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Munich Re Group Notes on the accounts
Shares, investment fund certificates, bearer bonds, and other fixed-interest
and variable-yield securities are valued at the acquisition cost or at the
market price on the balance sheet date, whichever is the lower; lower
valuations from previous years are maintained even if the reason for these
lower valuations no longer applies.
Loans and advance payments on insurance policies, as well as deposits
retained on assumed reinsurance business, are stated at the nominal value
of the amount outstanding.
The other investments are valued at their acquisition costs less admissible
writedowns.
Investments for the benefit of life insurance policyholders who bear the
policy risk are included at their market values, with due regard to the
principle of prudent valuation.
Receivables Amounts receivable on direct insurance business, accounts receivable on
reinsurance business and other receivables are included at the nominal
values; all necessary writedowns are made.
Other assets Inventories are valued at acquisition cost. Office furniture and equipment is
valued at the acquisition cost less admissible depreciations. The purchase
price of assets classifying as low-value goods is fully written off in the year
of acquisition.
Shareholders’ funds The subscribed capital and the capital reserve show the amounts paid in
by the shareholders of the Munich Reinsurance Company: the paid-up
nominal amounts of their shares in the one case and share premiums in the
other. The revenue reserves comprise the earned surplus of the Group
companies and the results of profit-affecting consolidation methods. The
balance sheet profit is the amount at the disposal of the Annual General
Meeting of the parent company. Consolidated subsidiaries’ shareholders’
funds apportionable to shareholders that are not members of the Group are
shown under the item “Minority interests”.
Underwriting funds and provisions The underwriting funds and provisions of the parent company and the
German subsidiaries are calculated in accordance with the requirements
of German commercial law. The underwriting funds and provisions of
the foreign subsidiaries are set up in accordance with the respective legal
regulations of their countries. We generally include these funds and
provisions unaltered in the consolidated accounts. In fact, in the case
of every subsidiary the calculation of underwriting funds and provisions
is based on methods which are comparable with those of the Munich
Reinsurance Company.
The unearned premiums are accrued premiums already written for future
risk periods. They are calculated pro rata temporis or using nominal
percentages based on many years of experience and the latest knowledge
we have.
The premium funds are the actuarial reserves calculated for life, personal
accident and health insurance.
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