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