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Analysis of our capital structure

Strategic debt

We define as strategic debt all financial instruments with the character of outside financing that do not have a direct link to our operative business. Strategic debt supplements our financial resources, is essentially designed to optimise the cost of capital and ensures that we have sufficient liquidity at all times.

Group equity
Development of Group equity
€m 31.12.2011 31.12.2010
Issued capital and capital reserve 7,388 7,388
Retained earnings 11,588 10,735
Other reserves 3,384 2,238
Consolidated result attributable to equity holders of Munich Reinsurance Company 702 2,422
Non-controlling interests 247 245
Total 23,309 23,028


Debt leverage
  2011 2010 Change
  €m €m %
Strategic debt 5,219 5,405 -3.4
Group equity 23,309 23,028 1.2
Total 28,528 28,433 0.3
Debt leverage 18.3% 19.0%  

Strategic debt includes subordinated liabilities amounting to €4,683m. Our subordinated bonds are recognised in part as own funds by the German Federal Financial Supervisory Authority (BaFin). When this is considered in calculating the strategic debt, the latter is reduced to €1,317m and the debt leverage amounts to only 5.3%.