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Munich Reinsurance Company Notes on the accounts
Underwriting funds The underwriting funds and provisions are calculated in accordance with
and provisions the requirements of German commercial law. In all cases we have taken
into account the necessity of ensuring that our obligations from the
reinsurance business assumed by us can always be met.
The reserves for unearned premiums have been calculated in accordance
with the principles of German commercial law, partly on the basis of
information received from our ceding companies and partly using
nominal percentages. Where unearned premiums are calculated using
percentages, these are based on many years of experience and the
latest knowledge we have.
The premium funds and the provisions for outstanding claims have
generally been set up in accordance with the amounts reported to us by
our ceding companies; in all cases where these amounts do not appear
adequate to us in the light of our experience and our assessment of the
situation, we have increased them accordingly. Sufficient provisions,
calculated using actuarial methods, have been posted for losses that have
been incurred but not yet reported.
The item “Claims equalization provision and similar provisions” contains
the amounts required in accordance with commercial law to mitigate
fluctuations in claims experience, plus the provisions for major risks and
for earthquake risks.
The “Other underwriting provisions” mainly comprise provisions for
anticipated losses, which are calculated on the basis of many years’
experience and taking into account the latest information we have.
The reinsurance funds and provisions apportionable to the business
retroceded by us have been calculated in accordance with the terms of
the retrocession agreements.
Other provisions The provisions for employees’ pensions are calculated according to the
entry age normal method on the basis of the actuarial interest rate of 6 %
provided for under German tax law. The other provisions are posted in
accordance with the probable requirements.
Liabilities The deposits retained on retroceded business, the accounts payable on
reinsurance business, and the other liabilities are stated at the amount
repayable.
Currency translation All business transactions are entered in our books in the respective original
currencies; assets, liabilities, income and expenditure are translated into
Deutschmarks using the relevant exchange rates at the end of the calendar
year. We also take account of the development in exchange rates up to the
balance sheet date in our result for the year.
Realized exchange gains and realized and unrealized exchange losses are
included under “Other income” and “Other expenditure” respectively;
unrealized exchange gains are eliminated through the formation of an
appropriate provision.
The exchange rates of the most important currencies for us are listed in the
notes on the consolidated accounts.
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