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Muench Rueckvers N (ETR:MUV2) |
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WIKI ANALYSIS
Munich Re also known as Muenchener Rueckversicherungs (FRA:MUV2, ETR(XETRA):MUV2, BIT:MUV2) is a Munich, Germany based risk management company dealing primarily in primary insurance, reinsurance (world's largest) and asset management. Reinsurance (also involves risk transfer to capital markets) operates internationally with 5,000 clients (each with multiple customers) and 13,300 staff in 150 countries. Core operations are separated into 3 main divisions, one of them Munich Reinsurance is segmented into 7 parts.[1]
As a reinsurance company it engages in risk management by taking on insurance policies deemed risky by other insurance companies . The reinsurer can be motivated by cost advantages as well as weaker regulations as compared to those dealt with by its clients.[2]
Company Overview
The whole company operates internationally and in Germany through numerous subsidiaries each under one of 3 distinct divisions. In 2009 58% of group premium came from reinsurance 42% from primary insurance.
- Health and property-casualty
- non life - involves analysis, software services, capital markets risk transfer in property, fire, water damange, windstorm, marine and aviation business areas.
- Risk Solutions - involves complex projects in various sectors ranging from construction, space, energy to agriculture, 3rd party liability cases.
- Specialized primary insurance - managing general agents
- Retakaful - business unit based Malaysia and licensed by Bank Negara. General and family reinsurance.
- Life (included Munich Health until 2009) -International business Life and Health gross premiums were up 36.6% to €9.7bn (7.1bn) in 2009 mainly because the financial crisis resulted in heavy demand for capital substitutes by clients. Life insurers gross premiums rose almost 10% to €7.9 billion
Munich Health (another reinsurance division) - Established in 2009 this division uses knowledge gained in all areas of healthcare insurance by Munich Re's other divisions to identify opportunities in sales, profitability, risk management, cost management, product and service enhancements. Products and services formulated from that information is offered to clients in over 100 countries (primary and other). In 2009 Munich Health tookover all of the groups health reinsurance and international (outside Germany) health primary insurance.
Primary Insurance (stake in ERGO increased from 90 to 95% in 2009)- Deals in areas such as life, property-casual, health, travel, and legas expenses. Also conducts underwriting medical risk reserach ERGO (also oversees the D.A.S brand in 16 countries, ERGO Direkt (4 million dental, long term care, term life and funeral benefit insurance customers in Germany), present in 31 countries in Europe and Asia where over 40 million people are served. Next to Allianz AG it is the largest primary insurance company in Germany. Meag, the company's asset manager looks after 113 billion euro in assets belonging to ERGO. Subsidiaries also include DKV (4 million health and long term care customers in Germany) and ERV (travel insurance represented in 26 countries). In 2009 74% of group premium income came from Germany. 2009 operating and consolidating results increased despite lower first half numbers
Asset Management - Handled by subsidiary MEAG GmbH, a company that manages over 50 investment funds with assets valued at over 190 billion euro. Started in 1999.
Regional Divisions
There are also 2 other segments; the Risk Trading Unit and Corporate Underwriting Division
Within Primary Insurance Main International subsidiaries (among many other smaller ones) include ERGO Italia, the Polish property-casualty insurer ERGO Hestia and the Turkish ERGO.İSVİÇRE. In Germany most if not all subsidiaries were withdrawn from the market/rebranded ERGO. ERGO (over 95% owned by Munich Re which plans to buy out the rest of the outstanding shares). In the banking sector ERGO collaborates with Unicredit Group. In 2009 ERGO absorbed travel insurer ERV (Europäische Reiseversicherung) and Mercur Assistance.
Within Asset Management MEAG (MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH in Germany and MEAG MUNICH ERGO AssetManagement GmbH) has officies in New York and Hong Kong. Holds 19% of the asset management company of the People’s Insurance Company of China (PICC).
Business & Financials
| Key Financial Metrics (€ million) | 2005 | 2006 | 2007 | 2008 | 2009 | 1HFY09 | 1HFY10 | Change (%) |
|---|---|---|---|---|---|---|---|---|
| Gross premiums written | 38,200 | 37,400 | 37,300 | 37,800 | 41,400 | 20,693 | 22,613 | 9.3% |
| Operating result | 4,156 | 5,877 | 5,573 | 3,834 | 4,721 | 2109 | 2218 | 5.2% |
| Total Assets | 218,737 | 215,874 | 214,253 | 215,362 | 223,412 | 219,191 | 237,322 | 8.27% |
| Investments | 177,200 | 176,900 | 176,200 | 174,900 | 182,200 | 177,437 | 192,462 | 8.47% |
| Net Income | 2751 | 3519 | 3923 | 1579 | 2564 | 1134 | 1194 | 5.3% |
| ROE | 12.5% | 14.1% | 15.3% | 7.0% | 11.8% | 10.5% | 10.4% | (-)0.1% |
| Natural Catastrophe Losses (Reinsurrance) | 2603 | 139 | 634 | 832 | 196 | 382 | 1485 | 289% |
| Earnings per share | 11.74 | 15.05 | 17.83 | 7.74 | 12.95 | 5.73 | 6.33 | 10.5% |
| Market Capitalization | 26,300 | 29,900 | 29,000 | 22,900 | 21,500 | 19,200 | 19,500 | 1.56% |
- Data from 2009 Annual Report[3] 2006, 2007, 2008 Annual Reports[4][5][6] 2009, 2010 first half reports[7][8]
- Since 2008 Consolidation which isn't included reduced assets by about €20 billion a year about 8-10% of assets.
Subsidiaries and Affiliated Companies
| Affiliated Companies with over €100 mil in Equity[9] | Base | % Interest | Equity €'000 | 2009 Result |
|---|---|---|---|---|
| Munich American Holding Corp | Delaware | 100 | 7,363,997 | 82,377 |
| Munich Re America Corp | Delaware | 100 | 3,074,614 | 98,005 |
| ERGO International Akt | Dusseldorf | 99.64 | 2,000,760 | 0 |
| ERGO Versich | Dusseldorf | 99.64 | 1,995,411 | 86,613 |
| Munich Reinsur America | Delaware | 100 | 1,688,503 | 167,127 |
| Osterreichische-Volksbanken AG | Vienna | 9.96 | 1,377,567 | 80,800 |
| Munich American Reassurance Comp | Atlanta | 100 | 1,052,603 | 45,124 |
| New Reinsur Comp Geneva | Floriana, Malta | 100 | 1,037,209 | 130,131 |
| VICTORIA Leb | Dusseldorf | 99.64 | 738,653 | 0 |
| Hartford Steam Boiler Insp and Insur Comp | Hartford | 100 | 597,725 | 89,231 |
| VICTORIA Ver | Dusseldorf | 99.64 | 528,152 | 5181 |
| DKV Deutsche Krank-Akt | Cologne | 99.64 | 466,352 | 0 |
| HSB Group | Delaware | 100 | 447,361 | -1004 |
| American Family Home Ins | Florida | 100 | 103,542 | 13,126 |
| American Modern Home Ins Comp | Ohio | 100 | 233,238 | 24,548 |
| Great Lakes Reinsurance | London | 100 | 330,375 | 84,779 |
| HSB Engin. Ins | London | 100 | 114,477 | 14,843 |
| Munich Re of Malta Holding Ltd | Floriana, Malta | 100 | 193,971 | -50 |
| Munich Re of Malta PLC | Floriana, Malta | 100 | 197,559 | 5181 |
| Munich Reins Comp of Africa | Johannesburg | 100 | 137,547 | 26,299 |
| Munich Reinsur Comp of Australasia | Sydney | 100 | 111,208 | 3853 |
| Munich Reinsur Comp of Canada | Toronto | 100 | 186,530 | 30,743 |
| Sterling Life Insur Comp | Floriana, Malta | 100 | 147,915 | 1557 |
| Hamburg Mannheimer Sach-Akt | Hamburg | 99.64 | 202,486 | 0 |
| Hamburg Mannheimer Ver-Akt | Hamburg | 99.64 | 402,885 | 0 |
| DKV Seguros y Reaseguros, Sociedad Anonima Espanola | Saragosa | 99.64 | 127,025 | 15,611 |
| D.A.S Deutscher Automobil | Munich | 99.64 | 249,657 | 0 |
| ERGO Italia SPA | Milan | 99.64 | 311,738 | 25,205 |
| Sopockie Towarzystwo Ubezpieczen ERGO Hestia Spolka Akcyjna | Sopot | 99.64 | 160,928 | 26,605 |
| ERGO Previdenza SPA | Milan | 99.64 | 331,854 | 44,501 |
| MEAG Munich ERGO Asset Management GmbH | Munich | 99.85 | 126,973 | 26,224 |
| Admiral Group | Cardiff | 10.18 | 310,168 | 162,623 |
| Helvetia Holding | St. Gallen | 8.16 | 550,720 | 44,977 |
| MEDICLIN Akt | Offenburg | 34.88 | 189,780 | 5820 |
| Sana Kliniken AG | Munich | 21.62 | 166,498 | 12,670 |
Trends & Forces
Upward trend in natural catastrophe costs
In the 1st half of 2010 losses by Munich Re were substantially higher than the previous year. Chile (more than 190,000 insurance claims) where insurance density is high, Haiti, Chile, Turkey and Costa Rica and volcanic eruptions in Iceland, Ecuador and Guatemala have burdened the company. In the long run climate change forecasts makes the insurance business more risky.[10]
Effects of the Financial Crisis
Capital base of insurers recovered quickly. Insurance markets in general grew with moderate growth in Europe and high growth in China. In Germany most of the premium income growth was in Life Insurance.[11]
Reinsurance business was less negatively impacted by the financial crisis than primary insurance. However in the long run reinsurers could be faced with higher capital costs as new capital will be more difficult to obtain[12]
Competition
- Central Reinsurance Corporation - Taiwanese market focussed reinsurance company mainly property and casualty.
- Hannover Rueckversicherung AG - Operates in two segments Non life reinsurance (Hannover Advanced Solutions) and Life and health reinsurance (Hannover Life).
- Odyssey Re Holdings - Underwriter of reinsurance that offers treaty and facultative reinsurance.
| Key Financial Metrics (000) | Central Reinsurance Corporation (Taiwan $)[13] | Hannover Re Group (€)[14][15] | Odyssey Re Holdings Corp. (US $)[16][17] |
|---|---|---|---|
| 2009 Gross Premiums Written | 13,778,934 | 10,274,800 | 2,195,000 |
| 1HFY10 Gross Premiums Written | na | 5,682,300 | 1,038,887 |
| Change over previous half | na | 8.2% | 2.57% |
| 2009 Total Assets | 29,516,324 | 42,264,200 | 10,785,400 |
| 1HFY10 Total Assets | na | 48,205,200 | 10,920,891 |
| Change over previous half | na | 14% | 1.26% |
| 2009 Net Income | 992,823 | 731,200 | 375,100 |
| 1HFY Net Income | na | 310,600 | 187,143 |
| Change over previous half | na | (-)28.3% | 59.32% |
- Average exchange rate for 2009: $1 Taiwan = $0.030237 US, €1 = $1.3884 US[18]
References
- ↑ Munich Re Group
- ↑ Info About Reinsurance
- ↑ 2009 Annual Report
- ↑ 2006 Annual Report
- ↑ 2007 Annual Report
- ↑ 2008 Annual Report
- ↑ 1HFY09 Report
- ↑ 1HFY10 Report
- ↑ Munich Re 2009 Group Report
- ↑ Munich Re sees unbroken upward trend in natural catastrophe costs
- ↑ Economic Parameters
- ↑ Reinsurers 'Unscathed by Financial Crisis' Says Willis Re Renewal Report (2009-01-05).
- ↑ Central Reinsurance Corporation 2009 Annual Report
- ↑ Hannover Re Group 2009 Annual Report
- ↑ 1HFY10 Results Hannover Re Group
- ↑ Odyssey Re Holdings 2009 Annual Report
- ↑ 1HFY10 Results Odyssey Re Holdings Corp.
- ↑ 2009 Average Exchange Rates
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