at their acquisition costs; in the case of inclusion at the nominal<br />
values, the relevant premiums and discounts are placed to account pro<br />
rata temporis.<br />
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