21 September 2000 | Translation of the German ad-hoc announcement
Munich Re Group 1st half-year 2000 Munich Re Group grows in all fields of business / Result on course
In the first half-year 2000 the Group's gross premiums showed a total rise of 15% compared with the same period last year, reaching Euro 15.2bn. The result situation also improved overall, although the reinsurers' claims costs continued to be high, despite considerably less impact from natural catastrophe losses than in the exceptional year 1999.
In the period under review Group investments rose to Euro 156.1bn (compared with Euro 150.9bn at 31.12.1999), the underwriting provisions to Euro 127.6bn (Euro 123.5bn) and shareholders' equity to Euro 19.8bn (Euro 18.5bn).
Reinsurance recorded an increase of 18% in premium income, contributing Euro 8.7bn to the Group's strong premium growth. The highest increases were reported in life and health and in motor reinsurance; they were attributable both to new business and to the expansion of existing accounts. A substantial portion of the premium growth was ascribable to changes in exchange rates, as the reinsurers in the Group write around half their business in countries outside the eurozone; a small portion resulted from the assumption of Alte Leipziger Re's portfolio. At 110.5%, the combined ratio in non-life reinsurance was lower than in the previous year (118.9%), but was still clearly too high; after elimination of claims costs for natural catastrophe losses, the combined ratio was almost unchanged at 108.1% (108.2%). The result before amortization of goodwill* amounted to Euro 370m in life/health reinsurance and Euro 525m in property-casualty reinsurance; the corresponding results for the full business year 1999 totalled Euro 669m and Euro 539m respectively.
For the year 2000 as a whole Munich Re expects its reinsurance business to show premium growth of over 10% and a considerable year-on-year improvement in the result.
*The interim report was prepared on the basis of IAS for the first time. Comparable figures for the first half-year 1999 are only available for premium income.
All primary insurers in the Munich Re Group together wrote premium income of Euro 7.2bn (+ 8%) in the first half-year 2000. The highest growth rate was achieved by property-casualty insurance, with over 10%; nearly half of this was attributable to Alte Leipziger Europa, consolidated in Munich Re's figures for the first time. In the second half-year Munich Re will complete the acquisition of Mercur Assistance, whose increasingly sought-after services will further augment the range offered by the Munich Re Group.
In the first half-year 2000 the primary insurers' result before amortization of goodwill totalled Euro 454m (full business year 1999: Euro 948m). The life and health insurers contributed Euro 250m to this, and the property-casualty insurers Euro 204m; the corresponding results for the full business year 1999 were Euro 432m and Euro 516m respectively.
Munich Re's investments, most of which are managed by MEAG, rose from Euro 150.9bn to Euro 156.1bn, even though in the period under review the reinsurers had to make large claims payments for last December's storms. The investment result totalled Euro 5.0bn (full business year 1999: Euro 9.5bn), with just under Euro 1bn coming from gains on the disposal of investments, especially those realized by the life and health insurers. With a view to the growing market for private pension provision, MEAG has expanded its range of products with additional funds in the securities and property sector.
For the business year 2000 as a whole Munich Re Group currently expects premium growth of 9% and is proceeding on the assumption that it will meet its target of improving the result by 10%.
Munich Re, 21 September 2000