Annual Report 2008 ERGO Insurance Group

Transcription

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Overview of ERGO Insurance Group
2008
2007
Change
previous year
(%)
Total premiums
Gross premiums written
€ million
€ million
17,711
16,578
17,385
16,401
1.9
1.1
Expenses for claims and benefits
€ million
13,896
15,888
– 12.5
Investment result
Result before impairment losses of goodwill
Consolidated result
€ million
€ million
€ million
2,871
584
92
5,351
1,070
781
– 46.4
– 45.4
– 88.2
Investments
Technical provisions (net)
Equity
€ million
€ million
€ million
108,247
98,939
3,734
104,258
95,108
5,081
3.8
4.0
– 26.5
21,709
31,508
20,772
29,127
4.5
8.2
0.99
–
9.78
13.25
– 89.9
–
Full-time representatives
Salaried employees
Group earnings per share in accordance with IFRS
Dividend per share
With premium income amounting to € 17.7bn, ERGO
is one of the major insurance groups in Europe. Worldwide, ERGO is represented in more than 30 countries
and concentrates on Europe and Asia. In Europe,
ERGO is no. 1 in the health and legal expenses insurance segments, and in its home market of Germany
it is among the market leaders. 50,000 people work
full-time for the Group, either as salaried employees
or as self-employed sales representatives.
ERGO offers a wide spectrum of different types of
insurance and other services, and, as a reliable and
fair partner, intends to be the permanent no. 1 choice
for all provision and insurance needs of its clients.
40 million clients currently place their trust in the
services, expertise and financial strength provided
by ERGO and its companies. In Germany, 20 million
clients place their faith in the strong brands of
D.A.S., DKV, Hamburg-Mannheimer, KarstadtQuelle
Insurance and Victoria.
€
€
ERGO has the right sales channel for every client:
Over 21,000 self-employed sales representatives,
staff working in direct sales, as well as insurance
brokers and strong cooperation partners – both in
Germany and abroad – look after our clients. We maintain a far-reaching sales partnership with the major
European bank UniCredit Group, both in Germany
as well as in Central and Eastern Europe.
ERGO is part of the Munich Re Group, one of the
leading risk carriers worldwide. Under its umbrella,
both primary insurers and reinsurers capitalise on
opportunities to turn risk into value. The joint asset
management and fund company MEAG manages
the investments of the Munich Re Group amounting
to approximately € 175bn, of which € 108bn are
accounted for by ERGO. Munich Re holds a 94.7 %
stake in ERGO.
2008
ERGO Insurance Group
Group Annual Report
Contents
3
6
12
Management Report
16
23
25
32
32
40
49
54
59
65
Governing bodies
Parameters
Business performance
Overview and key figures
Business segment development
Financial position
Other success factors
Prospects
Risk report
76
Shares in ERGO Versicherungsgruppe AG
Consolidated
78
Financial Statements 80
81
82
83
84
90
93
203
2 ERGO Insurance Group
Letter to shareholders by the Chairman of the Board
of Management
Report of the Supervisory Board
Report by the Board of Management and Supervisory Board
on Corporate Governance within the ERGO Insurance Group
Consolidated balance sheet as at 31 December 2008
Consolidated income statement for the financial year 2008
Statement of recognised income and expense
Group statement of changes in equity
Consolidated cash flow statement for the financial year 2008
Segment reporting – classification according to business segments
Segment reporting – classification according to regional segments
Notes to the Consolidated Financial Statements
Selected participating interests
207
Auditor’s report
208
Declaration of the Board of Management
209
Addresses
Dear shareholders,
The past financial year was an exciting but in many ways difficult year. The
global crisis on the financial markets brought disruption of unexpected proportions to politics, business, companies and consumers.
Dr. Torsten Oletzky
Chairman of the Board of Management
ERGO Versicherungsgruppe AG
ERGO, too, has certainly felt the effects of the crisis. By contrast to the
exceptionally good previous year, the investment result fell by 46 percent to
2.9 billion euros – despite our risk-conscious investment policy. Our technical
business was once again excellent: at 90.9 percent, our combined ratio in
non-life insurance was not only clearly below our long-term target figure but
also ranked among the top of our competitors yet again. This is the result of our
careful risk selection and first-class claims management, as well as considerable improvements in cost management. Indeed, as regards administration
expenses in Germany, all segments showed positive developments. However,
premium income only rose moderately by 1.9 percent to 17.7 billion euros. The
significant fall in single premium business in life insurance resulting not least
from the financial market crisis made itself felt here.
All in all, with a profit of 92 million euros it can be said that we have so far
got through the crisis rather well. Making a profit after encountering such a
year is quite an achievement and reflects well on our integrated risk management. It must be emphasised in this context that we did not in any way lower
our high standards regarding the strict interpretation of accounting regulations we are accustomed to.
Despite all the crisis management required in such a period, we did not lose
sight of the future and our long-term targets. For example, we continued to
make our business more international as planned. The ERGO Group currently
earns almost one quarter of its premium income outside of Germany. International business recorded strong organic growth again in 2008, especially in
Poland, Turkey and the Baltic States. An important step towards strengthening
our position in the bancassurance segment in the long term was made by
acquiring a majority stake in Bank Austria Creditanstalt Versicherung, even
though it initially put a strain on our result. This means that we are now no. 3
in the Austrian life insurance market and are using Vienna as a base to control
ERGO Insurance Group 3
sales via UniCredit-Banken in Central and Eastern Europe; the first policies
were sold in Slovenia in 2008. Our new companies and joint ventures were also
successful in Asian markets, such as South Korea and India.
In our home market we have started the “Continual Improvement in Competitiveness” project, which aims at further enhancing the administration expenses and acquisition cost ratios in Germany. To this end, we have developed a
number of measures; we took special care to ensure that the cost savings are
not at the expense of quality and service. The focus of companies and the public was notably on the necessary cut of 1,800 jobs connected with the measures. It was a difficult process for the executive management of the ERGO
Insurance Group and the Group Works Committee to come to an agreement on
a comprehensive package which, among other things, lays down that redundancies due to operational reasons have been ruled out for either back-office or
salaried field representatives until 31 December 2012. I am confident that the
savings and structural changes, for example with respect to sales, will further
improve the competitiveness of ERGO over the next few years.
In the year under review we also increased the effectiveness of our sales channels. For example, we worked at full steam to ensure that the integrated ERGO
broker sales channel went operative in January 2009. Geared towards the needs
of the customer, it offers brokers various ERGO brand products and services
from a single source. We intend to extend further our successful direct insurance. A very positive development in this context is our reorganisation of the
joint shareholdings in the financial services segment together with Arcandor AG
shortly before the end of the year. In the process, we managed to acquire the
remaining shares in KarstadtQuelle Insurance, Germany’s most popular direct
insurer.
At the beginning of 2009 we took over travel insurer Europäische Reiseversicherung from Munich Re thereby creating a competence centre for all
products related to travel. At the same time, we extended our range of products by adding the entire spectrum of assistance services. As we have pursued
a strategy of equipping our products with service features for years in order to
change from being a mere cost reimbursement company to a service provider,
we see this as a very positive development.
Product innovations in all segments support the various sales channels. In
good time for the introduction of the so-called health fund in Germany in 2009,
we launched a new and flexible tariff generation for health insurance onto the
market. In life insurance we concentrated on gearing our product range more
towards investment-type products. Our main focus here was on providing a
dynamic hybrid product. Furthermore, we continue in our efforts to make our
products even more transparent and easier to understand for our customers.
We also consistently implemented our strategy of optimising our capital structure by paying out an exceptionally high dividend totalling one billion euros
and by means of financing through borrowing. Once the capital markets have
calmed down again, we will also look into the increased use of hybrid capital.
As you can see, we have rigorously pursued our long-term goals again in the
year under review. Our benchmark continues to be high: we wish to achieve a
significant increase in our premiums and profits by 2012 while, at the same
time, continuously improving quality and service. We made good progress in
this respect in 2008 and will do our utmost again in 2009 to firmly establish
ERGO among the top major international insurance groups in Europe by 2012.
We believe that opportunities, too, will arise from the current crisis, be it life
insurance products with guarantees which will become more attractive in times
of uncertainty or acquisitions which can now be made at more reasonable
prices. In order to ensure that we retain room for manœuvre in all directions,
we suggest forgoing a dividend payout this year and ask you to approve this proposal at the Annual General Meeting.
We are optimistic about the future – despite the difficult economic situation.
Admittedly, we cannot as yet gauge the impact of the economic and financial
crisis over the next few years. However, we are confident that customers will
once again attach more importance to trust and reliability. These are good parameters for ERGO with its financial strength, sustainable business management,
well-known traditional brands and strong advisory sales forces.
Yours
Report of the Supervisory Board on the 2008 financial year
Dr. Nikolaus von Bomhard
Chairman of the Supervisory Board
of ERGO Versicherungsgruppe AG
During the course of the past financial year we carefully monitored the activities of the Board of Management on a regular basis and provided support and
advice with regard to the Group’s strategic development and a number of important individual measures. The Board of Management briefed us regularly,
promptly and thoroughly about all decisions and transactions of relevance to
the Group as a whole during our meetings as well as in additional verbal and
written reports, and has thus fully complied with all reporting duties.
During the year under review the Supervisory Board met four times, and virtually all members of the Supervisory Board were present during those meetings.
At and between meetings the Board of Management provided us with detailed
information about important transactions and pending decisions, for example
in connection with the results of the spring meeting of the Board of Management, the impact of the financial crisis on ERGO or a transaction with Arcandor.
In addition, as Chairman of the Supervisory Board, I regularly conferred with the
Chairman of the Management Board on the current business outlook and developments as well as significant transactions. The shareholder and employee representatives had the opportunity to discuss important issues with the Chairman
in separate meetings held before Supervisory Board meetings. Audit measures
in accordance with Section 111 para. 2 of the German Stock Companies Act
(AktG) were once again not required in the financial year under review.
Main focus of the meetings of the full Supervisory Board
During the 2008 financial year the Supervisory Board was very much concerned
with the business developments in the reporting year and the progress made in
the implementation of the strategy entitled “ERGO 2012 – simply better”.
Despite the difficult economic parameters ERGO has progressed well in each
area of action. Special mention should be made of ERGO’s international activities. Apart from strong organic growth, the acquisition of a majority stake in
Bank Austria Creditanstalt Versicherung was an important milestone in the further development of the international business. Together with the Board of Management we also discussed in detail the Group-internal takeover of Europäische
Reiseversicherung (ERV) and Mercur Assistance on 1 January 2009, their integration into ERGO and the expected positive effects on competitiveness,
growth and profitability of these transactions.
Moreover, we repeatedly discussed in detail the two projects “Continual
Improvement in Competitiveness” and “ERGO – one company” which were initiated by the Board of Management. The objective of the first project is to implement short-term measures for the attainment of the targeted cost ratios in the
home market by 2010. Apart from that, a continuous process for permanently
improving the service quality and cutting costs is being planned. The goal of
“ERGO – one company” is to incorporate in terms of labour law the
organisational structure and workflow encompassing functions across the
brands which have been established over the past years. Accordingly, it is
planned that as from the end of 2009 all employment contracts with staff working
in insurance operations will be exclusively with ERGO Versicherungsgruppe AG.
We have been particularly concerned about the situation on the financial markets. The Board of Management informed us about its impact on ERGO and its
companies. Thanks to its risk management, which has been considerably
improved over the past few years, we expect ERGO to weather the crisis in the
financial markets comparatively unscathed. We were also briefed in detail about
the investment strategy plan and the strategy in the life insurance segment.
The Supervisory Board also discussed and approved the changes within the
Board of Management and the new schedule of responsibilities. We further
dealt in depth with the remuneration system for the Board of Management,
including the most significant contractual matters, since, as prescribed by the
amended German Corporate Governance Code, decisions regarding these matters were incumbent on the full Supervisory Board for the first time.
In addition, we discussed the agenda for the Annual General Meeting 2008,
including the proposed resolutions, with the Board of Management. As regards
the proposed resolution for the appropriation of profit, the Board of Management told us that as part of an optimisation of the capital structure equity capital which is not required should be paid out to the shareholders by liquidating
reserves.
Moreover, we were informed by the Board of Management about the formation
of an Advisory Board. The function of this Board is to provide advice and support to the Board of Management regarding general economic issues. It consists of prominent members from politics, business and various associations.
Work of the committees
There are five committees in accordance with the procedural rules as applicable
to the Supervisory Board. Besides the prescribed Conference Committee in
accordance with Section 27 para. 3 of the German Co-Determination Act
(MitbestG), these are: Standing Committee, Audit Committee, Board Committee and the Nomination Committee. Membership of the various committees is
shown in the overview on page 24.
The Standing Committee held six meetings, among them an extraordinary meeting with the Audit Committee for discussing the current crisis in the financial
markets and its effect on ERGO. The Standing Committee concentrated on the
company’s investments and issues concerning the crisis in the financial mar-
kets. In addition, the committee was briefed about issues concerning inflation
and the insurance industry, and endorsed the acquisition of ERV and Mercur
Assistance and a range of further measures which the Board of Management
submitted to the committee for approval in accordance with its procedural rules.
Apart from the extraordinary meeting mentioned above, the Audit Committee
held three other meetings in the 2008 financial year. It dealt with the annual
accounts and consolidated financial statements and reviewed them with the
auditor prior to the balance sheet meeting. Reporting practices during the year
was also a subject discussed by the Audit Committee. In particular, it looked
closely at risk management as well as compliance issues and the annual report
of the Internal Auditing unit. Furthermore, the committee defined the tasks and
work of the Audit Committee more clearly. In addition, the committee made
preparations for the appointment of the external auditor, checked its declaration of independence, specified areas requiring special attention as well as
agreeing on the audit fee, and commissioned the audit.
The Board Committee met four times during the reporting year. Apart from discussing succession plans to the Board of Management, it also dealt primarily
with issues concerning appointments to the Board for discussion in the plenum.
The committee drafted proposals for the plenum regarding adjustments to the
schedule of responsibilities within the Board of Management. The committee
deliberated on the remuneration system for the Board of Management and the
rearrangement of the remuneration elements and prepared a corresponding resolution proposal for the plenum. It also made decisions regarding targets set for
the 2007 annual bonus, the company-related targets for the Board of Management members regarding the annual bonuses for 2008 and 2009 and the threeyear mid-term incentive plan 2009. Further, the committee reviewed salaries
received by the members of the Board of Management and pension entitlements,
as well as approving the assignment of mandates in Supervisory Boards, Advisory Boards and similar bodies by the members of the Board of Management.
The Nomination Committee held two meetings. Among other matters, the committee drafted proposals for the appointment of shareholder representatives by
the Annual General Meeting held on 5 May 2008. In addition, the committee adopted a check list of criteria for the committee which will be applied in the selection
process of shareholder candidates for membership of the Supervisory Board.
The Conference Committee did not need to convene during the year under
review.
The Chairman of the Audit Committee, Dr. Hasford, and I myself in my function
as Chairman of the other committees regularly briefed the full Supervisory
Board in detail about the work of the various committees.
Corporate Governance and Declaration of Conformity
ERGO’s Supervisory Board explicitly supports good corporate governance. As
part of the implementation of the new recommendations pertaining to the version of the German Corporate Governance Code dated 6 June 2008, the Supervisory Board modified its procedural rules and transferred responsibility for the
remuneration system for the Board of Management, including a number of significant contractual matters, to the plenum. In addition, we carried out the recommended efficiency test of the Supervisory Board’s activities. The test
revealed that the measures for improving efficiency introduced over the past
years have been effective and, accordingly, the activities of the Supervisory
Board are both efficient and appropriate.
The annual declaration of conformity with the German Corporate Governance
Code, as required by and pursuant to Section 161 of the German Stock Companies Act, was issued by the Supervisory Board and the Board of Management
on 19 December 2008. The declaration is published on the Group’s website.
See Corporate Governance Report on page 12 for more details on this topic.
Annual financial statements
KPMG Bayerische Treuhandgesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Munich, audited the annual financial statements prepared by
the Board of Management, including the management report, and the consolidated financial statements including the Group management report for the
2008 financial year, and awarded them an unqualified auditor’s opinion.
In a meeting held on 11 March 2009, the Supervisory Board’s Audit Committee
discussed these documents in detail and examined them in advance. We then
discussed at great length the annual financial statements and the consolidated
financial statements, the management report and the Group management
report along with the reports by the external auditor in the balance sheet meeting during which the representatives of the auditor were also present and made
a statement. We had no objections. We approved the annual financial statements and the consolidated financial statements for 2008 which are hereby
endorsed. We have studied the proposal by the Board of Management to fully
allocate the balance sheet profit to retained earnings, and approve it.
We have also examined the report prepared by the Board of Management
regarding relations to affiliated companies as well as the audit report compiled
by the external auditor and have no reservations.
The external auditor gave the report prepared by the Board of Management on
the relations to affiliated companies the following auditor’s opinion:
“After having duly audited and appraised the documents, we hereby certify that
1. the facts stated in the report are correct,
2. the Company did not render unduly high remuneration for any transaction
recorded in the report,
3. the provisions detailed in the report do not give rise to any significantly different assessment than that which is stated by the Board of Management.”
We share this judgement. On the basis of our own examination we have no objections to raise concerning the declaration made by the Board of Management at
the end of the report on the relations to affiliated companies.
Changes to the Supervisory Board
Following the Annual General Meeting held on 5 May 2008, Mr. Harald Pinger
and Dr. Hans-Dietrich Winkhaus both resigned from office. We would like to
thank both for the work undertaken and the commitment shown on our Board.
In their place the General Meeting appointed Dr. Lothar Meyer and Dr. Markus
Miele to the Supervisory Board for the remaining term of office. These appointments mean that committees have also changed accordingly: Dr. Meyer was
appointed to the Nomination Committee and the Standing Committee, replacing Dr. Winkhaus.
Changes to the Board of Management
On 1 April 2008 we appointed Dr. Ulf Mainzer as a regular member of the Board
of Management and Labour Director. He is in charge of HR (Germany), General
Services, Facility Management, Materials Management/Purchasing and Logistics. The temporary appointment of Dr. Oletzky as Labour Director ended on
31 March 2008 by mutual agreement.
Dr. Klaus Flemming, who had been a member of the Board of Management since
1 March 2003, resigned at the end of 2008 to take retirement. We would like to
take this opportunity to thank Dr. Flemming, who with his expert knowledge
played a decisive and successful role in shaping ERGO’s international business,
for his dedication and commendable work. As his successor Dr. Jochen
Messemer was appointed to the Board of Management on 1 October 2008.
Our gratitude to the Board of Management and staff
On behalf of the Supervisory Board I would like to thank the Board of Management and all company staff as well as all employees of the companies within the
ERGO Insurance Group for their dedication and their successful work despite
the difficult economic parameters.
Düsseldorf, 18 March 2009
On behalf of the Supervisory Board
Dr. Nikolaus von Bomhard, Chairman
Corporate governance stands for a responsible corporate management and
control geared towards long-term creation of value. Of particular importance to
us in this context are efficient practices on the Board of Management and
Supervisory Board, good collaboration between these bodies and corporate
communications that are transparent both internally and externally. We see corporate governance as an ongoing process, but merely stating the rules is not
sufficient, they must be lived out in practice. Major contributors to ensuring this
is the case are Internal Auditing, Risk Management and the Compliance Office.
In Germany the corporate governance rules are primarily anchored in the German
Stock Companies Act, in the German Co-Determination Act and in the German
Corporate Governance Code. This Code, which came into force in 2002 and
which has been amended several times since, contains recommendations and
proposals based on nationally and internationally recognised standards of good
and responsible management. ERGO’s Board of Management and Supervisory
Board publish a declaration each year, stating whether and to what extent the
recommendations of the Code have been complied with. The declaration
published in December 2008 can be found at the end of this report.
The Code was revised by the Government Commission on the German Corporate Governance Code during the first six months of 2008 and a new version
was adopted on 6 June 2008. A new recommendation was incorporated in the
Code, whereby, on recommendation of the Board Committee, the Supervisory
Board in plenum is to determine and regularly audit the remuneration system
for the Board of Management, including significant contractual elements. The
recommendation means that the Code will aim to strengthen the responsibilities of the plenary Supervisory Board with regard to the remuneration of Board
of Management members. In order to implement the recommendation, the
Supervisory Board passed a resolution regarding the remuneration system
for the Board of Management in its November meeting. In addition, the procedural rules of the Supervisory Board were adjusted to conform to the new
recommendation of the Code.
Moreover, the latest version of the Code now recommends that the Supervisory
Board or the Audit Committee discuss the half-year financial statements and
interim management reports with the Board of Management prior to publication. By scheduling the meeting dates of the Audit Committee accordingly, we
have ensured that this recommendation is complied with.
As part of the implementation of the Code amendments in 2007, we formed a
Nomination Committee, which, as part of the appointment process of shareholder representatives, nominates suitable candidates and recommends them
to the Supervisory Board which will propose the candidates to the Annual
General Meeting for election. To this end, the committee developed a checklist
of criteria which defines the principles for the selection of suitable candidates.
During the course of 2008, the Supervisory Board again examined the efficiency
of its activities. The measures implemented following the examination of the
previous year were evaluated as positive.
No acquisition or sales transactions notifiable under Section 15 a of the German Securities Trading Act were recorded up to the end of the 2008 financial
year. The total number of shares or any related financial tools held by all members of the Board of Management and Supervisory Board amounts to less than
1 % of the shares issued by the Company.
In December 2008, the Board of Management and Supervisory Board made a
declaration of conformity in accordance with Section 161 of the German Stock
Companies Act and published it on the Group’s Internet website:
“The last annual declaration of conformity as required by and pursuant to Section 161 of the German Stock Companies Act (AktG) was made by the Supervisory Board and the Board of Management on 21 December 2007. We hereby
confirm that, with the exception of the points below, the recommendations of
the ‘Government Commission on the German Corporate Governance Code’ in
the version of 14 June 2007 have been fully complied with since the last declaration was made and that with the exception of the same points the Code in the
version of 6 June 2008 will be complied with in the future:
쐍 Item 2.3.3 sentence 2 and 3
Only a small proportion of the shares of ERGO are held in free float. As a
result, the Annual General Meeting is comparatively small and manageable,
allowing the shareholder to exercise his rights fully and independently. Therefore, no proxy was appointed to exercise the voting rights at the General
Meeting according to the shareholder’s instructions.
쐍 Item 4.2.5 para. 1
Pursuant to legal provisions, specifications regarding the remuneration of
the Board of Management must be made in the Management Report as well
as in the Notes to the Annual Report. Explanations made there include all
information required by legislation and the Code. In order to avoid unnecessary repetitions, the explanations regarding the remuneration system for the
members of the Board of Management are therefore not included in the
Corporate Governance Report.
쐍 Item 5.4.7 para. 3 sentence 1
The remuneration of the Supervisory Board members is defined in ERGO’s
Articles of Association. In addition, the consolidated accounts contain
information regarding the remuneration of the Supervisory Board members,
broken down into fixed and variable components. Therefore, no individual
statement is provided.”
MANAGEMENT REPORT
Management Report
The ERGO Insurance Group
With premium income amounting to
€ 17.7bn, ERGO is one of the major insurance groups in Europe. Worldwide, ERGO is
represented in more than 30 countries
and concentrates on Europe and Asia. In
Europe, ERGO is no. 1 in the health and legal
expenses insurance segments, and in its
home market of Germany it is among the
market leaders. 50,000 people work fulltime for the Group, either as salaried
employees or as self-employed insurance
agents.
ERGO offers a wide spectrum of different
types of insurance and other services, and,
as a reliable and fair partner, intends to be
the permanent no. 1 choice for all provision
and insurance needs of its clients. 40 million
clients currently place their trust in the
services, expertise and financial strength
provided by ERGO and its companies. In Germany, 20 million clients place their faith in
the strong brands of D.A.S., DKV, HamburgMannheimer, KarstadtQuelle Insurance and
Victoria.
ERGO has the right sales channel for every
client: Over 21,000 self-employed insurance
agents, staff working in direct sales, as well
as insurance brokers and strong cooperation partners - both in Germany and abroad
- look after our clients. We maintain a farreaching sales partnership with the major
European bank UniCredit Group, both in
Germany as well as in Central and Eastern
Europe.
ERGO is part of the Munich Re Group, one of
the leading risk carriers worldwide. Under
its umbrella, both primary insurer and reinsurer capitalise on opportunities to turn risk
into value. Assets under management of
the Munich Re Group amount to approximately € 175bn, of which € 108bn are
accounted for by ERGO, are managed by the
joint asset management and fund company
MEAG. Munich Re holds a 94.7 % share in
ERGO.
As part of the Munich Re Group, we are
incorporated in the major group processes
of our parent company, e.g. in the areas of
group strategy and corporate policy, capital
and finance planning, risk management,
controlling, reporting and accounting. As a
result of a corporate directive which regulates responsibilities and degrees of authority between group executive management of
the Munich Re and ERGO in decisions of primary importance, a “uniform management”
prevails in the sense of the German Stock
Companies Act.
This management report summarises the
business activities of our Group. Following
an overall review of the developments of
ERGO on pages 32 to 39 we report in detail
on the segments life, health, property-casualty and legal expenses. In these segments
we conduct all types of life insurance, pension and health cover and virtually all
aspects of property and casualty insurance
in addition to legal expenses insurance. The
various segments and our international
operations are described on pages 40 to 48.
The most important brands and sales
channels in the ERGO Group
We pursue a multi-brand strategy because
our brands are of major importance, particularly for our clients and exclusive sales
channels. This is not only the case in Germany but with our international operations
too. For example, legal expenses insurance
is marketed throughout Europe under the
brand name of D.A.S. In the health segment
our business activities greatly benefit from
the strong brand name of DKV.
D.A.S. is Europe’s no. 1 in legal expenses
insurance and is represented in 16 European
countries. 11 million clients put their faith in
the D.A.S. brand and its experts when it
comes to questions concerning legal matters. It stands for the successful introduction of legal expenses insurance to various
markets. For three decades we have also
been successfully involved in propertycasualty insurance in Germany with the
brand D.A.S.
DKV is the European market leader in private
health insurance and has been a pioneer in
the industry for over 80 years with requirements-oriented and innovative products.
Apart from Europe, the DKV brand is also
represented in selected Asian markets.
According to its Think Healthcare! ® strategy,
DKV offers health and nursing care insurance cover, health service and medical care
from a single source. Over six million clients
put their faith in DKV and its services.
Since the beginning of 2009 the brands of
the ERGO Insurance Group have also included the “EUROPÄISCHE” travel insurance.
The Europäische has been involved in travel
cover for 100 years and is a market leader
among travel insurers. It is currently represented in 23 countries and ensures that its
clients receive optimum service before, during and after a trip through its international
network.
Hamburg-Mannheimer is one of the leading
brands in the German life and personal accident insurance business. Clients have
been placing their faith in the HamburgMannheimer brand for roughly a century.
Over five million Hamburg-Mannheimer
clients are provided with long-term security
and individual solutions in aspects of provision and savings. Apart from property and
legal expenses insurance, the HamburgMannheimer brand also provides us with
particular expertise in insurance of major
sporting events and professional athletes.
Within the ERGO Group, KarstadtQuelle
Insurance is the brand associated with
direct sales. It is Germany’s most popular direct insurance brand. We specialise in
personal lines insurance which is suitable
for direct marketing. The products are simple to understand, easy to take out and offer
particular service advantages. In total, more
than four million clients place their faith in
ERGO’s direct insurer and its tailor-made
products.
Victoria has been among the renowned
brands of the German insurance industry for
well over a century. As a modern all-round
insurer, it offers its clients comprehensive
insurance cover in all lines of business. Over
five million clients today trust Victoria insurance products for their private, commercial
and industrial needs. As a member of international networks, we also look after globally active corporate customers in terms of
company pension plans and industry insurance.
We are active internationally with our ERGO
brand mainly, for example in the Baltic
States, Russia or Italy. In the year under
review we changed the name of our Belgian
company to ERGO Life. In those countries
where we work with partners or have very
well established brands, we have frequently
opted to combine the name of ERGO with the
established brands.
Management Report
An example of this is Poland. ERGO Hestia is
one of the best-known insurance brands
there. Both private as well as industrial customers feature among our three million
clients, and the portfolio includes both property-casualty and life insurance products.
For years we have consolidated our position
as no. 3 in the country’s property-casualty
insurance segment, just falling short of the
two former state companies. A cooperation
arrangement with the Polish Post enables us
to reach clients with the MTU brand.
Our management style and objectives
In Turkey, we operate under the brand name
ERGOİSVİÇRE and are no. 4 in the local
property-casualty insurance market. Apart
from the most important property-casualty
segments, our portfolio also includes life
and health insurance. Our main focus there
is on private customer business as well as
small and medium-sized companies. 1.5 million clients place their trust in us when it
comes to insurance issues.
ERGO’s domestic business is divided into
the segments of life, health and non-life
insurance with central management for all
brands. Products are developed under sole
responsibility within the segment with the
involvement of the sales forces and adapted
to the requirements and target groups of the
various brands and sales forces. We also
organised our administrative locations in
Germany to cover various companies, thereby making use of synergy effects.
We offer our 700,000 clients in Italy life
insurance products under the ERGO Previdenza brand and property-casualty products
are marketed under the brand name of ERGO
Assicurazioni.
ERGO has held a majority shareholding in
the Bank Austria Creditanstalt Versicherung
AG (BA-CA Insurance) since 2008. As a provision specialist in life and personal accident
products, it offers its over 500,000 clients
services all around the subject of financial
security under the Bank Austria Insurance
brand.
We have set ourselves the goal of excellence
in managing and controlling our activities.
The main focus in this respect is a market
presence using well-established and strong
brand names with a uniform back-office in
all administrative processes, a modern risk
management - which includes asset-liability
management also known as ALM – as well as
value-based management of all business
activities.
Cross-sectional functions for operations are
coordinated and controlled centrally from
one source, meaning that procedures can be
streamlined and run efficiently. The ERGO
Insurance Group works group-wide with one
IT platform; this supports group-wide management and reduces costs which are
incurred with the maintenance of different
systems. Within Germany, all IT services
stem from ERGO’s in-house IT service
provider, ITERGO.
Responsibility for sales has been concentrated within the ERGO sales division. This is
about the parameters for an integral client
approach as well as central management of
sales channels and brands. The respective
members of the Board of Management of
these companies remain responsible for the
operative management of the exclusive
sales forces. This ensures that the sales
forces identify with their brand. Broker and
bank sales were integrated during the year
under review.
International business is managed by a separate division. Our multi-line activities
include different business models in life and
property-casualty insurance, combined with
our wide-ranging specialist skills in legal
expenses, travel and health insurance as well
as in assistance. In the future, management
for the specialist health insurers will be performed via the International Health Committee at Munich Re and will be regulated by a
corresponding service contract.
For the main part, we have entrusted management of our assets to MEAG MUNICH
ERGO AssetManagement GmbH and its subsidiaries. Strategic investment decisions are
taken by the companies of the ERGO Insurance Group based on the advice given by
MEAG.
Value-based management
Our goal is to recognise the risk, to assess it,
diversify it and thus create sustainable value
for our shareholders, clients and staff.
Increasing the value of our company in the
long run is an authoritative guiding principle
behind our corporate thinking and actions.
This also includes our active capital management. We implement this principle in practice above all through the consistent use of
value-based management systems.
Besides value-based performance measures, we observe a range of important additional conditions in managing our business.
These conditions may be reflected in supplementary targets within the Group, or in isolated cases may even determine a unit’s
short-term orientation in a particular situation. These include regulations governing
local accounting systems, tax aspects,
requirements pertaining to liquidity and
supervisory parameters.
Our value-based management is reflected in
the following aspects:
쐍 Business activities are not only assessed
according to their earnings potential but
also relative to the extent of risks assumed
which is material for the question of the
extent of value creation. As emphatically
emphasised by the heavy losses suffered
by investors in 2008, only the yield-risk
ratio can indicate whether a particular
activity is beneficial from a shareholder
perspective.
쐍 With value-based management factors we
ensure the necessary comparability of
alternative initiatives and prioritise them.
쐍 Responsibilities are clearly assigned, and
levers for increasing value are made transparent to management and staff.
쐍 Strategic and operational planning are
closely associated.
Management Report
Property-casualty and legal expenses:
value added
In the property-casualty and legal expenses
segments, where short-term business transactions dominate, the concept of value
added is used in order to measure the value
created in a given year. The value added is
calculated as the difference between adjusted results and cost of capital.
The adjusted results are used as the basis
for calculating the value added. They are
made up of the technical results as derived
from the income statement, the investment
result as well as the other non-technical
income. In each case, value-based adjustments are made, for example in order to
smooth out the burdens of major losses, to
normalise capital yield and to take account
of claims expenses in the event of later
payment at present value.
This kind of adjusted result is compared with
the requisite cost of capital. This is basically
derived from the risk capital based on our
internal model. For non-life insurance, which
are measured over a calendar year, the
positive added value attained is the extent
of adjusted results exceeding the cost of
capital.
Life and health: embedded value
Life insurance and health insurance products are characterised by their long-term
nature and the distribution of earnings over
the term of the policies. We assess these
types of long-term business portfolios,
where success cannot be measured sensibly
from a one-year perspective, on the basis of
“Principles and Guidance” of the “European
Embedded Value”, published by the CFO
Forum in May 2004. Even if we, like most
companies, are not yet applying the “Market
Consistent Embedded Value Principles” fully
for 2008, the calculation of our embedded
value is already based on market-consistent
principles.
The embedded value is the present value of
future net earnings from business in force
calculated using actuarial principles, plus
the fair value of equity less the explicitly
determined cost of capital tied up. The business in force is projected over its full term in
accordance with the “Principles and Guidance”.
The embedded value is that of the portfolio
in existence as of the valuation date. The
embedded value reflects more than 90 % of
our life and long-term health insurance business. The embedded value does not take
account of the value of future new business.
Nevertheless, the valuation is carried out on
the assumption of the continuation of business operations, i. e. in particular taking
account of the related costs. Options and
guarantees are valued explicitly via stochastic simulations. All cash flows are valued on
the basis of the so-called swap rates of the
respective currency zones as of 31 December 2008. The valuation of assets traded on
the capital market is on the basis of the market values observed as of the valuation date.
The development of the insurance portfolio
is modelled in line with current expectations
in terms of biometry, cancellation and costs.
Policyholder profit-sharing is modelled in
accordance with current planning and statutory regulations, and hence taken into
account in the valuation. We show the
embedded value after deduction of taxes
payable by the company in connection with
the business valued. Apart from taxes and
investment management costs, the costs of
capital tied up also include the non-explicitlymodelled risks of the business and the policyholder profit-sharing.
The change in the embedded value within a
year – excluding the effects of exchange rate
fluctuations, company acquisitions or sales
as well as dividend distribution or injections
of capital – is shown as the total embedded
value earnings. If this is also adjusted by
influences from changes to the fiscal and
capital market parameters, it is referred to
as operative embedded value earnings. It is
the measure of the success of operating
business activities in a year.
Managing Investments
Our investments are heavily geared towards
the structure of the liabilities side of the balance sheet, and the “neutral position” is
determined on the basis of asset-liability
management. It is a synthetic investment
portfolio which replicates – taking into
account major constraints affecting asset
investments, notably provisions of the regulatory authorities or the individual risk
capacity of a company - the characteristics
of the liabilities in relation to the policyholders as realistically as possible.
Taking account of our own risk capacity as
well as of additional investor preferences,
we determine a benchmark portfolio on the
basis of sustainably expected capital market
returns in an optimisation process. Our
asset manager, MEAG, is responsible for
implementing this strategic benchmark
portfolio through concrete asset management; it deviates from this solely within carefully defined limits and takes account of the
market opinion for the respective financial
year. The budgeted return, as the expected
return from the benchmark portfolio, is compared with the return of the actual portfolio.
Our asset manager MEAG is measured on
the level of the higher returns achieved compared with the benchmark portfolio, taking
account of the risk assumed.
Management Report
Non-financial performance measures
Apart from these purely financial performance factors, non-financial measures,
such as innovation, market share, speed of
processes, staff training level as well as productivity, client satisfaction and service
from sales play a major part in the strategic
management of ERGO. A company can only
be successful in the long term if it operates
on a sustainable basis and takes account of
future-geared qualitative factors too.
We closely link strategy and operational
planning by defining our strategies in structured overviews, so-called scorecards,
thereby deriving initiatives, variables and
responsibilities. The scorecards cover four
areas: “Finance”, “Clients/Market/Sales
Partners”, “Processes” and “Staff”. We
encourage employees to think and act in an
entrepreneurial manner by clearly assigning
responsibilities and, as a result, making it
clear how much the individual, a unit or a
business field contributes towards increasing value. Our consistent integration of
financial and non-financial goals into the
incentive schemes for the Board of Management and executive staff supports the clear
commitment to creating value.
The ERGO Insurance Group – Governing bodies
Supervisory Board
Chairman
Chairman of the Board of Münchener
Rückversicherungs-Gesellschaft AG
Deputy Chairman
Klaus Roth
Employee of DKV
Deutsche Krankenversicherung AG
Waltraud Baier
Employee of HamburgMannheimer Versicherungs-AG
Günter Bayerle
Personnel Specialist of DHV
(Associated Union of Workers in
German Trade and Industry)
Hans-Peter Claußen
Employee of
D.A.S. Deutscher Automobil Schutz
Allgemeine Rechtsschutz-Versicherungs-AG
Dr. Karin Dorrepaal
Former Board member of Schering AG
Frank Fassin
District Chairman for NRW of ver.di NRW
Günter Greisinger
Employee of the
Victoria Insurance Companies
Dr. Heiner Hasford
Board member of Münchener
Rückversicherungs-Gesellschaft AG (retired)
Dr. Gerhard Jooss
Board member of ThyssenKrupp AG (retired)
Volker Kallé
Executive employee of
Dr. Lothar Meyer, since 5 May 2008
Chairman of the Board of Management
of ERGO Versicherungsgruppe AG (retired)
Dr. Markus Miele, since 5 May 2008
Managing Partner of Miele & Cie. KG
Marco Nörenberg
Employee of HamburgMannheimer Versicherungs-AG
Reinhard Pasch
Employee of
the Victoria Insurance Companies
Harald Pinger, until 5 May 2008
Executive Board member of
Kion Group GmbH
Prof. Dr. Bernd Raffelhüschen
Director of the Institute for Public Finance
at the University of Freiburg
Prof. Dr. Theo Siegert
Managing Partner of
de Haen Carstanjen & Sons
Richard Sommer
Head of the Federal Group “Insurance”
of ver.di
Prof. Dr. Beatrice Weder di Mauro
Professor of Economics at the
Johannes Gutenberg University in Mainz
Dr. Hans-Dietrich Winkhaus,
until 5 May 2008
Member of the Shareholders’ Committee
Henkel KGaA (retired)
Prof. Dr. Klaus L. Wübbenhorst
Chairman of the Board of GfK AG
Management Report
The ERGO Insurance Group – Governing bodies
Audit Committee
Dr. Heiner Hasford
Dr. Gerhard Jooss
Marco Nörenberg
Board Committee
Hans-Peter Claußen
Nomination Committee
until 5 May 2008
Standing Committee
Klaus Roth
Reinhard Pasch
until 5 May 2008
Conference Committee
Klaus Roth
Richard Sommer
Board of Management
Chairman
Dr. Torsten Oletzky
Strategic Corporate Planning/
Group Development
Investor Relations, Press,
Corporate Communications
Legal Affairs
Internal Auditing
Dr. Bettina Anders
Customer Service,
Company Organisation and IT
Dr. Daniel von Borries
Finances and Investments
Life Insurance Germany
MEAG/ERGO-Interface
Günter Dibbern
Health Segment Germany and Abroad
Christian Diedrich
Non-Life Insurance
(Property-Casualty, Legal Expenses)
Germany
Dr. Klaus Flemming,
until 31 December 2008
International Operations
(except for Health Segment)
Dr. Ulf Mainzer, since 1 April 2008
(Labour Director)
Domestic Human Resources as well as
Comprehensive Questions of Principle
General Services, Facility and Materials
Management/Purchasing and Logistics
Germany
Dr. Jochen Messemer,
since 1 October 2008
International Operations
(except for Health Segment)
Dr. Rolf Ulrich
Accounting, Taxes, Planning and
Controlling, Risk Management
Jürgen Vetter
Sales Germany, Competence Centre
Bank Sales Germany and International,
Strategic Marketing, Brand Management
Parameters
General parameters
Our business activities are marked to an
increasing extent by growing complexity,
which confronts the insurance industry with
demanding challenges. Therefore, risk models must be continually developed and new
findings must be incorporated quickly.
Fundamental changes are also being caused
by demographic developments. The increasing life expectancy in conjunction with
falling birth rates are putting an enormous
burden on the pay-as-you-go social welfare
systems. In Europe, two members of the
active workforce will have to finance one
person outside the labour force by 2030.
Europeans will therefore only be able to
maintain their standard of life and first-class
medical care in the medium term if they take
out additional private cover – a great opportunity for the private insurance industry.
Many states are making changes to their
social security systems to accommodate
these demographic developments, meaning
that insurers will have to deal with uncertain
legal and political parameters for a while yet.
At the same time, insurers are having to
adapt to an ever growing new target group of
elderly people and their special needs especially in highly developed countries. Flexibility and the ability to react quickly in developing products are becoming increasingly
important aspects of competitiveness.
Furthermore, the regulatory environment of
the insurance industry is undergoing profound changes. The introduction of new
rules for state supervision – known as “Solvency II” – in Europe and new accounting
standards are having an impact on insurers’
capital requirements and their income statement. In addition, the current crisis affecting international financial markets is creating a high degree of uncertainty even in
terms of government intervention. In this
context, both the demand for insurance
cover and the type of insurance products on
offer will change. Companies, such as our
Group, which are leaders in integrated risk
management can take advantage of the benefits and opportunities which arise as a
result.
Economic parameters
As a result of the international financial market crisis, the general economic situation is
deteriorating for the insurance industry as
well. The growth of the world’s economy significantly lost momentum in the third and
fourth quarter of 2008. China, Europe and
the USA continue to be the major economic
motors of the world economy.
In 2008, economic growth in the eurozone
was clearly down compared to the previous
year. This was not least due to the different
degrees to which they were affected by the
international financial market crisis, resulting in considerable regional differences. For
example, the Dutch and Greek economies
were marked by above-average growth,
whereas the development in Italy was below
average; Ireland even showed negative
growth.
With a real growth rate of 1.3 %, economic
activity in Germany was significantly weaker
in 2008 than the year before (2.5 %). The
most important growth pillars were the continued positive development of investments
and exports. However, the latter fell noticeably in the course of the global decline in
demand at the end of 2008.
Management Report
Parameters
Strong economic growth encountered up
until the middle of the year continued to
have a positive effect on the labour market.
With just under three million unemployed at
the end of the year, the Federal Employment
Office recorded the lowest unemployment
rate in Germany since 1992. Owing to a clear
increase in unemployment in December,
however, the positive trend did not continue.
The unemployment rate for the year as a
whole stood at 7.8 %. The greatest challenges for the labour market continued to be
the high number of permanently unemployed persons as well as a shortfall of
skilled labour.
In Germany, consumer prices initially went
up significantly, especially against the background of steeply rising prices for raw materials. Inflation peaked at 3.3 % in June and
July, and the average inflation rate for the
year was 2.6 % compared to 2.3 % in 2007.
Due to the worldwide economic downturn,
the inflation pressure clearly eased in the
second half of the year. Overall premium
volume for the German insurance industry
merely grew by about 1%.
Capital market trends
Due to the global financial market crisis, the
international stock markets suffered historic
falls in prices in the course of the year. Compared to the start of 2008, the Euro Stoxx 50
declined by 44.4 %, whereas the DAX was
down by 40.4 %.
Owing to the high volatility and the sharp fall
in prices on the stock market, many
investors resorted to less risky forms of
investment, such as bonds issued by governments with top credit ratings. Apart from
expectations of recession, this investor
behaviour contributed to a fall in returns.
Even though an interim upturn was observed
due to inflationary tendencies, returns on
ten-year German government bonds fell
from 4.3 % to 2.9 % in the course of 2008.
During the same time period, the return on
ten-year US-American government bonds
fell from 4.0 % to 2.3 %. On the other hand,
the spreads for other fixed interest-bearing
securities, for example covered bonds and
corporate bonds, clearly increased despite
major fluctuations.
To combat the extremely tense liquidity situation on international capital markets, which
was marked by significant mutual distrust
among commercial banks, the reserve banks
made available enormous sums of additional money to commercial banks. As an additional stabilisation measure and against the
background of the first signs of an impending recession, the central banks repeatedly
lowered their base rate, in some instances
dramatically, in the second half of 2008.
Thus the US Federal Reserve lowered its
base rate from 4.25 % at the turn of the year
to 0 to 0.25 % at the end of the year. Over the
same period the European Central Bank
reduced its base rate from 4.0 % to 2.5 %, a
reduction by 75 basis points being made in
December alone. In the course of the year
the Bank of England lowered its base rate
from 5.5 % to 2.0 %, with December 2008
alone accounting for a reduction by 100
basis points.
The insurance industry in Europe
and Germany
Premium growth in the insurance industry
has been affected by the overall economic
situation, especially in property-casualty
insurance. In life and health insurance the
market development has also been influenced by changes to the legal and tax environment. Consequently, very different parameters prevail in the European insurance
markets. For 2008, reliable information is
available only for a few of the markets in
which we are active. We therefore limit ourselves to a closer look at the developments
in our home market of Germany in the following sections.
Life insurance in 2008
In the second half of 2008 it became
inevitable that German life insurance was
caught up in the difficult conditions encountered on the international capital markets.
Nevertheless, in terms of private old-age
provision, it continues to hold a key position.
After all, only its products can cover biometric risks such as death, old age and disability while providing guaranteed benefits at the
same time. Security, reliability and adequate
returns play an important role in this
respect. Due to a stable rate of growth over
the course of time, life insurance products
are a highly suitable method of old-age provision.
Compared to the previous year, premium
income only rose slightly by an expected
0.6 % to € 79.3bn (78.9bn). Payouts to life
insurance customers, who were already at a
high level in previous years, increased to
almost € 69.7bn (66.2bn).
Private old-age provision is an important
instrument to ensure that the standard of
living can be maintained after retirement.
Just how attractive the products of the German life insurance industry are is attested in
particular by the sales figures of stateassisted annuities: in 2008, almost 1.6 million customers opted for a Riester pension
scheme. Among the various Riester provision programmes, this product therefore
continues to be by far the most successful
one. In respect of Riester pensions, new
business also benefited from the positive
impact of the fourth Riester phase and the
increase in the state child allowance.
Overall, the trend towards insurance policies with payouts in the form of an annuity
continued. Unit-linked annuity policies continue to contribute to this development.
In recent years company pension schemes
have become a significant part of privately
funded old-age provision. Over the last few
years German legislation has developed its
parameters and on the whole improved
them. For example, at the end of last year
German legislators decided that deferred
compensation would continue to be exempt
from social security contributions.
Overall, business development was
restrained in 2008 with regard to company
pension schemes. Whereas new business
from direct insurance sales remained more
or less on par with the previous year, reinsurance business, retirement funds and
pension funds all showed a decline.
Management Report
Parameters
Private health insurance in 2008
Private health insurance in 2008 was influenced to a considerable degree by the regulations of the Act to Strengthen Competition
in Statutory Health Insurance (GKV-WSG)
which had already come into force in 2007.
The three-year changeover period, which
applies to employees who have taken out
statutory insurance on a voluntary basis and
which has been in force since 2 February
2007 in particular, clearly limited access to
private healthcare cover.
The overall deterioration of the parameters
for private health insurance again manifested themselves in the premium income figures. As a result, premium growth for private
healthcare cover only amounted to 2.9 %,
thus coming to a total of € 30.3bn (29.5bn)
in 2008, and insurance benefits paid out in
the private health insurance segment,
including claims settlement expenses, rose
overall by approximately 5.3 % to € 19.9bn
(18.9bn).
Property-casualty insurance
in 2008
In the property-casualty segment the trend
in premiums recovered somewhat in 2008.
Although the overall increase attained was
below that of the general economic trend
again in 2008, a slight premium growth of
0.4 % was recorded for the first time after
three consecutive years of negative growth.
Premium increases in commercial and private property insurance compensated for
the decline in motor insurance and industrial property insurance where competition
continued to be particularly fierce. Overall,
a slight increase in premium increase was
achieved amounting to € 54.7bn (54.5bn).
At the same time, claims expenses in the
business year were down from € 42.0bn to
€ 41.6bn. Despite several thunderstorms
and hailstorms, the high level of claims of
the previous year – caused largely by Hurricane “Kyrill” – was not reached; the business year claims ratio (prior to run-off) for
the financial year fell to 78.0 % (78.4 %). This
means that property and casualty insurers
achieved a combined ratio of 95.0 % (95.7 %)
and hence showed good underwriting profits
again. The market figures are based on gross
figures in accordance with the German Commercial Code (HGB), meaning that they are
not really comparable to IFRS figures and
figures after reinsurance.
As regards motor insurance, premiums were
down for the fourth time in a row, and stood
at € 20.4bn (20.8bn). Even though the
decline in premiums, at 1.7 %, was slightly
below that of the previous year, it must be
emphasised that the segment as a whole has
had to deal with a fall in premiums amounting to almost 10 % since 2004. Conversely,
due to a number of local hailstorms, claims
expenditure for the financial year was up by
2.8 % and, as a result, the combined ratio,
too, rose to 103.0 % (98.1%). Overall, the
segment recorded an underwriting loss.
Premiums in the segments of property insurance rose by a total of 3.1 % to € 14.4bn
(14.0bn) in 2008. By contrast, industrial
property insurance again showed a marked
decline in premium income. The combined
ratio fell significantly to 96.0 % (105.0 %),
meaning that the segments overall recorded
a technical profit.
In the segments of general liability insurance
and transport insurance, premium income
remained stable, whereas private accident
insurance showed a slight rise in premiums
of 1.0 %. All three segments recorded a technical profit.
Legal expenses insurance in 2008
In 2008 German legal expenses insurers
attained a growth in premiums of 1.5 %,
thereby generating premium income
totalling € 3.2bn (3.1bn). This means that
the legal expenses line of business was one
of the strongest growth sectors within nonlife insurance for the year. The growth in premiums is primarily the result of the premium
adjustment clause, of which virtually all
legal expenses insurers took advantage.
The clearly positive trend in the number of
contracts concluded in 2006 and 2007
continued in 2008. Legal expenses insurers
succeeded in further consolidating the
number of contracts. This development is
attributable to people’s awareness of the
significance of legal expenses insurance
which is once again on the increase as a
result of a trend towards the law playing an
ever more important part in virtually all
areas of life.
Compared to the previous year, the combined ratio fell to 95.0 % (95.7 %). This means
that the German legal expenses insurers
succeeded in further compensating for the
significant claim and cost burden which was
caused by the introduction of the Modernisation of Costs Law (KostRModG), as well
as the increase in VAT. The improvement
was primarily due to the implementation of
claims management measures and various
cost optimisation programmes across the
entire domestic insurance market.
Legal parameters
Changes made to the legal parameters permanently affect insurance companies. In our
home market of Germany, the new German
Insurance Contract Act (VVG) came into
effect at the beginning of 2008 together with
the supplementary Regulation on the Duty to
Supply Information (VVG-InfoV). The interim
ruling for the implementation of the new
requirements arising from this decree
applied until 30 June 2008. Since then,
potential new life insurance clients are also
given a so-called product information sheet
prior to signing an insurance contract. This
sheet summarises all the essential points of
the contract including the costs included in
the premiums.
Since 1 January 2008, the new Ordinance
for the Minimum Policyholders’ Dividend in
Life Insurance has been in force. Its main
point is to introduce a general standard to
ensure that all contracts entitled to dividends benefit from any profits made. As a
result, contracts forming part of the old and
the new portfolio now, to the same extent,
participate in profits made, namely with at
least 90 % in net investment income, at least
75 % in the risk result and at least 50 % in
other income. Losses made in individual
sources of income are not passed on to
policyholders.
In the health insurance segment, the next
decisive changes arising from the Act to
Strengthen Competition in Statutory Health
Insurance (GKV-WSG) will take effect in
2009. This includes, among other things, the
mandatory introduction of a basic tariff and
Management Report
Parameters
the portability of ageing reserves for existing
clients. However, these regulations lead to
an unacceptable burden on private health
insurers and their policyholders. For this
reason, a total of 29 companies in the industry – including DKV and Victoria Health –
which between them represent over 95 percent of privately insured persons, filed a
constitutional complaint with the German
Federal Constitutional Court in Karlsruhe
against this and other regulations in March
2008. The Federal Constitutional Court
accepted the complaint and has already
conducted a hearing. The industry is hoping
for a positive ruling before the end of the
first quarter 2009.
Apart from the GKV-WSG, a number of other
amendments to the law were implemented
in 2008. On 1 July 2008, the reform to longterm nursing care cover came into effect.
Nursing care amounts and rates were raised
and will continue to be gradually increased
over the next few years. Since the benefits
of the compulsory private long-term nursing
care insurance correspond to those of social
long-term nursing care insurance, compulsory private long-term nursing care insurance must also increase its benefits and
hence recalculate its premiums.
When it comes to the international business,
a gradual liberalisation of motor liability
insurance, which was previously subject to
price control, is taking place in Turkey. Since
mid-2008, insurance companies have been
able to determine their premiums freely,
though within legally defined limits. Plans for
a complete liberalisation of prices exist for
the future. As a result, we expect an improvement of technical results in this segment in
the medium term.
Regulatory parameters
The European Commission’s Solvency II project, which has been the subject of intensive
debates since 2005 and is tantamount to a
fundamental renewal of insurance supervisory law in Europe and is expected to come
into effect in about 2012, is already casting
shadows. Many insurance companies
including ourselves have been working on
the implementation of the future supervisory rules for quite some time. This goal is pursued irrespective of the delays that occurred
in the political decision-making process at
European Union level at the end of 2008.
In Germany, the 9th amendment of the German Insurance Supervision Act (VAG) came
into effect on 1 January 2008. As a preparation to Solvency II, German legislation has
included new regulations on risk management and risk reporting for insurance companies in the German Insurance Supervision
Act (VAG).
The new regulation explicitly states that the
executive board is responsible for ensuring
that the business organisation complies with
the pertinent rules and for putting in place
adequate risk management measures. The
core idea is to guarantee that companies
deal effectively with the specific risks of
their business ventures. For this purpose, it
is necessary that all major risks, to which an
insurance company is or could be exposed,
are recognised and adequately tackled. To
this end, processes must be set up within
the company with the aid of which risks are
identified, analysed, assessed, controlled
and monitored.
The legal regulation is supplemented by a
circular about the “Minimum Supervisory
Requirements for Risk Management” issued
by the German Federal Financial Supervisory Authority (MaRisk). The aim is to provide
companies with a flexible framework within
which they can define the details of their
internal risk management, so that they
can set up adequate internal supervision,
control and monitoring processes. The
implemented measures, precautions and
processes defined must adequately reflect
the specific risk of a company, the type and
extent of business operations and the complexity of the chosen business model.
Comparable regulations have been enacted in
other countries in which we are represented.
Management Report
Results for the 2008 financial year
adversely affected by financial market
crisis
All in all, business development was satisfactory last year. However, the investment
result in particular was adversely affected
by the financial market crisis, which had a
corresponding impact on the consolidated
result. Nevertheless, it can be said that
the consistent risk reduction undertaken in
recent years is now paying off. Otherwise
the negative effects of the financial market
crisis would have been considerably more
severe.
Expected consolidated results for 2008
started off in the region of between € 480m
and 600m. In view of the developments that
already became apparent in the first half of
the year, we lowered our expectations as
early as August to a range of € 320m to
380m. Nobody could have foreseen at that
time that the situation on the capital markets would deteriorate so dramatically as
was to happen from September 2008. Consequently, this development was not taken
into account in this revised profit outlook.
Ultimately, when viewed in absolute terms,
the actual consolidated result of € 92m is
certainly a disappointment. Nevertheless,
when taking into account the extreme conditions reigning on the capital markets and
the fact that we did not lower our high standards in our strict interpretation of the
accountancy rules, we can still be pleased
with the result. The previous year’s figure of
€ 781m had been positively influenced by an
above-average investment income and a
one-off tax effect amounting to € 120m.
In addition, goodwill write-offs totalling
€ 177m (8m) were undertaken in the year
under review primarily concerning the
shares in Austrian BA-CA Insurance which
we acquired as at 30 September 2008. This
acquisition had already been agreed in
spring 2007; the write-off takes account of
the crisis’ effects on the bancassurance
business model and the decline in the prices
of such transactions subsequently occurring
in the second half of the year as well as of
special investment risks. The rate of return
on our equity (RoE) was at a mere 2.2 %
(16.3 %).
The fact that we can call 2008 a satisfactory
year overall is due first and foremost to the
excellent technical result. At 90.9 %, the
combined ratio of non-life insurance is
clearly below the long-term target value of
95 %. This result is likely to be among the best
in the group of our competitors yet again. The
significantly lower cost ratios in all segments
are very positive. Here we are clearly moving
in the right direction, and are particularly
pleased that we managed to reduce our
administration expenses in Germany by
4.2 %.
The extremely negative developments on the
capital markets also had an effect on the calculation of the European Embedded Value.
Interest rates, which had fallen significantly
by the end of 2008, in conjunction with the
historic all-time highs of interest rate volatility led to a situation where the 1,000 modelled capital market scenarios included a
number of extreme ones which, in turn, had
a considerably negative impact on the European Embedded Value which is calculated as
an average value on the basis of market consistent valuation criteria. This development,
affecting the entire industry, showed the limits of such models. Although this means that
the model values must be interpreted with
great caution and that they are limited in
terms of their explanatory power, and
although the CFO Forum has announced that
it will review their valuation principles, we
nonetheless decided for the sake of transparency and consistency of method to
adhere to the strict regulations of market
consistent valuation as at 31 December
2008, even though we believe that the capital market parameters applied are not representative, and that the high volatility in
particular will return to long-term average
values. At the same time we added the
options management has in such a capital
market environment – including measures
such as for example a cautious investment
strategy – to the management rules of the
model.
As regards the entire life insurance business
and German health insurance, the market
consistent European Embedded Value fell to
€ 3,509m (5,406m) by the end of 2008; including allocations amounting to € 388m. The
overall drop of the European Embedded Value
by € 2,237m was mainly caused by the negative trend in the business in force value in life
insurance. Due to the extremely unfavourable
conditions, the modelled new business value
in life insurance fell to € – 45m (164m). Developments on capital markets led to the fact
that profitable business concluded in the
course of the year recorded a negative added
value at the balance sheet cut-off date at the
end of 2008. Regarding the sensitivity of the
European Embedded Value to certain changes
in investment parameters, please refer to the
explanations in the Notes on page 122.
Premium income
Total premium income for the 2008 financial
year was up by 1.9 % to € 17.7bn (17.4bn).
Gross premiums written – unlike total premiums they do not contain any savings premiums of unit-linked life insurance policies and
capitalisation products such as Riester pensions – rose by 1.1 % to € 16.6bn (16.4bn).
Up by 12.5 % to € 4.3bn (3.8bn), growth in
international business was very pleasing.
Changes to the consolidated group also contributed to this – the South Korean company
ERGO Daum Direct was consolidated in the
second quarter of 2008 and the Austrian
BA-CA Insurance was included in our figures
in the final quarter of 2008 following our
acquisition of a majority stake in the year
under review. Even without this consolidation
effect, international business would have
developed very well with growth still amounting to 8.9 %.
In contrast, we are not pleased with the trend
in premiums for our domestic business. Premiums fell by 1.1 % to € 13.5bn (13.6bn).
While the domestic composite insurance
premiums were up by a gratifying 1.4 % and
health insurance premiums by 1.6 %, life
insurance showed a clear decline of 4.4 %.
This can be associated with lower single premiums in particular which were adversely
affected by the financial market crisis in the
second half of 2008.
At the end of 2008 our equity stood at
€ 3.7bn (5.1bn). This development also
reflects the fact that we paid out an extraordinarily high dividend of € 1bn in 2008 in
order to optimise our capital structure, which
we then refinanced by means of debt capital.
As a result, finance costs rose by € 39m
compared to the previous year.
Management Report
2008
€ million
2007
€ million
Total premium income
17,711
17,385
16,578
16,401
2,871
5,351
13,896
15,888
3,128
2,981
Operating result
408
1,062
Taxes on income
255
259
92
781
Investment result
Net expenses for claims and benefits*
Net operating expenses
Consolidated result
* including policyholders’ dividends
Costs
Claims and benefits
There has been a considerable improvement
in costs. In gross terms, administration
expenses were down 0.9 % despite the
growth in international business. In Germany, we succeeded in lowering administration expenses by 4.2 % and have thus already
gone some way towards achieving our targets for 2010. In order to make the necessary further savings in terms of non-personnel and personnel costs, we drew up a range
of short-term measures in 2008. Acquisition
costs were up 2.0 %. The fact that net operating expenses rose by 4.9 % to € 3.1bn
(3.0bn) is attributable to lower deferred
acquisition costs and reduced reinsurance
commissions owing to higher retentions,
especially in property and casualty insurance.
Benefits for our customers in the year under
review amounted to € 13.9bn (15.9bn). This
12.5 % reduction is largely a result of
reduced investment result. Especially in life
and health insurance, it is mainly our customers who benefit from the investment
result in the form of direct or deferred dividends.
We managed to reduce the claims ratio in
non-life insurance to 58.4 % (59.1 %).
Although it is true that in the previous year it
had suffered from the effects of Hurricane
Kyrill, there were also numerous local natural disasters in 2008, notably the severe
storms of Emma and Hilal. Together with the
favourable development on the cost side,
the combined ratio fell to 90.9 % (93.4 %) and
thus remains clearly below our long-term
target value of 95 %.
Investments and investment result
Methods of investment
Since we are a major institutional investor,
capital market trends worldwide have considerable significance for us. This not only
applies to our business itself for which,
especially in the old-age provision and
health insurance segments, interest earned
on client funds is a critical success factor.
Due to the application of strict international
accounting rules, interest rate and share
price developments on the capital markets
also have a significant impact on the income
statement. Without a doubt, this was especially true for the 2008 financial year. For
this reason, a more detailed report on our
investments is given below.
Our investment strategy is based on the
structure of our liabilities, i. e. mainly underwriting liabilities. The best possible investment strategy is developed for each and
every insurance company in our Group, taking into account most specifically individual
financial strength and risk capacity. In addition, the established principles of security,
liquidity as well as a mix and diversification
of investments are at the forefront of each
portfolio. We only make investments in
assets from which we expect appropriate
returns. Currency risks are limited by basically hedging expected liabilities with investments in the corresponding currencies. Furthermore, as regards our fixed-interest
securities we ensure that their maturity are
geared towards the maturity profile of the
liabilities. Besides this, we keep sufficient
funds available to meet payment obligations
at all times.
The vast majority of our investments are
managed by MEAG MUNICH ERGO AssetManagement GmbH, a subsidiary of Munich
Re (60 %) and ERGO (40 %). As at 31 December 2008, MEAG managed investments
amounting to € 96.2bn (92.6bn) on our
behalf. We managed the Group’s remaining
investments ourselves. For the most part,
these are retained deposits, mortgage loans
and shareholdings in associated or affiliated
companies.
At the same time, MEAG also offers its asset
management expertise to partners outside
the Group, thereby securing additional
sources of income. To this end, it also banks
heavily on the sales forces of the ERGO companies which mediated fund business to
MEAG amounting to € 369m (435m) in the
year under review. As at 31 December 2008,
MEAG managed assets worth € 8.4bn
(8.9bn) for investors who are not part of the
Group.
For details on how we manage investment
risks, please refer to the risk report starting
on page 69. Our approach to asset-liability
management is also explained in that section.
Our investment strategy is based on the
principle of sustainability. We pursue the
goal of placing at least 80 % of the market
value of our investments in shares which are
represented in a sustainability index or
which, in accordance with generally recognised criteria, fulfil the sustainability criterion. The independent rating agency for sustainability oekom research has provided
advice in this respect since mid-2007. We
have thereby considerably tightened our
sustainability criteria for corporate and
and bank loans.
Management Report
Development and structure
of our capital investment
As at 31 December 2008, investments of the
ERGO Insurance Group totalled € 108bn
(104bn). Not including investments to the
benefit of life insurance policyholders who
bear the investment risk, investments
amounted to € 105bn (102bn). Compared
to the previous year, this corresponds to
an increase of 3.2 %.
We mainly invest in assets in Europe, the
European investment share accounting for
96 %. Investments are generally geared
towards the currency structure of liabilities
from the insurance business. For ERGO, the
main business focus and, hence, also the
focus of reserves to be covered with investments is in Germany and Europe.
As regards our property investments, we
aim at achieving adequate returns on current income as well as value appreciation. To
this end, we continually monitor existing
properties and funds with regard to their
long-term profitability as well as risks pertaining to the location and building. Our
focus here is on real estate of lasting value
in attractive locations in large European
cities. These investments are complemented by others in the USA and Asia which we
undertake in order to diversify our risk and
to secure additional profitable earnings.
Our investment portfolio is determined to a
large extent by fixed-interest securities and
loans which, at € 93.6bn (82.3bn), accounted for 88.8 % of our overall investments at
balance sheet values on 31 December 2008.
In the reporting year our investments in
loans rose significantly by 12.9 % to
€ 39.7bn (35.2bn), of which most are covered bonds (Pfandbriefe), government securities and non-fixed interest loans, some of
which have a minimum return. The latter participate in rising long-term interest, whereas
when interest rates fall, they nevertheless
guarantee a minimum interest rate. As a
result, they contribute to securing the contractually agreed guaranteed interest rate of
life insurance policies. A large portion of
these investments were undertaken by our
life and health insurance companies. At the
same time, the proportion of fixed-interest
securities available for sale in our overall
investment portfolio increased by 14.4 % to
€ 53.9bn (47.1bn).
Our balanced investment policy is reflected
in our portfolio of fixed-interest investments, including short-term investment
funds: just over 38 % of those are government bonds or similar secure instruments
guaranteed by public institutions. Approximately 37 % are first-class collateralised
securities and receivables, for the most part
German covered bonds (Pfandbriefe). Since
the beginning of the year, we have cautiously enlarged the credit exposure of our portfolio of fixed-interest securities. We are
making use of the significant expansion of
risk spreads on government bonds in order
to make changes to our portfolio and to
secure higher income from interest.
The on-balance sheet valuation reserves of
fixed-interest securities available for sale
and shown on the balance sheet at fair value
increased in the course of the year. They initially fell on account of the rise in the interest rate during the first six months of 2008.
In the second half of the year, however, interest rates dropped significantly with correspondingly positive effects on market values. The net sum of unrealised gains and
losses of our fixed-interest securities available for sale amounted to € 0.7bn (– 0.5bn)
at the end of the financial year.
Our entire interest-bearing investment portfolio is, as has always been the case, characterised by a good rating structure. As at
31 December 2008, 94.6 % (96.3 %) of our
fixed-interest securities available for sale
were given the rating categories AAA to A.
In order to cover obligations from our insurance activities with suitable investments, we
adjust the term structure of our interestbearing investments to the liabilities. Given
the long-term horizon of our life and health
insurance business, long-term investments
are at the forefront in these segments. We
have, as part of our asset-liability management, made allowances for the risk of a longlasting phase of low interest rates for several years by securing a minimum interest rate
level through the pertinent hedging tools in
the reinvestment process, thereby guaranteeing the sustained fulfilment of underwriting obligations.
In the year under review we reduced our
equity and shareholding portfolio from
€ 13.0bn to 5.9bn, and this mainly consists
of shares in European companies. On the
one hand, we intentionally reduced our
stock portfolio during the course of 2008 by
selling a large number of hedged items. In
addition, the drop was attributable to the
collapse of prices on the stock markets.
The proportion of our equity portfolio including shares held in affiliated and associated
companies at market values accounts for
5.6 % of our overall investments – a decrease
of 7.1 percentage points since the beginning
of the year. Since our stock portfolios are
hedged to a large extent through derivative
financial instruments, our economic equity
exposure at the end of the year only amounted to 1.0 (11.0) % of our investments at market values. The drop in this ratio is first and
foremost the result of the increasing number
of additional derivative financial instruments
which have been employed. As part of our
balanced investment policy and against the
background of the volatile capital market
environment, we have significantly reduced
our stock market dependence.
Against this background, the net sum of
unrealised gains and losses of the equity
portfolio fell since the beginning of the year
to € 0.4bn (2.4bn).
Valuation reserves
Our off-balance sheet valuation reserves,
i. e. the difference between the fair value and
the carrying value of assets which are not
recorded on the balance sheet at their fair
value, including owner-occupied property,
amounted to € 1.5bn (-) as at 31 December
2008.
The drop in interest rates at the end of the
year is primarily responsible for this development. As a result, loans – which are not
listed on an active market – are recorded at
amortised cost, as has been the case in previous years. Nevertheless, these, too, have a
Management Report
value which is influenced by the upturns and
downturns of market interest rates as well as
the credit ratings of the relevant debtors just
like fixed-interest securities available for
sale. Consequently, the trend in their value
and, hence, the development of unrealised
gains is influenced by market interest rates.
More detailed information on the on-balance
sheet valuation reserves can be found in the
Notes starting on page 133.
Investment result
The investment result came to € 2.9bn in the
2008 financial year. This amounts to a 46.4 %
drop compared to last year’s figure of
€ 5.35bn. In 2008 we fell far short of our
long-term goal of an investment return of
4.5 % (based on the average investment portfolio at market values) – having clearly
exceeded it in each one of the three preceding years.
The reason for this shortfall is the net amount
from gains and losses from disposals as well
as write-ups and write-downs. Whereas in the
previous year we still had a very good surplus
of € 898m due to high gains on disposals
from the sale of shares and a major real
estate package, high write-downs in the
course of the worldwide financial crisis led to
a loss of € 1.1bn in 2008.
Investment result
Thereof:
Regular income
Write-ups/write-downs
Realised gains/losses
Other income/expenses
Indeed, the IASB (International Accounting
Standard Board) hastily decided to make an
amendment to IAS 39 – Financial Instruments – regarding the reclassification of
financial instruments on 13 October 2008.
These changes make it possible to reclassify,
retrospectively to 1 July 2008, non-derivative
financial instruments from the “Held for trading” and “Available for Sale” categories into
other categories under certain circumstances. This makes it possible to record at
amortised cost. The users of this new regulation do not show impairments in value, which
occurred in the second half of the year and
will continue to occur in the future, either in
the income statement nor under equity.
Owing to our well- balanced investment policy and our already rather conservative
accounting practices, we were not forced to
apply these relaxed rules and hence did not
reclassify our financial instruments. We
attach great importance to the transparency
of our asset and earnings situation as well as
the consistency of our accounting practice.
There was a rise in regular income, up 2.0 %
to € 4.9bn (4.8bn). The regular income is of
special importance to us because we need
stable returns especially in the life and
health insurance segments.
Classified by investment types, the investment result for 2008 is as follows:
2008
€ million
2007
€ million
2,871
5,351
4,925
– 1,230
132
– 957
4,830
– 597
1,495
– 377
Investment income by type of investment
2008
€ million
2007
€ million
Land and buildings, including buildings on third-party land
176
581
Investments in affiliated companies
– 14
16
–4
246
Mortgage loans and other loans
1,553
1,251
Other securities
1,974
3,496
Other investments
– 816
– 241
Total
2,871
5,351
Investments in associated companies
Other investments
Apart from pure investments discussed in
detail in the previous section, investments
made during the reporting period and worth
mentioning were first and foremost in the
form of shareholdings.
For example, we acquired a 60.5 % share in
Austrian BA-CA Insurance in the year under
review. Overall, we now hold a 90 % stake in
the company and have therefore advanced to
no. 3 in the Austrian life insurance market.
market. Following this, we raised our stake
in the company from 70.3 % to 93.1 %.
At the end of 2008, we took over the remaining shares in KarstadtQuelle Insurance and
Neckermann Insurance. With regard to our
sales operations, it is one of our strategic
objectives to increase our successful direct
sales.
Investment in these transactions came to a
total of € 850m.
Events after the balance sheet date
In the first quarter, we acquired a 65 % stake
in South Korean specialist insurer Daum
Direct Auto Insurance and later renamed the
company ERGO Daum Direct. With the
acquisition, we are now in an excellent position in the growing South Korean direct
insurance market.
In addition, we increased our stake in the
Turkish company ERGOİSVİÇRE to 100 % by
buying the remaining 25 % of the shares from
the private founding shareholder. In Italy we
made a bid to the external shareholders of
ERGO Previdenza which is listed on the stock
As laid down in an agreement from 17 September 2008, ERGO Versicherungsgruppe AG
acquired a 100 % stake of Europäische Reiseversicherung AG from Münchener Rückversicherungs-Gesellschaft AG at a total price of
€ 193.5m. The acquisition of the shares will
come into effect in economic and legal terms
as at 1 January 2009. Therefore, the company will not be consolidated in this financial
statement for 2008.
Management Report
ERGO: an all-round insurer
The ERGO Insurance Group is active in all
segments as a result of the operations conducted by its insurers. Life insurance, which
accounts for 41 (42) %, and health insurance, at 31 (31) %, make up the lion’s share
of total premiums and, with a share of 93
(93) % of investments, play a predominant
role in the structure of our assets. The
segments of property-casualty and legal
expenses contribute significantly to our
profits.
Life
Total premium income for the 2008 financial year fell below the previous year’s level,
down 1.7 % from € 7.3bn in 2007 to € 7.2bn.
This is mainly due to premium income for
domestic business of € 5.7bn (6.0bn), which
is 4.4 % less than the previous year. The fall
can be largely attributed to lower single premiums, down 14.5 % on last year’s figures.
However, a major individual contract for a
company pension scheme had boosted the
2007 figures.
Overall, new domestic business accounted
for € 1.4bn (1.6bn), which was 10.5 % below
that of the previous year’s figures. Even
when measured as an Annual Premium
Equivalent (APE: regular premiums plus a
tenth of single premiums) there was a 3.4 %
decline recorded for new business, although
it was significantly less pronounced because
there was only a slight drop (0.7 %) in regular
premiums. As a result of the fourth stage of
the state-subsidised Riester pension policies, we were able to record strong growth;
many clients had agreed to automatically
adjust their policy to coincide with maximum
thresholds eligible for the state subsidy.
One reason for overall weak new business is
the problems encountered at the beginning
of the year with the conversion to the provisions as laid down in the amended German
Insurance Contract Act at the start of 2008.
At least two client visits are now required
before a policy is signed. Initially, this had a
dampening effect on new business which
had a particularly strong impact at the start
of the reporting year. Moreover, a certain
degree of reluctance to buy among consumers following the financial crisis did not
help single premium business in particular.
By contrast, business from international
operations enjoyed strong growth, up 10.6 %
to € 1.4bn (1.3bn), most notably as a result
of strong organic growth recorded in Poland
and the Baltic states, as well as the acquisition of the Austrian BA-CA Insurance, which
was consolidated for the first time in the
final quarter of 2008. On the other hand, the
restructuring taking place in Italy had a
dampening effect, also resulting in a contraction of new business. Overall new business for international operations stood at
25.1 % above the level attained in the previous year, € 349m (279m), meaning a 4.4 %
growth based on APE.
The vast extent to which business with
Riester policies or investment-type products,
such as unit-linked items, accounts for, can
be seen in the trend of our gross premiums
written in accordance with IFRS. As IFRS
gross premiums do not contain the savings
element of such products, the drop here is
larger than for total premium income. Gross
premiums written were down by 4.4 % to
€ 6.1bn (6.3bn). In Germany they fell to
€ 4.9bn (5.3bn) (– 7.1 %), whereas a 9.1 %
rise was recorded for international business
with figures of € 1.15bn (1.05bn). It can also
be assumed that there will be a stronger rise
in total premium income compared to gross
premiums written in accordance with IFRS in
the future, too.
The investment result in the life segment
fell to € 2.2bn (3.6bn). This was primarily
caused by the significant drop in the net surplus recorded for overall profits and losses
from disposals as well as write-ups and
write-downs due to the crisis on the financial
markets. Regular income was slightly up on
the previous year’s level, and stood at
€ 3.35bn (3.28bn).
Life segment
At € 6.3bn (7.9bn), benefits to clients were
20.7 % down on the previous year. The main
contributing factor for this fall is expenditure
on premium refunds; deferred premium
refunds in particular declined as a result of
the losses in value encountered on the
capital markets. Expenditure on premium
refunds fell to € 0.2bn (1.0bn) (– 81.8 %).
In addition, a negative trend recorded with
unrealised gains and losses in unit-linked life
policies caused a drop in provision for future
policy benefits. Claims expenditure itself, at
€ 6.2bn (5.9bn), was 5.2 % up on 2007.
2008
€ million
2007
€ million
7,185
7,313
6,053
6,330
Investment result
2,193
3,613
6,276
7,912
949
904
Operating result
143
431
Taxes on income
122
191
20
240
Consolidated result
Management Report
A positive picture is provided by net operating expenses. It was possible to once again
slightly reduce administration expenses; gross
figures were 4.0 % down on last year’s levels,
and stood at € 262m (273m). At € 859m
(887m), acquisition costs were 3.2 % less
than figures recorded for the previous year.
The fact that there was an 4.9 % overall rise
in net operating expenses can be put down
to lower relief as a result of deferment of
acquisition costs. In addition, we received
reduced commissions and dividends from
our reinsurers, which was also due to lower
returns on investments as part of the financial crisis.
As expected, the financial crisis has certainly left a negative mark on profits in the life
segment, which is influenced to a large
extent by investment income. Consequently,
income prior to depreciation on goodwill fell
by 25.7 % to € 320m (431m). Following the
impairment losses of goodwill for BA-CA
Insurance mentioned above as well as tax,
an overall disappointing result of € 20m
(240m) was recorded for the segment.
Health
Business development in the health segment during the year under review was particularly influenced by the health reform in
Germany.
Premium income climbed 2.4 % to € 5.4bn
(5.3bn). Compared to international business
(+ 7.2 %), domestic growth was more
reserved as a result of the adverse effects of
the health reform (for more details, please
turn to page 61 and following pages), and
rose by 1.6 % to € 4.63bn (4.56bn). Business
stemming from supplementary insurance
cover was up 4.3 %, premium income from
comprehensive insurance rose by 1.2 %.
The effects of the health reform can be
clearly seen with the trend in new business.
Overall, figures for new domestic business
stood at € 224m (262m) (– 14.8 %). In terms
of comprehensive cover, the number of
clients fell by 1.5 %, whereas a 5.2 % rise was
recorded for supplementary cover.
Figures for international business show a
rise, with premium income up by 7.2 % to
€ 815m (760m). There has been especially
strong growth recorded for our companies in
Spain and Belgium. International new business went up 3.8 % to € 85m (82m).
In the health segment, too, a drop in the
investment result was recorded as a result
of the financial crisis, and the figure stood at
€ 0.54bn (1.27bn) following a significant
deficit stemming from gains and losses
from disposals, write-ups and write-downs
amounting to € – 633m (+ 133m). For a long
time our investment strategy has focused in
particular on strengthening regular income
– up 2.6% to € 1.25bn (1.22bn).
Health segment
2008
€ million
2007
€ million
5,447
5,317
537
1,272
4,913
5,490
649
629
Operating result
34
180
Taxes on income
29
50
6
130
Investment result
Consolidated result
Benefits to clients (net) fell for the same
reasons as already stated in the life segment. Here they were down by 10.5 % to
€ 4.91bn (5.49bn), and expenditure on premium refunds dropped by 72.7 % as a result
of the fall in investment income. On the
other hand, net claims expenditure rose by
5.6 %. Besides a general increase in prices in
the healthcare sector, this rise stems from
the strong expansion of our business in supplementary cover over the past few years.
Net operating expenses increased by 3.2 %,
which can be traced to acquisition costs and
deferred acquisition costs. The former rose
as a result of healthy new international business (+ 8.7 %) and due to a completely new
tariff structure in Germany (+ 1.5 %) which
was introduced in August. Higher writedowns on acquisition costs reduced their
mitigating effects in the year under review.
Thanks to further cost savings there was a
fall in (gross) administration expenses in the
reporting year in spite of the growth of premium income, with a fall by 2.8 % to € 163m
(167m).
At € 34m (180m), the operating result is
considerably lower than last year’s figure.
After tax, the health segment, too, has
attained a disappointing consolidated result
of merely € 6m (130m).
On 1 January 2009 we took over the
Europäische Reiseversicherung [European
Travel Insurance] and Mercur Assistance,
which were both previously part of Munich
Re. By integrating these into ERGO, a centre
of competence for “travel” will be set up
within the ERGO’s health segment. We will
then be providing the entire range of services encompassing travel. This includes
cancellation insurance, travel baggage
insurance, foreign travel health insurance
and assistance services. By grouping these
products together, positive effects are felt
regarding competitiveness, growth and
earnings of the companies. Furthermore, we
expect synergy effects, especially concerning collective use of central functions. The
“Europäische Reiseversicherung” is one of
the international global leaders for travel
cover.
Management Report
Property-casualty
The trend in the property-casualty segment
over the past year was extremely positive;
continuing dynamic growth has been recorded in international business, also due to
acquisitions. Premiums there were up by
22.2 % to € 1.53bn (1.25bn). Our companies
in Central and Eastern Europe are shining
examples of double-digit growth rates; first
and foremost, ERGO Hestia in Poland, which
has recorded a rise of more than 30.6 %. Furthermore, since the second quarter of 2008
we have been consolidating the Southern
Korean company, ERGO Daum Direct, which
contributed to growth in the segment with
2.8 percentage points.
In our home market of Germany we have
recorded a rise of 1.6 % to € 2.66bn (2.62bn)
in spite of sluggish market activity, and have
hence recorded growth rates higher than for
the market in general. Nevertheless, the
price competition continues to flare in
Property-casualty segment
industrial fire insurance and, above all, in
motor insurance. A favourable claims trend
is reinforcing the decline on the premiums
side of the motor segment by reclassifying
into better no-claims categories. As a result
of our continued strict profit-based underwriting policy, we are still only assuming the
type of risks on our books which promise us
an adequate price-risk ratio. Against this
environment, a positive trend has set in first
and foremost in commercial and industrial
property and liability insurance, because
clients know they can depend on us as a reliable partner. Insurance for private customers basically remained on par with last
year (+ 0.7 %): a slight drop was recorded in
motor insurance (– 1.1 %), whereas the private property lines demonstrated pleasing
growth of 5.0 %.
Overall, our premium income rose by 8.2 %
to € 4.2bn (3.9bn). Net premiums earned
even increased by 13.6 % as a result of higher retentions.
2008
€ million
2007
€ million
4,182
3,864
237
402
Net expenses for claims and benefits
2,196
1,969
1,116
1,043
Operating result
444
524
Taxes on income
99
28
345
496
Investment result
Consolidated result
At 90.2 (93.1) %, our combined ratio for
property-casualty was once again well below
our long-term and sustainable target figure
of 95 %. This emphasises the vast significance which we place on gearing the underwriting of our risks towards income and
technical profit. The constantly good combined ratio also reflects the definite profitbased focus of our sales forces in all aspects
of property-casualty business.
Net claims expenditure rose by 11.7 % and,
hence, less than net premiums earned.
Indeed, last year’s figures were adversely
affected by Hurricane Kyrill, but 2008 also
witnessed some notable natural disasters,
such as the Emma storm damage and the
Hilal storm, although these were confined to
local areas.
Net operating expenses were up 7.0 %,
meaning they grew also considerably less
than net premiums earned. Administration
expenses, in particular, only recorded a
slight rise of 1.3 % (gross) in spite of strong
international growth, and remained in line
with our cost-saving efforts. We were able to
reduce our administration expenses by 2.0 %
in Germany. The dynamic growth in new
business, especially with our international
companies, resulted in acquisition costs rising by 6.9 %.
The investment result was significantly
lower compared with last year’s figures and
came to € 237m (402m). The reason for this
also includes higher write-downs and lower
net income from disposals. On the other
hand, we were also able to increase regular
income in this segment by 10.7 %.
The drop in net operating income, in
absolute terms, is less than the drop in
investment result, and stands at € 444m
(524m). The consolidated result of € 345m
(496m) is very pleasing; last year’s figure
had benefited from a positive tax impact.
Legal expenses
A slight increase in premium income was
recorded for legal expenses insurance, up
1.0% to € 917m (908m), which stemmed
from both domestic and international business. The latter experienced a rise of 1.6 %
to € 477m (470m) and here, above all, in
Belgium (+ 9.3 %) and The Netherlands
(+ 6.1%). More than half of all premiums
in this segment come from international
business, and we are currently active in
16 European countries.
Once again we recorded a slight growth in
Germany, too: at € 440m (439m), premium
income was up 0.3 % on the previous year. In
the home market of Germany we continue to
pursue innovative paths in order to raise the
attractiveness of the current product range
and to attract new client groups with new
products. In this respect, we are rigidly
adhering to our strategic repositioning, turning away from a company which purely reimburses costs to one which is a legal services
provider. After all, many client groups do not
wish to turn directly to a solicitor or to the
courts, preferring instead to seek advice in
the first instance. Legal advice products, an
improvement in mediation or optimised
management by a solicitor are all examples
of how we can provide the client with considerably more legal services.
Management Report
Legal expenses segment
2008
€ million
2007
€ million
917
908
78
97
500
489
343
344
Operating result
126
119
Taxes on income
29
3
Consolidated result
97
116
Investment result
Net claims expenditure rose in line with net
earned premiums (+ 1.9 %) by 1.8 %, whereas
net operating expenses fell by 0.4 %. The
combined ratio was thereby reduced one
percentage point to 93.5 % (94.5 %), and
stands significantly below our sustainable
target of 95 %.
The investment result dropped to € 78m
(97m). By regrouping we have significantly
increased operating income (+ 32.6 %), but
the overall decline in this segment, too, can
be traced back to lower gains from disposals
and higher write-downs. Consequently, a
decline was recorded in net operating income and the consolidated result. Results
for the legal expenses segment remain at a
pleasing level as is the case in the propertycasualty segment: net operating income
came to € 126m (119m) and the consolidated result stood at € 97m (116m).
International business
ERGO is globally active in more than 30
countries with the principal geographical
locations of international activities based in
Europe and Asia. The main focal points in
Europe are the markets in Southern, Central
and Eastern Europe; in Asia it is predominantly India and China but also other important markets in the region, such as, for
example, South Korea.
In international business, too, the focus is
on insurance lines for private customers. In
Europe ERGO is No. 1 in health and legal
expenses insurance, a strength which we
wish to extend still further.
Strong growth was once again recorded in
international business in the year under
review. There was a sharp increase in premium income, up 12.5 % to € 4.3bn (3.8bn),
meaning that international business now
accounts for a share of 24 (22) %.
The pleasing rise is primarily due to organic
growth in Poland (+ 33.0 %) and Belgium
(+ 9.9 %). In addition, we included ERGO
Daum Direct in South Korea in the consolidated group in the second quarter of the
year, and then added the Austrian BA-CA
Insurance in the final quarter of the year. If
premiums had been adjusted for the effect
of consolidation, they would have increased
by 8.9 %. A particular strong rise was recorded in property-casualty (+ 22.2 %). In life
(+ 10.6 %), health (+ 7.2 %) and legal expenses (+ 1.6 %), too, there were partially very
pleasing rises.
We have rigidly pursued the expansion of our
international activities in the reporting year.
We took over a majority stake in Bank Austria Creditanstalt Insurance (BA-CA Insurance) in 2008 and now hold 90 % of the
shares with the remaining 10 % still in the
hands of UniCredit Bank Austria AG. BA-CA
Insurance is one of the largest life and personal accident insurers in Austria, and the
takeover has meant that ERGO has climbed
to No. 3 in the Austrian life insurance market. As part of the takeover we consolidated
our bancassurance activities in Austria as
well as in Central and Eastern Europe under
the umbrella of the holding company, ERGO
Austria International AG, with headquarters
in Vienna. It plays a key role in the further
development of bancassurance sales, and
manages the business under one roof, i. e.
we have centralised our bancassurance
activities for Austria, Southern and Eastern
Europe there. A service company, ERGO
Insurance Service GmbH, provides central
services in the areas of accounting, actuarial office or HR management for all the firms
in the holding company, thereby realising
synergy effects.
It is our continued goal to extend the existing and successful bancassurance collaboration in Germany, Austria and Poland to
other growth markets in Central and Eastern
Europe. In this respect, we have extended
our successful cooperation with the Italian
UniCredit by introducing bancassurance
sales in dynamic regions of growth. The sale
of ERGO’s insurance products already began
in the UniCredit branches in Slovenia, Slovakia and in Hungary in 2008; San Marino and
Romania are due to follow in the first half of
2009.
Moreover, in the year under review ERGO
International AG accepted the proposal put
forward by the private founding shareholders to take over the remaining 25 % share in
the Turkish company ERGOİSVİÇRE, meaning that we have now become the sole shareholder. We entered the dynamic Turkish market in 2006 when we purchased 75 % of
the shares. Since then, we have climbed to
No. 4 in the Turkish property-casualty market. Apart from property-casualty insurance
cover, we also provide life and health insurance under the ERGOİSVİÇRE label. As a
result of its large growth potential the Turkish market is one of the main regions of
focus in ERGO’s international strategy.
In Italy the local ERGO company has
started to restructure its business. In 2008
we made a voluntary takeover offer to the
external shareholders of the life insurer
ERGO Previdenza, which is listed on the
stock exchange. After the period expired
we owned 93.1 % of the shares in ERGO
Previdenza and intend to take over the
remaining shares in the life insurer during
the delisting process. The next step will
be to improve the integration of the
ERGO Previdenza within the Italian group.
Management Report
The new strategy puts a clear focus on the
profitability on new business and a strict
cost control, even at the cost of a decline in
premium income. The aim is to increase the
efficiency of the ERGO companies in Italy.
International business
The consolidated result of € 15m (177m)
reflects the effects of the financial crisis
already described above as well as the
impairment losses of goodwill of BA-CA Insurance.
2008
€ million
2007
€ million
4,251
3,780
3,959
3,530
228
457
2,375
2,318
910
827
Operating result
93
231
Taxes on income
77
53
Consolidated result
15
177
Investment result
Financial position
Analysis of capital structure
Our capital structure is essentially determined by our activity as an insurer: the liabilities side of the balance sheet is dominated
by technical provisions (80.1 % of the balance
sheet total) – future payout commitments to
our clients. Equity (2.8 % of the balance sheet
total) is the most important source of funds.
The importance of strategic debt is increasing within the scope of our active capital
management.
Technical provisions stem mainly from life
insurance business with around 68 % and the
health segment with roughly 26 %. Propertycasualty and legal expenses segments
account for a total of 6 %. Detailed information on these provisions may be found in the
Notes to the financial statements starting on
page 150.
Compared to liabilities from loans and securities issued, we cannot foresee with certainty how high our liabilities from technical
business will be and when they will occur.
The payout pattern of technical provisions
varies enormously from segment to segment
and from one line of business to another. In
property insurance, for instance, a major
portion of the reserves is paid out after one
year, whereas in liability and accident insurance substantial amounts are still due under
certain circumstances decades after the
contracts were concluded. In life and health
insurance we use the premiums to create
actuarial and ageing provisions which make
up the lion’s share of technical provisions.
We ensure that our business is sufficiently
capitalised at all times by monitoring the situation on an ongoing basis and taking suitable measures. These are dealt with in more
detail in the section on capital management.
To optimise the capital position and lower
capital costs, we reduced our equity in the
last financial year through payment of an
unusually high dividend of € 1bn. To counter
this we borrowed from Münchener Rückversicherungs-AG. The remaining subordinate
capital is mainly the result of entering into a
subordinate loan with Munich Re Finance
B. V. in 2004; in December 2007 Münchener
Rückversicherungs-AG took over the role of
issuer.
All financial resources are invested according
to the principles of asset-liability management described on page 69 f. The structure of
our investments is described on page 35 f.
Group equity and capital management
In the year under review our equity fell to
€ 3.7bn (5.1bn) (for details see page 82 f.).
This development stems mainly from the
dividend payment mentioned above.
The financial crisis also resulted in a reduction in the net balance of unrealised gains
and losses. It fell by € 122m compared with
the level at the beginning of the year.
Although the net balance of unrealised gains
and losses of our fixed-interest securities
available for sale rose as a result of the lower
interest levels at the end of the reporting
Management Report
Financial position
period, the net balance of unrealised gains
and losses in the equity portfolio sank as a
result of sales and lower prices on the capital markets.
As a result of our active capital management
we guarantee that the level of ERGO’s capital resources is adequate at all times. This
means that all financial resources available
cover all capital requirements which we
determine according to our own internal risk
model as well as the requirements laid down
by the regulatory authorities and rating
agencies. In addition, our financial strength
should be sufficient for us to take advantage
of measured opportunities for growth, to
avoid significant impairments through normal fluctuations in capital market conditions, and should also be ensured in a reasonable scope at all times, even following
major losses or substantial stock market
falls. For us, however, adequate capital
resources also mean that the equity basis of
our Group does not exceed to a large extent
the amount which is necessary to operate
the business, as determined according to
these criteria.
Apart from an adequate level of equity the
efficient use of capital available is also a crucial factor. As a result of our value-based
management approach (see page 19 and following pages) we set the necessary management stimuli so that every investment
achieves a return commensurate with risk
in the long run. The results and capital base
of operational companies are protected
against unacceptable fluctuations by means
of suitable reinsurance cover. The same purpose is served by our asset-liability management, together with numerous limits to
restrict risks in terms of our capital investments.
Our internal risk model plays a key role in
capital management. We determine our economic capital on the basis of the internal risk
model data. First of all, we calculate the risk
capital required to absorb annual losses at a
level that can only be expected every 200
years (99.5 % value at risk). This policy is
based on the Solvency II developments. We
then set ourselves a minimum requirement
of 1.75 times this 200-year loss (175 % of the
99.5 % value at risk).
Capital management also takes considerable account of steering aspects which
chiefly stem from regulatory restrictions as
well as clients’ profit-sharing. We review the
assumptions on which the internal risk
model is based on a regular basis and adjust
them as required.
In view of the high dividend payout in the
previous year and given the high volatility of
the capital markets, our opinion in the current situation – based on all steering
aspects mentioned – is that we are well
advised to be cautious in terms of the equity buffer and to retain sufficient room for
manoeuvre. For this reason, we intend to
propose to this year’s Annual General Meeting that a dividend payout should be waived.
Solvency
The individual insurance companies of the
ERGO Group are subject to the regulatory
requirements pertaining to the countries in
question. All insurance companies of the
ERGO Insurance Group complied with the
local requirements concerning solvency in
the year under review.
There is no supervision at Group level
because the ERGO Insurance Group itself is
part of the Munich Re Group; this is subject,
in turn, to supervision at Group level (group
solvency).
Rating
ERGO’s financial strength and that of its
major subsidiaries are assessed by leading
rating agencies. The ratings are of a high
standard. The following table shows the
results as at 31 December 2008.
Financial strength ratings
Analysis of the consolidated cash flow
statement
The cash flow of the ERGO Group is strongly
influenced by our business in primary insurance. As a rule, we first collect the premiums for the risks assumed and do not make
payments until later in the event of benefits
or claims. The cash flow statements of insurance companies are therefore of limited relevance.
Fitch
Moody’s
DKV Deutsche Krankenversicherung AG
A
AA –
AA –
Hamburg-Mannheimer Sachversicherungs-AG
Hamburg-Mannheimer Versicherungs-AG
AA –
AA –
Aa 3
KarstadtQuelle Lebensversicherung AG
Victoria Lebensversicherung AG
AA –
A+
AA –
Victoria Versicherung AG
Vorsorge Lebensversicherung AG
S&P
Aa 3
AA –
AA –
A+
Management Report
Financial position
The cash flow statement (see page 83) was
prepared using the indirect method; it was
adjusted to eliminate influences from
changes in the consolidated group as well as
changes in exchange rates.
The basis for determining the cash inflow
from operating activities is the consolidated
results amounting to € 92m (781m). On the
one hand, it is increased by the change in
technical reserves of € 1.4bn (4.0bn). The
increase in the provision for future policy
benefits stems from the acquisition of
BA-CA Insurance as well as from the continued portfolio development and the current
interest returns in the life and health segments. The provision for future policy benefits for the health segment also rose within
the framework of the current allocation. By
contrast, the positive net gain from the disposal of investments had a reducing effect;
this was mainly due to the sale of securities
available for sale.
At € 4.2bn (2.6bn), the cash outflow from
investing activities was determined by outflows for the acquisition of other investments as well as from the purchase of
consolidated companies. The latter concern
primarily BA-CA Insurance in Austria. The
purchase price of € 416m for the 60.5 % of
the shares acquired in addition was paid in
cash and offset in the cash flow statement
against the company’s cash in hand. For
2008, the item “outflows from the acquisition of consolidated companies” also shows
payments made in order to increase our
shareholding in such companies. To be mentioned here are the shares in KarstadtQuelle
Insurance, Neckermann Insurance, Turkish
ERGOİSVİÇRE and Italian ERGO Previdenza.
The cash outflow arising from financing
activities is to be attributed above all to
unusually high dividend payments for 2007
totalling € 1bn within the scope of our active
capital management.
The cash at the end of 2008 fell overall by
€ 366m to € 1.3bn; this figure includes
operating balances with credit institutions,
checks and cash in hand. In the previous
year, the cash had increased by € 500m.
Details pertaining to Section 315 para. 4
of the German Commercial Code (HGB)
The company’s share capital amounts to
€ 196,279,504.20 and comprises 75,492,117
no-par-value shares. With a stake of 94.7 %,
Munich Re is our majority shareholder.
At ERGO there are neither constraints on
exercising votes or transferring shares nor
are there controls on voting rights by
employee shareholders. Our shares are not
subject to any special rights of control.
On 9 May 2007 the Annual General Meeting
gave the Board of Management permission,
which is valid until 8 May 2012, to raise the
Company’s share capital by issuing new
shares against cash deposits or investments,
either as a lump sum or in instalments, to
a total of up to € 97,500,000 (authorised capital) with the permission of the Supervisory
Board. No use has been made of this empowerment up until 31 December 2008.
Furthermore, the Board of Management was
empowered by the Annual General Meeting
of 9 May 2007, with validity until 8 May 2012,
to issue once or several times option bonds
and/or convertible bonds with or without a
limited period of validity of up to € 1bn as
well as granting the owners or creditors of
such bonds options or conversion rights to
new company shares with a proportional
sum of the share capital up to € 97,500,000
with the permission of the Supervisory
Board. To this end, there was a contingent
increase in the Company’s share capital of
up to € 97,500,000. Once again no use has
been made of this empowerment up until
31 December 2008.
The appointment of or revoking the appointment of members of the Board of Management is in accordance with Sections 84, 85
of the German Stock Companies Act (AktG)
and Section 31 of the German Co-Determination Act (MitBestG). ERGO does not have
any statutory provisions in this respect. Prerequisites governing an amendment to the
Articles of Association are stipulated in Section 179 of the German Stock Companies
Act. It is stipulated in Section 13 para. 4 of
the Articles of Association that the corresponding resolution passed at the Annual
General Meeting, as far as this is permissible under law, only requires a simple majority of the share capital represented at the
time of passing the resolution, as well as the
simple majority of votes. Additionally, use
was made of the possibility permitted
under Section 179 para. 1 cl. 2 of the German
Stock Companies Act, which states that in
accordance with Section 10 of the Articles
of Association, the Supervisory Board is
entitled to undertake changes to the Articles
of Association that only involve the wording.
At ERGO, major Company agreements which
concern a change in control as a result of a
takeover do not exist; neither do Company
compensation agreements with members of
the Board of Management or staff in the
case of a takeover bid.
Management Report
Sustainability
Besides our current profit-based activities
we intend to secure the sustainable economic success of our Group with factors
which cannot be measured in financial
ratios. These include:
쐍 open dialogue with our clients,
쐍 our continued commitment to new, needsoriented products and solutions,
쐍 our corporate responsibility towards our
employees, society and the environment,
as well as
쐍 efficient business processes for managing
our company as well as identifying and
avoiding risks.
Clients and client relationships
Our products are geared towards all client
groups – private clients as well as small and
medium-sized businesses and industrial
clients. They can select from all product
groups: life and health insurance, property
and casualty insurance, legal expenses
insurance. In addition, our agents offer fund
products – available from MEAG as the asset
management company of Munich Re and
ERGO – and bank products from our cooperation partner, the UniCredit Group.
Advisory activities and services round off
the portfolio.
Our clients can thus cover their needs conveniently and comprehensively from one
source in respect of the financial services of
tried and trusted providers.
The entire range of sales organisations at
ERGO ensures that our clients are able to
approach the Group in a way which suits
them best. By means of stronger sales support we intend to improve our competitive
position even further. A comprehensive IT
platform for sales will gradually be introduced in Germany which will assist the sales
and administrative processes and speed up
the introduction of new products.
In order to guarantee an even better support
service for our broker clients in the future we
have concentrated broker sales of our German brands at the ERGO level. This means
that ERGO has one of the largest broker
sales networks in Germany. In addition, we
are setting up a competence centre for
bank sales.
Our field staff place great importance on
support and service – not just during their
sales pitch alone. Even after the contract
has been signed our clients are convinced by
the good service we provide, for example a
fair and swift claims settlement process.
Such situations in particular reveal the value
of having a good insurance.
Client satisfaction and service by professional client management of ERGO have
been rated “good” in selected processes
tested by the German Technical Inspection
Association, TÜV. The quality of the claims
management has been certified by the German Association for the Certification of
Management Systems (DGS) according to
DIN-EN-ISO9001 which involves controls
and claims controlling, as well as regular onsite checks.
Research and development
Our main focus in research and development
is to analyse and forecast demographic
trends as these trends constitute important
parameters for calculating policy terms
and thus designing products. Furthermore,
demographic change affects social security
systems and thereby influences our clients’
needs for private provision. Our product
development incorporates not only our own
know-how but also the latest scientific findings.
length of service is 11.9 (12.4) years. The
proportion of female employees as a percentage of total staff increased to 55.5 %
(54.3 %).
The life insurers use to some extent their
own mortality tables to have the customised
data available for their specifically structured portfolios. The health insurers adopt
the mortality tables developed by the
Association of Private Health Insurers. The
knowledge of our actuaries regarding life
expectancy of clients is constantly extended
and updated by liaising with the German
Association of Actuaries.
A number of structural initiatives were
adopted within the ERGO Group in 2008 in
order to secure long-term competitiveness,
and these were implemented along with corresponding personnel management measures.
Staff
Our staff provide the basis of our success
with their expertise, motivation and commitment. That is the reason why we rigidly pursue a strategy of developing their skills.
There are approximately 50,000 people
working full-time for our Group, either as
salaried employees or as self-employed representatives. We offer our staff attractive
jobs with future perspectives, and focus our
attention on responsible tasks, a corporate
culture which encourages performance and
interesting opportunities for professional
development in our internationally active
organisation.
On 31 December 2008 a total of 31,508
(29,127) salaried employees were working
for the ERGO Insurance Group, of which
24,944 (23,396) in back-office and 6,564
(5,731) as salaried field staff. The rise in the
number of staff is solely due to developments in international business. The average
age is 40.6 (40.8) years and the average
In order to permanently improve our competitive edge measures were introduced
including the “Continual Improvement in
Competitiveness” project, which aims to
attain a further improvement in the administration expense and acquisition cost ratio as
well as service quality in our home market.
The target has been set to save € 180m in
material expenses and labour costs by 2010,
thereby achieving our target cost ratios by
that deadline. This includes cutting 1,800
jobs. Against this background, the executive
management of ERGO and the ERGO Group
works council have come to agreement on
an extensive overall package. Apart from
important agreements to achieve target
savings, it contains rulings pertaining to codetermination, such as the introduction of a
Group social plan as well as a Group agreement on the subject of “compatibility of job
and family”. The agreements envisage that
there will be no forced redundancies among
back-office employees and salaried field
staff before 31 December 2012. As a result
of the agreements reached with the works
council we can now begin to implement the
initiatives in good time. Notwithstanding
the above, an ongoing process to improve
quality and service on a permanent basis is
planned.
Management Report
Yet another important topic of last year and
the current year is the initiative “ERGO – one
company”. It aims at incorporating in terms
of labour law the organisational structure
and workflow in Germany encompassing
functions across the brands, which have
been established over the past years. Staff
working in insurance operations are to be
given solely employment contracts with
ERGO Versicherungsgruppe AG as from the
end of 2009 and no longer with the various
brand companies, as has been the case to
date. Field staff employees and those working in the sales departments for the brand
companies will continue to work for their
brand employer.
Moreover, ERGO set up a pool of mobile
international managers in 2008. These
members are permanently prepared to be in
a position to take up international assignments abroad.
In addition, we were busy preparing for the
integration of the ‘Europäische’ and Mercur
in the ERGO Insurance Group during the year
under review. Subject to negotiations currently underway with the co-determination
committees, this should be complete by the
end of March 2009.
As a major internationally operating company the ERGO Insurance Group assumes
social responsibility.
We still place great emphasis on vocational
training. We intend to give young people indepth training and to attract qualified and
motivated staff to the ERGO Insurance
Group on a long-term basis. In 2008 the
ERGO Insurance Group and its agencies
trained 1,399 (1,354) young persons, which
corresponds to a ratio of 5.8 (5.6) % to total
staff.
To assist our business ambitions, promoting
and recruiting qualified school and college
leavers who show potential for expert and
executive positions is assuming an everincreasing significance. In 2008 an ERGOwide “Talent Placement Programme” was
introduced where jobs are then envisaged
both in Germany and abroad in various companies of the Group throughout the staff
functions, segments as well as in sales.
Remuneration of the
Board of Management
In order to avoid reiteration, we refer to
the detailed statements on the remuneration
of the Board of Management in the explanatory notes [38] and [39] in the Notes, starting from page 182.
Social commitment
In 2008 the ERGO Board of Management
decided on a new concept pertaining to corporate social responsibility, which stems
from our core business of insurance. This
means that ERGO will focus on assisting
where people themselves wish to take over
responsibility for themselves and others, as
well as providing help in cases of need. Education, science, health, music and social
affairs form the focal point of this concept.
The action plan is initially conceived for
Germany and the following brands: D.A.S.,
DKV, EUROPÄISCHE Reiseversicherung,
Hamburg-Mannheimer, KarstadtQuelle Insurance and Victoria.
The societies “DASler helfen” and “Victorianer helfen” take an active part in charitable
projects. Primarily financed by small contributions made by the staff of D.A.S. and
Victoria from their salary and commissions,
they support social projects in Germany
and abroad. Employees of KarstadtQuelle Insurance collect money for the
Madeleine-Schickedanz Children’s Cancer
Foundation every year on action days which
is then donated to research.
Hamburg-Mannheimer assumes social
responsibility with the “Youth & Future”
foundation, and the “Job Locomotive” project gives deprived youngsters career guidance. Each year Hamburg-Mannheimer
offers three training jobs especially to the
youngsters of this foundation. In 2008 the
foundation celebrated its tenth anniversary,
and in the year under review HamburgMannheimer supported “children in need”
in Germany and worldwide with a generous
donation during the RTL TV donation
marathon.
DKV has been working together with the German Hygiene Museum in Dresden for many
years to promote people’s knowledge on
health-related matters and to motivate them
to lead sensible, healthy and responsible
lifestyles. DKV also supports the Aids Prevention Programme of the Federal Centre for
Health Education via the Private Health
Insurance Association, and promotes informational activities carried out by the Aids
Foundation.
Together with the foundation “Tierra Nueva”,
the Spanish DKV Seguros is involved with
the microinsurance project in Ecuador,
including setting up basic medical cover in
the south of Quito. The foundation provides
low-budget health insurance with the support of DKV Seguros. Furthermore, the
customer service centre of DKV Seguros is
solely manned by physically handicapped
staff who look after the customers’ needs on
the phone; this is promoted by the in-house
foundation “Fundación Integral”. ERGO
Hestia in Poland has adopted this idea and
has also set up a foundation with the same
name and purpose.
Environment
Protecting the environment has been an
important topic to the ERGO Insurance
Group for many years, and in terms of ecological components it is part of the corporate responsibility. We joined the United
Nations’ initiative “Global Compact” as part
of the Munich Re Group in 2007. This brings
with it the commitment to promote and
further develop environmental protection
measures. For instance, the recording of
environmental key data was improved still
further. This data also provides the basis for
the sustainability ratings of the Munich Re
Group. Achieving synergy effects and reciprocal potential for improvement between the
ERGO companies are checked and implemented on a regular basis.
As part of the ERGO facility management
extensive measures were undertaken to
reduce the amount of energy and resources.
Moreover, the ERGO Insurance Group operates an environmental management system
at the highest European level and in accordance with the EU Environmental Audit
Directive and with the aim of continually
improving environmental performance.
We are also making our contribution towards
the environment in terms of underwriting.
Following the introduction of the Energy
Performance of Buildings Directive (EnEV) in
2007 the energy pass for existing buildings
has become mandatory since 1 July 2008. In
turn, the ERGO Insurance Group reacted by
introducing a specially geared pecuniary
loss liability insurance for energy advisers.
Management Report
Since 2007 we have also been offering a
comprehensive insurance solution for environmental damages based on the EU Directive on Environmental Liability. More than
7,000 customers have already taken out this
policy with us.
With its commitment towards the environment and open dialogue with those members of the public who are interested, the
ERGO Insurance Group will assume social
responsibility in the future, too, by actively
facing such important issues, including protecting the environment and climate as well
as sustainability.
IT security and processes
Information management plays a central
role at ERGO. Accordingly, great importance
is attached to confidentiality, availability and
integrity of information. In order to protect
all electronic data, computers and networks,
as well as all information which is not stored
in our IT systems, ERGO has put in place
effective security measures.
Our inter-company IT security management
comprises four levels: security policy, security directives, security concepts and their
technical implementation. Managing information security lies in the hands of our Chief
Information Security Officer and he is supported by an IT Security Management Board
which acts as a strategic and controlling
committee.
We are continually developing our existing
security management system, taking into
account international standards as well as
the developments pertaining to Solvency II –
and we are still looking to be certified in
accordance with ISO 27001. We counter
possible operational risks with qualified
security measures. In order to maintain the
value of the ERGO Group in the long term,
the IT Security Management provides support in strategic and operational plans in
Germany and internationally, such as the
set-up of a security or risk management system for our foreign subsidiaries.
There is an intensive exchange of information between ERGO and Munich Re concerning questions relating to security issues: in
DISK (the German acronym for data protection and information security group) all parties responsible meet on a regular basis to
discuss project results, risk assessments
and their experiences, utilise synergy
effects and address ideas for group-wide
projects.
To ensure that persons, information, items
and assets are protected is of principal
importance to ERGO. Our data privacy policy, which regulates the handling of client
data, contains binding statements on the
protection of data pertaining to personal
details. It serves as the basis for our staff
when handling personal data and determines the technical and organisational measures which are to be carried out to ensure
that personal data is protected. At the same
time, it forms the basis for principles, guidelines, instructions and company agreements
for all data privacy topics. The legal basis for
processing client data is the contractual
relationship and the consent given by clients
when taking out insurance cover.
Prospects
Reservations concerning statements
on the future
Predictions about the forthcoming development of our Company are based primarily on
planning figures, forecasts and expectations. Consequently, the following assessment of the ERGO Group’s development
merely reflects our imperfect assumptions
and subjective views. It follows that we cannot accept any responsibility or liability in
the event that they are not realised in part or
in full.
The assessment and comments on probable
company development, including major
opportunities and risks, are conducted to
the best of our knowledge and belief taking
into account findings for prospects in the
industry which are available to us at the
moment, future economic and political parameters and trends as well as the major factors of influence they will have. Of course,
these prospects, parameters and trends can
change in the future without it already being
foreseeable at the moment. On the whole,
the actual development of the Company and
its results can therefore deviate significantly from forecasts.
All in all, looking ahead at the next two financial years, we continue to expect a positive
trend in ERGO’s business, despite the difficult economic environment. This assessment is based on a number of expectations
which take into account major opportunities
and risks, our economic environment and
our strategic alignment. The risks are
described in detail in the “Risk Report”, and
we would refer you to the statements made
there.
General economic trend
Even if there is currently a high level of
uncertainty concerning economic forecasts,
considerably poorer overall economic conditions can be expected for 2009. The
effects of the international financial market
crisis on the real economy give rise to expectations of a recession in industrial countries.
Newly industrialising countries will probably
show very dampened dynamic force in
growth. The fall in global demand is likely to
lead to noticeably lower inflation rates.
A recession can be expected in the euro
zone as well as in Germany. The cause of this
development is likely to be a major decline in
exports, sluggish investment as well as
lower levels of private consumption. This will
result in a significant clouding of the parameters for the German insurance industry in
2009 and 2010. There is a risk of a further
deterioration in the general economic situation. Additionally, falling price levels cannot
be excluded. Against this background, further state intervention is conceivable.
Capital market trend
In the light of the considerably dampened
economic outlook, the climate for higherrisk investments will remain difficult in
2009, particularly in the first half of the year.
A precondition for a return to a positive capital market trend is a clear indication of a
general economic recovery and a related
reduction in volatility.
Management Report
Prospects
The insurance industry in Europe
and Germany
As a result of the very different parameters
prevailing in the individual European insurance markets, the following sections take a
closer look at the trends of the segments in
our domestic market of Germany.
Life insurance in 2009 and 2010
In 2009, the German life insurance industry
is expecting the volume of premiums to be
slightly below that of the previous year. Nevertheless, the stability shown by life insurance during the crisis on the financial markets will further strengthen public confidence in this form of old-age provision in the
future. In the coming years in particular, the
importance of the guarantees will increase
with both classic annuity insurance as well
as with unit-linked products. The trend
towards provision policies with payouts in
the form of an annuity appears likely to
continue.
The Annual Tax Law 2009, passed by the
German Upper House on 19 December
2008, also includes changes in taxation on
life insurance policies and, overall, strengthens provident insurance solutions.
As regards private old-age pensions, we are
expecting positive stimuli from the extension of the “Riester” pension products
(“Residential Riester”). The state-subsidised
Riester pension and basic pension products
will therefore remain attractive, meaning
that the pleasing development of recent
years is likely to continue. Unit-linked insurance solutions remain an attractive alternative to classic products for many groups of
clients; the long-term trend towards a
widening of this product spectrum will continue.
In terms of company pension schemes, the
“Accounting Law Modernisation Act” (BilMoG) that will probably be passed in 2009
will receive particular attention. Under this
law, pension obligations in German Gaap
balance sheets will probably have to be
valued using a procedure based more on
actual market conditions. This could result
in a notable increase in the pension obligations of companies. Pension funds or
provident funds provide the companies
concerned with adequate opportunities to
externalise these pension obligations.
The planned “Law for Improving the Parameters for the Protection of Flexible Working
Hour Rulings” (Flexi II) deals above all with
the protection of working-life time accounts
against insolvency. The effects on these oldage provision solutions remain to be seen.
Private health insurance
in 2009 and 2010
Fundamentally speaking, the “Act to
Strengthen Competition in Statutory Health
Insurance” (GKV-WSG) came into force on
1 April 2007. Among other things, this introduced compulsory insurance for all residents in Germany as from 1 January 2009
and, at the same time, excluded termination
of substitutive health insurance by private
insurers. Persons not insured or liable to
insurance under the statutory health insurance scheme will be liable to insurance in
the private health insurance scheme as from
1 January 2009.
In addition, all private health insurers providing substitutive health insurance have been
obliged to offer a basic tariff with effect from
1 January 2009. This offers benefits comparable with those of the statutory health
insurance scheme but is calculated with
ageing reserves. In the basic tariff, the insurer cannot charge risk surcharges or agree
the exclusion of benefits. As the premium for
the basic tariff cannot exceed the maximum
premium under the statutory health insurance scheme, this tariff will be subsidised by
those with full insurance, resulting in a corresponding trend towards higher premiums.
Since 1 January 2009, too, ageing reserves
in private health insurance have been transferable in the event of a change of insurer.
Policyholders taking out private health insurance after 1 January 2009 are credited with
the ageing reserve for the basic tariff plus the
10 % surcharge when changing insurers. Pol-
icyholders who took out private health insurance before 1 January 2009 will be credited
with the ageing reserve for the basic tariff if
they terminate during the first half of 2009,
however only if they transfer to the basic tariff of another insurer. This new ruling will
also lead to higher premiums throughout the
industry.
1 January 2009 saw the introduction of the
Health Fund in the statutory health insurance scheme. On 29 October 2008, the Federal Cabinet agreed on a nationwide, uniform contribution rate for persons with
statutory health insurance. For many people
with statutory health insurance, this has led
to a higher contribution. In addition, selfemployed persons voluntarily insured under
the statutory health insurance scheme have
lost their entitlement to sickness benefit
since 1 January 2009. To cover this risk,
there is therefore a need for a supplementary tariff under the statutory health
insurance scheme or a private daily sickness
benefits insurance.
The rulings of the healthcare reform lead us
to expect only moderate growth again in
2009. The net intake of new clients will
remain strongly affected by the raising of the
compulsory insurance threshold and by the
fact that the healthcare reform makes it
more difficult for employees to transfer from
statutory to private health insurance. Nevertheless, it is to be assumed that there will
again be a net increase in new clients for full
insurance in 2009, although this rise will
remain at the moderate level of recent
years. As the healthcare reform will not
solve the financing problems of the statutory health insurance scheme, a further
increase can be expected in waiting times as
Management Report
Prospects
well as in rationing of medical care for persons in the statutory health insurance
scheme. Against this background and given
the continued high need for first-class
healthcare among wide sections of the population, a positive development can be
expected in supplementary insurance. The
result is that for 2009 we are expecting a
growth in premiums in private health insurance of 3 % – slightly above the figure for the
previous year.
In 2010, the 3-year changeover period, in
force since February 2007, will start to run
out and lead to a slightly higher level of new
clients among employed persons. Overall, it
is not possible to make any reliable forecast
concerning the development of new clients
in private health insurance for 2010. Only in
2009 will it become clear how the industry
has started out in the “new” world of private
health insurance and how the constitutional
court will rule on the appeals of the private
health insurance companies.
Non-life insurance in 2009 and 2010
Developments in terms of non-life insurance
over the coming years will depend to a significant extent on overall economic developments. A decisive factor here will be whether
the measures introduced to stabilise the
banking sector are effective in the long run.
Over 80 % of the overall demand for insurance stems from private clients. At present,
we do not expect any improvement in the
economic situation of private households;
their real income has hardly increased at all
even in years of strong economic growth.
Additionally, falling sales and investment
levels are also likely to lead to restrained
demand from industry and commerce. A further factor is the greater price sensitivity of
households and companies which leaves
hardly any room for increases in premiums.
The high level of market penetration already
achieved and the continuing intense price
competition – above all in motor insurance –
are also continuing to weigh down on sales
in property and casualty insurance.
Experience shows that an economic downturn would also have a dampening effect on
the level of claims, thus reducing the pressure for premium adjustments. Irrespective
of this, natural disasters such as hurricane
“Kyrill” at the beginning of 2007 or hurricane
“Emma” in 2008, or the hailstorms this summer lead to a review of premiums in the natural hazards line of business.
Overall therefore, property-casualty insurance are expecting premium income to
remain almost constant in the 2009 and
2010 financial years. Growth in premiums of
around 1.5 % per annum is expected in legal
expenses insurance.
ERGO’s performance
Despite the high level of uncertainty concerning the effects of the gloomy general
economic environment, we expect to be able
to achieve higher premiums over all segments in the coming year. The long-term
nature of the contractual relationships with
our clients, above all in personal lines insurance, will play an important role in this
respect.
We expect total premium income in life
insurance to rise, above all as a result of our
international business. This will also be
helped by the first-time consolidation of
BA-CA Insurance whose premiums have
been shown in our Group figures since the
fourth quarter of 2008. In Germany, we, like
the market, are expecting a slight fall in premium income. As far as new business is concerned, the economic environment is likely
to throw up major challenges, even if clients
are tending towards more secure forms of
investment and provision as a result of the
financial crisis. We assume that provision
business with regular premiums will develop
more positively than that with single premiums.
In the health segment in Germany, we are
aiming for growth of around 2 %; and a higher increase of premiums should again be
possible abroad. Especially in the case
of supplementary insurance policies, we
should achieve a good level of new business
as a result of the growing awareness of the
general public of the need to take out cover
against the increasing gaps in benefits of the
statutory health insurance scheme. The
first-time consolidation of “Europäische”
and “Mercur” within the health segments
will have an additional effect.
In non-life insurance we expect an increase
in premiums, above all as a result of international growth. We are also aiming for a slight
increase in our German business in 2009
although the market is stagnating. However,
it must be feared that the poor overall economic environment will have a greater effect
on the demand for insurance in 2009 than
we currently expect. For example, there is
unlikely to be any rise in premiums in German motor insurance in 2009 because of the
collapse in sales of new and used cars. On
the other hand, it is a fact that people tend
to show an increased need for security in difficult economic times. We wish to maintain
the combined ratio, including legal expenses insurance, at the good level of under 95 %.
Management Report
Prospects
Total premium income is likely to lie within a
range of € 18.7bn to € 19.4bn in 2009 compared to € 17.7bn in 2008. Given the high
volatility of the capital markets it is not
possible to offer a serious prognosis for the
consolidated Group results.
Risk report
Objectives of risk management
Risk management is an important element in
corporate management. In addition to the
function of early recognition of developments that could endanger the continued
existence of the Company (Section 91
para. 2 of the German Stock Companies Act
[AktG]), a task of risk management is to
maintain the financial strength required to
secure the claims of our clients and to create
sustainable value for our shareholders. This
is achieved by means of risk management
that encompasses all divisions. In our risk
management we adhere to the German Control and Transparency Law (KonTraG) as well
as to the requirements of Section 64 a of the
German Insurance Supervision Act (VAG).
Organisational structure
of risk management
To ensure efficient risk management, the
ERGO Insurance Group has set up specific
risk management functions and bodies. The
central Integrated Risk Management (IRM)
unit ensures risk management throughout
the Group and is supported in its role by
decentral risk management structures in all
divisions of the Group. This risk management organisation is headed by the Chief
Risk Officer (CRO) to whom the individual,
decentral risk managers report. The duties
of the CRO include the identification,
assessment, control and monitoring of risks,
as well as reporting them to the Risk Committee. This committee is responsible for
setting up and monitoring the risk management strategies, systems and processes.
The Risk Committee also ensures that the
entire risk management system, consisting
of risk criteria, limits and governance
processes, complies with the regulatory
requirements and the guidelines applicable
throughout the Group. Risks are recognised
at an early stage and managed in an optimum manner.
Risk strategy
The basis for the assumption of risks is
formed by the requirements and decisions of
the Board of Management concerning risk
tolerance, as derived from the risk strategy
approved within the scope of the annual
planning and geared towards the capital and
liquidity base as well as towards the volatility of earnings. In this respect, account is
taken of both criteria for the overall portfolio
as well as of supplementary criteria with
which high risks, concentrations, loss accumulations and systematic risks can be limited and managed throughout the Group. Our
Strategic Risk Management Framework
plays a central role within the scope of
these requirements and processes.
Risk management cycle
The risk appetite determined by the Board of
Management enables us to consider the limits and rulings of relevance for risk management as early as during the business planning stage and to anchor these in the operative management of the company. In the
event of capital bottlenecks or conflicts with
the limit and regulation system, fixed escalation and decision-making processes are
followed which ensure that business interests and risk management aspects are
brought into line. If necessary, risks are
externalised.
Management Report
Risk report
The practical implementation of risk management includes the identification, analysis and assessment of risks and the resulting
risk reporting, limitation and monitoring.
Risk identification is carried out using
appropriate systems and indicators (quantitative component) as well as via bottom-up
and top-down risk surveying which is supplemented by expert opinions (qualitative component). Our ad-hoc reporting process
enables employees of the ERGO Insurance
Group to report risks to the central Integrated Risk Management (IRM) unit at any time.
Risk analysis and assessment is carried
out at the highest level in the central IRM
unit in consultation with a number of experts
from various units of the ERGO Insurance
Group. In this way, we obtain an assessment
that is both quantitative and qualitative, and
which also takes account of possible interdependencies between the risks.
Risk limitation fits in with the Strategic Risk
Management Framework and the Limit and
Trigger Manual applicable throughout the
Group. Risk-reducing measures are decided
and implemented on the basis of the defined
risk appetite.
Risk monitoring is carried out centrally in
terms of the quantitative monitoring (based
on indicators), i. e. at MEAG for investments,
and, as far as qualitative risks are concerned, both decentrally as well as centrally
depending on the materiality and classification of the risks.
Risk reporting
Risk reporting is the responsibility of the
central Integrated Risk Management unit,
which complies with current legal requirements (for example based on Section 55 c
VAG). It also informs the public and creates
internal transparency for management.
Internal risk reporting informs management
regularly on the risk position in terms of the
individual risk categories (quarterly). Immediate reporting to the management is
ensured in the event of a significant change
in the risk position as well as in cases of particular claims and occurrences. This guarantees that even weak signals and negative
trends are recognised in good time, thus
enabling us to take countermeasures.
Our external risk report is based on our
corporate calculation and accounting regulations. We comply extensively with the
requirements of the German Accounting
Standard DRS 5-20.
Control and monitoring systems
To prepare for future statutory requirements
according to Section 64 a VAG and to further
increase the efficiency of the Group’s risk
management, the ERGO Insurance Group
started a project in mid 2008 which harmonises and coordinates its various control
and monitoring systems. Implementation of
this integrated internal control system was
started in 2008 and is expected to be concluded in 2010.
In accordance with DRS 5-20, the overall
risk is broken down into the five categories:
underwriting risks, risks caused by default
on receivables from insurance business,
investment risks, operational risks and other
risks.
We underwrite private and corporate client
insurance business which results in an overall heterogeneous portfolio of risks incurred.
General parameters exist in terms of the
segment or line of business for calculating
tariffs and underwriting on the level of the
individual companies in order to ensure a
balanced portfolio among all those insured.
Furthermore, each actuarial office ensures
that the calculation of tariffs is carried out
properly and that sufficient provisions have
been set up to meet any obligations
incurred.
These measures and processes ensure our
primary insurers are monitoring and controlling risks sufficiently. With the help of
independent controlling processes, the adequacy of the guidelines is checked on a regular basis and adjusted where necessary.
Underwriting risks
Management of underwriting risks takes a
prominent position in the risk management
system of our Company. The key elements
here include control of risk patterns and
ongoing monitoring of accounting principles
for calculating technical provisions. Premiums and reserves are calculated using carefully selected calculation methods, meaning
we can be assured that our obligations are
met in the long term.
Management Report
Risk report
In spite of calculating the tariffs carefully
and allocating sufficient sums to provisions,
further risks may arise which need to be contained. Thus, for example, the longevity risk
is of major importance for annuity policies.
The safety margins in our annuity insurance
portfolio have declined in the past. If, compared with our assumptions, the trend
towards higher life expectancy continues,
additional amounts may, under certain circumstances, have to be allocated to the provisions for future policy benefits. Further
risks may include, for instance, the ERGO
Insurance Group in its entirety or each operational insurance company being exceptionally called upon as a result of high individual
claims or due to an accumulation of lossentailing occurrences. The interaction of
risks of change and risk concentrations may
also lead to considerable loss potential. This
not only involves regional concentrations
but can also occur both within a line of business or across several lines.
The IRM unit is in charge of identifying,
assessing, monitoring and coordinating
cumulative items and concentrations which
Life insurance
Health insurance
쐍
쐍
쐍
쐍
쐍
쐍
쐍
쐍
biometric risk
interest rate risk
other market risk
lapse risk
occur across multiple segments and balance
sheets. The unit works together very closely
with the specialists in the various segments
in order to advise the Risk Committee concerning the impact of these types of cumulative effects on our Group-wide exposure.
These types of risk are observed using scenarios and model calculations which are
there to provide information regarding the
total burden for the ERGO Insurance Group
based on a corresponding extreme scenario.
To protect ourselves against such risks and
to limit fluctuations in earnings, we take out
re-insurance policies.
When choosing our reinsurer, a high degree
of solvency is an essential criterion,
enabling us to limit the contingency risk and
risks pertaining to cash flow fluctuations.
Our outwards reinsurance is mainly placed
within the Munich Re Group.
The following table depicts the specific features of the underwriting risk with our operational insurance companies depending on
the particular business:
biometric risk
lapse risk
claims risk
technical interest rate risk
Property-casualty insurance/
legal expenses insurance
(non-life)
쐍 premium risk
쐍 major and very large loss risk
쐍 reserve risk
쐍 interest rate risk
A differentiated analysis of the risks and relevant factors specific to the business segment in question, as well as explanations on
managing underwriting risks, can be found
in the Notes to the consolidated financial
statements. This account complies with the
IFRS 4 accounting requirements.
54.6 % of our accounts receivable stem from
Munich Re which has been awarded the second highest rating by the international rating
agencies Standard & Poor’s and A. M. Best.
Overall and based on the rating classification
of Standard & Poor’s, the spread of receivables from reinsurers is as follows:
Receivables from reinsurers according to rating classes
2008
€ million
1
30
4
–
7
Rating class 1 (AAA)*
Rating class 2 (AA)*
Rating class 3 (A)*
Rating class 4 (BBB and less)*
No rating
2007
€ million
3
76
7
1
10
* corresponds to the rating classes as compiled by the international agencies Standard & Poor’s and A. M. Best.
Risks from default on receivables
from insurance business
Receivables from reinsurers, agents and
clients are basically subject to risk from
default. As at the balance sheet date,
accounts receivable, where payment due
was more than 90 days old, accounted for
€ 140m (131m). To hedge the risk we have
therefore taken precautionary measures by
making adjustments to the value of receivables. On average 9.4 % (9.5 %) of total receivables were adjusted in value on the balance
sheet date over the past three years. This
share is equivalent to a three-year period
average of 0.7 % (0.8 %) of the premiums
earned. Experience has shown our precautionary measures to be adequate.
Investment risks
Investments undertaken by the ERGO Insurance Group represent a major source of
income and can basically be grouped into
four major investment categories: fixedinterest securities, equities, property and
shareholdings. Besides the criteria of
returns, security and credit-rating, aspects
of liquidity, reasonable diversification as
well as, above all, underwriting obligations
are also taken into consideration. This is
ensured at an institutional level by our assetliability teams. Representatives from the
actuarial office, strategic asset allocation,
investment controlling, integrated risk management and the asset management company – MEAG, part of the Munich Re Group –
are responsible for the asset-liability management for each operational unit.
Management Report
Risk report
The basic investment decision (strategic
asset allocation) is undertaken at the individual company level in accordance with the
structures of liabilities specific to the business activities and company in question.
Following these strategic directives, mandates are then formulated by the ERGO
investment management unit with MEAG
acting in an advisory capacity. These mandates define the asset categories, quality
and limits by taking into account tax,
accounting and supervisory parameters.
Financial parameters and thresholds are set
for the mandates for purposes of control.
Implementation of the mandates is the
responsibility of MEAG. Monitoring and
advice concerning strategic investment
decisions are undertaken by the asset-liability teams.
Adherence to the company-specific mandate requirements is monitored by MEAG on
a daily basis via the early warning system of
the ERGO Insurance Group. Triggers have
been implemented for the various sources of
risk, which activate strictly defined processes. This trigger landscape, which is in operation throughout the Group, differentiates
between three danger levels involving different measures. The levels are derived from
the risk capacity of the companies in question. The early warning system is supplemented by an analysis of long-term trends
and scenarios, particularly as regards interest-rate and share markets.
Proactive risk management has enabled a
considerable reduction in the negative
effects of the crisis on the financial markets
for the ERGO Insurance Group. The share
ratios of our companies were reduced to a
major extent as early as the beginning of
2008. Permanent monitoring of the risks of
default by a contract partner is ensured by
means of a Group-wide counterparty limit
system.
Overall, there has been continued development in risk management activities concerning investments in the 2008 financial year.
To be mentioned in particular is the account
now taken of issuer-specific credit spreads
when calculating the market value of interest-bearing investments included in the
accounts at par value, and the adaptation of
the limit system for counterparties.
The investment risks are mainly market
risks, credit risks and liquidity risks.
Market risks
Market risks form the lion’s share of capital
investment risks. They result from a possible
drop in market values which, depending on
the investment category, may have varying
causes. At 91.4 % (84.2 %), the largest part
of our investments is fixed-interest investments. Consequently, the development of
general interest rate levels and the issuerspecific credit spreads have a considerable
effect on the value of the investments. To
secure investment returns in the long term,
our activities in asset-liability management
are regularly adjusted in line with changing
parameters.
Financial derivatives are used to extend the
horizon for interest-bearing investments. We
have already reduced the number of shares
held, particularly in the banking sector, during the 2007 financial year, in order to lower
the risk stemming from this sector. In addition, we have reacted quickly to developments on the share markets in the 2008
financial year and hedged large sections of
the share exposure.
Market rates are not always readily available
in order to ascertain property values. Therefore, surveys or other appropriate and generally recognised and verified assessment
procedures are required. Value adjustments
were made provided the impairment in value
was deemed to be of a permanent nature.
Currency risks in the ERGO Insurance Group
are hedged for the main part by forward
exchange transactions. Additional risks
stem mainly from long-term investments
where there are no adequate or economically viable hedging mechanisms available.
These risks are constantly monitored to be
able to counteract any wrong movements
early on. Exchange rate gains or losses
recorded in accordance with IFRS are calculated by separating the change in market values in euros and the original currency on the
one hand and the effects of the exchange
rate written against the income statement
on the other.
Risk potential as regards fluctuations in the
market value of investments is regularly
assessed using scenario analyses – socalled stress tests. These stress tests take
into account blanket changes to market values regarding fixed-interest securities, equities and currencies. A detailed example of a
scenario statement is to be found in the
Notes under “market risks from financial
instruments”.
A host of other tools are used to determine
potential market risks. The investment
result, in particular, is forecast at the next
balance sheet date subject to changing capital market conditions. The assessment and
quality of our investments indicate that
there are currently no apparent dangers
threatening the existence of the ERGO Insurance Group and the fulfilment of obligations
against policyholders. Risk management is
structured in such a way that any possible
problem areas can be anticipated at an early
stage in order to be able to adapt the investment policy accordingly and in time.
Credit risks
Credit risks stem from the danger that
debtors are unable to keep up with their payment obligations. Credit assessment of the
respective individual investment is of utmost
importance for credit risks in respect of
managing bond portfolios. Our securities
portfolio can be distinguished by the fact
that most of the securities are from issuers
with excellent creditworthiness. The quality
of our credit-rating management can be
seen among other things by the fact that,
even in an extremely negative market environment, write-downs related to interestbearing investments account for € 232m or
less than 0.3 % of overall investments. Securities of Lehman Brothers accounted for
€ 131m. The share of financial assets actually
invested in US subprime loans amounted to
about € 4m. As regards the bond portfolio,
95.7 % (97.4 %) of investments at the end of
the financial year had a rating at least in the
Management Report
Risk report
third-highest category “strong” (see explanation [6 g] and [6 h] in the Notes). This corresponds to the “A” rating category as used
by Standard & Poor’s. Bonds are divided up
according to individual categories as follows:
Bonds portfolio according to individual categories
Bank bonds/loans against promissory notes
Debenture bonds
Government bonds
Corporate bonds
Other
of subordinated securities, latent shareholdings and participation certificates in the
portfolio. Currently, we do not see any risk
for future defaults for our investments in
subordinated securities. Whereas we do not
expect any payment defaults for latent
shareholdings and participation certificates
Share in all
interest-bearing
investments
%
11.0
37.2
38.4
6.5
6.9
Rating at least
category “strong”*
%
88.2
100.0
97.9
68.4
96.9
* This corresponds to the rating category “A” of Standard & Poor’s.
The diversification of the investment portfolio is deemed adequate. Unlisted registered
bonds make up the main part of interestbearing investments. The assessment of
their market value is based on yield curves
and, following a conservative approach, also
takes specific credit spreads of individual
issuers into account. For listed interestbearing investments, we draw on given price
notations.
A Group-wide limit system is used to monitor
and control our risk from contract partners
defaulting on payments. The individual limits
are based on the financial position of the
contract partner as well as on the risk tolerance defined by the Board of Management.
Account was taken of the particularly critical
situation in the banking sector in the 2008
financial year through constant verification
of the maximum limits with in part proactive
lowering of the individual limits and the
introduction of collateral management. Permanent monitoring ensures the risk control
either, we expect interest payment defaults
for a low number of securities.
Liquidity risks
We make sure that we are in a position to
meet our payment obligations at any
moment in time. This is guaranteed with our
detailed liquidity planning. Our asset-liability management manages cash flows from
our investments and the premiums in terms
of time and quantity in accordance with
obligations which arise from insurance contracts.
Major hedging operations
Financial derivatives are mainly used by the
ERGO Insurance Group for hedging market
risks in capital investments. These include
most notably risks pertaining to share prices
which are tackled making intensive use of
our risk management system and, where
necessary, the use of financial derivatives.
A sustained fall in the rate of interest bears
the risk that funds have to be reinvested at a
lower rate of interest (reinvestment risk).
This risk was taken account of by the permanent ongoing development of the hedging
strategy using structured products. For our
personal insurers, these products ensure a
reinvestment at a minimum interest for the
case of falling interest rates, thus guaranteeing lasting fulfilment of insurance obligations
even in prolonged periods of low interest
rates. According to accounting requirements
of the respective financial tools, fluctuations
in the market value are recorded in the
income statement or in equity without an
impact on profit or loss. The counterparty
risk stemming from the products is spread
between several issuers and is additionally
minimised by the deposit of covered bonds
(Pfandbriefe).
Variable external financing by banks has
been hedged in part using interest rate
swaps. As regards most of the interest rate
swaps or interest rate currency swaps, variable rates are exchanged for fixed rates.
Investments in foreign currencies are mainly
hedged using financial derivatives against
currency risks.
On the one hand, financial derivatives used
are monitored within the framework of our
trigger system and are, on the other hand,
also included in the qualitative components
of the risk controlling of investments and
financial shareholdings of the ERGO Insurance Group. An assessment of the market,
credit and liquidity risks is made in this context. The monitoring of the issuer risk is part
of the limit system for contracting parties.
The hedging operations applied fulfil their
function. There are currently no major risks
which can be recognised as a result of the
hedging carried out.
Operational risks
The ERGO Insurance Group considers operational risks to be risks of losses associated
with inappropriate processes, technological
failure, human error or external events.
These risks are reduced by means of systematic, cause-related risk management. Our
declared corporate objective and one that is
resolutely pursued, is to make employees
aware of possible risks and to establish an
appropriate risk culture.
Human Resources risks (for example the risk
of shortages of personnel) are reduced by
targeted human-resources marketing measures, procedures for estimating potential,
personnel development and systematic succession planning. Modern management
instruments together with adequate monetary and non-monetary incentive systems
ensure that our employees are highly motivated.
Companies are under an increasing threat
from white-collar crime (fraud). With the
Code of Conduct, the Board of Management
has laid down the fundamental rules and
principles for legally correct and responsible
conduct on the part of the legal representatives, managers and all other employees.
Additional rules and principles have been
laid down which are aimed at ensuring
appropriate and effective prevention, discovery and reaction concerning white-collar
crime.
Management Report
Risk report
ITERGO, which is part of the ERGO Group, is
in charge of the management of IT systems
and the risks associated with them. This
company operates its own risk management
system which is incorporated in the Groupwide risk management organisation.
At the forefront is IT security, which can be
put at risk especially as a result of operational breakdowns and interruptions, data
loss and external attacks on our systems.
These risks are dealt with by means of
undertaking extensive precautionary measures, contingency planning, back-up solutions and access controls.
Implementation of the business continuity
management was completed to a large
extent. Apart from an adequate organisational structure with emergency committees, there are also uniform and binding
emergency management plans available at
the relevant locations of the ERGO Insurance Group.
Solvency II is a European project aimed at a
fundamental reform of insurance supervision law with particular regulatory requirements in terms of the risk management of
insurance companies. The ERGO Insurance
Group supports speedy further development
and implementation of the regulations striven for, which correspond to our risk management approach in all fundamental aspects.
Internally, we have adopted a proactive
approach to the introduction of our own,
group-wide risk model and the orientation of
the risk management system towards Solvency II. This will ensure early implementation of the corresponding standard.
Risks associated with incorrect business
decisions, poor implementation of decisions
or the inability to adapt to changes in the
corporate environment are defined by ERGO
as strategic risks. We counter these risks
through the close interlinking of strategic
decision processes and risk management.
This includes both cultural as well as organisational aspects.
Other risks
Amendments to legal and supervisory parameters can be of major significance. Over
the course of time, these amendments
result in opportunities as well as risks. All of
these developments are therefore the subject of constant monitoring. We also counter
these risks by being actively involved in
industry bodies and on committees.
The risk of losses as a result of a deterioration in the reputation of the company
amongst the public, clients, shareholders or
other parties, such as supervisory bodies, is
referred to as reputation risk. To monitor this
risk, we have set up identification processes
in various parts of the Company (for example
in the central “External Communication”
unit). The aim of the defined compliance
guidelines is the protection of the ERGO
Insurance Group and its employees. Compliance means acting in accordance with the
applicable laws as well as internal company
regulations and principles. Among other
things, implementation should avoid reputation risks, risks of criminal punishment for
employees and members of governing bodies, liability risks, official sanctions and litigation risks, as well as conflicts of interest
between the company and its clients and/or
its employees.
The risk management system is guaranteed
to work at a high level. Risk developments
are recognised at an early stage and risk
management is applied using the implemented structures and procedures.
The early risk warning system as per
KonTraG also covers so-called emerging
risks – i. e. risks which arise as a result of
changing parameters (such as legal, social
policy or scientific and technical parameters) and which can therefore have effects
on our portfolio that have not yet been registered or recognised. Here, uncertainty in
terms of the extent of the damage and the
likelihood of occurrence is naturally very
high. We identify trends and weak signals in
a variety of ways, for example through systematic trend research by our Group development, our knowledge management or
inquiries concerning emerging risks.
Against the background of Solvency II and
the ever-increasing requirements of risk
management, we have subjected our integrated risk management system to an ongoing optimisation and adjustment process.
The creation of systems to model the risks in
our business models as regards our planning
and market comparison is running according
to plan. We check our investments continually with a Group-wide early warning system
which takes care of different risk and key
income data for each company. This enables
us on the level of our individual companies
and at Group level to ensure that target
results are achieved and requirements pertaining to solvency are met, as well as sufficient protection for our equity is available.
This happens within the framework of our
Group-wide risk management process which
is practised by the central risk management
team together with the decentralised risk
management units in all Group companies.
We consider the risk situation of the ERGO
Insurance Group to be controllable, policed
and viable.
Summary of the risk situation
In short, we can state that the existence of
the ERGO Insurance Group and the interests
of policyholders were not in danger at any
time. Furthermore, we are not currently
aware of any developments which could
result in an adverse risk to the continued
operation or asset, liability, financial and
earnings situation of the Group in the long
run. All companies in the Group have sufficient financial security in place and have
enough resources to more than cover solvency requirements.
Shares in ERGO Versicherungsgruppe AG
Information relating to the ERGO share
The ERGO share in 2008
No dividend for 2008
The trend in the ERGO share price in the year
under review was affected to a large degree
by two factors: the high dividend paid out
to shareholders in May and the turbulences
experienced on the stock market during the
remainder of the year.
Our active capital management is intended
to ensure that the degree of ERGO’s capital
base is always adequate, that our financial
strength also paves the way for modest
opportunities for growth, is not critically
impaired as a result of normal fluctuations
from situations on the capital markets and
can also be reasonably preserved after
incurring major losses or encountering substantial falls on the stock market. As far as
we are concerned, an adequate capital base
also means that the Group’s equity basis
does not exceed to a large extent the
amount which is necessary to operate the
business.
From the beginning of 2008 until the dividend payment in May, the ERGO share was
essentially characterised by a sidewards
trend. After the high dividend payout of
€ 13.25 as part of our active capital management the share price declined as expected.
Following a further period, in which the price
drifted sidewards, the share followed the
general downwards trend as from August as
part of the crisis on the financial market. It
stabilised again at the start of the final quarter and was even able to make ground by the
end of the year. There is little point in comparing the development of domestic and
international indices as only a small proportion of ERGO shares are held in a free float.
In face of last year’s high dividend payout
and given the high volatility of the capital
markets, our opinion in the current situation
– based on all steering aspects mentioned –
is that we are well advised to be cautious in
terms of the equity buffer and to retain sufficient room for manoeuvre. For this reason
we intend to propose to this year’s Annual
General Meeting that a dividend payout be
waived.
Movement in the price of ERGO shares in 2008
€ 190
€ 170
€ 150
€ 130
€ 110
€ 90
€ 70
January
March
May
July
September
November
Information on the ERGO share
Earnings per share in accordance with IFRS
Dividend
Total dividend amount
Year-end share price
Type of share
Number of shares
2008
2007
€
€
€ million
0.99
–
–
9.78
13.25
1,000
€
102.00
159.50
million
No-par value
75.49
No-par value
75.49
ISIN: DE0008418526 · Securities Identification Number: 841 852 · Reuters Code: ERGG.DE
Investor Relations
Besides our annual and interim financial
reports further topical information on the
ERGO are available on our website at
www.ergo.com. For more information, please
also contact Investor & Rating Relations on
+ 49 (0)2 11/49 37-15 10 or at ir@ergo.de.
Consolidated Financial Statements
Consolidated balance sheet as at 31 December 2008
Assets
Notes to the
consolidated
annual
accounts
2008
€ million
2007
€ million
A. Intangible assets
I. Goodwill
[1]
p. 127
469.4
404.1
II. Other intangible assets
[2]
p. 129
610.6
1,080.0
268.6
672.7
[3]
p. 130
2,552.9
16.2
2,562.3
78.2
II. Investments in affiliated companies and associates
[4]
p. 131
836.6
802.9
III. Mortgage loans and other loans
[5]
p. 131
39,700.2
35,163.0
IV. Other securities
[6]
p. 132
142.8
58,546.6
1,989.4
200.0
59,812.8
393.6
60,678.9
60,406.4
1,604.9
105,373.5
3,144.7
102,079.4
2,873.9
2,178.4
7,666.3
7,419.8
464.8
431.0
3,640.4
4,105.2
3,627.7
4,058.7
1,343.0
1,721.5
6,648.4
452.6
6,195.8
6,577.9
448.2
6,129.7
B. Investments
I. Land and buildings, including buildings on third-party land
Thereof: investment property held for sale
1. Held to maturity
2. Available for sale
3. Held for trading
V. Other investments
[7]
p. 142
C. Investments for the benefit of life insurance policyholders
who bear the investment risk
D. Reinsurers’ share in technical provisions
[8]
p. 142
E. Receivables
[9]
p. 143
I. Current tax receivables
II. Other receivables
F. Cash at bank, cheques and cash in hand
G. Deferred acquisition costs
– Gross
– Reinsurers’ share
– Net
[10]
H. Deferred tax assets
Thereof: deferred tax assets relating to disposal groups
[11]
p. 145
2,094.4
–
1,371.5
2.7
I.
[12]
p. 145
2,315.3
2,174.3
133,047.3
127,806.0
Other assets
Total assets
p. 144
Equity and liabilities
Notes to the
consolidated
annual
accounts
2008
€ million
2007
€ million
841.4
841.4
2,333.1
2,633.8
306.4
541.3
74.9
738.4
A. Equity
I. Issued capital and capital reserve
II. Retained earnings
III. Other reserves
IV. Consolidated result attributable to ERGO equity holders
V. Minority interests
[13]
p. 147
178.5
3,734.2
326.6
5,081.4
[14]
p. 149
437.0
382.8
[15]
p. 150
1,517.8
1,439.4
II. Provision for future policy benefits
[16]
p. 150
89,137.7
84,223.6
III. Provision for outstanding claims
[17]
p. 152
6,810.6
6,520.0
IV. Provision for premium refunds and policyholders’ dividends
Thereof: provision for deferred premium refunds relating to disposal groups
[18]
p. 156
9,045.2
–
10,265.6
– 172.3
V. Other technical provisions
[19]
p. 157
94.0
106,605.4
79.4
102,528.0
[20]
p. 158
2,939.6
2,308.0
[21]
p. 159
844.1
891.8
[22]
[23]
p. 164
p. 165
1,106.6
1,950.7
1,103.4
1,995.2
[24]
p. 166
909.3
822.5
13,673.0
14,582.2
18.8
12,628.0
13,450.5
19.2
2,798.0
–
2,060.2
0.6
133,047.3
127,806.0
B. Subordinated liabilities
C. Gross technical provisions
I. Unearned premiums
D. Gross technical provisions for life insurance policies
where the investment risk is borne by the policyholders
E. Other accrued liabilities
I. Provisions for post-employment benefits
II. Tax provisions
F. Liabilities
I. Current tax receivables
II. Other receivables
Thereof: amounts due to banks relating to disposal groups
G. Deferred tax liabilities
Thereof: deferred tax liabilities relating to disposal groups
Total equity and liabilities
[25]
p. 167
Consolidated income statement
for the financial year 2008
Items
Notes to the
consolidated
annual
accounts
1. Gross premiums written
[26]
p. 168
2. Earned premiums
– Gross
– Ceded share
– Net
3. Investment result
– Investment income
– Investment expenses
– Total
Thereof: income from associates
[27]
4. Other income
[28]
[29]
6. Operating expenses
– Gross
– Ceded share
– Net
[30]
7. Other expenses
[31]
p. 176
16,401.2
16,461.8
1,311.4
15,150.4
16,270.1
1,460.5
14,809.6
8,922.8
6,052.3
2,870.5
– 3.5
7,654.8
2,304.0
5,350.8
246.4
2,224.2
1,274.4
20,245.1
21,434.8
14,758.1
862.5
13,895.6
16,821.0
932.7
15,888.3
3,427.0
298.8
3,128.2
3,351.4
370.2
2,981.3
2,636.9
1,495.6
19,660.8
20,365.2
584.3
1,069.6
176.8
7.6
407.5
1,062.0
p. 178
p. 179
8. Result before impairment losses of goodwill
[32]
16,578.2
p. 176
Total expenses (5.–7.)
9. Impairment losses of goodwill
2007
€ million
p. 170
Total income (2.–4.)
5. Expenses for claims and benefits
– Gross
– Ceded share
– Net
2008
€ million
p. 179
10. Operating result
11. Finance costs
[33]
p. 180
60.8
21.9
12. Taxes on income
[34]
p. 180
254.5
259.2
92.2
780.9
74.9
17.3
738.4
42.5
0.99
9.78
–
13.25 €
13. Consolidated result
Thereof:
– Attributable to ERGO equity holders
– Attributable to minority interests
Earnings per share
Dividend per share*
* Subject to approval by the Annual General Meeting in the financial year
[35]
p. 181
Statement of recognised income and expense
2008
€ million
2007
€ million
92.2
780.9
Currency translation
Gains (losses) recognised in equity
Included in the income statement
– 122.7
–
32.8
–
Unrealised gains and losses on investments
– 3.9
– 121.1
– 65.2
– 247.8
Change resulting from valuation at equity
– 0.4
–
– 1.8
–
Change resulting from cash flow hedges
2.8
– 0.1
– 14.6
–
Actuarial gains and losses on
defined benefit plans
55.5
57.5
Change in consolidated group
20.6
21.9
– 266.1
21.9
Income and expense recognised directly in equity
– 435.4
– 195.3
Total recognised income and expense
Thereof:
Attributable to ERGO equity holders
Attributable to ERGO minority interests
– 343.2
585.6
– 198.8
– 144.4
552.1
33.5
8.1
5.4
Consolidated result
Other changes
Thereof:
Adjustments pursuant to IAS 8
Group statement of changes in equity
Changes in equity
Equity attributable to ERGO
equity holders
Retained
Other Consolidated
earnings
reserves
result
Minority
interests
Total
equity
€ million
€ million
€ million
€ million
€ million
841.4
1,831.3
810.3
840.6
305.0
4,628.6
–
–
719.8
82.7
–
– 269.0
– 719.8
738.4
–
33.5
–
585.6
–
–
–
4.3
–
–
–
–
–
–
– 120.8
–
1.1
– 11.9
–
5.4
– 132.7
–
841.4
2,633.8
541.3
738.4
326.6
5,081.4
–
–
– 261.9
– 38.8
–
– 234.9
261.9
74.9
–
– 144.4
–
– 343.2
–
–
–
8.1
–
–
–
–
–
–
– 1,000.3
–
–
– 3.7
–
8.1
– 1,004.0
–
841.4
2,333.1
306.4
74.9
178.5
3,734.2
Issued
capital and
capital
reserve
€ million
Status at 31 December 2006
Allocation to retained earnings
Total recognised income and expenses
Thereof:
Dividend
Share buy-backs
Allocation to retained earnings
Total recognised income and expenses
Thereof:
Dividend
Share buy-backs
Consolidated cash flow statement for the financial year 2008
Changes in cash
2008
€ million
2007
€ million
Consolidated result
Net change in technical provisions
Change in deferred acquisition costs
Change in deposits retained and accounts
receivable and payable
Change in other receivables and liabilities
Gains and losses on the disposal of investments
Change in securities held for trading
Change in other balance sheet items
Other income/expenses without impact on cash flow
92.2
1,353.0
– 82.5
780.9
4,039.3
– 119.3
303.8
696.4
– 132.0
1,000.5
– 80.5
2,161.8
239.3
– 540.2
– 1,494.6
– 201.5
0.3
776.7
I. Cash flows from operating activities
5,312.7
3,480.9
Inflows from the sale of consolidated companies
Outflows from the acquisition of consolidated companies
Change from the acquisition, sale and maturities
of other investments
Change from the acquisition and sale of investments
for unit-linked life insurance
Other
–
– 817.9
70.3
– 11.2
– 3,399.5
– 2,568.1
– 379.6
– 65.9
– 353.0
245.5
II. Cash flows from investing activities
– 4,663.0
– 2,616.6
Inflows from increases in capital
Dividend payments
Change from other financing activities
–
– 1,004.0
– 12.1
–
– 132.7
– 231.8
III. Cash flows from financing activities
– 1,016.1
– 364.6
Cash flows for the financial year (I. + II. +III.)
– 366.4
499.7
Effect of exchange rate changes on cash
Cash at the beginning of the financial year
Cash at the end of the financial year
12.2
1,721.5
1,343.0
1.7
1,223.5
1,721.5
299.3
536.8
4,188.9
574.9
368.5
499.2
3,923.6
555.0
Additional information:
Income tax paid (net)
Interest paid
Interest received
Dividends received
Assets
Life
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
I. Goodwill
148.9
84.7
82.6
82.6
452.2
601.1
62.4
147.1
46.4
129.0
46.9
129.5
1,808.9
–
1,792.6
60.5
593.4
–
618.0
–
275.4
325.6
256.1
283.2
27,146.0
24,415.0
12,186.7
10,761.5
138.5
192.7
–
–
39,746.6
40,346.5
13,043.8
13,322.8
3. Held for trading
1,723.9
41,609.0
298.9
40,838.1
225.4
13,269.3
81.5
13,404.3
1,118.7
71,958.0
2,375.6
69,746.9
124.3
26,429.8
248.3
25,315.4
C. Investments for the benefit of life insurance
policyholders who bear the investment risk
2,873.2
2,177.1
0.7
1.3
D. Reinsurers’ share in technical provisions
5,803.0
5,592.5
1,042.0
1,020.2
E. Deferred acquisition costs
– Gross
– Net
4,340.1
468.3
3,871.8
4,300.4
466.2
3,834.2
1,804.2
0.3
1,803.8
1,787.7
0.4
1,787.4
F. Other segment assets
Thereof: other segment assets relating to disposal groups
5,670.1
–
5,534.6
2.0
1,752.9
–
1,680.0
–
90,777.1
87,032.4
31,158.3
29,933.8
B. Investments
I. Land and buildings, including buildings
on third-party land
II. Investments in affiliated companies and associates
1. Held to maturity
Total segment assets
Property-casualty
Legal expenses
Other/
consolidation
2008
2007
€ million
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
227.8
226.8
–
–
10.0
70.6
298.4
96.3
323.1
7.0
7.0
4.7
4.7
64.4
–
68.5
1.5
7.5
–
318.9
313.7
1,882.5
Group value
2008
€ million
2007
€ million
10.0
469.4
404.1
34.4
44.4
58.3
68.4
610.6
1,080.0
268.6
672.7
8.9
–
78.8
16.2
74.3
16.2
2,552.9
16.2
2,562.3
78.2
74.2
65.5
– 88.1
– 185.1
836.6
802.9
1,434.3
277.0
233.5
– 1,792.0
– 1,681.3
39,700.2
35,163.0
–
–
4.4
7.3
–
–
142.8
200.0
4,206.2
4,557.7
1,243.7
1,308.4
306.3
277.4
58,546.6
59,812.8
28.4
4,234.6
10.0
4,567.6
5.9
1,254.0
2.0
1,317.6
5.6
311.9
1.4
278.7
1,989.4
60,678.9
393.6
60,406.4
284.0
6,784.4
322.7
6,706.9
57.3
1,670.0
96.7
1,722.2
20.6
– 1,468.8
101.4
– 1,412.0
1,604.9
105,373.5
3,144.7
102,079.4
–
–
–
–
–
–
2,873.9
2,178.4
871.0
848.2
3.7
6.2
– 53.5
– 47.4
7,666.3
7,419.8
425.1
26.6
398.4
410.9
30.6
380.2
122.4
0.6
121.9
128.5
0.5
127.9
– 43.2
– 43.2
–
– 49.5
– 49.5
–
6,648.6
452.6
6,195.8
6,578.1
448.2
6,129.7
2,248.0
–
2,320.8
0.7
495.1
–
472.7
–
– 308.2
–
– 682.1
–
9,857.9
–
9,326.1
2.7
10,600.2
10,579.2
2,297.7
2,333.7
– 1,786.1
– 2,073.1
133,047.3
127,806.0
Life
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
97.3
–
1.5
–
0.2
0.4
102.8
104.4
68,342.4
64,926.3
20,497.6
19,031.6
1,317.2
1,236.8
1,018.4
949.6
IV. Provision for premium refunds and policyholders’ dividends
Thereof: provision for deferred premium refunds relating to disposal groups
2,792.6
–
3,745.6
– 85.7
6,113.0
–
6,407.0
–
13.4
72,465.9
13.1
69,922.1
8.8
27,740.6
1.6
26,494.1
2,938.9
2,306.7
0.7
1.3
498.3
542.0
275.7
232.0
E. Other segment liabilities
Thereof: other segment liabilities relating to disposal groups
12,251.9
–
12,259.7
0.6
2,131.8
–
2,120.2
–
Total segment liabilities
88,252.3
85,030.5
30,150.3
28,847.6
A. Subordinated liabilities
B. Gross technical provisions
C. Gross technical provisions for life insurance policies
where the investment risk is borne by policyholders
D. Other accrued liabilities
Equity*
* The equity is merely stated for the Group as a whole. A break-down into segments would result in an inappropriate representation of the capital resources
due to inter-segment capital interlocking.
Property-casualty
Legal expenses
Other/
consolidation
2008
2007
€ million
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2.0
–
–
–
336.2
1,089.4
994.3
328.3
341.0
344.8
310.2
–
3,398.1
3,248.1
54.0
–
Group value
2008
€ million
2007
€ million
382.8
437.0
382.8
– 3.0
– 0.7
1,517.8
1,439.4
–
– 47.1
– 44.5
89,137.7
84,223.6
1,080.0
1,087.2
– 3.1
– 1.6
6,810.6
6,520.0
52.0
–
2.5
–
2.6
–
83.1
–
58.5
– 86.6
9,045.2
–
10,265.6
– 172.3
59.8
4,946.3
52.2
4,656.7
12.3
1,423.1
13.1
1,443.9
– 0.3
29.6
– 0.6
11.1
94.0
106,605.4
79.4
102,528.0
–
–
–
–
–
–
2,939.6
2,308.0
246.3
266.2
99.5
131.1
831.0
824.1
1,950.7
1,995.2
1,485.9
–
1,507.8
–
209.7
–
210.8
–
1,301.0
18.8
– 587.9
19.2
17,380.3
18.8
15,510.7
19.2
6,680.4
6,430.6
1,732.3
1,785.7
2,497.7
630.1
129,313.0
122,724.6
3,734.2
5,081.4
133,047.3
127,806.0
Life
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
4.6
0.9
0.1
–
6,048.5
6,328.7
5,446.5
5,317.0
6,053.1
6,329.6
5,446.6
5,317.1
2. Earned premiums
– Gross
– Ceded share
– Net
6,053.2
594.8
5,458.4
6,330.0
639.2
5,690.8
5,440.1
238.9
5,201.2
5,311.3
238.0
5,073.4
– Total
6,322.7
4,129.5
2,193.2
– 13.7
5,214.5
1,601.6
3,612.9
187.6
1,931.1
1,394.0
537.0
– 8.1
1,764.0
492.1
1,271.9
54.8
4. Other income
1,557.2
1,070.9
633.9
337.4
9,208.8
10,374.5
6,372.1
6,682.6
– Gross
– Ceded share
– Net
6,679.9
404.9
6,274.9
8,319.5
407.6
7,911.9
5,070.1
157.4
4,912.8
5,649.1
158.7
5,490.3
– Gross
– Ceded share
– Net
1,078.0
129.3
948.7
1,077.0
172.5
904.4
718.8
69.7
649.1
697.2
68.0
629.2
7. Other expenses
1,664.8
1,127.0
775.9
383.6
8,888.5
9,943.3
6,337.7
6,503.1
320.3
431.2
34.4
179.5
176.9
–
–
–
143.4
431.2
34.4
179.5
1.3
–
–
–
122.2
190.9
28.7
49.7
19.9
240.3
5.7
129.8
9.2
10.7
212.3
28.0
6.0
– 0.4
129.2
0.6
1. Gross premiums written
From insurance transactions with other segments
From insurance transactions with external third parties
11. Finance costs
12. Taxes on income
Thereof:
Property-casualty
Legal expenses
Other/
consolidation
2008
2007
€ million
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
16.2
16.7
–
–
– 20.8
4,166.2
3,847.3
917.0
908.2
4,182.4
3,864.0
917.0
4,078.6
494.1
3,584.6
3,754.4
597.9
3,156.5
682.6
445.7
236.9
– 2.4
Group value
2008
€ million
2007
€ million
– 17.6
–
–
–
–
16,578.2
16,401.2
908.2
– 20.8
– 17.7
16,578.2
16,401.2
908.3
2.1
906.2
891.8
2.8
889.0
– 18.5
– 18.5
–
– 17.5
– 17.5
–
16,461.8
1,311.4
15,150.4
16,270.1
1,460.5
14,809.6
559.6
157.7
401.9
– 16.0
140.2
62.6
77.5
1.8
122.4
24.9
97.5
1.7
– 153.7
20.4
– 174.1
18.9
– 5.7
27.7
– 33.4
18.4
8,922.8
6,052.3
2,870.5
– 3.5
7,654.8
2,304.0
5,350.8
246.4
298.4
195.4
143.4
139.0
– 408.7
– 468.3
2,224.2
1,274.4
4,119.9
3,753.9
1,127.2
1,125.5
– 582.8
– 501.7
20,245.1
21,434.8
2,506.0
309.5
2,196.4
2,338.1
368.9
1,969.2
500.0
– 0.1
500.1
490.4
0.9
489.5
2.1
– 9.2
11.3
23.9
– 3.5
27.4
14,758.1
862.5
13,895.6
16,821.0
932.7
15,888.3
1,226.5
110.3
1,116.3
1,184.3
141.3
1,043.0
343.1
0.3
342.8
344.6
0.4
344.3
60.6
– 10.8
71.4
48.3
– 12.0
60.3
3,427.0
298.8
3,128.2
3,351.4
370.2
2,981.3
363.4
217.4
158.3
172.7
– 325.4
– 404.9
2,636.9
1,495.6
3,676.1
3,229.6
1,001.2
1,006.4
– 242.7
– 317.3
19,660.8
20,365.2
443.8
524.2
125.9
119.1
– 340.1
– 184.5
584.3
1,069.6
–
–
–
–
– 0.2
7.6
176.8
7.6
443.8
524.2
125.9
119.1
– 340.0
– 192.1
407.5
1,062.0
–
–
–
–
59.5
21.8
60.8
21.9
98.7
28.3
28.7
3.2
– 23.8
– 12.8
254.5
259.2
345.1
495.9
97.2
115.9
– 375.7
– 201.1
92.2
780.9
348.2
– 3.1
491.3
4.6
86.7
10.5
107.0
8.9
375.2
– 0.4
201.5
0.4
74.9
17.3
738.4
42.5
Assets
2008
€ million
Germany
2007
€ million
2008
€ million
International
2007
€ million
2008
€ million
Group value
2007
€ million
I. Goodwill
101.9
101.9
367.5
302.2
469.4
404.1
90.6
192.6
117.9
219.8
519.9
887.4
150.7
452.9
610.6
1,080.0
268.6
672.7
2,236.1
16.2
2,283.5
78.2
316.8
–
278.7
–
2,552.9
16.2
2,562.3
78.2
729.6
695.8
107.0
107.1
836.6
802.9
39,233.9
34,814.6
466.3
348.4
39,700.2
35,163.0
138.5
192.7
4.4
7.3
142.8
200.0
46,333.5
50,702.5
12,213.2
9,110.3
58,546.6
59,812.8
3. Held for trading
1,359.0
47,830.9
298.5
51,193.6
630.4
12,847.9
95.2
9,212.8
1,989.4
60,678.9
393.6
60,406.4
1,196.5
91,227.0
2,731.6
91,719.2
408.4
14,146.5
413.1
10,360.1
1,604.9
105,373.5
3,144.7
102,079.4
821.6
864.9
2,052.3
1,313.5
2,873.9
2,178.4
D. Reinsurers’ share
in technical provisions
5,123.3
5,133.4
2,543.0
2,286.3
7,666.3
7,419.8
E. Deferred acquisition costs
– Gross
– Net
5,768.0
333.3
5,434.7
5,741.4
311.3
5,430.1
880.6
119.3
761.1
836.7
136.9
699.6
6,648.6
452.6
6,195.8
6,578.1
448.2
6,129.7
7,479.6
7,419.5
2,378.3
1,906.6
9,857.9
9,326.1
–
2.7
–
–
–
2.7
110,278.7
110,787.0
22,768.5
17,019.1
133,047.3
127,806.0
B. Investments
I. Land and buildings, including
buildings on third-party land
II. Investments in affiliated companies
on associates
1. Held to maturity
C. Investments for the benefit of life insurance
F. Other segment assets
Thereof: other segment assets relating
to disposal groups
Total segment assets
A. Subordinated liabilities
2008
€ million
Germany
2007
€ million
2008
€ million
International
2007
€ million
2008
€ million
Group value
2007
€ million
377.1
382.8
59.9
–
437.0
382.8
530.1
519.3
987.8
920.1
1,517.8
1,439.4
77,949.4
76,651.8
11,188.3
7,571.8
89,137.7
84,223.6
5,201.5
5,024.8
1,609.2
1,495.2
6,810.6
6,520.0
8,961.2
10,191.1
83.9
74.5
9,045.2
10,265.6
–
– 172.3
–
–
–
– 172.3
54.0
92,696.2
51.8
92,438.9
40.0
13,909.2
27.5
10,089.0
94.0
106,605.4
79.4
102,528.0
877.3
907.5
2,062.3
1,400.5
2,939.6
2,308.0
1,748.7
1,796.4
202.1
198.8
1,950.7
1,995.2
13,871.3
12,553.8
3,509.0
2,956.9
17,380.3
15,510.7
18.8
19.2
–
–
18.8
19.2
109,570.6
108,079.4
19,742.5
14,645.2
129,313.0
122,724.6
3,734.2
5,081.4
133,047.3
127,806.0
B. Gross technical provisions
IV. Provision for premium refunds and
policyholders’ dividends
Thereof: provision for deferred premium refunds
relating to disposal groups
C. Gross technical provisions
for life insurance policies where
the investment risk is borne
by the policyholders
D. Other accrued liabilities
E. Other segment liabilities
Thereof: other segment liabilities relating
to disposal groups
Total segment liabilities
Equity*
* The equity is merely stated for the Group as a whole. A break-down into segments would result in an inappropriate representation of the capital resources
due to inter-segment capital interlocking.
2008
€ million
Germany
2007
€ million
2008
€ million
International
2007
€ million
2008
€ million
Group value
2007
€ million
1. Gross premium written
12,619.2
12,870.8
3,959.0
3,530.4
16,578.2
16,401.2
2. Earned premiums
– Gross
– Ceded share
– Net
12,606.5
821.3
11,785.2
12,865.4
993.5
11,871.9
3,855.3
490.1
3,365.2
3,404.7
467.0
2,937.7
16,461.8
1,311.4
15,150.4
16,270.1
1,460.5
14,809.6
– Total
8,131.0
5,488.0
2,643.0
6.8
7,064.2
2,170.3
4,893.9
270.8
791.8
564.3
227.5
– 10.3
590.6
133.7
456.9
– 24.4
8,922.8
6,052.3
2,870.5
– 3.5
7,654.8
2,304.0
5,350.8
246.4
4. Other income
2,105.8
1,181.5
118.4
92.9
2,224.2
1,274.4
16,533.9
17,947.3
3,711.1
3,487.5
20,245.1
21,434.8
12,105.4
584.2
11,521.1
14,247.0
677.2
13,569.9
2,652.7
278.2
2,374.5
2,574.0
255.6
2,318.4
14,758.1
862.5
13,895.6
16,821.0
932.7
15,888.3
– Gross
– Ceded share
– Net
2,426.3
207.6
2,218.7
2,434.4
279.8
2,154.6
1,000.7
91.2
909.6
917.0
90.4
826.7
3,427.0
298.8
3,128.2
3,351.4
370.2
2,981.3
7. Other expenses
2,480.2
1,384.0
156.8
111.6
2,636.9
1,495.6
16,220.0
17,108.4
3,440.8
3,256.8
19,660.8
20,365.2
314.0
838.9
270.3
230.7
584.3
1,069.6
– 0.2
7.6
176.9
–
176.8
7.6
314.1
831.3
93.4
230.7
407.5
1,062.0
59.7
21.0
1.0
0.9
60.8
21.9
177.4
206.4
77.1
52.8
254.5
259.2
77.0
603.9
15.2
177.0
92.2
780.9
74.0
3.0
584.8
19.1
0.9
14.3
153.6
23.4
74.9
17.3
738.4
42.5
– Gross
– Ceded share
– Net
11. Finance costs
12. Taxes on income
Thereof:
Principles of presentation and consolidation
International accounting rules
Consolidated group
The consolidated financial statements of ERGO
Versicherungsgruppe AG are based on Section
315 a para. 1 of the German Commercial Code
(HGB) in conjunction with Article 4 of the Regulation (EC) no. 1606/2002 of the European Parliament and Council of 19 July 2002 concerning the
application of international accounting standards.
The international accounting principles stated in
Articles 2, 3 and 6 of the aforementioned Regulation were observed, as well as the provisions governed in Section 315 a para. 1 of the German Commercial Code. The consolidated financial statements also comply with all requirements as laid
down by the IFRS. The currency of the report is the
Euro (€).
In accordance with IAS 27, the consolidated financial statements include ERGO Versicherungsgruppe AG (the parent) and all the entities in which
ERGO Versicherungsgruppe AG owns, directly or
indirectly, more than half of the voting power or
over which it has the factual ability to exercise
control (subsidiaries). This applies analogously to
the special funds held by the subsidiaries. The only
exceptions are subsidiaries and special funds
determined as being not material for assessing the
Group’s financial position; insurance companies
are consolidated regardless of their size.
The standards adopted by the IASB have been
referred to as “International Accounting Standards (IFRS)” since 2002; the standards from
previous years continue to bear the name “International Accounting Standards (IAS)”. As far as we
do not explicitly refer to a particular standard, we
use the two terms synonymously. The underwriting
items are recognised and measured in accordance
with the regulations of IFRS 4 on the basis of USGAAP (United States Generally Accepted Accounting Principles). The German accounting standards
(DRS) approved by the German Accounting Standards Committee (Deutscher Standardisierungsrat, DSR) were also observed provided they do not
contradict the applicable IFRS.
Declaration of conformity with the German
Corporate Governance Code in accordance
with Section 161 German Stock Companies
Act (AktG)
An updated declaration of conformity with the
German Corporate Governance Code (Section 161
German Stock Companies Act) was signed by the
Board of Management and Supervisory Board in
December 2008 and has been made permanently
available to the shareholders on the Company’s
website.
Hamburg-Mannheimer Versicherungs-AG, Hamburg, Hamburg-Mannheimer SachversicherungsAG, Hamburg, Hamburg-Mannheimer Rechtsschutzversicherungs-AG, Hamburg, HamburgMannheimer Pensionskasse AG, Hamburg,
Victoria Versicherung AG, Düsseldorf, Victoria
Lebensversicherung AG, Düsseldorf, Victoria
Krankenversicherung AG, Düsseldorf, Victoria
Pensionskasse AG, Düsseldorf, ERGO Pensionsfonds AG, Düsseldorf, ERGO Immobilien-GmbH 5.
Hamburg-Mannheimer & Co. KG, Kreien, DKV
Deutsche Krankenversicherung AG, Cologne,
D.A.S. Deutsche Automobil Schutz VersicherungsAG, Munich, D.A.S. Deutsche Automobil Schutz
Allgemeine
Rechtsschutz-Versicherungs-AG,
Munich, and ITERGO Informationstechnologie
GmbH, Düsseldorf, make full or partial use of the
exemption in accordance with Section 264 para. 3
of the German Commercial Code for their own
financial statements, but are still included in the
consolidated financial statements.
Bank Austria Creditanstalt Versicherung AG
On 30 September 2008 the ERGO Group acquired a
further 60.54 % of the shares in Bank Austria Creditanstalt Versicherung AG via its subsidiary ERGO
Austria International AG for € 416.1m, thus raising its shareholding to 90 %. Incidental acquisition
costs, other expenditure, such as consulting services, and taxes incurred totalled € 0.4m.
Bank Austria Creditanstalt Versicherung is a
specialist in the field of life insurance, pension
provision and personal accident insurance. The
company is the fifth largest life insurer in the
Austrian market (based on market share).
The opening balance sheet of Bank Austria
Creditanstalt Versicherung includes the following
IFRS figures as of the date of acquisition (figures
immediately prior to the merger): intangible
assets € 403.8m (0.9m), investments € 3,850.6m
(3,850.6m), reinsurers’ share of technical provisions € 306.7m (306.7m), other assets € 255.0m
(502.0m), gross technical provisions € 3,920.1m
(4,097.5m) and other provisions and liabilities
€ 559.5m (485.6m). In addition, contingent liabilities of € 3.8m were assumed for a letter of support as a result of the purchase.
In connection with the acquisition of the shares
in Bank Austria Creditanstalt Versicherung, other
intangible assets of € 402.8m as well as goodwill
of € 212.4m (before amortisation and impairment)
have been recognised. Of past share acquisitions
totalling 29.46 %, the then goodwill of € 26.8m was
capitalised. Overall, goodwill of € 239.2m was
capitalised for our 90 % share (before amortisation
and impairment). Particularly through Bank Austria’s reputation, brand and existing distribution
network, ERGO will significantly expand the bancassurance business and systematically use Austria as a platform for tapping the promising central
and eastern European markets. Considerable
added value from synergies is scheduled to result
from combining operations, transferring knowhow and efficient use of resources following the
restructuring of all ERGO companies in Austria.
In the course of the impairment test, we identified
impairment losses of goodwill, leading to a writedown of € 175.0m on the income statement (for
further details on the write-down and the impairment test see note [1] “Goodwill”). The goodwill
from the acquisition of Bank Austria Creditanstalt
Versicherung is thus € 64.2m on the balance sheet
date.
The company was consolidated for the first time in
our financial statements as at the end of the third
quarter 2008. Income and expenses for the
months October to December have been recognised in the consolidated income statement. In
this period, Bank Austria Creditanstalt Versicherung AG contributed an IFRS result of
€ – 23.9m to the 2008 consolidated financial
result. In the financial year 2008, Bank Austria
Creditanstalt Versicherung AG posted total premiums of € 543.9m and a result of € – 40.1m. These
figures are based on local accounting. When
preparing the opening balance sheet as of 30 September 2008, the additional accrual of the IFRS
revaluations at profit or loss for the cut-off date
1 January 2008 was waived. This would only have
been possible at disproportionate expense since,
at the time, Bank Austria Creditanstalt Versicherung did not have its own accounting. As the
valuation is not yet final, the figures shown here
are still provisional. The goodwill was allocated to
a group of cash-generating entities “Austria” (for
further details concerning the definition of the
cash-generating entity see note [1] “Goodwill”).
ERGO Daum Direct Auto Insurance Co.
65 % of the share capital of ERGO Daum Direct
Auto Insurance Co., Seoul, was acquired as of
28 March 2008 at a price of € 68.9m. The price
includes all incidental acquisition costs, other
expenditure such as consulting services and taxes
incurred, and was in part paid as an increase in
capital.
ERGO Daum Direct has an exceptional competitive
position in the South Korean direct motor insurance market and is the country’s second-largest
motor insurer.
The opening balance sheet at the time of acquisition includes the following IFRS figures (the
figures in brackets are the amounts directly prior
to the business combination): intangible assets
of € 7.6m (1.8m), investments of € 112.1m
(112.1m), reinsurers’ share in technical provisions
of € 55.0m (55.0m), other assets of € 50.7
(50.7m), gross technical provisions of € 121.9m
(121.9m), and other liabilities of € 53.4m (51.8m).
In connection with the acquisition of the shareholding in ERGO Daum Direct Auto Insurance,
goodwill of € 35.8m and other intangible assets of
€ 5.8m have been recognised. The goodwill and
other intangible assets are based on our expectations regarding the company’s profitability and
growth potential, deriving in particular from the
company’s good reputation and brand, experienced management team, and integration in
ERGO’s international insurance network. The
income and expenses for the months of April to
December 2008 have been recognised in the consolidated income statement. During this period,
ERGO Daum Direct contributed € – 8.2m to the
consolidated result for 2008. In the financial year
2008, ERGO Daum Direct posted gross premiums
written of € 150.8m and a result of € – 20.4m. The
figures shown are final, as the valuation has been
completed.
No other business combinations as per IFRS 3 are
material, either individually or in the aggregate.
The ERGO Insurance Group acquired the remaining (45 %) indirect shares in KarstadtQuelle
Versicherungen as well as the remaining (25 %)
shares in Neckermann Versicherungen as of
31 December 2008. The purchase price was
€ 195.6m. In the 2008 financial year the ERGO
Insurance Group made the minority shareholders
of ERGO Previdenza a voluntary takeover bid for
the remaining shares. Within the scope of this
takeover bid, 22.7 % of the shares were acquired at
a price of € 90.1m. The ERGO Insurance Group
now holds 93.1 % of the shares. The ERGO Insur-
ance Group acquired the remaining (25 %) shares
in ERGOİSV İÇRE from the private founder shareholder. The purchase price was € 79.6m. All acquisitions were carried out as equity transactions
among shareholders. Consequently, the balancing
amounts totalling € 123.1m were offset against
the revenue reserves (shown under “Other
changes” in the statement of recognised income
and expense).
A 26 % stake in HDFC ERGO General Insurance
Ltd., Mumbai, was acquired on 22 February 2008
at a price of € 39.9m. The shares were valued at
equity.
Victoria Zivotno Osiguranje d. d., Zagreb, ERGO
životná poistovna a. s., Bratislava, ERGO Zavarovalnica d. d., Ljubljana, and ERGO Élétbiztosító Zrt.,
Budapest, were included in the consolidated group
in the financial year 2008 through formation. Three
companies left the consolidated group as a result
of internal mergers within the Group.
BioEnergie Elbe-Elster GmbH & Co. KG, Elsterwerda, ERGO Treasury Centre Ltd., Dublin, Titus AG,
Düsseldorf, VV Immobilien GmbH & Co. GB KG,
Düsseldorf, and SAS Tour Descartes, Paris, discontinued operations in 2008.
As a result of exceeding the threshold on materiality and following additional acquisitions and formations, five non-insurance companies were
included in the consolidated group of the ERGO
Insurance Group for the first time. The ability to
compare with the previous years’ figures has not
been limited as a result of the changes made to the
consolidated group.
The overview starting on page 203 provides details
of the consolidated group and other important
shareholdings. It will also appear on the website of
the German Corporate Register.
Number of consolidated subsidiaries
Development during the financial year
31 December previous year
Germany International
Total
60
82
142
Additions
4
11
15
Disposals
5
2
7
59
91
150
Total
31 December financial year
In addition, one German and two international special funds were included in the consolidated group
for the first time. One German special fund left the
consolidated group.
Number of non-consolidated subsidiaries
155
43
198
Additions
16
15
31
Disposals
27
5
32
144
53
197
Consolidation methods
As a general rule, the balance sheet date of the
consolidated companies is 31 December. Some
special funds have other balance sheet dates;
these funds are consolidated as of 31 December
on the basis of interim financial statements.
subsidiary or special fund at fair value. The acquisition costs of the shares are netted against the
equity capital apportionable to the Group at the
time of acquisition. Any residual positive amount
is capitalised as goodwill.
Generally speaking, we consolidate subsidiaries
and special funds as soon as the Group holds a
majority of voting rights and/or effectively has
other means of control. Acquisitions are accounted for by the purchase method. In order to determine the equity capital at the time of acquisition,
we measure the assets and liabilities of the
Profits earned by the subsidiaries or special funds
after their first consolidation are included in Group
equity. Amounts relating to intra-Group transactions (receivables and liabilities, expenses and
income between consolidated companies) are
eliminated unless they are determined as not
being material.
Associated companies
Pursuant to IAS 28, associates are generally all
entities which are not subsidiaries but on whose
financial and operating policies the investors can
exercise a significant influence.
In the case of shareholdings amounting to
between 20 % and 50 % of the voting power, the
entities in question are deemed to be associates.
Where we hold less than 20 % of the voting power,
entities are classified as associates nevertheless
if there is existence of significant influence on our
part, mainly as a result of representation on the
board of directors or equivalent governing body
of the investee in accordance with IAS 28.7 (a).
Investments in associates are valued at equity
unless they are not material for assessing the
Group’s financial position.
Number of companies valued at equity
Total
22
16
38
Additions
–
1
1
Disposals
1
3
4
21
14
35
Total
Number of other associates (not valued at equity)
12
7
19
Additions
19
1
20
Disposals
–
1
1
31
7
38
Accounting and valuation methods
The annual financial statements of the consolidated subsidiaries and special funds are subject to
uniform accounting policies. Valuations used in
the financial statements of associates not classified as significant are maintained. In preparing the
consolidated financial statements, we have to use
our judgement in applying accounting policies and
to make estimates and assumptions that affect the
year-end items shown in the consolidated balance
sheet, the consolidated income statement and the
disclosures on contingent assets and liabilities.
Details are provided in recognition and measurement methods for the individual items.
Principles of recognition and measurement
Changes in accounting
and valuation methods
The application of accounting, measurement and
disclosure methods adheres to the principle of
consistency. Changes became necessary as a
result of the new or revised IFRS. All IFRS applied
for the first time or revised with effect from 1 January 2008 have been observed. These include
most importantly:
There were also other adjustments which pertain
to IAS 8: the effects of these on the consolidated
balance sheet are so minor that we have waived
individual reporting. These other adjustments
resulted in a change to retained earnings totalling
€ 1.3m.
In October 2008, the IASB, subject to waiving of
the usual due process, approved changes to IAS
39 and IFRS 7 with retrospective effect to 1 July
2008 as from the date of their publication. The
change to IAS 39 now makes reclassification of
financial instruments permissible under certain
conditions. If such reclassifications are made, the
amended IFRS 7 also provides for additional information on these in the Notes. We have waived
application of this facilitation ruling.
The ongoing monitoring of actuarial assumptions
for revaluation of the claims reserve under IFRS
has shown that the use of the German Commercial
Code figures for individual, non-proportional
ceded reinsurance constitutes a significantly better basis for estimation than the assumptions and
parameters used up until now. Consequently, the
estimations for these non-proportional ceded
reinsurance were adjusted in line with this
improved knowledge in the 2008 financial year. In
accordance with IAS 8, these amended estimations were included in the consolidated income
statement. The reinsurers’ share in the provision
for outstanding claims rose by € 30.1m.
The first-time application of other or amended
IFRS and IFRIC interpretations had no significant
effects.
Standards or changes in standards
not yet entered into force
There were no IAS 8 issues in the 2008 financial
year which would have necessitated adjustment of
the previous year’s figures. However, the following
IAS 8 matters were dealt with via an adjustment to
the revenue reserves in the 2008 financial year.
Based on IAS 8 sub-section 43, all IAS 8 matters
in the current reporting period were taken into
account.
The switchover to and introduction of IT systems
resulted in changes of € 6.8m which, as per IAS 8,
were corrected via an adjustment to the revenue
reserves.
This adjustment had the following effects on the
consolidated balance sheet for the 2008 financial
year:
Consolidated balance sheet
Assets
Other receivables
Liabilities
Revenue reserves
Tax liabilities
Application of the following amended standards is
mandatory for financial years beginning on or after
1 January 2009.
IAS 1 (rev. 2007), presentation of the financial
statements, will not be applied prematurely in the
financial year. The main change is that tax effects
included in income and expenses recognised
directly in equity are disclosed separately in the
notes to the consolidated financial statements.
In addition, IAS 1 now requires publication of the
earliest comparison period whenever retrospective adjustments are made in the financial statements. We do not make use of the options of a
renaming of the individual components of the
financial statements or of publication of a single
€ million
10.1
6.8
3.2
statement of income combining the income statement and the statement of recognised income and
expense.
IFRS 2 (rev. 2008), Share-based Payment – Vesting Conditions and Cancellations, provides for
clarification regarding exercise conditions and
premature termination of plans. The new rules
have no repercussions for the ERGO Insurance
Group.
IFRS 8, Operating Segments, provides new rules
for segment reporting. Firsttime application will
result not only in more extensive information in the
notes but also in a more detailed disclosure of the
segments and a change in result presentation. The
result presentation for the whole Group will thus
be based on the management approach and show
an operating result adjusted to eliminate nonoperating components. This operating result will
be broken down into a technical and a non-technical result.
The change in IAS 23 (rev. 2007), Borrowing
Costs, deletes the option under which it has been
permissible for borrowing costs directly attributable to the acquisition, construction or production
of an asset to be recognised as an expense in the
period in which they are incurred. Such borrowing
costs must now be capitalised as part of the cost
of the asset in every case. As the ERGO Insurance
Group has not availed itself of the option, this
change will not have any impact.
The change in IAS 32 (rev. 2008), Financial instruments: Presentation, regarding socalled puttable
financial instruments and obligations arising on
liquidation makes it possible to classify cancellable instruments as equity in future under
certain conditions. At the same time, new disclosure requirements have been included in IAS 1
(rev. 2008), Financial Statements Presentation,
which concern redeemable instruments and obligations in the event of liquidation. The amendments
have no practical sigificance for the ERGO Insurance Group.
As part of its first Annual Improvement Process
Project, the IASB published an omnibus standard
in May 2008 summarising minor changes – i. e.
changes that are not part of one of the IASB’s
major projects – to a total of 19 standards. Some
of these involve amendments that have an impact
on accounting, whilst others merely concern
changes in terminology or editorial changes that
have virtually no effect on recognition or measurement in the financial statements.
Application of the following amended standards is
mandatory for financial years beginning on or after
1 July 2009:
The revision of IFRS 3 (rev. 2008), Business Combinations, and IAS 27 (rev. 2008), Consolidated
and Separate Financial Statements, involves
changes in the balance sheet recognition of noncontrolling interests, successive acquisition of
shares, acquisition-related costs, and contingent
consideration pay able. Effects of the new rules for
the ERGO Insurance Group will, owing to their
prospective application, result only for future
acquisitions of shareholdings and will be dependent on the conditions of the respective acquisition.
The change in IAS 39 (rev. 2008), Financial Instruments: Recognition and Measurement, Eligible
Hedged Items, provides guidance on designating a
portion of cash flows or a risk as a “hedged item”
and the extent to which inflation risks may be designated “hedged items”. The new rules will have no
impact for the ERGO Insurance Group.
In addition, the interpretations IFRIC 13, Customer Loyalty Programmes, IFRIC 15, Agreements
for the Construction of Real Estate, IFRIC 16,
Hedges of a Net Investment in a Foreign Operation, and IFRIC 17, Distributions of Noncash
Assets to Owners, have not yet entered into force.
It is not yet possible to make a final assessment of
the effects of first-time application of the revised
standards.
Assets
Long-term assets held
for sale and disposal groups
In accordance with IFRS 3, goodwill from the firsttime consolidation of subsidiaries is tested for
impairment at least once annually, i. e. the carrying amount of goodwill is compared with the recoverable amount and, if this recoverable amount is
lower, a write-down is made for impairment equivalent to the amount of the difference (IAS 36, subsection 90).
The second quarter of 2008 saw the transfers of
economic ownership of the business and residential buildings classified as “held for sale” in the
first quarter of 2007, as well as of the portfolio of
six foreign items of real estate and buildings of the
iii fund, used by third parties and classified as
“held for sale” in the first quarter of 2008. As a
result, the figure shown for land and buildings,
including buildings on third-party land has fallen
by € 55m.
The balance sheet value of real estate and buildings of HGE Haus- und Grundbesitzgesellschaft
Elsterwerda mbH, summarised into disposal
groups in the second quarter of 2007, remains
unchanged as of the balance sheet date. As a
result of the global financial crisis, the disposal
will be delayed until 2009.
Furthermore, in the fourth quarter of 2007 we
decided to sell our shareholding in MPE Hotel I
L.L.C., New York. In view of the changed market
environment, we discontinued sales activities in
the fourth quarter of 2008. As of the date of
cessation of the sales activities, no expenditure
had been accrued from business areas to be continued.
Intangible assets
Other intangible assets mainly comprise purchased and internally generated software and
acquired insurance portfolios. The software is carried at cost less straight-line amortisation. The
useful life assumed is generally three to five years,
in exceptional cases up to ten years. Acquired
insurance portfolios are recognised at their present value on acquisition (PVFP – present value of
future profits). This is determined as the present
value of expected profits from the portfolio
acquired, without consideration of new business
and tax effects. The items in question are amortised in accordance with the realisation of the
profits from the insurance portfolios underlying
the PVFP calculation. The other intangible assets
are tested for impairment at each balance sheet
date and write-downs made if required. Writedowns of software and other in tangible assets are
distributed in the consolidated income statement
between investment expenses, expenses for
claims and benefits and operating expenses. If
it is not possible to allocate the expenses to
these functional areas, they are shown under
“other expenses”. Write-downs of purchased insurance portfolios are recognised under operating
expenses.
Investments
Land and buildings shown under investments comprise property used by third parties and are carried at cost. Maintenance expenses are recognised as an expense. Structural measures equivalent to 5% or more of the historical cost of a building are generally assessed with regard to whether
they have to be capitalised. Buildings are depreciated on a straight-line basis in accordance with
the component approach over 40 to 55 years,
depending on the weighted useful life for their specific building class. If the recoverable amount of
land and buildings falls below their carrying
amount, the carrying amount is written down to
the recoverable amount. Impairment losses are
recognised as investment expense in the consolidated income statement, and reversals of impairment losses as investment income. Land and
buildings classified as “held for sale” are recognised at the lower of book value or fair value less
sales costs.
In the 2001 financial year, the companies Victoria
Grundstücksverwaltungs-Gesellschaft GbR, Düsseldorf, Hamburg-Mannheimer Grundstücksgesellschaft HV2 GbR, Hamburg, and HamburgMannheimer Erste Bürogebäude-Verwaltungsgesellschaft mbH & Co. KG, Kreien, leased the extension at Fischerstraße 2 in Düsseldorf and two
buildings located at Überseering 45 in Hamburg to
the Wilmington Trust Company, Wilmington, for 99
years and then rented back their rights of use for
the same period. However, the companies have
the option of repurchasing the rights leased to the
Wilmington Trust Company, Wilmington, after 29.5
years by making a final payment determined in
advance. The companies Hamburg-Mannheimer
Grundstücksgesellschaft HV2 GbR, Hamburg, and
Hamburg-Mannheimer Erste Bürogebäude-Verwaltungsgesellschaft mbH & Co. KG, Kreien, were
merged into Hamburg-Mannheimer Versicherungs-AG, Hamburg. Consequently, HamburgMannheimer Versicherungs-AG, Hamburg, has
taken over the rights of these companies.
In the 2000 financial year, Victoria Grundstücksverwaltungs-Gesellschaft GbR leased the
building complex of Victoriaplatz 1, 2 and Fischerstraße 8 to 10 in Düsseldorf (excluding the extension) to BNY International Leasing LLC, New York,
for a period of 99 years and rented back the rights
of use on it for the same period. However, the
company has the option to repurchase the rights
leased to BNY International Leasing LLC, New
York, after a period of 27 years by making a final
payment determined in advance.
Under German fiscal and commercial law, Victoria Grundstücksverwaltungs-Gesellschaft GbR and
Hamburg-Mannheimer Versicherungs-AG remain
the equitable owners of the building. They own the
entire rights of use and are responsible for maintenance. The financial side of the transactions was
undertaken by banks with excellent credit ratings.
The ERGO Insurance Group has contingent liabilities amounting to € 88.3m (72.3m) for risks associated with the transaction.
Investments in affiliated companies that we do
not consolidate because they are not material are
carried at fair value insofar as this can be reliably
measured. If the investments are quoted on a
stock exchange, we use the share prices at the
balance sheet date; for other investments, the fair
value is measured using the discounted earnings
or net asset value method. Changes in the fair
value are recognised in “other reserves” under
unrealised gains and losses.
Investments in associates are valued by the equity method at the Group’s proportionate share of
their net assets. The associate’s earnings attributable to the Group are included in the investment
result. As a rule, the equity and annual result from
the most recent individual or consolidated financial statements of the associate are used; exceptional transactions of material importance for a
true and fair picture of the associate’s financial
position are recognised in the same financial year.
Investments in associates that are not material for
assessing the Group’s financial position are
accounted for at fair value insofar as this can be
reliably measured.
To determine the fair value, we use the share prices
at the balance sheet date if the investments are
quoted on a stock exchange; for other investments,
the fair value is measured using the discounted
earnings or net asset value method.
Loans are non-derivative financial assets with fixed
or determinable payments that are not quoted in an
active market. They are carried at cost in accordance with the effective interest method. Writedowns for impairments are made in cases where the
repayment of a loan can no longer be expected.
Fixed-interest securities held to maturity are measured at amortised cost. Fixed-interest or nonfixed-interest securities available for sale that are
not held for trading or recognised under loans are
accounted for at fair value. If there are no stock
market prices available, fair values are based on
recognised valuation methods in line with the present value principle. Unrealised gains or losses are
calculated taking into account interest accrued
and, after deduction of deferred taxes and the
amounts apportionable to policyholders by the life
and health insurers on realisation (provision for
deferred premium refunds), are recognised directly in equity.
Securities held for trading comprise all fixed-interest and non-fixed-interest securities that we have
acquired for trading purposes to earn short-term
profits from price changes and differences; in addition, they include all derivative financial instruments with positive fair values which we have
acquired for hedging purposes but which do not
meet the strict requirements of IAS 39 for hedge
accounting, and the positive fair values of the
derivative components of variable annuities. We
also show here structured securities classified as
recognised at fair value with impact on profit or
loss. Such classification can only be made at the
time of acquisition; a reclassification to this category in later periods is not possible. Securities held
for trading are accounted for at fair value at the balance sheet date. If there are no stock market prices
available, fair values (particularly with derivatives)
are based on recognised valuation methods. The
ERGO Insurance Group uses a range of valuation
models for this purpose, details of which may be
obtained from the following table:
Valuation models
Derivatives
Listed stock options
OTC stock options,
other stock options,
appreciation rights
Stock index futures
Equity forwards
Pricing method
Listed price
Theoretical price
Swaptions
Theoretical price
Interest rate swaps
Theoretical price
Currency options
Theoretical price
Currency forwards
Theoretical price
Listed price
Theoretical price
Parameters
–
Listing of underlying shares,
effective volatilities, money-market
interest rate, dividend yield
–
Money-market interest rate,
share price, dividend yield
At-the-money volatility matrix
and skew, swap curve,
money-market interest-rate curve
Swap curve,
Volatility, currency spot rates,
Currency spot rates,
Pricing model
–
Black-Scholes (European),
Cox, Ross and
Rubinstein (American)
–
Present-value method
Black-76
Garman-Kohlhagen
All unrealised gains or losses from such valuation
are included in the investment result.
Determining fair values
IAS 39 defines the fair value of a financial instrument as the amount for which a financial asset
could be exchanged, or a financial liability settled,
between knowledgeable, willing parties in an
arm’s length transaction. Where financial instruments are quoted in an active market, the quoted
prices are used to determine the fair values. If this
is not the case, we determine the values using
recognised valuation methods with observable
market data. Only if no such market parameters
are available do we use valuation models based
on nonobservable, company-specific parameters.
Where in individual cases the valuation is based on
such company-specific data, we specifically point
this out. Insofar as realistic changes in the
assumptions underlying such valuation methods
would have significant effects on profit or loss or
on equity, we would disclose this as well.
Other investments are measured at amortised
cost.
Financial assets in our direct portfolio are generally accounted for at the settlement date. Investments held in special funds are accounted for at
the trade date.
Securities that we lend by way of securities lending continue to be recognised in our balance
sheet, as the main risks and rewards remain with
the ERGO Insurance Group; securities that we
have borrowed are accounted for by the lender.
Fees from securities lending are shown in the
investment result.
The net investment result comprises regular
income, income from write-ups, gains and losses
on the disposal of investments, other income,
write-downs of investments, management expenses, interest charges and other expenses. Regular
income and expenses from investments measured
at fair value without impact on profit or loss are
calculated in accordance with the effective interest method, i. e. any premiums or discounts are
deducted from or added to the acquisition costs,
with impact on profit or loss, until maturity.
Impairment
Regularly, at each balance sheet date, we assess
whether there is any substantial objective evidence of impairment in a financial asset or group
of financial assets.
In the case of all fixed-interest securities held to
maturity or available for sale, as well as all nonfixed-interest securities, impairments in value – in
contrast to temporary diminutions – are recognised as an expense in the income statement. IAS
39.59 contains a list of factors providing substantial objective evidence of impairment of such
financial assets. In addition, IAS 39.61 states that
for equity investments, a significant or prolonged
decline in the fair value of the investment below its
acquisition cost is objective evidence of impairment. These rules are given more concrete form by
means of internal guidelines. For equities quoted
on the stock exchange, we assume a significant
decline in fair value if the market value at the
review date is at least 20 % below the average purchase price or has been lower than this amount for
at least six months. In the case of fixed-interest
securities and loans, the main basis for establishing evidence of impairment is the rating of the
issue, the rating of the issuer or creditor, and the
market assessment.
We determine acquisition cost on the basis of the
average purchase price. In the case of an impairment, a write-down is made to the fair value at the
balance sheet date, i. e. generally the publicly
quoted market price. If there is a further fall in the
fair value of equity investments that have already
been written down once, a further write-down
recognised in the income statement is made again
immediately, even if the impairment is only temporary. Impairments recognised in profit or loss may
not be reversed through profit or loss.
In the impairment test for financial assets valued
at amortised cost, we generally first assess
whether objective evidence of impairment exists
for significant items. If this is not the case, and
also in the case of individually insignificant items,
the impairment test is carried out collectively on
the basis of groups of similar financial assets.
Assets that are individually assessed for impairment are not included in the collective assessment. The amount of the probable loss is measured as the difference between the amortised
cost of the asset or group of assets and the present value of estimated future cash flows. The
impairment thus determined is recognised as an
expense. We generally deduct impairments directly from the items concerned on the assets side,
without using a value adjustment account. If, in a
subsequent period, the reasons for the impairment cease to apply, the impairment is reversed,
with impact on the income statement. The resultant carrying amount may not exceed the original
amortised cost.
Investments for the benefit of life insurance
These are investments for policyholders under
unit-linked life insurances. They are measured at
fair value. Unrealised gains or losses from changes
in fair value are included in the investment result.
These are matched by corresponding changes in
the technical provisions, which are taken into
account in the underwriting result. The decision to
recognise these investments at fair value, with
impact on profit or loss, avoids valuation mismatches that would otherwise occur due to
different measurement of the corresponding
provisions.
Other investments
Other investments include deposits retained and
deposits with banks. Deposits retained stem from
reinsuring other insurers to the amount of the
retained cash deposits. They are valued at par or
at acquisition cost respectively. Credit risks are
taken into account accordingly.
Deferred acquisition costs
Deferred acquisition costs comprise commissions
and other variable costs directly connected with
acquisition or renewal of insurance contracts. In
life business and long-term health insurance,
acquisition costs are capitalised and amortised
over the duration of the contracts, either proportionally to the premium income (FAS 60) or proportionally to the respective contracts’ expected
gross profit margins calculated for the relevant
year of the contract term (FAS 97, 120). The allocation of individual contracts to the FASs concerned is shown in the notes on technical liabilities. In determining the amount of amortisation,
we take into account an actuarial interest rate and
changes resulting from the disposal of contracts
from the portfolio. In property-casualty business,
short-term health primary insurance and health
reinsurance, the deferred acquisition costs are
amortised on a straight-line basis over the average
term of the policies, from one to five years.
Deferred acquisition costs are regularly tested for
impairment using a liability adequacy test as per
IFRS 4.
Deferred tax assets
Liabilities
Under IAS 12, deferred tax assets must be recognised in cases where asset items have to be valued
lower, or liability items higher, in the consolidated
balance sheet than in the tax accounts of the
Group company concerned and these differences
will be eliminated at a later date with a corresponding effect on taxable income (temporary differences). Also included are tax assets deriving
from tax loss carry-forwards. We take into account
the tax rates of the countries concerned and
the company’s respective tax situation; in some
cases, for purposes of simplification, we use uniform tax rates for individual circumstances or subsidiaries. Where unrealised losses on securities
available for sale are recognised in equity (see
notes on investments - other securities available
for sale), the resulting deferred tax assets are
recorded but not recognised in income. Deferred
tax assets are reversed if a realisation of the corresponding receivable is not probable.
Equity
Other assets
Receivables and cash in banks, cheques and cash
in hand are recorded at nominal value. Receivables are reduced by the required value adjustments. The corporation tax credit (Section 37
para. 5 of the German Corporation Tax Act (KStG)
– revised version) is capitalised with its full present value. Property, plant and equipment and
inventories are reported at amortised cost less
write-downs. These are recorded under other
assets. Minor assets acquired during the financial
year are written off in full. Owner-occupied land
and buildings are reported in the same way as for
land and buildings used by third parties.
The item issued capital and capital reserve contains the amounts that the equity holders of the
ERGO Versicherungsgruppe AG have paid in on
shares.
Under retained earnings, we show the profits
which consolidated companies have earned and
retained since becoming part of the Group, and
income and expenses resulting from changes in
the consolidated group. In addition, the adjustment amount resulting from changes in accounting policies for earlier periods not included in the
consolidated financial statements is recognised in
the opening balance of the retained earnings for
the earliest prior period reported.
Other reserves contain unrealised gains and losses resulting from the recognition of other securities available for sale at fair value and from investments in unconsolidated affiliated companies.
These reserves also include unrealised gains and
losses from the valuation of associates at equity,
differences resulting from the currency translation of foreign subsidiaries’ figures, and the valuation result from the hedging of cash flows. Writeups of equity investments available for sale are
also recognised in this equity item.
Minority interests are accounted for as part of
equity in the balance sheet. These are the shares
of third parties in the equity of subsidiaries that
are not wholly owned directly or indirectly by
ERGO Versicherungsgruppe AG. Direct minority
interests in special funds are recognised under
“other liabilities”. The portion of the result attributable to minority interests is shown in the consolidated result.
Subordinated liabilities
Subordinated liabilities are liabilities which, in the
event of liquidation or insolvency, are only satisfied after the claims of other creditors. They are
measured at amortised cost in accordance with
the effective interest method.
Technical provisions
The measurement of the provisions for future policy benefits depends on the type of contract, being
based either on FAS 60 (life insurance without performance-related participation in surplus, health
insurance and the bulk of reinsurance), on FAS 97
(life insurance with limited premium payment, life
insurance on the universal life model and unitlinked life insurance based on FAS 97) or on FAS
120 (life insurance with performance-related participation in surplus).
Unearned premiums
Unearned premiums are accrued premiums
already written for future risk periods. These premiums are generally calculated separately for
each insurance policy pro rata temporis. The posting of unearned premiums is restricted to shortterm underwriting business.
Provision for future policy benefits
The provision for future policy benefits in longterm underwriting business is posted for the actuarially calculated value of obligations arising from
policyholders’ guaranteed entitlements. As well
as life insurance, this concerns portions of health
and personal accident insurance, insofar as the
business is conducted like life insurance. Measurement is usually based on the prospective
method, by determining the difference between
the present values of future benefits and future
premiums. The actuarial assumptions used for
their calculation include, in particular, assumptions relating to mortality, disablement and morbidity, as well as assumptions regarding interestrate development, lapses and costs. These are
estimated on a realistic basis at the time the insurance contracts are concluded and they include
adequate provision for adverse deviation to make
allowance for the risks of change, error and random fluctuations. The actuarial assumptions are
adjusted if this is shown to be necessary by a liability adequacy test in accordance with IFRS 4.
For contracts in accordance with FAS 60, the provision for future policy benefits is calculated from
the present value of estimated future policy benefits (including claims adjustment expenses) less
the present value of future net level premiums. Net
level premium is that part of the gross premium
that is needed to finance future policy benefits.
Life primary insurance contracts with limited premium payment as per FAS 97 are generally valued
in the same way as contracts falling under FAS 60.
For all other contracts as per FAS 97, an account
is kept to which net level premiums and interest
earnings are credited and from which risk premiums and administration expenses are debited, not
all credits and debits being contractually fixed at
the time the contracts are concluded. The provision for future policy benefits for life primary insurance where policyholders bear the investment risk
themselves (unit-linked life insurance) is shown as
a separate item.
In the case of contracts as per FAS 120, the provision for future policy benefits comprises the net
level premium reserve, liabilities for terminal dividends and sometimes even reserves for anticipated losses. The net level premium reserve is calculated prospectively as the present value of guaranteed policy benefits (including acquired bonuses
but excluding claims adjustment expenses) less
the present value of future net level premiums.
Here the same technical interest rate and biometric calculation principles are employed which were
used as the basis to calculate tariff premiums or
surrender values.
Additionally, a reserve is set up to cover administration expenses for non-contributory periods. The
calculation principles of tariffs are regularly verified by the regulatory authorities or actuarial associations and include safety margins which take
into account risks caused by change, error or
chance. To the extent that safety margins in the
biometric calculation principles have been used
up in full, there may be a need to set up additional
provisions or to conduct an unscheduled amortisation of deferred acquisition costs. This kind of
adjustment is carried out together with the IFRS 4
adequacy test if the adequacy of technical provisions can no longer be guaranteed when taking all
calculation principles into account. A possible
deficit is recognised in the income statement. The
adequacy of the provision for future policy benefits is assessed on a regular basis using current,
realistic estimates on the calculation principles,
the proportionate amount of the investment return
as well as future profit-sharing for contracts which
include this aspect.
The biometric calculation principles used for life
insurance contracts are considered adequate. The
actuaries in charge consider the mortality tables
used to be adequate and to contain a sufficient
safety margin for policies with mortality risk. However, narrower safety margins have been observed
in the annuity portfolio. Should the trend towards
a sustained improvement in life expectancy continue, a transfer of additional sums to the provision
for future policy benefits cannot be ruled out in
future.
The accrual of the provision for terminal bonuses
is carried out as scheduled over the term of the
contracts by means of annual transfers and interest. As regards life insurance policies which are
reported in the balance sheet in accordance with
FAS 120 or FAS 97, transfers are based on the
income already realised in the past as well as
future expected income which has already been
calculated for capitalising deferred acquisition
costs. The assumptions applied here are checked
regularly and adjusted where necessary. The provision for terminal bonuses is recalculated following a necessary adjustment to the actuarial calculation principles. This normally leads to a change
in the amount which is transferred. The revaluation of the provision for terminal bonuses is carried out within the provision for premium refunds
without affecting income. It is for this reason that
fluctuations do not have any effect on the consolidated result.
For contracts primarily of an investment nature,
e. g. unit-linked life policies and products with
prospective entitlement in accordance with the
German law on the Certification of Old-Age Provision Agreements (AltZerG), FAS 97 is applied for
reporting the provision for future policy benefits.
The provision for future policy benefits results
from additions to the amounts invested, the performance of underlying investments, the contractual withdrawals plus the provision for terminal
bonuses and the provision for “unearned parts of
premiums” for the FAS 97 products concerned.
FAS 60 has been applied to reporting the provision
for future policy benefits in health insurance. Reasons for using FAS 60 are to be found in the
absence of a causality in generation and utilisation
of surpluses, and the usually lifelong term of
health insurance policies which are calculated in
the same manner as life insurance policies.
The provision shown is calculated as the difference between the present value of future insurance benefits including loss adjustment expenses
and the present value of future premiums. Here
that share of the gross premium is taken into
account which is required to finance future insurance benefits including the costs of claims settlements (net level premium). The provision is calculated on the basis of current actuarial calculation
bases. These include adequate safety margins in
either direction.
The provision which is based on Section 12 a
para. 2 of the German law on the Supervision of
Insurance Companies (VAG), is not part of the
provision for future policy benefits, but rather
recorded in the provision for premium refunds.
Provision for outstanding claims
Provision for premium refunds
The provision for outstanding claims is set up at
the balance sheet date for payment obligations
arising from insurance contracts. Part of the provision is for known claims for which individually
calculated provisions are posted. Another part is
for expenses for claims whose occurrence is not
yet known (e. g. because they have not been
reported yet or have not yet manifested themselves). A third class of provisions covers claims
which are known but whose extent has turned out
to be greater than originally foreseen. All these
provisions include expenses for internal and external loss adjustment expenses. The provision for
outstanding claims is based on estimates: the
actual payments may be higher or lower. The
amounts posted are the realistically estimated
future amounts to be paid; they are calculated on
the basis of past experience and assumptions
about future developments (e. g. social, economic
or technological factors).
Apart from non-profit related premium refunds
this item contains in particular profit-related premium refunds for life, health and personal accident insurance. In health insurance the non-profit
related premium refunds also comprise sums
which must be set up in accordance with Section
12 a of the German Insurance Supervision Act
(VAG). According to national regulations the provision only has to be set up for the German insurance business. Provided that the provision for premium refunds has been set up, a valuation is conducted retrospectively based on regulations
imposed by the regulatory authorities or as a result
of provisions governing the individual contract.
For those life insurance and pension fund companies which are subject to supervision by the Federal Financial Supervisory Authority (BaFin), the
supervisory regulations of the German Insurance
Supervision Act and the regulation pertaining to
minimum appropriation need to be observed.
In the areas of industrial, property and transport
business provisions are set up for individual
claims. In these lines of business provisions for as
yet unfiled claims are based on past experience.
The provision for business taken over generally
follows declarations by the previous insurers. The
provision for outstanding claims is largely not
discounted with the exception of some provisions
set up using actuarial calculation for pensions
concerning occupational disability, liability and
personal accident insurance. In the cases of these
exceptions a discount rate is applied which is
allowed by the regulatory authorities, and the
provisions in question are discounted.
Furthermore, a provision is set up for deferred premium refunds in favour of life and health insurance
policyholders. It is made up of the differences
between the reporting of assets and liabilities
according to national laws and the valuation in line
with IFRS or US-GAAP. In this respect, as far as
unrealised gains and losses from marketable securities are recorded directly in shareholders’ funds,
this provision for deferred premium refunds is set
up without going through the income statement. In
other cases, changes to the provision are reported in the income statement. To ascertain this
amount, the portion is taken with which policyholders participate in the realisation based on
national statutory or contractual provisions or
individual plans of the companies. The amount
varies depending on the business segment as well
as the country in which the policy was taken out,
and it can amount to between 85 % and 92.5 %.
Provisions for terminal bonuses are transferred
from the provision for premium refunds into the
provision for future policy benefits without affecting the income statement. Here the funds
reserved for terminal bonuses and available funds
are used for the provision for profit-related premium refunds. If the provision for terminal bonuses
exceeds these amounts, parts of the provision for
deferred premium refunds are reclassified.
All technical provisions are regularly subjected to
a liability adequacy test in accordance with IFRS 4.
If current experience shows that the provisions
posted on the basis of the original assumptions –
less the related deferred acquisition costs and the
present value of the related premiums – are inadequate to cover the expected future benefits, we
adjust the relevant technical provisions with
recognition in profit or loss and disclose this under
impairment losses/unscheduled changes in the
notes to the consolidated balance sheet. The
appropriateness of unearned premiums and of the
provision for outstanding claims is assessed in
relation to the realistically estimated future
amount to be paid. The appropriateness of the
provision for future policy benefits is assessed on
the basis of realistic estimates of the actuarial
assumptions, the proportional investment result
and, for contracts with participation in surplus, the
future profit sharing.
Technical provisions for life insurance
policies where the investment risk is borne
by the policyholders
This item encompasses the provision for future
policy benefits in life insurance where policyholders bear the investment risk themselves (unit
linked life insurance). The value of the provision for
future policy benefits essentially corresponds to
the market value of the relevant investments
shown under assets item C. Besides this, as under
the provision for future policy benefits as per
FAS 97, they may include additional premium components. Changes in this provision are fully recognised in the underwriting result. Insofar as these
changes derive from unrealised gains and losses
from alterations in the fair values of the related
investments, they are matched by opposite
changes of the same amount in the investment
result. The decision to recognise these provisions
at fair value, with impact on profit or loss, avoids
valuation mismatches that would otherwise occur
due to different measurement of the corresponding investments.
Provisions for post-employment
and similar benefits
The companies within the ERGO Insurance Group
generally give commitments to their staff in the
form of defined contribution plans or defined benefit plans. The type and amount of the pension
obligations are determined by the conditions of
the respective pension plan. In general, they are
based on the staff member’s length of service and
salary. Under defined contribution plans, the companies pay fixed contributions to an insurer or a
pension fund. This fully covers the companies’
obligations. Under defined benefit plans, the staff
member is promised a particular level of retirement benefit either by the companies or by a pension fund. The companies’ contributions needed
to finance this are not fixed in advance.
Pension obligations are recognised in accordance
with IAS 19, Employee Benefits, using the projected unit credit method and based on actuarial studies. The calculation includes not only the pension
entitlements and current pensions known on the
balance sheet date but also their expected future
development.
The interest rate at which the pension obligations
are discounted is based on the yields for long-term
high-quality bonds (e. g. commercial or government bonds). Actuarial gains or losses from pension obligations result from the deviation of actual risk experience from estimated risk experience.
They are recognised directly in equity, without
impact on profit or loss.
Other provisions
Segment reporting
Other provisions are established in the amount of
the probable requirement; such amounts are not
discounted if the interest-rate effect is insignificant.
The breakdown of the annual accounts figures follows the internal organisation and management
structure of the ERGO Insurance Group and is
shown according to strategic business segments
(primary segments) as well as regional aspects
(secondary segments). The strategic business
segments are:
Liabilities
This item comprises bonds and notes issued,
deposits retained on ceded business, current tax
liabilities, and other liabilities. Financial liabilities
are recognised at amortised cost. Current tax
liabilities comprise current taxes on income and
other taxes of the individual companies, based on
their respective national taxation. Current tax liabilities are posted – without discounting – in
accordance with the probable tax payments for
the year under review or previous years. Deferred
tax obligations are shown under the item “deferred
tax liabilities”. Direct minority interests in special
funds are measured at fair value.
Deferred tax liabilities
Under IAS 12, deferred tax liabilities must be
recognised if asset items have to be valued higher,
or liabilities items lower, in the consolidated balance sheet than in the tax accounts of the reporting company and these differences will be eliminated at a later date with a corresponding impact
on taxable income (temporary differences).
Reinsurance
Reinsurers’ shares in the technical positions are
shown on the assets side of the balance sheet and
based on the contracts with reinsurers. The reinsurers’ shares in deferred acquisition costs and in
technical provisions are detailed in the Notes. The
reinsurers’ shares are reported separately in the
income statement.
쐍
쐍
쐍
쐍
Life insurance
Health insurance
Property-casualty insurance
Legal expenses insurance
Classification by domestic or international business is based on the registered office of the
respective Group company. The ERGO Insurance
Group is represented in over 30 countries.
The segments chosen reflects the opportunities
and risks of the Group. Earnings capacity and
prospects for success are thus made more transparent. Apart from complying with IAS 14, segment reporting also follows German Accounting
Standard No. 3 (DRS 3) of the German Standards
Council (DSR). Reporting also complies with DRS
3-20, which applies to insurance companies.
The presentation of specific business segments
(primary segments) is after consolidation of internal transactions within the individual business
segments but prior to consolidation across the
segments. Profit transfer agreements have been
signed with virtually all domestic insurance companies. Profit transfer is deemed as appropriation
of profits in the segment reporting. Profit transfers
are thus eliminated prior to segment reporting.
This is shown in the “other/consolidation” column
where expense and income from profit transfer
agreements are eliminated. Group tax expenditure
is allocated to the segments. Group values are
derived by adding the “other/consolidation” column. Apart from consolidation entries, this column also includes figures of companies which
cannot be clearly attributed to the business segments listed. This includes, for instance, the activities of the ERGO Versicherungsgruppe AG as the
holding company for the Group. This form of presentation was chosen to truly show the core areas
of business competence in an undistorted fashion.
Premiums from transactions with other business
segments are stated separately.
The secondary segments show fully consolidated
figures.
Cash flow statement
The cash flow statement shows how the liquid
funds of the ERGO Insurance Group have changed
during the course of the year under review by way
of the inflow and outflow of funds. Here a distinction is made between cash flows from operating,
investing and financing activities. The statement
reconciles to financial assets shown in the balance sheet as “Cash at bank, cheques and cash in
hand”. Apart from complying with IAS 7, the cash
flow statement is also carried out in conformance
with German Accounting Standard No. 2 (DRS 2)
of the German Standards Council (DSR). Reporting also complies with DRS 2-20, which applies to
insurance companies.
Foreign currency translation
The consolidated financial statements of the
ERGO Insurance Group are prepared in euros.
The annual accounts of foreign companies, where
the currencies do not as yet participate in the
European Economic and Monetary Union, have
been converted into euros in accordance with
IAS 21. The mean exchange rates on the balance
sheet date have been used for the conversion of
the balance sheets, whereas the quarterly mean
exchange rates were used for the income statements of the 2008 financial year. Differences
resulting from conversion are included directly in
shareholders’ equity.
In the capital consolidation the equity amounts of
foreign subsidiaries have been converted into
euros using the historic exchange rates at the
respective acquisition dates.
Contingent liabilities
To support Hypo Real Estate (HRE), the German
federal government adopted a rescue package in
2008, backed by the Deutsche Bundesbank and
also the German financial services industry. In this
rescue package, the financial institutions were
obliged to participate through a reguarantee in
covering a possible claim on the federal government under the guarantee for the Bundesbank’s
liquidity support and the government-guaranteed
bond; cf. note [6] “Other securities available for
sale”. Of the total amount of € 8.5bn for this
reguarantee, liability for € 110.0m is apportionable to companies of the ERGO Insurance Group.
Disclosures on the type and extent of risks stemming from insurance contracts
and financial instruments
Risks from insurance contracts
in the Life segment
The most significant risks in this segment are biometric risks, interest rate risks and lapse risks.
Technical provisions and deferred acquisition
costs are calculated based on biometric principles, i.e. based on the assumption of the trend in
mortality and invalidity, as well as discount interest rates or technical interest rates which depend
on the contract or tariff. Further, assumptions
concerning the probability of cancellation and
profit-sharing are included in the valuation. Moreover, other market risks from unit-linked policies
and risks from embedded derivatives have to be
taken into consideration, as well as the liquidity
risk.
Biometric risk
As regards volume, the structure of our business is
presented in note [16b] provision for future policy
benefits according to the insured risk.
The biometric assumptions used for reporting
insurance contracts in our portfolios are checked
regularly based on up-to-date information regarding the portfolio. In this respect, checks conducted in the specific countries by the supervisory
authorities or by actuarial associations are especially taken into account. In addition, standards for
the market are taken into consideration in order to
check the adequacy of the biometric calculations
as well as the trend assumptions associated with
them. This can lead to a change in the safety
margin allowed in the actuarial assumptions. The
amount of the technical provisions or the deferred
acquisition costs is not directly affected as long as
there is provision for adverse deviation.
In life insurance the risk of exposure to biometric
risks depends on the type of insurance product.
Product category
쐍 Life insurance
쐍 Life insurance
(cover in the event of death)
Features
Significant risks
쐍 Long-term contracts with benefits
쐍 Mortality (short-term):
in the event of death
쐍 Primarily with
a payout upon expiry
쐍 Actuarial assumptions fixed when
taking out the policy, premium
adjustments not possible
쐍
쐍 Annuity insurance
쐍 Predominantly guaranteed life-long
쐍
쐍 Occupational disability
pension
쐍 Actuarial assumptions mainly fixed
when taking out policy, premium
adjustments not possible
쐍 Long-term policies with a
guaranteed fixed-term pension
in the event of invalidity
쐍 Actuarial assumptions fixed when
taking out policy
쐍
and invalidity insurance
쐍
increase in net expenditure for
insured incidents due to unique
unusual circumstances
(e. g. pandemics)
Mortality (long-term):
increase in expenditure for insured
incidents as a result of a sustained
increase of mortality for business in
force
Longevity:
increase in anticipated expenditure in
the future for pensions as a result
of a sustained rise in life
expectancy of business in force
Disablement:
increased expenditure due to a rise
in the cases of disablement from
business in force, as well as a
reduction in the average age where
the insured event occurs
Longevity:
increased expenditure due to the rise
in the average duration of receiving a
pension
The biometric calculation assumptions currently
used are considered by the actuaries in charge
to be adequate and contain sufficient safety
margins.
The sensitivity towards changes to biometric
assumptions in life insurance is measured in
the context of an embedded value analysis, see
page 122.
Interest risks
Interest risks can generally be subdivided into
risks associated with the change in the interest
rate and risks from guaranteed interest rates.
As regards life insurance policies, there is normally an implied or explicit guaranteed interest rate
for the entire term of the policy based on a set
interest rate at the time of taking out the policy.
The discount interest used in order to calculate
the provision for future policy benefits is identical
with this interest rate for the majority of the policies. The technical interest rates used are presented in the Notes to the consolidated financial
statements.
Technical provisions are not generally subject to a
direct change to the interest rate risk, as the fixed
interest rate is not adjusted to coincide with the
capital-market interest rate during the term of the
policy. This means that there is no direct impact on
equity and the consolidated income statement.
There is, however, a risk pertaining to the guaranteed interest. To achieve the minimum interest for
the benefits set out in the policy in the long term,
we are reliant on investment income – and possibly underwriting results.
The discount interest relating to provisions for
future policy benefits and provisions for outstanding claims are shown in table [16c] of the Notes to
the consolidated financial statements.
The main risk comes when the terms of fixedinterest-bearing investments do not coincide with
those of the liabilities (duration mismatch), meaning that when there is a significant fall in interest
rates over the remaining term of the liabilities,
reinvestment earnings remain below the discount
interest resulting in additional expenditure. However, a complete match in the term of the liabilities
by means of fixed-interest bearing investments
with the same terms to maturity would not be
worthwhile, because significantly rising interest
rates may mean that policyholders exercise their
rights to cancel and there would be a liquidity
requirement for premature payouts. The sensitivity towards the interest risk is measured within the
framework of an embedded value analysis on
page 122.
Other types of market risk
and embedded derivatives
Apart from guaranteed interest, which is analysed
when presenting the interest risk, risks here pertain especially to unit-linked and index-related life
policies as well as the lump-sum option with
deferred annuity policies. Other embedded derivatives are not of any economic importance.
As regards unit-linked policies in our portfolios,
the investment risk is borne by the policyholder.
Consequently, there is no direct market risk as
such. An adequate tariff structure ensures that the
necessary portions of the premium for a guaranteed minimum benefit for an insured incident can
be taken when required based on current total
funds assets. Besides, unit-linked insurance policies may contain a guaranteed gross premium
which is secured in certain cases by an issuer. This
reduces our market risk accordingly, but there is
still the risk of bad debts. To minimise this, we are
particularly demanding as regards the creditworthiness of the issuer.
The lump-sum option right for a deferred annuity
gives the policyholder the option to have the annuity paid out in a lump sum on a given date. There is
a potential risk if, following a level of interest which
is significantly above the level used to calculate
the annuity, many policyholders unexpectedly
exercise their lump sum option. However, there is
no direct interest or market sensitivity as the exercising of the option is influenced decisively by individual factors concerning the policyholder as a
result of the existing components of the insurance. The adequacy test for underwritten liabilities in accordance with IFRS 4 explicitly takes this
option pertaining to the policyholder into consideration.
Lapse risk
As far as policies with a right to surrender are concerned, the provision recorded is generally at least
as much as the surrender values associated with
it. The adjustment of deferred acquisition costs is
carried out taking into account expected surrender amounts. The assumptions made here are
monitored on a regular basis.
If the policyholder has the right to maintain the
policy without having to pay a premium in return
for adjusted guaranteed benefits, this corresponds to a partial lapse and will be calculated
accordingly.
The sensitivity towards a change in the lapse probability in life insurance is measured in the context
of an embedded value analysis, see page 122.
Liquidity risks
A liquidity risk might exist if the cash outflow from
claims payments and costs incurred would exceed
the cash inflow from premiums and investments.
As we are predominantly involved in long-term
business, we therefore analyse the expected
future surplus from cash inflows from premium
payments and cash outflows from benefits and
costs.
As regards business in force on the balance sheet
date, expected future technical surpluses are
shown in the table according to maturity bands.
Only technical cash flows are taken into account
here, hence reimbursements from investments,
i. e. capital gains and investments coming up for
renewal, are not included in the figures. If those
reimbursements from investments are taken into
account, whose cash flows have largely been offset with liabilities by our asset-liability management, positive items occur as expected. The liquidity risk is thus minimised in this segment.
It should be noted that these forecast figures may
be associated with a considerable degree of
uncertainty.
Further details on liquidity risks can be read on
page 72 of our Risk Report.
Expected future technical cash flow (gross)*
Less than one year
More than one year but less than five years
More than five years but less than ten years
More than ten years but less than twenty years
More than twenty years
* Premiums less benefits guaranteed and costs at the cut-off date (excl. unit-linked products).
** After eliminating internal Group transactions across all segments.
€ million**
– 2,081
– 10,748
– 17,682
– 28,560
– 46,597
Health segment risks
The biometric risk, lapse risk, benefits risk and the
assumed interest rate risk are the major risks in
the health segment. Technical provisions and
deferred acquisition costs are calculated based on
biometric principles, i. e. on assumptions pertaining to trends in mortality and morbidity. In addition, the discount interest or technical interest
rate as well as the lapse behaviour pertaining to
the respective contract or tariff are to be taken
into account. Besides, other market risks as well
as the liquidity risk have to be taken into account.
Biometric risk and lapse risk
The exposure towards biometric risks differs
depending on the type of insurance product.
Product category
쐍 Health insurance
biometric calculation assumptions used are adequate. However, as regards long-term contracts,
we assume that the treatment possibilities will
improve in the future, too, which will result in higher costs. In the event that calculation assumptions
are changed, an adjustment in the premium is generally possible. On the other hand, as regards
short-term health insurance business, there is primarily the risk of short-term increased expenses
due to one-off exceptional events.
Nevertheless, these types of biometric risks may
come at the same time and be accentuated by
interference from legislation and courts as
regards the spread of opportunities and risks on
which the conclusion of contracts between the
respective partners of insurance are based.
Features
Significant risks
쐍 Mainly long-term contracts
쐍 Morbidity:
which guarantee that costs
are taken over for medical
treatment; reserves are set
up to cover increased costs
as a result of advancing age
쐍 Variable actuarial assumptions,
premium adjustment possible
in the event of sustained
changes to the cost structure
Biometric calculation assumptions and the lapse
probability in health insurance are revised by actuaries or fiduciaries on a regular basis. In addition,
standards in the form of directives, circulars,
guidelines and recommendations for calculation
assumptions are prescribed by the regulatory
authority, actuary association and other organisations. The respective actuary in charge undertakes
constant monitoring based on current portfolio
information. Any deviation in reality to the respective assumptions may lead to a change in the safety margin contained in the calculation model. The
figure of the provisions for future policy benefits
and deferred acquisition costs is not directly
affected by this, provided that there are safety
margins. According to the actuaries in charge, the
increase in the costs for medical
treatment which cannot be absorbed
by adjustments to premiums.
Increase in claims expenditure as
a result of unique and exceptional
circumstances (e. g. pandemics)
With the lapse risk in mind, it should be noted that
the adjustment of the deferred acquisition costs
as well as the calculation of provisions are carried
out taking lapses of business in force into account.
The assumptions made here are monitored on a
regular basis.
Benefit risk
The benefit risk occurs when benefits have to be
paid out of a previously determined premium. Here
the scope of benefits has been agreed beforehand, but the risk lies in not knowing how medical
expenses and drawing on the benefits will develop
in the future. The benefits promise plays an important role in this aspect. In the future we also
expect that medical possibilities will improve still
further with more applications and, hence, higher
costs.
Consequently, the relationship of calculated costs
to the benefits required is constantly monitored.
An adjustment is made to tariffs where actual benefits deviate not only temporarily from calculated
benefits. Actuarial assumptions used are deemed
to be adequate by the respective actuary in charge
and the fiduciary in cases inspected by the latter.
The risk of particularly high individual losses and a
dramatic rise in the number of losses as a result of
a pandemia are constrained by means of a special
reinsurance concept.
Technical interest rate risk
The technical interest used for the premium calculation can be changed during the term of the policy in health insurance. The technical interest rates
used for calculation purposes are not higher than
the maximum technical interest rate by regulatory
bodies.
The interest used to calculate the provision for
future policy benefits may differ from the technical interest used to calculate the premium. An
adjustment of the interest used to calculate the
provision for future policy benefits for long-term
business is only possible if the technical interest
rate is adjusted within the context of a premium
adjustment. Consequently, a guaranteed interest
risk only exists until the next premium is set. There
is no direct interest risk for short-term business.
We are reliant on net investment income in order
to generate the necessary interest for technical
provisions. This results in an investment risk. As
regards future expected premiums, there is a risk
regarding new investment. If, with significantly
falling interest over the remaining period of the liabilities, reinvestment earnings lag behind discount
interest, the calculated interest return cannot be
generated solely from net investment income. The
sensitivity towards any change in the interest rate
is measured in the context of an embedded value
analysis, see page 122.
Impact on equity and the consolidated
income statement
An additional provision may be required if net
investment income should not be sufficient or if an
unscheduled write-off of deferred acquisition
costs be necessary. This type of adjustment is carried out on the basis of the adequacy test in accordance with IFRS 4, but only if no offset is possible
from other sources of income. In such a case a
possible deficit would be recorded in the income
statement.
The balance sheet effects of too little return on
investments can be limited in that the technical
interest rate can be adjusted if an adjustment of
the assumed interest rate becomes necessary
within the framework of a premium adjustment.
The permanent satisfiability of the technical interest rate used is monitored within the framework of
investment planning. Furthermore, the technical
interest rate for German business is checked
annually using the procedure worked out by the
German Association of Actuaries on measuring
the “actuarial corporate interest rate”. The effect
of the risk caused by a change in the interest rate
can be limited further by carefully fine-tuning
future cash flows from investments, premiums and
obligations (asset-liability management). According to the opinion of the actuary in charge and in
accordance with the procedure for determining
the “actuarial corporate interest rate”, the technical interest currently used is deemed adequate.
Liquidity risks
A liquidity risk might exist if the cash outflow from
claims payments and costs incurred would exceed
the cash inflow from premiums and investments.
As we are predominantly involved in long-term
business, we therefore analyse the expected
future surplus from cash inflows from premium
payments and cash outflows from benefits and
costs.
As regards business in force on the balance sheet
date, expected future technical surpluses are
shown in the table according to maturity bands.
Only technical cash flows are taken into account
here, hence reimbursements from investments,
i. e. capital gains and investments coming up for
renewal, are not included in the figures. If those
reimbursements from investments are taken into
account, whose cash flows have largely been offset with liabilities by our asset-liability management, positive items occur as expected. The liquidity risk is thus minimised in this segment.
Property-casualty and legal expenses
insurance risk
The risks of estimation regarding the extent of the
amount necessary for future losses from current
policies (premium risk) as well as for claims
incurred (reserve risk) are particularly important
in this segment. When estimating the loss amount,
cost inflation is also taken into account. There is
an interest rate risk for parts of the portfolio. In
addition, the liquidity risk also has to be taken into
consideration.
The basis for assessing an underwritten risk is an
estimate of the claims frequency to be expected
for a portfolio of policies. Besides this, an estimation of the claims amount is required, with which a
mathematical distribution of expected losses is
derived. The result of both of these steps is an estimate for the expected overall loss in a portfolio.
The third element comprises estimating the anticipated cash flows for settling claims incurred
which often extends over several years.
Expected future technical cash flow (gross)
€ million*
Less than one year
More than one year but less than five years
More than five years but less than ten years
More than ten years but less than twenty years
More than twenty years
356
1,476
– 551
– 9,959
– 51,257
* After eliminating internal Group transactions across all segments.
It should be noted that these forecast figures may
be associated with a considerable degree of
uncertainty and depend on assumptions made on
medical inflation as well as future trends with benefits.
Premium risk
The degree of exposure to estimated risks varies
depending on the type of insurance. Using claims
ratios or combined ratios from recent years, conclusions can be drawn retrospectively as to historical levels of fluctuation in the different types of
insurance, as well as possible correlations. Volatilities are derived equally from fluctuations in the
cost of claims and the level of the applicable market price for protective cover provided.
Premiums, claims and expenses
according to lines of business
When calculating and costing underwritten risks,
assessment of the technical, social and demographic parameters plays an important role for all
areas of insurance. Furthermore, in liability insurance and some aspects of motor insurance economic trends and legal parameters are important.
In segments where there is a high degree of sensitivity towards the underlying assumptions on natural catastrophes we include expected trends in
our calculation when estimating these risks.
2008
2007
2006
2005
1,569
818
751
859
722
514
131
388
4,182
1,350
745
605
847
712
513
135
306
3,864
1,113
658
455
828
637
493
118
285
3,474
1,097
664
433
815
635
487
132
275
3,442
Claims ratio (%)
Motor
thereof for motor liability
thereof for other motor
Accident
Fire/property
Liability
Transport/aviation
Other
Total
77.2
79.1
75.1
34.9
63.1
48.1
62.8
45.3
59.0
79.1
84.7
72.1
37.6
64.8
55.0
62.7
43.1
60.0
76.8
82.3
69.0
37.2
53.7
58.0
60.9
42.5
56.2
76.0
80.3
69.6
41.7
54.7
47.9
64.0
47.0
56.6
Combined Ratio (%)
Motor
Accident
Fire/property
Liability
Transport/aviation
Other
Total
101.8
103.5
99.8
71.4
97.3
80.5
88.2
88.8
90.2
105.6
110.8
99.0
75.1
103.2
87.6
89.1
84.1
93.1
101.5
106.6
94.2
75.2
90.3
91.6
87.9
86.9
89.4
99.3
102.1
95.3
81.6
92.4
82.2
91.9
89.5
90.0
Gross premiums in € million
Motor
Accident
Fire/property
Liability
Transport/aviation
Other
Total
We are convinced that we have calculated our premiums to include a sufficient margin for risks. The
containment of risk is guaranteed through our targeted underwriting policy, strict underwriting
guidelines and guidelines for the degree of authority and competency. The systematic controlling of
the portfolio and regular recalculation of premiums ensure that premium income and claims payments remain in an appropriate balance.
Large and very large losses
Following the strong focus on private customer
business there are, on the one hand, very few risks
concerning future cash flows and, on the other, little exposure to large and major losses. High single
losses and large indemnity amounts associated
with them, as well as the effects of cumulative
events, are contained regarding their effect on the
income statement by our reinsurance programmes, meaning that their negative impact can
be planned in the sense of profit-oriented company management. We make use of risk-based reinsurance solutions to achieve this goal.
As regards ceded reinsurance, we pursue the
objective of reducing the volatility of net profits.
This means that less equity is required for operational purposes and, at the same time, the results
can be planned more accurately. To calculate our
reinsurance needs we regularly analyse the gross
and net exposure of our insurance portfolios with
a special focus on cumulative dangers. From this,
we derive areas of action for steering our reinsurance programme.
As a result of the special significance of insurance
against natural disasters, and our company’s
exposure to those perils, our portfolio is evaluated
on a regular basis using recognised actuarial
methods. The results of these analyses form the
basis for the type and degree of protection programmes against natural disasters. The respective
net retentions are financially viable sums for the
companies.
The portfolios of private customer lines of business are very homogeneous. Nevertheless, in the
context of internal risk modelling, large, cumulative and basic losses are modelled and the effect
of the current reinsurance structure tested on it.
The normal (Pareto) distribution is then used as an
assumption for claims amounts for large and
cumulative losses. In addition, this internal risk
model is used to gauge reinsurance requirements
and is part of the internal risk management
process.
As a result of the very different amounts regarding
the insured values, commercial and industrial lines
of business are characterised by a hetereogeneity
of the portfolios. In the course of internal risk
modelling large, cumulative and basic losses are
therefore assessed on a very individual basis, and,
accordingly, the impact of the respective current
and very individual reinsurance structure is permanently tested on it and adjusted where
required.
Where necessary, high individual risks are spread
using co-insurance or by taking out optional reinsurance solutions.
Reserve risk
Reserves for outstanding claims are subject to the
uncertainty as to whether losses are higher or
lower than expected (reserve risk). Special attention is given to situations where claims reserves
might not be sufficient.
The calculation of these reserves is based on
assumptions derived from an analysis of past
claims data for the various segments. This also
includes provisions for losses already incurred but
not yet reported or only partially claimed (socalled “IBNR”). To cover these, we set up reserves
for indeterminate liabilities on the basis of actuarial methods. To analyse this data we make use of
established actuarial methods. These methods
take into account the various levels of prices,
cover, benefits and inflation. At the same time,
we take into consideration all trends that can
already be predicted. The actuarial analysis is
supplemented by checks undertaken by claims
specialists, underwriters and accounting experts.
Wherever possible, we also draw on external statistics and documents for these analyses, e. g.
official biometric calculation assumptions for
ascertaining provisions required for pensions in
property and casualty business (e. g. indemnity
pension). We observe our settlement results continually, thereby ensuring that the assumptions on
which the evaluation of the reserves are based,
always reflect the current situation. Consequently, when determining the reserves, it may become
necessary to revise earlier estimates on losses
and adjust reserves accordingly. We deem the
level of reserves to be sufficient to coincide
with our estimates regarding existing liabilities.
Nevertheless, we cannot rule out future changes
to provisions.
Actual claims requirements can deviate from the
expected claims requirement for future insurance
risks from insurance business that has already
been underwritten. A check is made during an
IFRS 4 adequacy test to find out whether the
expected loss requirement, including costs, is
more than expected earned premiums plus the
proportionate amount of investment income. If
this is the case, additional reserves must be set
up.
The appropriate reserves are set up based on
experience over the past years. There have not
been any major fluctuations in the past in either
the claims ratio or run-off results. The table below
illustrates together with the run-off triangles (see
note [17 f]) the trend in claims ratios for property
and casualty insurance as well as legal expenses
insurance:
Net claims expenditure as a %
of earned net premiums
Claims ratio (%)
The run-off result as a percentage of original loss
reserves is directly derived from the run-off triangles for the loss reserves and ultimate losses. It
should be noted that the run-off triangles are
shown from the point of view of the year in which
the accident occurred.
Interest risk
Economically, an interest-rate risk derives in principle from the need to earn a return on the investments covering the provision that is commensurate
with the discount rate used in measuring the provision. In balance sheet terms, the interest-rate risk
affects only those parts of the technical provisions
that are discounted. In our case this risk is predominantly with annuity policies. As, however, only
roughly 8.5 % of all reserves in the composite
segment in Germany are discounted, this is considered to be a minor risk. If interest earnings do not
cover expenses as a result of discounting, losses
arise which have not been calculated. In such
circumstances an adjustment has to be made to
the reserves. On the other hand, unforeseen gains
are the result of higher interest earnings.
Liquidity risks
Liquidity risks in the property-casualty segment
might occur if the cash outflow from claims payments and costs incurred would exceed the cash
inflow from premiums and investments. A difference must be made in this segment between
claims expenditure where provision for claims has
already been set up in the past and immediate payments, i. e. payments for losses incurred during
the current financial year.
2008 2007 2006 2005 2004 2003 2002 2001 2000
58.4
60.0
56.1
57.5
57.6
56.8
62.6
63.7
60.2
As far as provisions for claims have been set up,
the liquidity risk can be minimised by our asset-liability management where investment is geared
towards the nature of liabilities. As far as we are
concerned, immediate payments only account for
a part of all benefits to be paid and are relatively
stable over the course of time, meaning that here,
too, liquidity risks can be minimised accordingly
by asset-liability management.
The table below shows that our liquidity position
was consistently positive over the past years.
Cash flows and available funds
in individual years (gross)
Premiums received
Claims payments for financial year
Claims payments for previous years
Costs
Liquid funds
Effects on equity as well as the
consolidated income statement
Technical provisions as well as deferred acquisition costs are regularly checked that they are adequate within the framework of the IFRS 4 adequacy test. If this type of test finds that the original
safety margins in the biometric calculations or
the assumptions regarding the discounting of
reserves and for cancellations have been used up
entirely, an adjustment is made. Here opportunities to adjust the policyholders profit participation
are to be taken into account. As far as an adjustment is required, a deficit is recorded in the consolidated income statement.
2008
€ million*
2007
€ million*
2006
€ million*
2005
€ million*
2004
€ million*
5,083
1,448
1,272
1,613
750
4,756
1,389
1,154
1,553
659
4,324
1,114
1,149
1,435
625
4,270
1,091
1,165
1,424
590
4,264
1,124
1,145
1,437
558
* After eliminating internal Group transactions across all segments.
Quantitative impact on changes made
to assumptions pertaining to long-term
business
The ERGO Insurance Group uses an economic
assessment as part of the embedded value calculations when measuring the sensitivity of its longterm insurance business in the life and health segments (cf. page 20 f), and this method covers
more than 90 % of long-term insurance business.
The sensitivities mentioned here measure the
impact of changes to the principles of calculation
on the economic value of our business thereby
calculated. This takes into account our measures
to reduce risk as well as tax effects.
Embedded value sensitivities (market risks)
Embedded value on the balance sheet day
Change with a sustained rise in interest by 100 BP
Change with a sustained fall in interest by 100 BP
Change with a fall in the value of shares and land by 10 %
Changes following a 5 % rise in the mortality rate with policies
featuring mainly mortality risk
Changes following a 5 % fall in the mortality rate with policies
featuring mainly longevity risk
Change following a 5 % rise in morbidity
Change following a 10 % rise in the lapse rates
It should be noted that in spite of the aforementioned sensitivities, especially at the end of 2008,
ERGO adhered to the rigid regulations pertaining
to a market-consistent valuation as at the cut-off
date on 31 December 2008. Due to the exceptional situation of the capital markets at this date and
the capital market parameters associated with it,
distortions arise for 2008, especially as regards
the assessment of the fair value of options and
guarantees, meaning that the figures representing the situation on the cut-off date do not necessarily coincide with the expected value of the
options and guarantees in the long term. See also
Management Report on page 32 f.
It should be noted that the figures shown in
the Munich Re publication regarding the consolidation parts are based on the look-through
principle of Munich Re’s proportional parts.
Furthermore, the calculations comply with the
European Embedded Value Principles (EEVP).
Measures to reduce and control risk
The ideal diversification of our portfolio is
achieved by applying a balanced set of measures.
Measurement of risk takes a key role here as this
creates the prerequisite for the targeted steering
of our portfolio. Risk measurement is based on our
internal risk model.
2008
€ million
2007
€ million
3,509
968
– 1,564
– 25
5,406
746
– 895
– 192
– 14
– 13
– 38
– 12
–3
– 30
– 10
– 87
However, the method of diversification hits boundaries where systematic effects, such as fluctuations in the interest, exchange or inflation rates
affect a large portion of the policies or even segments in equal measure and thus obstructs the socalled “equilibrium in the collective body of the
policyholders”. We apply asset-liability management to reign in such systematic risks. This
observes investments and technical provisions
and liabilities simultaneously. Asset-liability management aims to synchronise fluctuations in the
value of investments and technical provisions and
liabilities and to stabilise the company value.
Asset-liability management is described in more
detail starting on page 69.
The distribution of fluctuations in the value of
investments and technical liabilities are used to
determine the risk capital and to aggregate these.
As the overall Company risk profile can be pursued
right down to individual risk components in the
model, it is possible to measure the impact of
major risks. In accordance with the principles of
value-based corporate management, the necessary risk capital for the assumption of risks is only
provided on the condition that adequate returns
can be expected. As a result of assessing the
internal risk model on a regular basis we are able
to react quickly to changes in our overall risk
situation and to take appropriate measures.
The product design itself also ensures a substantial reduction in risk and is paramount in the management of risks in all segments. Prudent calculation methods are mainly applied in the life segment in order to determine guaranteed benefits;
policyholders are also entitled to a profit-related
bonus in addition to the guaranteed benefits. More
than 99% of the amounts stated in note [16] provision for future policy benefits are allocated to this
type of policies. Following the corresponding margins in the calculations it is also possible under
moderately changed assumptions to provide the
pledged commitments without having to carry out
an adjustment to the provisions. Even in the case
of adverse developments, the provision for
deferred premium refunds, as well as parts of the
provision for premium refunds, stated in note [19]
other technical provisions, may be used to offset
risk in accordance with national regulations. A
major additional reduction in risk in the health segment is achieved by the premium adjustment
clause on which most of the long-term policies are
based.
Our ceded reinsurance is another very important
instrument of risk provision. Our principal aim
here is to reduce the volatility of the net results. In
turn, this reduction in volatility lowers the required
risk capital while at the same time bringing us in a
better position to plan the results. To determine
our reinsurance needs, we regularly analyse,
among other things, the gross/net exposure of our
insurance portfolios, giving special attention to
cumulative risks. From this analysis, we deduce
measures for controlling the reinsurance structure.
In addition we create, where required in accordance with national insurance and accounting regulations, provisions for fluctuations in the pattern
of results which, however, is not shown in our IFRS
consolidated financial statements.
For unlikely events which could, nevertheless,
potentially result in major losses if they did occur,
we draw up scenarios with the aid of which we test
the robustness of our portfolio both in terms of
assets and liabilities.
Our heterogeneous overall insurance portfolio
means that our underwriting risks benefit from
diversification effects which, together with our
wide range of different risk policy measures, significantly reduce the overall risk. This means that
the underwriting risks can be planned and controlled.
Credit risks from our ceded reinsurance
business
With regard to business ceded to reinsurers, the
risk of default is also relevant.
For provisions ceded to reinsurers, our reinsurers
show the following credit ratings:
and convexity. The reaction of interest derivatives
to changes in the underlying market value is taken
into account by means of the delta of the derivative. On the other hand, changes in exchange rates
affect both interest and equity-sensitive instruments as well as participating interests. The sensitivity of instruments in foreign currencies is
established by multiplying the euro market value
Technical provisions ceded to reinsurers according to rating
2008
%
2007
%
AAA
4
4
AA
88
89
A
7
6
BBB and less
–
–
No rating available
1
1
Out of these, 94 % are directly secured by means of
deposits. There is no credit risk for this portion.
Information on risks arising from default on receivables from insurance business can be found in the
risk report on page 69.
Market risks from financial instruments –
sensitivity analysis
The sensitivity analysis shows the effect of capital
market events on the value of investments as well
as the related consequences on the income statement. Sensitivity analyses of shares, interest and
exchange rates are carried out independently of
each other, i. e. under a ceteris paribus assumption. The basis for this is the determination of the
change in market value under selected capital
market scenarios which is undertaken as follows:
The analysis of shares and equity derivatives is
based on a market fluctuation of ± 10 %, ± 30 %
of the delta-weighted exposure. By contrast, for
interest-sensitive instruments, the market fluctuation of a global interest rate change amounting to
± 100 BP and ± 200 BP is calculated via duration
by the hypothetical currency fluctuation of ± 10 %.
Alternative investments (private equity, hedge
funds and commodities) are analysed together
with the shares.
The effects of the capital market events listed
below do not take into account tax and the provision for premium refunds (gross figures given).
This means the analysis does not make allowance
for the effects resulting from policyholders’ dividends in the segment of personal lines insurance.
The consequences for the results and equity as
shown below would be significantly reduced if
these effects were taken into account. It is also
assumed that the changes on the capital markets
occur instantaneously and that therefore neither
the limit systems nor active counter-measures
would work.
In the analysis, more than 95 % of the investments
of the ERGO Insurance Group are taken into
account. Compared to an analysis based on 100 %,
the difference resulting from the missing 5 % is
negligible.
Market price risk for shares as at 31 December 2008
Change in share price
Change in the market value
of stockmarket-sensitive
investments – impact on
profit/loss*
€ million
30 % increase
– 491
10 % increase
– 165
10 % fall
– 116
30 % fall
– 257
Market values as at 31 December 2008
equity*
€ million
804
268
– 14
– 54
2,724
* gross figures (before tax and profit-sharing)
Market price risk for shares as at 31 December 2007
Change in share price
profit/loss*
€ million
30 % increase
– 335
10 % increase
– 187
10 % fall
– 356
30 % fall
– 1,311
equity*
€ million
3,148
1,101
– 548
– 1,454
12,161
A rise in the share prices does not generally have
any effect on the assets side of the income statement. Write-downs on hedging instruments following a rise in the share price are recorded in the
income statement. By contrast, a drop in share
prices leads to the changes of value being reflected in the income statement. Write-downs on
shares are undertaken which are partly offset by
the write-ups on hedging instruments also recorded in the income statement.
Derivative hedging measures mean that a 10 %
change in share prices has an effect on the income
statement and equity amounting to only 2.8 %. The
non-linear effects of hedging measures, e. g.
through puts or other asymmetrical strategies,
are not taken into account in this overview due to
its delta-weighted approach.
Market price risk for investments sensitive to interest rates as at 31 December 2008
Change in interest rate
of interest rate-sensitive
profit/loss*
equity*
€ million
€ million
Rise of 200 BP
– 369
– 4,683
Rise of 100 BP
– 356
– 2,473
Fall of 100 BP
724
2,736
Fall of 200 BP
1,829
5,735
96,684
Market price risk for investments sensitive to interest rates as at 31 December 2007
Change in interest rate
profit/loss*
equity*
€ million
€ million
Rise of 200 BP
– 61
– 4,494
Rise of 100 BP
– 85
– 2,320
Fall of 100 BP
187
2,475
Fall of 200 BP
483
5,097
84,703
In terms of their market value, the fixed interestbearing investments of the ERGO Insurance Group
react to interest rate fluctuations in a way similar
to a level-coupon bond with a residual term of
about seven years. Since one portion of the investments is accounted for at amortised cost, the
effects shown deviate from that, however.
In case of interest rate fluctuations, the effects on
the income statement are insignificant compared
to the effects on equity, since the majority of the
changes in value of fixed interest-bearing investments are offset against equity without having any
effect on the income statement. Furthermore,
about 41% of the investments taken into account
in this analysis are accounted for at amortised
cost. This means that changes in market values do
not have any effect on the financial statements.
In economic terms, the equity effect of the fixed
interest-bearing investments is counter-balanced
by the change in economic value on the liabilities
side. For this reason, our asset-liability management gears our investments in such a way that the
effect of interest fluctuations on the value of
investments on the one hand and on the economic value of liabilities on the other offset each other.
With regard to the balance sheet, however, these
balancing measures do not have any effect, however, since significant parts of the liabilities shown
on the balance sheet are not valued on the basis
of the current interest rate development.
Market price risks arising from exchange rates
Change in market values due to exchange rate changes
Exchange rate change
2008
Impact on
profit/loss*
€ million
2008
Impact on
equity*
€ million
2007
Impact on
profit/loss*
€ million
2007
Impact on
equity*
€ million
10 % rise
8
18
– 146
158
10 % fall
–8
– 18
142
– 157
Market values
4,552
6,703
Nearly half of the foreign currency exposure taken
into account results from US Dollar investments,
and a third in British pounds. The low sensitivity
towards changes in the exchange rate is due to
extensive currency hedging. In this analysis a 10 %
rise in the currency rate is to be understood as a
10 % appreciation in the foreign currency compared to the euro.
Notes on the balance sheet – assets
[1]
Goodwill
2008
€ million
2007
€ million
431.9
463.0
27.8
20.2
Carrying amount at 31 December previous year
404.1
442.8
Currency translation differences
– 34.0
11.5
Additions
276.1
7.6
Disposals
–
50.2
Impairment losses
176.8
7.6
Carrying amount at 31 December financial year
469.4
404.1
Accumulated impairment losses at
204.6
27.8
Gross carrying amount at 31 December financial year
674.0
431.9
Gross carrying amount at 31 December previous year
Accumulated impairment losses at
Goodwill is mainly from the acquisition of
ERGOİSVİÇRE SIGORTA in October 2006 as
well as ERGO Previdenza in the 2000 financial year. Additions recorded in the 2008
financial year primarily stem from the purchase of shareholdings in ERGO Daum
Direct, Seoul, and Bank Austria Creditanstalt Insurance, Vienna. These acquisitions have been reported in detail in our
Notes on the scope of consolidation.
Impairment test
of significant goodwill
For impairment testing, IFRS 3 in conjunction with IAS 36 requires that the goodwill
be allocated to the cash-generating units
or groups of cash-generating units expected to derive benefit (in the form of cash
flows) from the company’s acquisition. To
ascertain whether there is any impairment,
the carrying amount (including allocated
goodwill) of a cash-generating unit or group
of cash-generating units is compared with
that unit’s or group’s recoverable amount.
The recoverable amount is the higher of
쐍 its fair value less costs to sell
and
쐍 its value in use (present value of the future cash flows expected to be derived
from a cash-generating unit or group of
cash-generating units).
The future cash flows used for determining
the value in use are based on management’s most recent financial plans/forecasts. Beyond the period covered by these
financial plans/forecasts, the future cash
flows are estimated by extrapolating the
prognoses on which the financial plans/
forecasts are based, applying a growth rate
for the subsequent years.
Goodwill has generally been allocated to
the respective acquired legal entity. The
recoverable amount for these entities is
determined by means of the value in use.
The impairment test did not result in a need
to undertake impairment for these cashgenerating entities in the 2008 financial
year.
Goodwill stemming from the purchase
of ERGO Daum Direct was allocated to
the cash-generating entity “ERGO Daum
Direct”. No impairment requirement was
identified following the impairment test of
the cash-generating entity; this was carried
out in line with the gross rental method.
Goodwill from the acquisition of Bank Austria Creditanstalt Insurance was allocated
to a group of cash-generating entities “Austria” in the final quarter of 2008. This group
comprises our Austrian holding company,
ERGO Austria International, our Austrian
insurance companies Bank Austria Creditanstalt Insurance and Victoria Volksbanken Versicherungsaktiengesellschaft as
well as their Central and Eastern European subsidiaries, as ERGO is concentrating on Austria as a platform to open up
future markets in Central and Eastern
Europe. Prior to the impairment test, goodwill amounting to € 239.2m and € 393.7m
in intangible assets were allocated to
this group of cash-generating entities. The
recoverable amount for this group of cashgenerating entities corresponds to the fair
value less costs incurred as a result of the
sale. The fair value of the group of cash-
generating entities predominantly involved
in life insurance business is carried out
using the appraisal value method. This
method coincides with the principles of the
gross rental method. In line with the fair
value method we made a flat-rate deduction of 1% for costs to sell. We have not
stated any expected synergetic added
value.
An impairment of € 175.0m was identified
as part of the impairment test of the group
of cash-generating entities. The recoverable amount for the group of cash-generating entities is mainly derived from the
appraisal value, which is made up of the
embedded value and the value of new business. The impairment test was based on a
current appraisal value which included
financial plans and corporate management
forecasts. The appraisal value taken as the
basis for the impairment test was based on
actuarial assumptions to hand, which
resulted in a significant fall in the appraisal
value. A write-down on the goodwill was
carried out in line with the provisions governing IAS 36. The impairment is only
required for goodwill which has been written down in the income statement accordingly. Other intangible assets were valued
using corresponding risk premiums. Consequently, there was no need for impairment losses to be carried out on other
intangible assets. The write-down was
recorded under item 9 “impairment losses
of goodwill” in the income statement and
pertains to the life segment.
[2]
Other intangible assets
Software
Purchased
insurance
portfolios
Other
Total
Total
2008
€ million
2008
€ million
2008
€ million
2008
€ million
2007
€ million
Gross carrying amount
at 31 December previous year
621.4
354.9
167.0
1,143.3
1,100.3
Accumulated impairment losses
at 31 December previous year
530.6
267.4
76.7
874.7
757.3
90.8
87.5
90.3
268.6
343.0
– 0.1
–
– 18.5
– 18.3
7.5
Carrying amount at 1 January financial year
90.9
87.5
71.8
250.2
350.4
1.8
235.2
177.2
414.2
1.1
Additions
36.0
–
9.9
45.9
34.6
Disposals
5.7
–
2.8
8.5
3.0
Reclassification
3.9
–
– 1.8
2.1
–
52.5
18.0
25.8
96.3
112.8
Impairment losses
–
1.6
–
1.6
1.8
Write-ups
–
3.7
0.9
4.5
–
74.4
306.9
229.3
610.6
268.6
Accumulated impairment losses
at 31 December financial year
558.7
283.3
76.3
918.3
874.7
Gross carrying amount
at 31 December financial year
633.1
590.2
305.6
1,528.8
1,143.3
Depreciation
Impairment losses were undertaken as
follows: life € 1.6m (0.7m) and other
€ – (1.1m).
The remaining other intangible assets
include land rights amounting to € 1.4m
(1.4m). Assets pledged as security and
other restrictions on title amount to € 1.4m
(1.4m).
Additions shown under “Change in consolidated group” stem from the purchase of
Bank Austria Creditanstalt Insurance and
ERGO Daum Direct, of which € 235.2m is
accounted for by PVFP and € 147.0m from
sales agreements.
[3]
Land and buildings, including buildings on third-party land
2008
€ million
2007
€ million
3,204.2
3,993.0
641.9
764.3
2,562.3
3,228.8
– 1.6
73.7
0.8
– 1.3
2,561.6
3,301.2
41.1
–
Additions
78.1
18.3
Disposals
51.3
643.6
Depreciation
51.0
63.5
Impairment losses
31.7
67.5
6.8
17.4
– 0.7
–
2,552.9
2,562.3
699.7
641.9
3,252.5
3,204.2
Fair value as at 31 December financial year
3,290.7
3,401.8
Accumulated depreciation and accumulated impairment
losses at 31 December previous year
Reclassification owner-occupied land and buildings
Write-ups
Other
losses at 31 December financial year
Restrictions on disposals and pledges as
security exist for land and buildings
totalling € 526.4m (512.0m).
life € 30.6m (47.9m), health € 0.3m
(13.0m), property-casualty € 0.8m (0.2m)
and other € – (6.4m).
The impairment losses and write-ups largely result from market value adjustments.
Impairment losses are distributed between
the different Group segments as follows:
Write-ups are distributed between the
different Group segments as follows: life
€ 5.3m (11.9m), health € 1.3m (0.9m) and
property-casualty € 0.2m (4.6m).
[4]
Investments in affiliated companies and associates
The fair value of the investments in affiliated companies which are not consolidated
due to their overall subordinate importance
amounts to € 132.0m (114.2m).
The fair value of the investments in associates which are usually valued at equity was
€ 751.5m (965.9m) on the balance sheet
date. Of this € 51.3m (25.1m) is for investments in associates where public listed
prices exist. Losses from associated companies totalling € 8.2m (0.3m) were not
recorded in the year under review. Overall,
the losses resulting from associated companies, which are not recorded, amount to
€ 8.2m (0.3m).
Carrying amounts
Fair values
2008
€ million
2007
€ million
2008
€ million
2007
€ million
4,566.7
4,668.0
4,720.7
4,619.4
616.5
608.4
616.5
608.4
Other loans
34,517.0
29,886.6
34,972.7
28,617.0
Total
39,700.2
35,163.0
40,309.9
33,844.8
Mortgage loans
Loans and advance payments
on insurance policies
The “other loans” item contains loans
to affiliated, non-consolidated companies
in the sum of € 31.9m (36.9m) and also
to associates in the sum of € 105.3m
(135.8m).
The fair value of mortgage loans and other
loans is determined using recognised
methods of valuation in line with the present value principle and taking into
account observed market parameters.
Rating categories
Other securities
Carrying amounts
2008
€ million
2007
€ million
AAA
AA
A
BBB
BB and lower
No rating
17,392.7
11,468.2
4,758.4
406.9
40.3
450.6
14,683.9
9,504.3
5,067.3
170.3
2.8
458.1
Total
34,517.0
29,886.6
The rating categories are based on those of
the leading international rating agencies.
By contrast to the purely economic aspect,
the carrying amount of loans in accordance
with IFRS 7 represents the maximum expo-
[5]
[5a]
[5b]
sure to credit risk at the balance sheet
date. Virtually no credit risk exists in
respect of the mortgage loans or the loans
and advance payments on insurance policies.
[5c]
Maturity structure
Carrying amounts
2008
2007
€ million
€ million
2008
€ million
Fair values
2007
€ million
Contractual period to maturity
Up to one year
1,346.7
1,080.2
1,334.5
1,076.7
956.6
786.5
977.6
783.9
Over two years and up to three years
2,122.5
924.8
2,178.6
928.6
Over three years and up to four years
1,740.9
2,053.5
1,860.4
2,118.7
Over four years and up to five years
2,263.8
1,671.9
2,328.1
1,660.0
Over five years and up to ten years
14,829.2
13,927.9
15,003.0
13,857.6
Over ten years
16,440.6
14,718.2
16,627.6
13,419.3
39,700.2
35,163.0
40,309.9
33,844.8
Over one year and up to two years
Total
[6]
Other securities
[6a]
Other securities –
held to maturity
Carrying amounts
Fair values
2008
€ million
2007
€ million
4.4
7.3
–
–
4.4
7.3
Debt securities
of banks
138.5
192.7
1.1
– 0.1
139.6
192.6
Total
142.8
200.0
1.1
– 0.1
143.9
199.9
Government bonds
There were no securities loaned to third
parties. The fair values of securities were
determined using the present value
method based on market data.
Unrealised
gains/losses
2008
2007
€ million € million
2008
2007
available for sale
2008
€ million
Carrying
amounts
2007
€ million
7,137.1
9,795.1
868.7
1,339.5
19,140.4
4,569.5
7,047.3
1,107.0
218.1
12,942.0
226.2
211.3
136.3
– 10.9
562.9
– 72.8 7,363.3
– 44.3 10,006.4
42.8 1,005.0
– 0.1 1,328.6
– 74.4 19,703.3
4,496.7
7,003.0
1,149.8
218.0
12,867.6
Corporate debt securities 19,090.9
17,951.3
– 147.7
– 222.9 18,943.2
17,728.4
Other
14,986.2
53,217.6
16,721.2
47,614.5
256.7
671.9
– 192.6 15,242.9
– 489.9 53,889.4
16,528.6
47,124.6
2,297.6
8,463.8
336.7
2,059.1
2,634.3
10,522.9
293.6
372.4
570.9
1,237.0
525.8
281.2
512.6
1,319.6
61.7
17.5
– 0.1
79.0
253.8
9.3
18.8
281.8
355.3
389.9
570.8
1,316.0
779.5
290.5
531.4
1,601.3
723.9
4,258.5
496.6
10,279.9
– 17.0
398.7
67.4
2,408.3
706.9
4,657.2
564.0
12,688.2
57,476.1 57,894.4
1,070.6
Fixed-interest securities
Government bonds
Germany
Rest of EU
US
Other
Non-fixed-interest securities
Shares
Investment funds
Equity funds
Bond funds
Real estate funds
Other
Total
4.9 % (17.9 %) of stated fair value consists
of quoted securities.
Measurement at fair value results in valuation reserves of € 1,070.6m (1,918.4m).
After deduction of provisions for deferred
premium refunds, deferred taxes and minority interests, unrealised gains/losses of
€ 303.2m (504.2m) have been posted
in equity (other reserves). € 1,085.0m
(1,169.7m) of the securities shown are loaned to third parties. These securities continue to be recognised in our balance sheet,
as the main resultant risks and rewards
remain with the ERGO Insurance Group.
There were no amounts pledged as security and other restrictions on the title.
Unrealised
gains/losses
2008
2007
Fair values
[6b]
2008
2007
1,918.4 58,546.6 59,812.8
In its attempts to back up the Hypo Real
Estate (HRE) the German federal government adopted a rescue package in October
2008 which not only involved the Deutsche
Bundesbank but also the German financial
services industry. As part of this rescue
package, the Bundesbank has granted
liquidity assistance of € 20bn, and a
consortium of financial institutes has
underwritten an HRE government-guaranteed bearer bond of € 15bn with a maximum term up to the end of 2009 as well as
another bearer bond secured by assets of
the HRE Group, also totalling € 15bn. Individual companies of the ERGO Insurance
Group have taken over amounts totalling
€ 70.1m in the latter bond. It is recorded
under corporate debt securities.
[6c]
Other securities
available for sale
Fair values*
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
36,608.8
32,289.3
12,498.3
10,358.2
3,137.8
8,057.2
545.5
2,964.6
39,746.6
40,346.5
13,043.8
13,322.8
Other securities
held for trading
Fair values*
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
543.5**
77.0
–
–
3.4
–
–
–
Derivative financial instruments
1,177.0
221.9
225.4
81.5
Total
1,723.9
298.9
225.4
81.5
Total
* Figures based on fully consolidated Group values
[6d]
*
Figures based on fully consolidated Group values
** Of this amount, € 481.9m (–) are securities which have been classified at fair value
with impact on profit or loss
In the reporting year, changes in the value
of hedging instruments have partly been
shown affecting income. Fair values of
derivatives have been determined by using
market values, option price models and
valuation by external parties. There were
no securities loaned to third parties.
Property-casualty
2008
2007
€ million
€ million
Legal expenses
2008
2007
€ million
€ million
2008
€ million
Other
2007
€ million
2008
€ million
Group value
2007
€ million
3,514.4
3,238.1
1,165.4
1,141.4
102.5
97.5
53,889.4
47,124.6
691.8
1,319.6
78.4
166.9
203.8
179.8
4,657.2
12,688.2
4,206.2
4,557.7
1,243.7
1,308.4
306.3
277.4
58,546.6
59,812.8
Legal expenses
2008
2007
€ million
€ million
2008
€ million
Other
2007
€ million
2008
€ million
Group value
2007
€ million
Property-casualty
2008
2007
€ million
€ million
–
–
–
–
–
–
543.5
77.0
–
–
–
–
–
–
3.4
–
28.4
10.0
5.9
2.0
5.6
1.4
1,442.5
316.6
28.4
10.0
5.9
2.0
5.6
1.4
1,989.4
393.6
Maturity structure
held to maturity
Carrying amounts
2008
2007
€ million
€ million
2008
€ million
Fair values
2007
€ million
[6e]
Up to one year
37.6
52.4
37.6
52.5
37.3
39.1
37.9
39.0
45.0
38.2
45.1
38.6
7.5
46.7
7.8
46.1
6.9
7.5
7.1
7.7
8.6
16.1
8.5
16.0
–
–
–
–
142.8
200.0
143.9
199.9
Over ten years
Total
[6f]
Maturity structure
available for sale
Carrying amounts
2008
2007
€ million
€ million
2008
€ million
Fair values
2007
€ million
Up to one year
8,949.7
3,929.4
8,985.5
3,926.4
4,665.0
5,175.3
4,746.3
5,175.9
3,624.9
4,786.2
3,661.1
4,785.0
3,744.0
2,828.0
3,816.4
2,791.3
4,165.1
4,029.0
4,221.4
3,998.6
17,915.4
16,239.3
18,367.4
16,038.4
Over ten years
10,153.5
10,627.3
10,091.2
10,409.0
53,217.6
47,614.5
53,889.4
47,124.6
Total
The non-fixed-interest securities are mainly
made up of shares.
[6g]
Rating categories
held to maturity
Carrying amounts
2008
2007
€ million
€ million
AAA
4.4
7.3
AA
10.0
23.1
A
121.4
156.7
BBB
–
1.3
BB and lower
–
–
7.1
11.5
142.8
200.0
No rating
Total
In deviation from the purely economic view,
the carrying amount of the securities represents the maximum exposure to credit
risk at the balance sheet date, in accordance with IFRS 7.
Rating categories
available for sale
2008
€ million
Fair values
2007
€ million
AAA
36,487.9
31,356.8
AA
7,918.1
8,698.2
A
6,551.5
5,325.0
BBB
2,198.1
1,198.7
BB and lower
325.5
227.0
No rating
408.2
319.0
53,889.4
47,124.6
Total
Rating categories
held for trading
2008
€ million
Fair values
2007
€ million
AAA
55.8
6.8
AA
299.4
52.7
A
154.1
2.1
19.9
–
2.4
–
11.9
15.4
543.5
77.0
BBB
BB and lower
No rating
Total
[6h]
[6i]
[6j]
Disposal proceeds
available for sale
2008
€ million
2007
€ million
18,659.5
22,446.6
9,529.3
333.0
9,862.4
9,329.8
378.2
9,708.0
Total
28,521.9
32,154.6
Realised gains and losses
available for sale
2008
€ million
2007
€ million
197.7
710.0
907.7
71.1
1,649.6
1,720.6
208.4
1,173.1
1,381.5
397.5
251.8
649.3
– 473.8
1,071.3
Quoted
Unquoted
[6k]
Gains on disposal
Losses on disposal
Total
[6l]
Derivative financial instruments
Derivative financial instruments (derivatives) are financial instruments whose fair
value is derived from one or more underlying assets.
A distinction is made between “over-thecounter” (OTC) products and standardised
transactions concluded on the stock
exchange.
Derivatives are used to hedge against currency, interest rate and market price risks.
This is done at the individual Group companies within the framework of individual
supervisory regulations and additional
company directives. The risk of default is
practically non-existent in the case of
products traded on the stock exchange.
Over-the-counter products, on the other
hand, harbour a theoretical risk in the
amount of the replacement costs. Therefore, at ERGO Insurance Group, only top
quality counterparties are selected for
such transactions. Derivatives are measured at fair value. Depending on whether
they qualify for hedge accounting or not
and whether they have positive or negative
fair values, derivatives are shown under the
following balance sheet items:
Fair value
Qualifying for
hedge accounting
Balance sheet item
Positive
No
Yes
Investments,
other securities,
held for trading
Other assets
No
Yes
Liabilities,
other liabilities
Negative
Total
2008
€ million
2007
€ million
1,442.5
22.4
316.6
25.2
– 59.1
– 126.6
1,405.8
215.2
Derivatives – open positions
Fair value hedges
The following table shows the fair values
and the related notional principal amounts
of all our open positions, broken down
according to risk types. Positive and negative fair values are netted. At 31 December
2008, they amounted to € 1,405.8m
(215.2m), i. e. 1.1 % of the balance sheet
total. The fair values shown are either
quoted prices or values at the balance
sheet date determined using recognised
valuation models.
In the case of fair value hedges, the change
in the fair value of the hedging instrument
and the change in the fair value of the hedged instrument are generally recognised in
profit or loss under the item “investment
result” in the consolidated income statement. In the ERGO Insurance Group, hedging relationships in the form of fair value
hedges are used to selectively and efficiently reduce interest-rate risks of parts of
the portfolio and to mitigate market price
risks. The fair value of the derivatives used
for this amounted to € 2.6m (10.6m) at the
balance sheet date. In 2008, the following
changes in value were recognised in the
consolidated income statement: € 136.4m
(21.1m) for the hedging instruments and
€ –121.0m (–18.7m) for the relevant
underlyings.
Interest-rate risks in life insurance have
been hedged using swaptions. These options to receive a fixed interest rate are
shown in the category “interest-rate risks/
over-the-counter”. At the reporting date,
the fair values of the swaptions amounted
to € 565.7m (72.6m). The underlying notional principal amounts totalled € 14.8bn
(17.1bn). The investment result from derivatives includes a gain of € 493.0m (loss of
91.5m) from fluctuations in value of these
options. Although the derivatives essentially serve to hedge against market risks, they
do not meet the strict requirements of
IAS 39 for hedge accounting. IAS 39 distinguishes between fair value hedges and
cash flow hedges.
[6m]
Cash flow hedges
Cash flow hedges play a role in countering
fluctuations that may be caused, for example, by variable interest payments. In the
Group, corresponding derivatives are used
mainly to hedge against interest rate risks.
Changes in the fair value of the hedging
instrument are recognised directly in equity for this purpose. Only when the actual
cash inflow or outflow takes place, as a
result of the hedged circumstance, is the
relevant equity item reversed with recognition in profit or loss. The change in fair
value of the hedging instrument assignable
to the ineffective portion of the hedging is
Open positions
negligible. At the balance sheet date, there
is an equity item of € 2.9m (0.2m) from
cash flow hedges. The net fair value of
the derivatives falling into this category
amounted to € 19.6m (–0.7m) at the balance sheet date.
Periods to maturity in years
3–4
4–5
>5
2008
€ million € million € million € million
<1
€ million
1–2
€ million
2–3
€ million
Interest-rate risks
Traded on the stock exchange
Fair values
Notional principal amounts
– 6.1
1,601.7
–
–
–
–
–
–
–
–
Over-the-counter
Fair values
73.3
2,176.1
95.8
2,033.6
109.2
2,053.6
115.7
1,981.6
Total
Fair values
67.2
3,777.8
95.8
2,033.6
109.2
2,053.6
Currency risks
Fair values
–
–
–
–
Over-the-counter
Fair values
262.5
4,248.4
Total
Fair values
– 6.1
1,601.7
1.5
847.0
51.2
1,741.6
183.5
628.7
6,960.6 16,946.8
33.7
19,184.4
115.7
1,981.6
51.2
1,741.6
183.5
622.6
6,960.6 18,548.6
35.2
20,031.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.5
243.5
265.1
4,491.9
67.0
6,151.6
262.5
4,248.4
–
–
–
–
–
–
–
–
2.5
243.5
265.1
4,491.9
67.0
6,151.6
Equity and index risks
Fair values
497.1
3,114.7
–
–
–
–
–
–
–
–
0.1
0.8
497.1
3,115.5
81.7
7,089.2
Over-the-counter
Fair values
5.6
87.7
–
0.3
–
0.5
–
0.1
–
–
16.8
106.2
22.4
194.8
30.3
542.4
Total
Fair values
502.7
3,202.4
–
0.3
–
0.5
–
0.1
–
–
16.8
107.0
519.5
3,310.3
111.9
7,631.7
–
–
Total
2007
€ million
Open positions
Periods to maturity in years
3–4
4–5
>5
2008
€ million € million € million € million
Total
2007
€ million
<1
€ million
1–2
€ million
2–3
€ million
Credit risks
Fair values
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Over-the-counter
Fair values
–
–
–
–
–
–
–
–
– 0.9
10.3
–
–
– 0.9
10.3
– 1.2
10.3
Total
Fair values
–
–
–
–
–
–
–
–
– 0.9
10.3
–
–
– 0.9
10.3
– 1.2
10.3
Other risks
Fair values
–
–
–
–
–
–
–
–
–
–
– 0.4
10.0
– 0.4
10.0
2.3
10.0
832.4
11,228.6
95.8
2,033.9
109.2
2,054.0
115.7
1,981.7
50.2
1,751.9
Total
Fair values
202.5 1,405.8
215.2
7,321.1 26,371.0 33,835.0
[6n]
The following table provides information on
period to maturity and amount of the cash
flows hedged at the balance sheet date.
of hedged transactions
2008
€ million
2007
€ million
134.5
10.2
–
134.5
–
–
–
–
–
–
Over five years
250.0
250.0
Total
384.5
394.7
Up to one year
[7]
Other investments
The other investments mainly comprise
deposits retained by others on assumed
reinsurance business in the sum of € 89.4m
(281.3m) as well as deposits with banks
totalling € 1,515.5m (2,863.4m). The carrying amount of the deposits represents the
maximum exposure to credit risk at the
balance sheet date.
[8]
The deposits retained by others on assumed
reinsurance business include receivables
from non-consolidated affiliated companies
in the sum of € – (2.5m) and from associates
in the sum of € – (194.6m).
As other investments generally have a term
of less than one year, the fair values largely
correspond to the carrying amounts.
Reinsurers share in technical provisions*
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
–
–
0.7
0.8
139.0
135.8
0.7
1.1
140.5
137.8
5,537.3
5,335.6
811.7
781.8
–
–
–
–
6,349.0
6,117.5
Provision
for
outstanding
claims
114.2
103.8
43.3
40.9
727.2
707.7
2.7
4.4
887.4
856.8
Other
technical
provisions
102.5
106.3
181.8
196.0
4.9
4.7
0.3
0.7
289.5
307.7
5,753.9
5,545.7
1,037.6
1,019.6
871.0
848.2
3.7
6.2
7,666.3
7,419.8
Unearned
premiums
Provision
for future
policy benefits
Total
Property-casualty
2008
2007
Legal expenses
2008
2007
Group value
2008
2007
[9]
Receivables
The accounts receivable from policyholders mainly comprise insurance policies
for which the first premium has not been
paid, and outstanding premiums.
Receivables from intermediaries mainly
stem from regular invoicing procedures for
insurance agents and field sales representatives.
Tax rebate entitlements comprise accrued
income taxes and other accrued taxes of
individual companies which arise on the
basis of the respective national taxation
procedures. Deferred tax rebate entitlements are stated in the item deferred tax
assets.
[9a]
Both items have been adjusted using not
only general bad debt provisions to cater
for overall credit risk but also, where
necessary, using specific value adjustments. Cancellation provisions have been
allocated to cater for the eventuality of
policyholder default.
Receivables
Current tax receivables
Other receivables
Interest and rent
Amounts receivable on direct business
Accounts receivable on reinsurance business
Miscellaneous
Total
€ 282.5m (302.7m) of the amounts receivable on direct insurance business is apportionable to receivables from insurance
agents.
2008
€ million
2007
€ million
464.8
431.0
2,012.7
846.6
64.1
717.1
3,640.4
1,764.6
1,003.6
104.4
755.1
3,627.7
4,105.2
4,058.7
As other investments generally have a term
of less than one year, the fair values largely
correspond to the carrying amounts.
the carrying amount of the securities represents the maximum exposure to credit risk
at the balance sheet date, in accordance
with IFRS 7.
[9b]
Maturity structure
Carrying amounts
2008
2007
€ million
€ million
Up to one year
3,931.9
3,885.9
Over one and up to two years
46.3
35.3
14.3
16.8
15.8
15.3
15.6
15.3
72.5
70.1
8.8
20.0
4,105.2
4,058.7
Over ten years
Total
[10]
Deferred acquisition costs*
Deferred acquisition
costs (gross)
Life
PropertyLegal expenses
Group value
casualty
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
€ million € million € million € million € million € million € million € million € million € million
Status at 31 December previous year
4,300.4
– 5.9
Status at 1 January financial year
4,294.5
Newly deferred acquisition costs
485.9
Amortisation
– 370.5
Impairment losses
Change in consolidated group/
other effects
Carrying amount at 31 December
financial year
Health
4,226.8 1,787.7
1,761.2
361.5
332.6
128.5
–
–
– 10.7
3.4
– 4.3
4,229.5 1,787.7
1,761.2
350.8
336.1
124.2
171.4
175.7
157.7
78.3
– 144.9 – 140.5
– 135.9
– 79.8
2.7
436.8
184.4
– 361.0 – 167.9
131.7 6,578.1 6,452.4
– 2.1
– 20.9
129.7 6,557.2 6,456.5
80.3
924.3
846.2
– 81.7 – 758.7
– 723.5
– 60.5
16.3
–
–
–
– 0.2
–
–
– 60.5
16.1
– 9.3
– 21.2
–
–
– 4.1
3.8
– 0.3
0.1
– 13.7
– 17.3
4,340.1 4,300.4 1,804.2 1,787.7
381.9
361.5
122.4
128.5 6,648.4 6,577.9
* Figured based on fully consolidated Group values
Amortisation includes accrued interest as
well as write-downs. The impairment losses comprise write-ups and write-downs
4.1
stemming from changes in the assumptions underlying the calculations, which
require an adjustment in the measurement.
[11]
Deferred tax assets
The deferred tax assets stated in the balance sheet are attributable to the following
causes:
Causes of origin
2008
€ million
2007
€ million
253.5
200.3
1,223.8
775.4
95.2
84.2
Other
521.9
311.6
Total
2,094.4
1,371.5
Investments
Losses carried forward
[12]
Other assets
2008
€ million
2007
€ million
1,469.1
1,407.4
Assets from insurance contracts
450.9
404.1
Tangible assets and inventories
197.3
215.2
Other
198.0
147.6
Total
2,315.3
2,174.3
Owner-occupied property
[12a]
[12b]
Owner-occupied property
2008
€ million
1,856.6
losses at 31 December previous year
Reclassification from third party land and buildings
469.4
1,407.4
1,669.1
1.6
– 73.7
2.8
1,401.9
1,598.2
0.3
7.2
Additions
122.2
27.8
Disposals
20.6
151.5
Depreciation
32.4
36.6
Impairment losses
2.9
40.1
Write-ups
0.6
2.4
1,469.1
1,407.4
478.7
449.2
1,947.8
1,856.6
Accumulated depreciation and impairment losses at
Fair value at 31 December financial year
The impairment losses and write-ups are
predominantly due to the adjustment of
market values. The life segment is affected
by impairment losses with € 2.7m (16.9m),
health with € 0.2m (1.7m) and legal
expenses with € – (21.5m).
2,138.5
449.2
– 7.1
2007
€ million
1,615.4
1,601.0
Write-ups are distributed between the different Group segments as follows: life
€ 0.6m (1.3m), health € – (0.5m) and legal
expenses € – (0.6m).
Notes on the balance sheet – equity and liabilities
[13]
Equity
[13a]
Issued capital and capital reserve
The Company’s share capital was
€ 196,279,504.20 on the balance sheet
date and is divided into 75,492,117 individual bearer no-par shares.
The Board of Management is empowered to
raise the share capital with the consent of
the Supervisory Board during the period
ending 8 May 2012 in one or more steps by
a total of up to € 97,500,000 by issuing up
to 37,500,000 new bearer no-par shares
with right to participation in the profits of
such new shares from the beginning of the
financial year in which they are issued
against cash deposits or investments in
kind (authorised capital). In the case of
capital increase for cash, the shareholders
are to be granted a pre-emptive right. The
Board of Management is empowered to
exclude the pre-emptive right of the shareholders with the consent of the Supervisory Board,
쐍 in order to exempt peak amounts from
the pre-emptive right,
쐍 where this is necessary to grant the
owners of stock options or creditors of
convertible bonds issued by the Company or by its subsidiaries the right to
subscribe to new shares on the scale to
which they would be entitled after exercising the conversion or option rights or
after satisfying the conversion obligation,
쐍 if the issue price of the new shares is not
substantially lower than the market price
and if the issued shares excluding the
pre-emptive right in accordance with
section 186 para. 3 cl. 4 of the Stock
Corporation Act (AktG) do not exceed
10 % of the share capital, neither at the
point in time when this empowerment
comes into force nor at the time when it
is enacted. Shares are to be added to this
figure which were issued or sold under
exclusion of subscription rights, applying
either directly or in accordance with
Section 186 para. 3 cl. 4 of the Stock
Corporation Act (AktG).
Furthermore, the Board of Management is
authorised with consent of the Supervisory
Board to exclude the pre-emptive right in
cases of increases of capital against noncash contributions.
Moreover, the Board of Management is
empowered to determine with consent of
the Supervisory Board further details concerning share rights and the conditions
surrounding the issue of shares.
There is a contingent increase in the share
capital by up to € 97,500,000 by issuing up
to 37,500,000 new bearer no-par shares
with right to participation in the profits of
such new shares from the beginning of the
financial year in which they are issued (contingent capital). The contingent increase in
capital serves the concession of shares to
owners or creditors of option bonds and/
or convertible bonds which are issued in
accordance with the resolution taken at the
Annual General Meeting on 9 May 2007
and ending on 8 May 2012 by the Company
or by a subsidiary company in the Group.
This will only be implemented insofar as the
option and/or conversion rights of the
aforementioned bonds are exercised or
conversion obligations are complied with
from these bonds. The Board of Management is authorised to determine the further
details of implementing the increase in contingent capital.
[13b]
Other reserves
Unrealised gains and losses
Reserve from currency translation
Valuation result from cash flow hedges
Total
The other reserves contain € 13.4m
(13.8m) unrealised gains and losses from
the equity valuation of associates and
€ 393.3m (514.8m) unrealised gains and
[13c]
2007
€ million
406.7
528.6
– 103.2
12.5
2.9
0.2
306.4
541.3
losses mostly from other securities available for sale as well as shares in non-consolidated affiliated companies.
Retained earnings
The retained earnings are broken down into
the reserve of ERGO Versicherungsgruppe
AG required by law in the sum of € 0.5m
and the other retained earnings of the
[13d]
The claims equalisation reserves amount
to € 419.7m (445.4m); according to IFRS
and US-GAAP they are part of the equity.
[13e]
Unrealised gains and losses on investments
Group whose development and composition are detailed in the overview on
page 82.
Unconsolidated affiliated companies
Associated companies valued at equity
Cash flow hedges
Other securities – available for sale
Fixed-interest
Non-fixed-interest
Less:
Provision for deferred premium refunds recognised in equity
Deferred taxes recognised in equity
Minority interests
Consolidation effects
Total
2008
€ million
2008
€ million
2007
€ million
95.8
23.1
19.6
12.3
23.1
– 0.6
671.9
398.7
1,070.6
– 489.9
2,408.3
1,918.4
786.6
44.2
– 1.7
– 29.6
409.6
1,363.5
59.2
1.8
– 0.1
528.8
[13 f]
Minority interests
2008
€ million
2007
€ million
Unrealised gains and losses
on investments
– 1.7
1.8
Share in consolidated result
11.5
43.9
Other equity
168.8
280.8
Total
178.5
326.6
[14]
Subordinated liabilities
The subordinated liabilities item includes
on the one hand ERGO Versicherungsgruppe AG’s entry into an existing subordinated loan incurred by the Munich Re.
The fair value of subordinated liabilities
at the balance sheet date amounted to
€ 372.8m (371.4m).
It also comprises bearer bonds of Bank
Austria Creditanstalt Versicherung AG
(BA-CA Insurance) on paid-in supplementary capital.
[15]
Unearned premiums*
[15a]
Life
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
Propertycasualty
2007
€ million
Legal expenses
Group value
Gross
–
0.1
102.8
104.4
1,086.7
993.9
328.3
341.0
1,517.8
1,439.4
Reinsurers’
share
–
–
0.7
0.8
139.0
135.8
0.7
1.1
140.5
137.8
Net
–
0.1
102.1
103.5
947.8
858.1
327.5
339.9
1,377.4
1,301.6
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
2007
€ million
[15b] Development of unearned premiums*
Life
Status at
31 December
previous year
Currency
translation
effects
Change in
consolidated
group
Addition/
disposal
portfolio
Gross
premiums
written
Earned
premiums
Status at
31 December
financial year
[16]
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
Propertycasualty
2007
€ million
Legal expenses
Group value
0.1
0.5
104.4
91.2
993.9
856.1
341.0
332.4
1,439.4
1,280.2
–
0.3
– 1.9
–
– 92.5
28.1
– 21.4
– 7.7
– 115.8
20.4
–
–
–
–
83.9
–
–
–
83.9
–
–
–
– 6.1
7.4
–
–
–
–
– 6.1
7.4
6,048.5
6,328.7
5,446.5
5,317.0
4,166.2
3,847.3
917.0
908.2
16,578.2
16,401.2
6,048.6
6,329.3
5,440.1
5,311.3
4,064.8
3,737.6
908.3
891.8
16,461.8
16,270.1
–
0.1
102.8
104.4
1,086.7
993.9
328.3
341.0
1,517.8
1,439.4
2008
€ million
2007
€ million
2008
€ million
2007
€ million
Provision for future policy benefits*
[16a]
Life
Gross
Reinsurers’
share
Net
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
Propertycasualty
2007
€ million
68,342.4
64,926.3
20,497.6
19,031.6
297.7
265.7
–
–
89,137.7
84,223.6
5,537.3
5,335.6
811.7
781.8
–
–
–
–
6,349.0
6,117.5
62,805.2
59,590.6
19,685.9
18,249.8
297.7
265.7
–
–
82,788.8
78,106.1
Legal expenses
Group value
Gross provision for future policy benefits
according to type of insurance cover*
2008
€ million
2007
€ million
43,343.1
23,956.2
1,037.0
6.1
68,342.4
42,977.6
21,026.2
918.1
4.3
64,926.3
20,497.6
19,031.6
297.7
265.7
–
–
89,137.7
84,223.6
2008
€ million
2007
€ million
Actuarial interest rate < 2.5 %
3,568.5
2,119.0
Actuarial interest rate 2.5–3 %
19,698.9
18,933.9
Actuarial interest rate 3–3.5 %
26,544.9
26,166.4
Actuarial interest rate 3.5–4 %
15,738.3
14,370.6
Actuarial interest rate > 4 %
19,172.3
18,308.4
4,414.8
4,325.2
89,137.7
84,223.6
Development of gross provision for future policy benefits
2008
€ million
2007
€ million
84,223.6
81,786.8
– 16.7
– 2.3
Changes
Scheduled
Unscheduled
2,327.3
–
2,439.1
–
2,603.5
–
89,137.7
84,223.6
Segment Life
Mainly mortality risk
Mainly longevity risk (annuities)
Mainly disablement risk
Combination of more than one risk
Segment Health
Segment Property and casualty
Segment Legal expenses
Total
[16b]
Gross provision for future policy benefits
according to actuarial interest rates*
Without guaranteed interest rate
Total
[16c]
Total
[16d]
[17]
Provision for outstanding claims*
[17a]
Life
Gross
Reinsurers’
share
Net
Health
2008
€ million
2007
€ million
2008
€ million
2007
€ million
2008
€ million
Propertycasualty
2007
€ million
Legal expenses
Group value
1,316.2
1,236.5
1,018.4
949.6
3,396.0
3,246.7
1,080.0
1,087.2
6,810.6
6,520.0
114.2
103.8
43.3
40.9
727.2
707.7
2.7
4.4
887.4
856.8
1,202.0
1,132.8
975.1
908.6
2,668.9
2,539.0
1,077.3
1,082.8
5,923.2
5,663.2
2008
€ million
2007
€ million
2008
€ million
2007
€ million
The provision for outstanding claims comprises provisions for annuities from insurance coverage for health, motor third
party liability, personal accident and third
party liability insurance in the sum of
[17b]
Provision for outstanding claims
Development in the financial year
Status at 1 January (net)
Claims expenses (including expenses
for claims settlement)
Financial year
Previous years
Total
thereof: payments (including payment
for claims settlement)
Financial year
Previous years
Total
Other changes
Status at 31 December (net)
€ 325.0m (310.1m) (gross). This figure was
determined in accordance with actuarial
principles using discount rates of up to
4.0 %.
2008
€ million
2007
€ million
5,663.2
5,525.3
11,865.2
617.5
12,482.7
11,135.4
619.0
11,754.4
10,055.6
2,123.0
12,178.6
9,480.6
2,147.4
11,628.1
– 77.6
11.5
33.5
–
5,923.2
5,663.2
Expected payments from the provisions for
outstanding claims in property-casualty segment*
2008
%
2007
%
Up to one year
39.7
39.3
Over one and up to five years
34.5
36.3
Over five and up to ten years
14.2
13.6
Over ten and up to fifteen years
5.5
5.3
Over fifteen years
6.1
5.5
100.0
100.0
Total
[17c]
When ascertaining the expected payout
dates concerning the provision for outstanding claims, it should be noted that
these are of course associated with a considerable degree of uncertainty.
Gross provision for
outstanding claims
by type*
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
Provision for benefit cases
446.7
403.2
991.2
923.0
Annuity provisions
869.5
833.3
27.2
26.6
1,316.2
1,236.5
1,018.4
949.6
Total
[17d]
Gross provision for
outstanding claims
by type*
Provision for known claims
Property and
casualty
2008
2007
€ million
€ million
Legal expenses
2008
€ million
2007
€ million
2,594.5
2,479.5
703.9
718.4
IBNR reserves
503.4
483.6
376.1
368.8
Annuity provisions
298.1
283.6
–
–
3,396.0
3,246.7
1,080.0
1,087.2
Total
[17e]
[17f]
Net run-off results in property-casualty and legal expenses segments
Claims payments for the individual accident years
Accident year
Calendar year
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
≤ 1998
1999
2000
2001
2002
1,374.5
743.6
310.0
199.9
111.8
88.4
64.6
70.0
60.2
45.1
39.8
–
683.0
415.8
158.4
67.8
36.4
26.9
21.6
26.3
16.5
11.6
–
–
679.4
389.9
141.2
66.3
42.1
34.9
21.5
18.6
13.6
–
–
–
722.6
347.7
145.5
75.5
47.4
34.9
24.2
17.0
–
–
–
–
825.7
442.7
165.6
79.6
41.7
30.6
24.2
Claims reserve for the individual accident years at the respective reporting dates
Accident year
Datum
31 December 1998
31 December 1999
31 December 2000
31 December 2001
31 December 2002
31 December 2003
31 December 2004
31 December 2005
31 December 2006
31 December 2007
31 December 2008
≤ 1998
1999
2000
2001
2002
1,962.5
1,236.7
888.0
682.8
545.2
476.6
400.5
415.8
352.2
333.1
268.7
–
806.8
472.0
285.5
204.5
140.8
142.5
110.7
97.2
94.7
82.6
–
–
811.3
524.2
340.8
157.4
168.0
175.9
119.9
112.9
97.2
–
–
–
880.7
524.4
488.5
240.5
180.8
170.5
140.1
103.5
–
–
–
–
952.6
472.2
354.1
252.1
185.8
175.9
116.1
Ultimate loss for the individual accident years at the respective reporting dates
Accident year
Datum
31 December 1998
31 December 1999
31 December 2000
31 December 2001
31 December 2002
31 December 2003
31 December 2004
31 December 2005
31 December 2006
31 December 2007
31 December 2008
Currency-adjusted
net runoff result
≤ 1998
1999
2000
2001
2002
3,336.9
3,354.7
3,316.1
3,310.8
3,285.0
3,304.7
3,293.3
3,378.6
3,375.2
3,401.2
3,376.6
–
1,489.8
1,570.9
1,542.7
1,529.5
1,502.2
1,530.7
1,520.6
1,533.4
1,547.4
1,546.9
–
–
1,490.6
1,593.5
1,551.3
1,434.2
1,486.9
1,529.6
1,495.3
1,506.8
1,504.7
–
–
–
1,603.4
1,594.7
1,704.3
1,531.9
1,519.6
1,544.2
1,538.0
1,518.4
–
–
–
–
1,778.3
1,740.6
1,788.1
1,765.7
1,741.1
1,761.9
1,726.3
– 39.7
– 57.1
– 14.1
85.0
52.0
2003
2004
2005
2006
2007
2008
Total
–
–
–
–
–
909.6
485.3
196.9
80.2
43.1
39.3
–
–
–
–
–
–
947.7
503.7
169.3
80.6
49.4
–
–
–
–
–
–
–
985.9
545.2
175.2
88.4
–
–
–
–
–
–
–
–
991.9
562.0
183.6
–
–
–
–
–
–
–
–
–
1,158.8
616.0
–
–
–
–
–
–
–
–
–
–
1,277.7
2,360.8
2003
2004
2005
2006
2007
2008
Total
–
–
–
–
–
1,074.2
586.1
317.3
248.5
191.5
184.3
–
–
–
–
–
–
1,138.9
532.6
362.8
276.1
215.3
–
–
–
–
–
–
–
1,226.8
583.4
370.3
270.9
–
–
–
–
–
–
–
–
1,247.2
569.1
363.9
–
–
–
–
–
–
–
–
–
1,303.2
594.1
–
–
–
–
–
–
–
–
–
–
1,439.6
3,736.3
2003
2004
2005
2006
2007
2008
Total
–
–
–
–
–
1,983.8
1,980.9
1,909.1
1,920.5
1,906.6
1,938.7
–
–
–
–
–
–
2,086.6
1,984.0
1,983.5
1,977.4
1,966.1
–
–
–
–
–
–
–
2,212.7
2,114.5
2,076.7
2,065.6
–
–
–
–
–
–
–
–
2,239.1
2,123.0
2,101.4
–
–
–
–
–
–
–
–
–
2,462.0
2,368.9
–
–
–
–
–
–
–
–
–
–
2,717.4
22,830.9
45.1
120.5
147.1
137.7
93.1
n/a
569.6
The values in the preceding runoff triangles
cover more than 99 % of our Group’s portfolio of property-casualty and legal expenses
business. The difference between the status
of the provision for outstanding claims at
31 December 2008 for property-casualty
and legal expenses business and the value in
the runoff triangles is mainly due to the fact
that some entities have been freed from the
duty to communicate figures for reasons of
an otherwise improper cost-benefit ratio.
The ultimate loss of an accident year comprises all payments made for that accident
year up to the reporting date, plus the claims
reserve at the reporting date. Given com[18]
plete information regarding all losses
incurred up to the balance sheet date, the
ultimate loss status for each accident year
period would remain the same. The runoff
triangles are prepared on a currency-adjusted basis. To this end, all figures are translated from the respective local currency into
the Group currency (euro), consistently
using the exchange rates applicable at the
end of the year under review (i. e. at 31
December 2008). This ensures that neutral
net runoff results in the original currency
(i. e. where the ultimate loss originally estimated for an accident year and current loss
estimate are identical) remain neutral when
expressed in the Group currency.
Provision for premium refunds and policyholders’ dividends*
[18a]
Life
Health
Group value
casualty
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
Gross
Reinsurers’ share
2,815.1
–
3,762.9
–
6,173.5
66.7
6,448.2
75.7
54.0
2.6
52.0
2.7
2.5
–
2.6
–
9,045.2 10,265.6
69.3
78.4
Net
2,815.1
3,762.9
6,106.8
6,372.4
51.5
49.3
2.5
2.6
8,975.8 10,187.2
[18b] Gross provision for premium refunds and policyholders’ dividends*
Life
Health
Group value
casualty
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
Provision for
premium refunds
(based on
national regulations)
769.0
1,016.2
3,611.4
3,854.5
54.0
52.0
2.5
2.6
4,437.0
4,925.2
Provision for deferred
premium refunds
Recognised
directly in equity
533.8
1,146.2
257.9
217.4
–
–
–
–
791.7
1,363.6
1,512.3
2,046.1
1,600.6
2,746.8
2,304.2
2,562.1
2,376.3
2,593.7
–
–
–
–
–
–
–
–
3,816.5
4,608.2
3,976.9
5,340.4
2,815.1
3,762.9
6,173.5
6,448.2
54.0
52.0
2.5
2.6
Recognised in
profit and loss
Total
9,045.2 10,265.6
The development of the provision for premium refunds and policyholders’ dividends, which has been calculated on the
basis of national and statutory or contractual regulations, as well as the provision for deferred premium refunds which
and policyholders’ dividends –
development during the financial year*
arises due to the different valuation between national accounting regulations and
IFRS or USGAAP, is detailed in the following
overview individually for the business segments life and health insurance.
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
1,016.2
– 247.1
769.0
949.0
67.2
1,016.2
3,854.5
– 243.0
3,611.4
3,313.3
541.2
3,854.5
2,746.8
31.8
3,405.9
–
2,593.7
–
2,706.5
–
(based on national regulations)
Status at 1 January
Status at 31 December
Provision for deferred premium refunds
Status at 1 January
Changes resulting from unrealised
gains and losses on investments
(recognised directly in equity)
Changes resulting from other revaluations
(recognised in profit or loss)
Status at 31 December
– 612.4
– 1,145.5
40.5
– 225.9
– 120.1
2,046.1
486.4
2,746.8
– 72.1
2,562.1
113.1
2,593.7
Total provision for premium refunds
(status at 31 December)
Gross
Reinsurers’ share
2,815.1
–
3,762.9
–
6,173.5
66.7
6,448.2
75.7
Net
2,815.1
3,762.9
6,106.8
6,372.4
[18c]
[18d]
The surplus allocation from direct bonuses
in life insurance amounts to € 289.6m
(255.2m). It is granted in addition to the
profit-related refunds.
[19]
Other underwriting provisions
Gross
Reinsurers’ share
Net
2008
€ million
2007
€ million
94.0
79.4
220.2
229.3
– 126.2
– 150.0
[20]
Gross technical provisions for life insurance policies where the investment risk
is borne by the policyholders
Changes in consolidated group
Currency translation differences and other influences
Savings premiums
Unrealised gains/losses on fund assets
Withdrawal for expenses and risk
Withdrawal for benefits
Carrying amount at 31 December business year
These provisions are valued retrospectively. The withdrawal for underwriting risks
from the premiums and provision for future
policy benefits is made on the basis of
prudent assumptions regarding expected
mortality and morbidity. Here, as with the
provision for future policy benefits for nonunit linked life insurance, the underlying
calculation is based on best estimates with
2008
€ million
2007
€ million
2,308.0
1,930.3
826.1
–
– 4.9
6.5
562.8
466.2
– 591.0
41.0
19.7
26.0
141.7
109.9
2,939.6
2,308.0
appropriate provisions for adverse deviation. The provisions are directly covered by
the investments for the benefit of life insurance policyholders who bear the investment risk. Small differences in relation to
these investments arise as a result of
including unearned revenue liability in
these provisions.
[21]
Provisions for post-employment benefits
Provisions are made for most employees
within the ERGO Insurance Group for the
period after retirement directly or by way
of contributions to private institutions
through the Group companies. The type
and amount of retirement benefits correspond with the respective provision regulations (pension regulations, individual
contractual commitments etc.). These are
usually based on the term of employment
and remuneration of employees. A distinction is made here between defined contribution plans and defined benefit plans.
With regard to the defined contribution
plans, the Group companies pay contributions to insurers on the basis of contractual
stipulations or on a voluntary basis. Following the payment of contributions the
companies are not subject to any further
commitments regarding benefits. The cur-
Change in the present value of defined
benefit obligations under defined benefit plans
rent contribution payments in the sum of
€ 31.3m (32.0m) are expenses incurred
during the current year.
[21a]
Defined benefit plans are financed via pension provisions within the ERGO Insurance
Group. The pension provisions include provisions not only for existing pensions but
also entitlements to pensions that are to be
paid out in the future. The pension provisions are determined uniformly within the
Group as stipulated by IAS 19 (revised in
2004) after the Projected Unit Credit
Method. In this respect the future commitments are determined by using actuarial
procedures with a careful estimation of the
relevant factors. With regard to a dynamic
system, the expected benefits following
the occurrence of the covered event are
spread over the employees’ entire period
of employment.
2008
€ million
2007
€ million
Current service cost
Interest cost
Actuarial gains/losses
Payments
Past service cost
Other
986.6
– 9.7
9.8
32.1
52.6
– 96.1
– 34.2
4.3
– 6.4
1,046.8
– 4.9
0.1
39.9
46.1
– 110.0
– 32.8
3.8
– 1.4
Status at 31 December financial year
939.0
986.6
[21b]
Defined benefit obligations include medical-care benefits. The present value of
defined benefit obligations for these items
amounted to € 55.7m at the balance sheet
date.
Change in the plan assets
for defined benefit plans in the financial year
[21c]
2008
€ million
2007
€ million
Expected return
Capital transfer to plan assets
Payments
Other
94.8
– 7.4
5.3
4.8
– 3.4
8.6
– 2.0
– 5.0
89.9
– 3.4
–
4.7
– 2.4
7.5
– 1.5
–
95.7
94.8
2008
€ million
2007
€ million
Expected return
Capital transfer
Payments
Other
56.1
–
–
1.9
–
4.6
– 1.6
0.2
51.8
–
–
1.6
0.2
4.6
– 2.4
0.3
61.2
56.1
Change in the reimbursement
rights for defined benefit plans in the financial year
The reimbursement rights derive from reinsurance concluded to cover the benefit
obligations.
Funded status of the defined benefit plans
2008
€ million
2007
€ million
Unfunded obligations
Present value
Past service cost not yet recognised
Other
Net balance sheet liability
836.4
–
–
836.4
863.1
–
–
863.1
Wholly/partly funded obligations
Present value
Fair value of plan assets
Other receivables
Other
102.6
– 95.7
–
0.8
–
7.7
123.5
– 94.8
–
–
–
28.7
Unfunded or wholly/partly funded defined benefit obligations
Present value
Fair value of plan assets
Other receivables
Other
939.0
– 95.7
–
0.8
–
844.1
986.6
– 94.8
–
–
–
891.8
2008
€ million
2007
€ million
Expenses
Payments
Capital transfer to plan assets
Transfer to other receivables
Actuarial gains/losses recognised in equity
Other
891.8
– 2.3
4.5
82.7
– 30.6
– 8.6
0.8
– 92.7
– 1.5
956.9
– 1.5
0.1
83.5
– 28.9
– 7.5
–
– 108.8
– 2.0
844.1
891.8
Change in the provision for defined benefit plans
in the financial year
[21d]
[21e]
[21f]
Breakdown of expenses booked
in the financial year
2008
€ million
2007
€ million
Current service cost
Interest cost
Expected return on plan assets
Expected return on reimbursements
Past service cost
Other
32.1
52.6
– 4.8
– 1.9
4.3
0.4
39.9
46.1
– 4.7
– 1.6
3.8
–
Total
82.7
83.5
The actual return on plan assets amounts
to € 1.4m, and the actual return on reimbursements to € 1.9m.
The expenses are shown mainly under
“operating expenses” and “expenses for
claims and benefits” in the consolidated
[21g]
Breakdown of plan assets to cover
pension obligations
Fixed-interest securities and loans
Land and buildings
Other
Total
[21h]
2008
%
2007
%
33.4
63.7
0.4
2.5
45.5
53.5
0.3
0.7
100.0
100.0
2008
%
2007
%
6.0
5.2
5.4
2.9
2.0
2.5
5.5
5.5
4.9
2.9
1.7
2.1
The consolidated companies used the following actuarial assumptions (weighted
average values) for calculating their pension obligations:
Discount rate
Expected rate of return on fund assets
Expected rate of return on reimbursements
Future increases in entitlement/salary
Future pension increases
Medical cost trend rate
income statement. Included in the statement of recognised income and expenses
are actuarial gains/losses of € –91.7m
(–109.0m) for the financial year and
€ – 4.4m (87.3m) cumulative.
The expected rate of return on plan assets
is determined on the basis of anticipated
long-term capital yields.
For the financial year 2009, capital transfers of € 4.2m to plan assets are expected.
[21i]
A change in the medical cost trend rate by
one percentage point would have the following effects on the amount of defined
benefit obligations and pension expenses:
Increase
by one
percentage
point
€ million
Reduction
by one
percentage
point
€ million
9.9
1.3
– 7.9
– 1.0
Present value of defined benefit obligations
Pension expenses
Other figures for the current financial year
Present value of defined benefit obligations (excluding medical-care benefits)
Plan assets
Deficit
2008
€ million
[21j]
883.3
95.7
787.6
[22]
Other provisions
Provision for
Early-retirement benefits/semi-retirement
Unearned commission
Outstanding invoices
Bonuses
Impending losses
Other in-house staff and field representatives’
remuneration
Holiday and overtime pay
Anniversary benefits
Sales contests
Miscellaneous
Total
The provisions for early-retirement
benefits/semi-retirement and anniversary
benefits are mainly long term, whereas
the provisions for unearned commission,
2008
€ million
2007
€ million
181.9
157.0
81.9
64.6
44.7
206.2
169.8
91.4
60.0
31.4
42.3
34.9
32.6
28.1
45.7
33.8
33.8
25.6
438.6
405.7
1,106.6
1,103.4
outstanding invoices, holiday and overtime
pay, and miscellaneous are essentially
short term.
[23]
Other provisions
Development during financial year
2008
€ million
2007
€ million
1,103.4
993.9
6.2
0.5
1,097.2
994.4
12.9
22.4
Consumption
638.8
615.6
Release
118.9
50.7
3.4
0.6
750.9
752.3
–
–
1,106.6
1,103.4
Discounting effects
Additions
Other changes
[24]
Liabilities
[24a]
Current tax liabilities
Other liabilities
Deposits retained on ceded business
Accounts payable on direct insurance business
Amounts due to banks
Accounts payable on reinsurance business
Interest and rents
Accruals and deferred income
In connection with social security
Miscellaneous other liabilities
Total
Current tax liabilities comprise current
taxes on income and other taxes of the
individual companies, based on their
respective national taxation. Deferred tax
obligations are shown under “deferred tax
liabilities”.
The liabilities resulting from direct insurance business payable to policyholders
are mainly dividends on policies that
accumulate compound interest, premiums
2008
€ million
2007
€ million
909.3
822.5
6,794.5
3,714.4
460.1
95.9
24.3
13.2
8.7
2,561.8
13,672.9
6,645.3
3,991.2
427.9
102.1
24.2
17.6
6.2
1,413.6
12,628.0
14,582.2
13,450.5
deposits and other advance premium
payments as well as contracts without a
significant risk transfer.
Deposits retained on ceded business are
collateral for technical provisions covering
business ceded to reinsurers and retrocessionaires. As a rule, the changes in deposits retained on ceded business derive
from the changes in the relevant technical
provisions covering ceded business.
The following table shows the contractual
maturities of the liabilities. Since liabilities
from direct insurance business are intertwined with the underlying insurance business, the resulting liquidity risk is only to be
explained together with the corresponding
insurance contracts. Deposits retained on
Liabilities
Maturity structure
ceded business thus do not have a fixed
maturity date, their release generally being
dependent on runoff of the corresponding
provisions. Consequently, both positions
are not taken into account in the following
table.
2008
€ million
2007
€ million
Up to one year
Over one and up to two years
Over ten years
2,638.0
29.3
25.4
26.8
11.9
354.9
77.9
1,476.9
121.0
12.8
25.8
4.1
77.1
273.7
Total
3,164.2
1,991.5
Deferred tax liabilities
Causes of origin
[25]
2008
€ million
2007
€ million
1,441.3
987.1
Deferred acquisition costs
534.3
458.9
321.5
316.2
Intangible assets
131.7
40.5
Other
369.3
257.5
Total
2,798.0
2,060.2
Investments
[24b]
Notes on the consolidated income statement
[26]
Premiums*
[26a]
Life
Health
Group value
casualty
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
Total
premiums
7,180.9
7,312.2
5,446.5
5,317.0
4,166.2
3,847.3
917.0
908.2 17,710.6 17,384.8
Gross
premiums
written
6,048.5
6,328.7
5,446.5
5,317.0
4,166.2
3,847.3
917.0
908.2 16,578.2 16,401.2
Change
in unearned
premiums
(– = expense)
0.1
0.7
– 6.4
– 5.8
– 101.5
– 109.7
– 8.7
Gross earned
premiums
6,048.6
6,329.3
5,440.1
5,311.3
4,064.8
3,737.6
908.3
582.1
622.2
233.1
237.0
478.4
599.0
1.9
2.1
1,295.5
1,460.3
–
0.2
–
0.2
15.7
– 1.1
0.2
0.7
15.9
0.1
582.1
622.5
233.1
237.3
494.0
597.9
2.1
2.8
1,311.4
1,460.5
5,466.5
5,706.9
5,207.0
5,074.0
3,570.7
3,139.7
906.2
Ceded
premiums
written
Change
in unearned
premiums
(reinsurers’
shares)
(– = income)
Ceded
premiums
Net
earned
premiums
– 16.4
–116.4
891.8 16,461.8 16,270.1
889.0 15,150.4 14,809.6
In accordance with international accounting principles the premiums from the
gross provision for premium refunds and
policyholders’ dividends are not stated as
premiums but reduced in the change in the
provision for future policy benefits. In life
insurance these amount to € 92.5m
(92.3m) and in health insurance to
€ 488.8m (219.4m).
– 131.2
In the case of life insurance products
where the policyholders bear the investment risk, only those parts of the premiums
used to cover the risks insured and associated costs are treated as premiums.
by countries
2008
€ million
2007
€ million
Germany
12,619.2
12,870.8
Poland
674.1
505.3
Belgium
659.0
597.1
Italy
494.5
556.6
Spain
461.9
435.6
Turkey
382.1
383.0
Austria
300.3
211.2
The Netherlands
172.3
162.4
Other
814.9
679.2
Total
16,578.2
16,401.2
by lines of business*
2008
€ million
2007
€ million
Property and casualty
thereof:
Motor
Personal accident
Fire and property
Liability
Transport and aviation
Other
4,166.2
3,847.3
1,569.2
858.7
721.5
513.6
130.5
372.6
1,350.1
846.7
712.2
513.1
135.0
290.2
[26b]
[26c]
[27]
Investment result
[27a]
Investment result
according to segments*
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
127.5
477.3
37.0
72.3
0.7
7.3
– 0.4
– 0.7
Investments in associates
– 13.7
187.6
– 8.1
55.0
994.1
833.1
477.9
369.0
7.6
11.0
–
–
– 1,316.5
1,092.6
– 807.4
300.7
1,428.8
112.3
1,257.8
2,350.4
472.8
– 334.6
474.2
774.9
1,676.2
1,796.1
– 102.1
2,259.2
393.8
59.1
28.2
803.1
Other investments
– 773.5
– 173.9
– 59.3
– 55.4
Total
2,131.3
3,590.7
506.2
1,243.3
Land and buildings, including buildings on
third-party land
Other securities
Held to maturity
Available for sale
Non-fixed-interest
Fixed-interest
Held for trading
The result for land and buildings includes
rental income of € 217.6m (244.9m).
Property-casualty
2008
2007
€ million
€ million
Legal expenses
2008
2007
€ million
€ million
2008
€ million
Other
2007
€ million
2008
€ million
Group value
2007
€ million
7.3
33.5
0.5
0.7
4.1
– 2.9
176.4
580.9
1.2
– 10.3
0.5
0.5
– 5.9
19.4
– 3.8
16.2
– 2.4
– 16.0
1.8
1.7
18.9
18.2
– 3.5
246.4
66.8
40.8
10.5
5.9
3.9
3.1
1,553.2
1,251.8
–
–
0.4
0.6
–
–
8.0
11.5
– 184.2
135.1
– 21.8
37.7
– 2.9
72.9
– 2,332.8
1,639.1
157.8
– 26.4
134.5
269.7
50.8
29.0
43.8
81.5
8.9
6.0
7.5
80.4
2,119.1
– 213.7
1,917.7
3,556.9
96.8
70.4
0.7
270.4
12.2
41.6
1.3
83.4
0.9
6.9
– 0.2
80.2
2,179.9
1,974.2
– 72.1
3,496.3
6.3
– 2.1
– 1.2
– 1.2
1.8
– 8.4
– 826.0
– 240.9
149.5
316.2
53.9
90.9
29.7
109.7
2,870.5
5,350.8
[27b]
Investment income and expenses
Regular income
2008
2007
€ million
€ million
Land and buildings, including buildings
on third-party land
Investments in associates
217.6
244.9
9.5
22.4
– 9.7
137.5
1,709.5
1,426.8
8.0
11.5
570.1
545.3
2,205.0
2,775.2
2,219.3
2,764.6
84.3
2,867.5
86.2
2,862.3
131.1
136.0
4,925.4
4,829.9
Other securities
Held to maturity
Available for sale
Non-fixed-interest
Fixed-interest
Held for trading
Other investments
Total
The total interest cost amounts to
€ 114.6m (106.5m).
Management expenses for investments
amount to € 186.1m (182.0m). Other
expenses for investments totalled € 94.9m
(90.6m). Thereof, expenses for the repair
and maintenance of property amounted to
€ 33.8m (38.3m).
Income from investments for life insurance
policies where the investment risk is borne
by the policyholder amounted to € 76.2m
(52.2m). Expenses for these investments
were € 637.7m (49.9m).
Income deficits resulting from shares in
associated companies are mainly due to
changes to the proportion in equity in the
context of the at-equity valuation.
Income
Gains on disposals
2008
2007
€ million
€ million
Write-downs
2008
2007
€ million
€ million
Expenses
Losses on disposals
2008
2007
€ million
€ million
2008
€ million
Write-ups
2007
€ million
8.8
16.9
35.1
476.4
84.8
130.7
0.4
26.4
–
–
0.1
1.6
3.0
2.9
10.4
4.9
–
–
6.2
143.0
–
20.6
–
13.4
–
1.1
0.7
3.4
153.5
14.6
3.5
164.8
–
–
–
–
–
–
–
–
6.7
4.0
710.0
1,649.6
2,446.4
307.9
1,173.1
251.8
3.2
9.8
25.4
29.4
197.7
907.7
71.1
1,720.6
78.5
2,524.9
0.5
308.4
208.4
1,381.5
397.5
649.3
1,811.1
1,820.9
170.9
200.3
1,141.5
2,049.2
209.5
1,930.1
293.3
2,818.3
337.8
646.2
563.6
1,945.2
200.9
850.2
–
–
–
–
–
–
–
–
1,829.8
218.2
2,091.4
2,554.5
3,059.6
815.2
1,959.4
1,059.8
[27c]
Investment income and expenses
according to segments*
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
Regular income
3,282.9
3,228.8
1,226.0
1,195.1
Write-ups
1,469.0
152.2
308.9
49.8
Gains on the disposal of investments
1,429.9
1,752.4
365.1
490.1
76.2
52.2
–
–
Total income from investments
6,257.9
5,185.6
1,900.0
1,735.0
Write-downs
2,057.3
544.6
696.2
182.0
Losses on the disposal of investments
1,151.6
740.3
612.8
226.1
84.6
73.8
28.3
25.2
Management expenses for
investments
122.7
120.0
38.9
37.8
Other expenses for investments
710.3
116.2
17.5
20.6
Total expenses for investments
4,126.6
1,594.9
1,393.8
491.7
Investment result
2,131.3
3,590.7
506.2
1,243.3
Other income from investments
Interest charges
Property-casualty
2008
2007
€ million
€ million
Legal expenses
2008
2007
€ million
€ million
2008
€ million
Other
2007
€ million
2008
€ million
Group value
2007
€ million
298.5
264.5
73.0
69.4
45.2
72.1
4,925.4
4,829.9
40.1
13.8
6.8
1.8
5.1
0.6
1,829.8
218.2
256.6
195.3
32.6
44.6
7.2
72.1
2,091.4
2,554.5
–
–
–
–
–
–
76.2
52.2
595.2
473.6
112.3
115.8
57.5
144.9
8,922.8
7,654.8
265.5
75.3
28.8
4.9
11.8
8.4
3,059.6
815.2
161.4
65.5
23.4
14.3
10.2
13.7
1,959.4
1,059.8
1.7
1.5
–
–
–
6.0
114.6
106.5
12.7
11.8
6.1
5.7
5.6
6.8
186.1
182.0
4.4
3.3
0.2
0.1
0.2
0.3
732.6
140.5
445.7
157.4
58.5
24.9
27.8
35.2
6,052.3
2,304.0
149.5
316.2
53.9
90.9
29.7
109.7
2,870.5
5,350.8
[28]
[29]
Other income
2008
€ million
2007
€ million
Foreign currency exchange gains
Income from services rendered and
from broking insurance policies
Income from owner-occupied property
Income from releases from other
non-technical provisions
Interest from other than expenses
Miscellaneous
1,746.2
787.1
149.9
98.1
180.4
58.5
65.8
35.6
128.6
56.1
89.1
103.1
Total
2,224.2
1,274.4
2008
€ million
Life
2007
€ million
2008
€ million
Health
2007
€ million
Claims and benefits paid
Change in provision for outstanding claims
Change in provision for future policy
benefits and other provisions
Expenses for premium refunds
and policyholders’ bonuses
Other technical result (– = income)
Gross expenses for claims
and benefits
6,651.6
60.0
6,509.4
– 131.9
3,741.1
69.9
3,548.0
66.0
– 346.5
741.8
993.9
1,039.2
186.3
124.0
1,045.6
177.2
280.9
– 2.7
1,001.2
–
6,675.4
8,342.2
5,083.0
5,654.4
Other technical result (– = expense)
Reinsurers’ share of expenses
for claims and benefits
484.2
7.2
443.7
16.4
163.8
2.4
165.2
2.3
70.0
168.6
21.8
27.1
–
– 159.7
–
– 224.0
– 1.1
– 35.6
12.3
– 48.7
401.8
404.7
151.3
158.2
6,167.4
52.8
6,065.8
– 148.3
3,577.3
67.5
3,382.8
63.7
– 416.6
573.2
972.1
1,012.1
186.3
283.7
6,273.6
1,045.6
401.2
7,937.5
281.9
32.9
4,931.7
988.9
48.6
5,496.1
Other technical result (– = income)
Property-casualty
2008
2007
€ million
€ million
Legal expenses
2008
2007
€ million
€ million
2008
€ million
Group value
2007
€ million
2,233.1
181.8
2,074.0
184.4
487.4
17.6
469.7
27.5
13,113.2
329.3
12,601.2
146.0
40.1
42.5
0.8
0.7
688.3
1,824.3
14.1
30.8
19.2
14.0
1.1
– 7.2
1.3
– 9.0
482.5
144.8
2,067.4
182.2
2,499.9
2,334.2
499.7
490.3
14,758.1
16,821.0
284.7
17.2
361.0
2.9
1.9
– 1.6
3.2
– 2.0
934.6
25.2
973.1
19.6
0.3
– 0.7
– 0.3
– 0.3
91.9
194.8
1.2
6.1
1.3
4.4
–
– 0.2
–
– 0.1
0.1
– 189.4
13.6
– 268.4
309.5
368.9
– 0.1
0.9
862.5
932.7
1,948.4
164.6
1,713.0
181.5
485.5
19.2
466.5
29.5
12,178.6
304.1
11,628.1
126.4
39.8
43.2
1.1
1.0
596.4
1,629.5
12.9
24.7
2,190.5
17.9
9.7
1,965.3
1.1
– 7.1
499.8
1.3
– 8.9
489.4
482.4
334.2
13,895.6
2,053.7
450.6
15,888.3
[30]
Net operating expenses*
Life
Group value
casualty
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
Acquisition costs
Administration
expenses
Deferred
acquisition costs
Amortisation of PVFP
Gross operating
expenses
Reinsurers’ share of
acquisition costs
deferred acquisition costs
Commission received
on ceded business
operating expenses
Health
872.4
905.6
608.8
580.3
787.6
737.8
216.5
213.1
2,485.4
2,436.8
262.7
273.5
162.2
167.4
471.3
463.0
137.3
139.4
1,033.6
1,043.2
– 54.9
12.0
– 91.8
8.1
– 16.4
1.1
– 26.5
1.2
– 35.2
–
– 20.9
–
1.5
–
1.4
–
– 105.0
13.1
– 137.8
9.3
1,092.2
1,095.3
755.7
722.3
1,223.7
1,179.9
355.4
353.9
3,427.0
3,351.4
–
–
–
–
2.2
2.5
–
–
2.2
2.5
– 16.2
– 14.1
–
–
1.1
– 1.7
–
–
– 15.0
– 15.9
136.1
174.8
68.3
67.9
107.0
140.5
0.3
0.4
311.6
383.5
119.9
160.7
68.3
67.8
110.3
141.2
0.3
0.4
298.8
370.2
972.3
934.6
687.4
654.5
1,113.4
1,038.6
355.1
353.6
3,128.2
2,981.3
[31]
Other expenses
2008
€ million
2007
€ million
1,826.4
829.9
Expenses for services rendered and for
broking insurance policies
145.3
168.6
Interest and similar expenses
121.4
90.4
Other write-downs
52.0
64.0
Allocation to provisions
18.2
4.3
Expenses for owner-occupied property
16.2
59.5
475.4
278.9
2,636.9
1,495.6
Currency exchange losses
Other non-technical expenses
Total
Only those parts of the expenses for
employee pensions and the other writedowns are stated here which do not affect
the underwriting or the investment items.
[32]
Amortisation of goodwill
Applying IFRS 3, goodwills stated in the
balance sheet are no longer amortised on a
regular basis. An impairment test was carried out at the balance sheet date.
Impairment losses on goodwill from capital
consolidation amount to € 176.8m (7.6m),
of which € 175.0m is for Bank Austria
Creditanstalt Insurance, Vienna.
[33]
Finance costs
By finance costs we understand all interest
and other expenses directly attributable to
strategic debt. Debt has a strategic character for us if it does not have an original,
direct link with our underwriting business.
The increase to € 60.8m (21.9m) mainly
[34]
Taxes on income
[34a]
Current tax and the change in deferred tax
together make up the taxes on income item
in the consolidated income statement.
Taxes on income
stems from the liabilities of ERGO Versicherungsgruppe AG due to Münchener Rückversicherungs-Gesellschaft AG. The loans
serve to strengthen the liquidity basis in
order to finance strategic assets.
Apart from current tax expenditure there
was income from deferred tax which resulted from changes in deferred tax items
due to revaluations.
2008
€ million
2007
€ million
Current tax for financial year
364.0
321.5
Current tax for other periods
– 23.4
1.8
Deferred tax resulting from the occurrence
or reversal of temporary differences
– 55.5
95.1
Deferred tax resulting from the occurrence
or reversal of loss carry-forwards
27.2
– 24.1
Effects of changes in tax rates
or tax law on deferred tax
– 57.8
– 135.1
Total
254.5
259.2
The Group tax rate corresponds with the
average income tax burden of all domestic
Group companies. This burden is calculated on the basis of the German corporation
tax in the sum of 15 % (25 %) plus a solidarity surcharge of 5.5 % on this part. Together with the domestic trade tax the uniform
Group tax rate is thus 32 % (40 %).
The following transfer of the expected tax
expenditure to the actual tax expenditure is
stated on the basis of the operating result.
Reconciliation to effective tax expenses
2008
€ million
2007
€ million
Result before taxes on income (after finance costs)
x Group tax rate 32 % (40 %)
346.7
1,040.2
= Derived taxes on income
110.9
416.0
69.3
56.5
5.2
– 81.2
56.5
150.3
53.3
158.7
– 4.8
– 131.1
3.4
81.1
254.5
259.2
+
+
+
+
+
Tax effect of
none-deductible expenses
tax-free income
tax rate differences
tax for prior years
amortisation of goodwill or PVFP
miscellaneous
= Taxes on income shown
[35]
Earnings per share
The undiluted earnings per share for the
individual periods are calculated by dividing the consolidated result attributable
to ERGO equity holders by the weighted
average figure of the ordinary shares in
Consolidated result (attributable
to ERGO equity holders)
Number of shares
Group earnings per share
Cash flow statement
[34b]
circulation in the respective period. The
diluted earnings per share corresponds
with the undiluted earnings per share in
both financial years.
2008
2007
€ million
74.9
738.4
million
75.5
75.5
€
0.99
9.78
[36]
For a comment on the cash flow statement,
reference is made to page 51 f.
[37]
Personnel expenses
Wages and salaries
Social security contributions and employee assistance
Expenses for employees’ pensions
Total
[38]
2008
€ million
2007
€ million
1,344.8
1,330.5
251.7
247.7
77.8
80.8
1,674.3
1,659.0
2007
1 July 2007
30. 6. 2014
–
134.07 €
–
29.84 €
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
94,115
–
10,422*
83,693
–
–
–
–
–
–
2006
1 July 2006
30. 6. 2013
–
108.87 €
3.13 €
33.02 €
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
130,667
–
–
130,667
–
–
–
6,849*
123,818
–
–
–
–
123,818
123,818
Long-term incentive plan
Incentive plan
Plan commencement
Plan end
Old initial share price
New initial share price after 2003 capital increase
Intrinsic value 2008 for one right
Fair value 2008 for one right
Number of rights on 31 December 2002
Additions
Exercised
Forfeited
Additions
Exercised
Forfeited
Exercisable at year-end
Additions
Exercised
Forfeited
Additions
Exercised
Forfeited
Additions
Exercised
Forfeited
Additions
Exercised
Forfeited
2008
1 July 2008
30. 6. 2015
–
121.84 €
–
33.80 €
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
132,306
–
–
132,306
–
* Owing to retirement from the Board of Management, payments in the amount of the grant value were made in lieu of
the stock appreciation rights and rights already granted under the conditions reduced pro rata temporis.
Other information
Since 1 July 2002, at yearly intervals, ERGO
Versicherungsgruppe AG and individual
affiliated companies have set up long-term
incentive plans, each with a term of seven
years. Entitled to participate in these shareprice-related remuneration plans are members of the Boards of Management and
selected senior management. The participants receive a certain number of stock
appreciation rights based on the Munich Re
shares.
2005
1 July 2005
30. 6. 2012
–
88.10 €
23.90 €
37.07 €
–
–
–
–
–
–
–
–
–
–
158,648
–
–
158,648
–
–
–
3,072
155,576
–
–
30,486
–
125,090
125,090
–
16,983
–
108,107
108,107
2004
1 July 2004
30. 6. 2011
–
88.65 €
23.35 €
34.14 €
–
–
–
–
–
124,678
–
–
124,678
–
–
–
23,123
101,555
–
–
31,390
–
70,165
70,165
–
24,278
–
45,887
45,887
–
2,000
–
43,887
43,887
2003
1 July 2003
30. 6. 2010
86.24 €
82.02 €
29.98 €
33.87 €
–
139,006
–
–
139,006
1,651
–
13,414
127,243
–
–
64,361
22,850
40,032
40,032
–
25,002
–
15,030
15,030
–
4,143
–
10,887
10,887
–
–
–
10,887
10,887
The relevant initial share price for the stock
appreciation rights is calculated from the
average of closing prices for Munich Re
shares in Frankfurt Xetra trading over the
last three months prior to plan commencement.
2002
1 July 2002
30. 6. 2009
260.37 €
247.64 €
–
0.12 €
45,476
2,337
–
–
47,813
–
–
3,050
44,763
–
–
–
9,098
35,665
35,665
–
–
–
35,665
35,665
–
–
–
35,665
35,665
–
–
–
35,665
35,665
Other information
The initial price for the 2008 long-term
incentive plan is € 121.84 (134.07). As a
result of Munich Reinsurance Company’s
capital increase in the business year 2003,
the initial share prices for the stock appreciation rights issued up to then and the
number of stock appreciation rights
already granted were adjusted in accordance with the conditions.
In the year under review, a total of 132,306
(94,115) stock appreciation rights were
granted, 126,676 (90,383) of these to
Board of Management members. The
future obligations arising from the longterm incentive plans are covered with
Munich Re shares or options on Munich Re
shares.
The personnel expenses and income
incurred for the stock appreciation rights
are determined on the basis of the change
in the fair value of the underlying options.
The fair value recognises not only the
intrinsic value (difference between current
share price and initial share price of the
stock appreciation rights) but also the possibility of growth in value up to the date of
forfeiture or expiry of the rights and is
determined on the basis of recognised valuation models, taking into account the
exercise conditions. The stock appreciation rights of the financial year had a fair
value of € 3.6m (2.9m) when granted.
At each balance sheet date, the fair value is
calculated and reserved; this amount is
recognised in full. The personnel expenses
recognised in the income statement therefore correspond to the change in the provision in the year under review, taking into
account any rights exercised. In the year
under review, provisions of € 17.8m
(13.8m) had to be posted; the personnel
expenses totalled € 4.3m (– 0.7m). The
weighted average share price for the stock
appreciation rights exercised in 2008 was
€ 110.45 for plan year 2004 and € 123.50
for the plan year 2005. No stock appreciation rights were exercised in 2008 from the
schemes operated in 2002, 2003 and
2006. The intrinsic value of the exercisable
stock appreciation rights amounted to
€ 4.3m (7.3m) at the balance sheet date.
Each stock appreciation right entitles the
holder to draw in cash the difference
between the Munich Re share price at the
time when the right is exercised and the
initial share price.
The stock appreciation rights may only be
exercised after a two-year vesting period
and then only if the share price is at least
20 % higher than the initial price. In addition, Munich Re shares must have outperformed the Euro Stoxx 50 twice at the end
of a three-month period during the term of
the plan. The gross amount that may be
obtained from the exercising of the stock
appreciation rights is limited to an increase
of 150 % of the initial share price.
Stock appreciation rights not exercised on
the last trading day of the plan term are
exercised on the participant’s behalf insofar as the prerequisites for this are met. If
the prerequisites are not met, the stock
appreciation rights are forfeited.
If another company acquires control of
Munich Re or the company’s group of
shareholders changes significantly due to
a merger or comparable transaction or
intended business combination (“change in
control”), all plan participants from the
Munich Re Group may exercise their stock
appreciation rights within 60 days after the
change in control becomes effective, even
if the prerequisites for exercising the rights
are not yet met at that juncture.
Total remuneration of the Supervisory Board and the Board of Management
Expenditure for the Supervisory Board
totalled € 1.0m (1.1m), of which € 0.3m
(0.4m) is profit-related remuneration.
Total remuneration of the Board of Management’s members for their activities on
behalf of the holding company and Group
companies amounted to € 9.0m (12.6m),
of which variable elements accounted for
64 % (70 %).
Former members of the Board of Management and their surviving dependants
received € 4.0m (8.5m) in total. A provision
of € 38.7m (36.8m) has been set aside for
current and future pension payments to
this group of people.
Structure of the remuneration system for the Board of Management
In conformity with the German Corporate
Governance Code, we explain here the
principles of the remuneration system for
ERGO’s Board of Management and the
structuring of the individual remuneration
components.
Until now, the structure and system governing the Board of Management’s remuneration has been determined by the Board
Committee of the Supervisory Board,
whose three members comprise the Chairman of the Supervisory Board, another of
the shareholder representatives and one
of the employee representatives. Regular
reviews of the remuneration structure have
been conducted by the full Supervisory
Board.
[39]
[39a]
[39b]
In accordance with the German Corporate
Governance Code, in future the remuneration system for the Board of Management,
along with the key elements of relevant contracts, will be determined by the full Supervisory Board. The Board Committee of the
Supervisory Board will prepare the draft
resolutions for submission to the full Supervisory Board, which will review the remuneration system at least every three years
unless earlier reviews become necessary in
individual cases.
Other information
Structure and system of the Board of Management’s remuneration
Component
Assessment basis/
parameters
Corridor
Precondition for
payment
Payment
Basic remuneration,
remuneration in kind/
fringe benefits
(company car,
healthcare, insurances)
Function, responsibility,
length of service
on the Board
Fixed
amount
Contractual
stipulations
Monthly
Short-term
compensation
component:
Annual bonus
Consolidated result
(ERGO Group)
Divisional result
Individual objectives
0–150 %
(fully achieved
=100 %)
Achievement of objectives
Once annually in
following year
Medium- and long-term
compensation
component:
Medium-term bonus
Consolidated result
(ERGO Group)
50–150 %
(fully achieved
=100 %)
Achievement of objectives
at least 50 % on average
over three years
In the fourth year
Share-price-based
Appreciation in
compensation
Munich Re
component:
share price
Long term incentive plan
(stock appreciation
rights; term: seven years)
0–150 %
(cap at 150 %
on share price
increase)
쐍 End of vesting period
(2 years)
쐍 Share price increase 20 %
쐍 Munich Re shares have
outperformed the
Euro Stoxx 50 twice at the
end of three-month period
during the term of the plan
As from third year of plan
until end of plan
Retirement plan:
Pension entitlement
Fixed amount
쐍 Retirement
–
쐍 Insured event
쐍 Premature termination
or non-extension of
employment contract under
certain circumstances
Basic remuneration,
number of years
on the Board
Fixed components
Basic remuneration
The fixed annual basic remuneration is paid
in the form of a monthly salary.
Remuneration in kind/fringe benefits
Remuneration in kind and fringe benefits
are granted according to function, and are
commensurate with market conditions.
Income tax on the benefits in question is to
be paid individually by each member of the
Board of Management.
Variable components
Short-term compensation component –
Annual bonus
This compensation component is based on
different categories of objectives. The targets and scaling for Group and divisional/
segment objectives are geared to particular indicators; individual objectives form
the basis for the achievement of personal
targets. The key indicators used for the
Group and divisional/segment objectives
comprise key figures from external
accounting and from value-based management.
Medium- and long-term compensation
component – Medium-term bonus
The medium-term bonus is based on performance over a three-year period and is
measured on the basis of the Group result
category from the short-term compensation component. Payments are made only
if the achievement rate is at least 50 % on
average for the three-year period. The
three-year planning period started in 2006
expired on 31 December 2008.
A medium-term bonus has again been set
up for the 2009 financial year, although its
structure differs significantly from the previous three-year bonus plans. Whilst the
new mid-term incentive plan is also geared
to performance over a three-year period, it
is set up afresh each year. It is intended to
promote the mid- and long-term increase in
the Munich Re Group’s value in terms of
internal value creation of the ERGO Group
(value-based success factors) and improving the Munich Re share’s total shareholder return (TSR).
Share-price-based compensation
component – Long-term incentive plan
This remuneration component, with a longterm perspective, is linked to the sustained
appreciation of Munich Re’s share price.
The long-term incentive plan is set up each
year, and the participants receive a certain
number of stock appreciation rights. These
can only be exercised if, after a two-year
vesting period, Munich Re’s share price has
risen by at least 20 % since inception of the
plan and the shares have outperformed the
Euro Stoxx 50 at least twice at the end of a
three-month period during the term of the
plan. The exercise hurdles are exacting and
in keeping with the German Corporate
Governance Code.
Whether the stock appreciation rights can
be exercised and, if so, when, is not certain
at the time they are granted. The exercising
and proceeds depend on the development
of the share price and the exercise price
and date. The amount of income is limited.
Up to now, stock appreciation rights have
only been exercised under the plans set up
in 2003 and 2005. Further information on
the long-term incentive plans can be found
in the note [38].
Weighting of remuneration components
In the case of 100 % achievement of objectives (annual bonus, medium-term bonus)
and based on the imputed value of the
share-price-linked compensation (longterm incentive plan) at the granting date,
the weightings of the individual components in terms of total remuneration are as
follows: basic remuneration approx. 30 %,
annual bonus approx. 35 %, medium-term
bonus approx. 20 %, and long-term incentive plan approx. 15 %. Annual bonus, medium-term bonus and long-term incentive
plan together form a well-balanced incentive system.
Other information
In addition it is ensured that the targets set
for the members of the Board of Management do not have undesirable effects.
In accordance with the recommendations
of the German Corporate Governance
Code, the monetary remuneration of the
Board members thus comprises fixed and
variable components.
The total remuneration is set at an appropriate level by the Board Committee of the
Supervisory Board and reviewed at regular
intervals, also taking into consideration data
from peer-group companies. Criteria for the
appropriateness of compensation are in
particular the respective Board member’s
duties, the Board member’s personal performance, the performance of the Board as a
whole and the financial situation, performance and future prospects of the Company. New Board members are generally
placed at a level which allows sufficient
potential for development in the first three
years.
Other remuneration
In the case of seats held on other boards,
remuneration for board memberships must
be paid over to the Company or is deducted in the course of regular compensation
computation. Excepted from this is remuneration for memberships explicitly recognised by the Company as personal. No such
memberships exist at present. In the event
of a change of control, the members of the
Board of Management have no contractual
entitlement to payments. As far as the
share-price-based remuneration is concerned, the conditions merely provide for
special exercise options in the event of a
change of control.
Pension
Up to and including 2008, the members of
the Board of Management are members of
a defined benefit plan under which they
will receive a fixed pension whose amount
depends on their basic remuneration and
years of service on the Board. The pension
level starts at 30 % and can reach a maximum of 50 % of annual basic remuneration.
Benefits in case of termination
of occupational activities;
old-age pension
Members of the Board of Management are
entitled to an old-age pension if they
resign from active service in the company
after their 60th birthday or when they
reach the retirement age of 65 years.
Old-age pension due
to occupational disability
entitled to an old-age pension if – owing to
permanent occupational disability – their
contract was terminated by mutual agreement, if it was cancelled by the Company, or
if it expires because the Board of Management member mandate is not renewed.
Early retirement
with reduced old-age pension
Board of Management members are entitled to an old-age pension if their contract
comes to an end as a result of non-extension or revocation of their Board of Management mandate without the member
having given cause by gross negligence
of his or her duties and without having
expressed a request to resign; in such
cases, the old-age pension shall be contingent upon the member of the Board of Management having reached his or her 50 th
birthday, that s/he has rendered services
to or was employed with the Company for
more than ten years at the end of the contract and that the Board of Management
mandate was extended at least once.
Extent of the benefit in all three cases:
쐍 For six months, continuation of previous
monthly basic salary (only applies to
members of the Board of Management
who were appointed before 2006).
쐍 A pension pledge of between 30 % and
50 % of the annual basic salary which in
case of early retirement is reduced by 2 %
for every whole or part of a year prior to
one’s 65th birthday.
쐍 Up until the person’s 65th birthday, the
pension is subject to reductions based
on other income from activities for third
parties.
Non-lapsable entitlement to old-age,
occupational disability and dependants’
benefits
Benefits from non-lapsable entitlements
are paid out when the pensioner turns 65,
when s/he becomes occupationally disabled or following the death of the member
of the Board of Management.
a) Non-lapsable entitlements subject
to the German Company Pensions Act
entitled to non-lapsable benefits in accordance with the German Company Pensions
Act if they discontinue rendering services
to the company before their 60th birthday
and if their affiliation with the Company at
the time of their departure amounts to at
least five years.
Extent of the benefit: the pension pledge
amounts to between 30 % and 50 % of the
annual basic salary. Non-lapsable is that
part of the old-age pension which corresponds to the proportion of the effective as
opposed to the potential affiliation with the
Company until the person’s 65th birthday
(m/n proceedings, Section 2, para. 1
Occupational Pension Law).
b) Improved non-lapsable entitlement
Improved non-lapsable entitlement is
granted if the employment contract ends
due to non-extension (on the part of the
Company) without gross negligence or termination request on the part of the individual. An additional requirement is that the
member of the Board of Management discontinues services with the Company
before his/her 60th birthday and that the
affiliation with the Company at the time of
departure amounts to at least 10 years.
Extent of the benefit:
쐍 Following departure, six-month continuation of previous monthly basic salary
(only applies to members of the Board of
Management who were appointed before
2006).
쐍 A pension pledge of between 30 % and
50 % of the annual basic salary which is
reduced by 2 % for every whole or part of
year prior to one’s 65th birthday.
Dependants’ benefits
In case of death of a member of the Board
of Management during active service, the
dependants (widow/widower, orphans) will
receive the previous monthly basic salary
for six months, provided that the member
was appointed to the Board of Management
before 2006. For members of the Board of
Management who were appointed after
2006, the previous monthly basic salary will
be paid to the dependants for three months.
In case of the death of a member of the
Board of Management following retirement, the dependents shall receive the previous monthly pension for the duration of
three months, provided that the marriage
and/or the birth of the child took place
before the start of their retirement pension. If the old-age pension of the member
of the Board of Management was reduced
due to early retirement, any widow/widower
and orphan pension shall be calculated on
the basis of the reduced amount.
The dependants of a member of the Board
of Management who passed away in active
service or following their pension will subsequently receive the benefits listed below:
쐍 Widow(er) pension amounting to 60 % of
the pension pledge.
쐍 Where applicable, age-related reduction
쐍
쐍
쐍
쐍
of the widow(er) pension depending on
the age of the married couple by a maximum of 50 %.
Taking into account up to 50 % of revenues,
provided that they exceed 50 % of the
widow(er) pension as well as benefits
paid under pension schemes of previous
employers (for members of the Board of
Management who were appointed after
2006).
Orphan’s pension amounting to 20 % of
the pension pledge per orphan.
Doubling of the orphan’s pension if no
widow(er) pension is to be paid (for members of the Board of Management who
were appointed before 2006).
In combination, widow(er) and orphan pensions must not exceed the old-age pension.
Other information
[40]
Shares held by members of the Supervisory Board and the Board of Management
Members of the Supervisory Board and the
Board of Management held less than 1 % of
[41]
Group affiliation
On 17 January 2002 Münchener Rückversicherungs-Gesellschaft AG, of Munich,
informed us that it held 91.7 % of the voting
rights of the Company as at 15 January
2002. At the balance sheet date Munich Re
held 94.7 % of the voting rights.
ERGO Versicherungsgruppe AG, of Düsseldorf, prepared these consolidated annual
accounts as at 31 December 2008 in
accordance with the International Finan-
the total shares in the ERGO Versicherungsgruppe AG as at 31 December 2008.
cial Reporting Standards, and it in turn is
included in the consolidated annual
accounts of Münchener Rückversicherungs-Gesellschaft AG, of Munich.
The consolidated annual accounts are
being published on the website of the
German Corporate Register. The accounts
can be obtained directly from either company on request.
[42]
Auditor’s fees
The following amounts have been accounted for as expenses for the auditors of the
consolidated annual accounts pursuant to
Section 319 para 1 cl. 1 and 2 of the German Commercial Code (HGB):
2008
€ million
2007
€ million
Audits of financial statements
4.4
4.1
Other assurance and appraisal services
0.9
0.8
Tax consultancy services
0.2
0.2
Other services
0.1
0.4
Total
5.6
5.5
[43]
Related parties
The ERGO Insurance Group maintains
various reinsurance relations with the
Münchener Rückversicherungs-Gesellschaft
AG, Munich, and some of its reinsurance
subsidiaries. In the year under review, a
total of € 978.6m (1,079.5m) in premiums,
i. e. 75.5 % (73.9 %) of the total reinsurance
premiums was reinsured there and
€ 758.6m (790.2m) was taken from these
reinsurers as payments for insurance
claims. Those companies’ share in receivables concerning deposits on ceded business amounts to € – (2.5m); the share in
deposits retained on ceded business is
€ 5,095.3m (5,103.4m). With regard to
accounts receivable from ceded business,
their share is € 35.0m (63.8m) and
€ 29.4m (25.9m) regarding accounts
payable.
The ERGO Insurance Group enjoys extensive and diverse relations with the
HypoVereinsbank Group, one of the major
German private banks.
A general agreement has put the relations
between the ERGO Insurance Group and
HypoVereinsbank into a definite form. In
particular, it regulates joint co-operative
activities. On the basis of individual cooperation agreements companies of the
ERGO Group sell selected products of the
HypoVereinsbank. On the other hand,
employees of the various companies within
the HypoVereinsbank Group sell insurance
products of the ERGO Insurance Group to
their customers. The co-operation agreements signed by the companies of the
ERGO Insurance Group and the companies
of the HypoVereinsbank Group have been
concluded at conditions prevailing in the
market.
ERGO Versicherungsgruppe AG has outsourced the portfolio management activities and administration of its investments
to MEAG MUNICH ERGO AssetManagement GmbH. The underlying agreement
includes the management of the property
Other information
assets, all tradeable national and international securities as well as the loans. In
addition, MEAG MUNICH ERGO AssetManagement GmbH provides audit services in
the field of property construction. MEAG
MUNICH ERGO AssetManagement GmbH
is an associated company of ERGO Insurance Group.
[44]
Corporate Governance Code
The declaration of conformity with the
German Corporate Governance Code in
accordance with Section 161 of the Stock
Corporation Act (AktG) was signed by the
Board of Management and Supervisory
Board on 19 December 2008 and has been
made permanently available to the shareholders on the Company’s website.
[45]
The Company was not notified about any
business activities which must be declared
in the sense of clause 6.6 of the German
Corporate Governance Code.
Contingent liabilities, other financial commitments
The details listed below pertaining to the
contingent liabilities and other financial
commitments amount to details within the
meaning of Sections 251 and 285, no. 3, of
the German Commercial Code (HGB) which
extend beyond the obligation to disclose
information as stipulated in IAS 37. According to IAS 37.28, such secondary liabilities
are merely to be disclosed for which the
probability of an asset outflow is not low. It
is not expected that the following disclosed
contingent and secondary liabilities be
utilised.
ERGO Versicherungsgruppe AG has agreed
to assume joint liability for the pension
commitments entered into by Victoria Versicherung AG, Victoria Lebensversicherung
AG, Vorsorge Lebensversicherung AG, Victoria Krankenversicherung AG, ERGO International AG, Hamburg-Mannheimer Versicherungs-AG, DKV Deutsche Krankenversicherung AG, Hamburg-Mannheimer
Sachversicherungs-AG, ITERGO Informationstechnologie GmbH, D.A.S. Deutscher
Automobil Schutz Allgemeine Rechtsschutz-Versicherungs-AG, D.A.S. Deutscher
Automobil Schutz Versicherungs-AG and
Longial GmbH. In return, all of these com-
MEAG companies’ share in remuneration
received for services rendered and for
broking insurance policies amounts to
€ 12.5m (18.4m) and € 19.7m (21.7m) for
expenses in this respect.
panies have placed the funds allocated to
their pension provisions at the disposal of
ERGO Versicherungsgruppe AG. ERGO Versicherungsgruppe AG has undertaken to fulfil all pension commitments vis-à-vis third
parties, releasing its subsidiary companies
from any and all claims against them. The
joint and several liability resulting from pension obligations as at 31 December 2008
came to € 515.0m (477.8m). The ERGO
Versicherungsgruppe AG has signed a letter
of support of € 10.1m (9.0m) for an affiliated company and one for a non-affiliated
company for € 4.3m. A letter of support also
exists for BA-CA Insurance for € 3.8m.
Contingent liabilities resulting from leasing
transactions with real estate amounted to
€ 88.3m (72.3m).
Furthermore, the Company has put up guarantee bonds worth € 16.5m (17.1m) for
affiliated companies, plus similar guarantee letters totalling $ 10.0m (65.0m) and
€ 177.1m (140.8m).
D.A.S. Deutscher Automobil Schutz Allgemeine Rechtsschutz-Versicherungs-AG has
guaranteed the primary insurance obligations of DAS Legal Expenses Insurance Company Limited, of Bristol, vis-à-vis an entity
with which the company does business, and
also its reinsurance obligations vis-à-vis two
other third parties. The parent company has
further pledged to back up the obligations
of its subsidiary companies and the DAS
branch operation in Ireland.
Victoria Versicherung AG and HamburgMannheimer Sachversicherungs-AG are
members of insurance pools which means
that, if any other pool member became insolvent, they would be called upon to meet the
policy claims against that member on a pro
rata basis in accordance with their stake in
the pool.
Owing to their stakes in the Protektor
Lebensversicherungs-AG, Victoria Lebensversicherung AG, Hamburg-Mannheimer
Versicherungs-AG, KarstadtQuelle Lebensversicherung AG, Vorsorge Lebensversicherung AG and Neckermann Lebensversicherung AG – in case of a German life insurer
becoming insolvent – are called upon to
meet policy claims of these companies on a
pro rata basis in accordance with their
stake. The ERGO Insurance Group thus has
a 10.76 % (10.76 %) stake in the Protektor
Lebensversicherungs-AG.
Against the background of a judgement
passed by the District Court of Munich concerning the legitimacy of zillmerised tariffs of
life insurance policies in deferred compensation, the following companies issued a
limited exemption for new business in 2008
on the part of the employer from a possible
liability as a result of this verdict: Victoria
Lebensversicherung AG, Vorsorge Lebensversicherung AG, Hamburg-Mannheimer
Versicherungs-AG, Hamburg-Mannheimer
Pensionskasse AG and Victoria Pensionskasse AG. On the balance sheet date the risk
of the aforementioned judgement being
exercised came to € 9.3m.
To support Hypo Real Estate (HRE), the German federal government adopted a rescue
package in 2008, backed by the Deutsche
Bundesbank and also the German financial
services industry. In this rescue package, the
financial institutions were obliged to participate through a reguarantee in covering a
possible claim on the federal government
under the guarantee for the Bundesbank’s
liquidity support and the government-guaranteed bond; cf. [6b] “Other securities available for sale”. Of the total amount of € 8.5bn
for this reguarantee, liability for € 110.0m is
apportionable to companies of the ERGO
Insurance Group.
According to Sections 124 f. VAG, German
life and health insurers are obliged to
become members of a protection fund. The
protection fund is entitled to claim – in addition to the regular fees – extraordinary fees
of 1‰ in the case of life insurers or 2 ‰ in the
case of health insurers of net technical provisions. This leads to a contingent liability of
€ 155.5m (159.9m) for the ERGO Insurance
Group.
Other information
[46]
Investment and other financial obligations
Obligations of Group companies under
tenancy agreements, leases and service
contracts totalled € 79.3m (168.6m) as at
the year-end 2008. Capital investment
commitments totalled € 778.0m (559.6m).
The above amounts have all been stated at
their nominal value, without discounting.
Victoria Versicherung AG, Hamburg-Mannheimer Sachversicherungs-AG, D.A.S.
Deutscher Automobil Schutz Versiche-
[47]
Leasing
ERGO Insurance Group as lessee
ERGO Insurance Group as lessor
At the balance sheet date, the total of lease
payments under non-cancellable operating
leases was € 265.7m (280.0m). Payments
under operating leases concern in particular rents for offices.
Operating leases mainly involve leased
property. The total of future lease payments
under non-cancellable property leases at
the balance sheet date was € 538.6m
(500.5m). In the financial year, an amount of
€ 2.4m (3.0m) from contingent rent payments was recognised as income.
The sum of liabilities from financing and
leasing agreements amounted to only
€ 0.6m (0.6m) at the balance sheet date.
Maturity of leasing relationships
rungs-AG and KarstadtQuelle Versicherung
AG have all pledged contributions to an
organisation set up to assist traffic accident victims (Verkehrsopferhilfe e. V.);
each member company’s contribution is
calculated on the basis of its share of the
total membership’s premium income from
direct motor third-party liability insurance
in the calendar year before last (“direct”
meaning: net of reinsurance accepted).
At the balance sheet date sum of receivables from finance leases amounted to only
€ 1.5m (3.3m).
2008
€ million
2007
€ million
ERGO as lessee
Not later than one year
Later than one year and not later than five years
Later than five years
Total
59.0
141.3
65.4
265.7
86.1
125.6
68.3
280.0
ERGO as lessor
Not later than one year
Later than one year and not later than five years
Later than five years
Total
111.2
248.9
178.5
538.6
92.0
228.9
179.7
500.5
[48]
Liabilities secured by liens
Group real estate holdings are encumbered
by mortgages, land charges and annuity
charges to a total value of € 28.4m (26.6m).
[49]
Number of employees
Employees (year-end)
2008
Number
2007
Number
In-house employees
24,944
23,396
Salaried sales force
6,564
5,731
31,508
29,127
Total
The number of staff employed by the Group
at year-end totalled 20,617 (20,789) in
Germany and 10,891 (8,338) in other
countries.
Events after the balance sheet date
[50]
On 17 September 2008 the ERGO Versicherungsgruppe AG signed a contract
with the Münchener RückversicherungsGesellschaft AG, where it acquired 100 % of
all shares held in the Europäische Reiseversicherung AG. The purchase price was
€ 193.5m and the purchase took effect, in
legal and economic terms, on 1 January
2009. Consequently, the consolidation was
not included in the 2008 annual report.
Other information
[51]
[51a]
Offices held by members of the Supervisory Board and of the Board of Management*)
Supervisory Board
Offices held on other legally
required Supervisory Boards
(domestic companies)
Waltraud Baier
Hans-Peter Claußen
UniCredit S.p.A., Genua, Italy, Board of
Directors
D.A.S. Deutscher Automobil Schutz Allgemeine Rechtsschutz-Versicherungs-AG,
Deputy Chairman
Dr. Karin Dorrepaal
Onco Methylome Sciences, Liège, Belgium,
Supervisory Board
Frank Fassin
Provinzial NordWest Holding AG
Dr. Heiner Hasford
Europäische Reiseversicherung AG,
Chairman
Hamburg-Mannheimer
Sachversicherungs-AG
MAN AG
Nürnberger BeteiligungsAktiengesellschaft
*) as at 31 December 2008
Offices held on comparable
domestic and foreign boards
Supervisory Board
Dr. Gerhard Jooss
Crown Westfalenbank AG
Heitkamp BauHolding GmbH
Klinikum der Universität ErlangenNürnberg, Supervisory Board
Dr. Lothar Meyer
Bayerische Hypo- und Vereinsbank AG
DKV Deutsche Krankenversicherung AG
Jenoptik AG
Victoria Lebensversicherung AG
Dr. Markus Miele
Syskoplan AG
Marco Nörenberg
Hamburg-Mannheimer Versicherungs-AG,
Deputy Chairman
Harald Pinger
Jelmoli Holding AG, Zurich, Switzerland,
Administrative Board
Prof. Dr.
Bernd Raffelhüschen
Augustinum gGmbH
Victoria Krankenversicherung AG
Volksbank Freiburg
Deutsche Bank AG
E.ON AG
Merck KGaA
Richard Sommer
DKSH Holding Ltd., Zurich, Switzerland,
Other information
Supervisory Board
Prof. Dr.
Beatrice Weder di Mauro
Prof. Dr.
Klaus L. Wübbenhorst
Roche AG, Basel, Switzerland,
BU Holding GmbH & Co. KG,
Chairman
GfK Holding Inc.**), Wilmington, USA,
President
GfK Arastirma Hizmetleri A.S.**),
Istanbul, Turkey, Chairman of the Board
of Directors
**) Own group company within the meaning of Section 18
of the German Stock Companies Act
Board of the Management
Dr. Bettina Anders
ERGO Netsolutions TK-Consulting GmbH**),
Chairwoman
KarstadtQuelle Bank AG
KarstadtQuelle Krankenversicherung AG**),
Chairman
KarstadtQuelle Lebensversicherung AG**),
Chairman
KarstadtQuelle Versicherung AG**),
Chairman
MEAG MUNICH ERGO
Kapitalanlagegesellschaft mbH
Mediclin AG
Vorsorge Lebensversicherung AG**),
Chairman
Günter Dibbern
Compass Private Pflegeberatung GmbH
KarstadtQuelle Krankenversicherung AG**)
Medicator AG
Sana Kliniken GmbH & Co. KGaA,
Deputy Chairman
Christian Diedrich
Allgemeine RechtsschutzVersicherungs-AG**), Chairman
Versicherungs-AG**), Chairman
Hamburg-Mannheimer Rechtsschutzversicherungs-AG**), Chairman
KarstadtQuelle Versicherung AG**)
Victoria Krankenversicherung AG**),
Deputy Chairman
PICC Health Insurance Company Ltd.,
Beijing, China, Administrative Board
[51b]
Other information
Dr. Klaus Flemming
Allgemeine Rechtsschutzversicherungs-AG**)
ERGO Assicurazioni S.p.A.**), Milan, Italy,
President of the Administrative Board
ERGOİSVİÇRE Hayat Sigorta A. S.**),
Istanbul, Turkey, Administrative Board
ERGOİSVİÇRE Sigorta A. S.**), Istanbul,
Turkey, Administrative Board
ERGO Italia S.p.A.**), Milan, Italy,
ERGO Previdenza S.p.A.**), Milan, Italy,
Österreichische Volksbanken AG, Vienna,
Austria, Administrative Board
Victoria Internacional de Portugal
S.G.P.S., S.A.**), Lisbon, Portugal,
Victoria-Seguros S.A.**), Lisbon, Portugal,
Victoria-Seguros de Vida S.A.**),
Lisbon, Portugal, President of the
VICTORIA-VOLKSBANKEN Versicherungsaktiengesellschaft**), Vienna, Austria,
Dr. Jochen Messemer
ArztPartner almeda AG**),
Chairman
MEDICLIN AG
MedWell Gesundheits-AG,
Chairman
DKV BELGIUM S.A.**), Brussels, Belgium,
Chairman of the Administrative Board
DKV Globality S.A., Luxembourg, Luxembourg,
Chairman of the Administrative Board
DKV Seguros y Reaseguros, Sociedad
Anónima Española**), Saragossa,
Spain, Administrative Board
ERGO Generales Seguros y Reaseguros
S.A.**), Madrid, Spain, Administrative
Board
ERGO Italia S.p.A.**), Milan, Italy,
ERGO Vida Seguros y Reaseguros, Sociedad
Anónima**), Saragossa, Spain,
Unión Médica la Fuencisla S.A., Compañia
de Seguros**), Saragossa, Spain,
Storebrand Helseforsikring AS, Oslo,
Dr. Torsten Oletzky
DKV Deutsche Krankenversicherung AG**),
Chairman
ERGO International AG**), Chairman
Hamburg-Mannheimer
Sachversicherungs-AG**), Chairman
Hamburg-Mannheimer Versicherungs-AG**),
Chairman
Victoria Krankenversicherung AG**),
Chairman
Victoria Lebensversicherung AG**),
Chairman
Victoria Versicherung AG**),
Chairman
Dr. Rolf Ulrich
ERGO International AG**)
ITERGO Informationstechnologie GmbH**)
Other information
Jürgen Vetter
ITERGO Informationstechnologie GmbH**)
VEREINSBANK VICTORIA Bauspar AG
D.A.S. Difesa Automibilistica Sinistri,
S.p.A. di Assicurazione, Verona, Italy,
Deputy Chairman of the Administrative
Board
D.A.S. Nederlandse Rechtsbijstand
Verzekeringsmaatschappij N.V.**),
Amsterdam, The Netherlands,
Supervisory Board
D.A.S. poist’ovna právnej ochrany, a. s.**),
Bratislava, Slovakia, Supervisory Board
D.A.S. Österreichische Allgemeine
Rechtsschutz-Versicherungs-AG**),
Vienna, Austria, Supervisory Board
KarstadtQuelle Finanz Service GmbH,
Supervisory Board
Düsseldorf, 18 February 2009
Board of Management
Dr. Torsten Oletzky
Dr. Bettina Anders
Günter Dibbern
Christian Diedrich
Dr. Ulf Mainzer
Dr. Jochen Messemer
Dr. Rolf Ulrich
Jürgen Vetter
*) as at 31 December 2008 (in the case of members
who have left the Board, the information shows the
status at the date of their departure)
Additional information – selected participating interests
Consolidated affiliated companies
Stake held in % Shareholders’ Profit/(loss) 7)
direct
indirect
equity 7)
in € 000
in € 000
Domestic companies
D.A.S. Deutscher Automobil Schutz Allgemeine
Rechtsschutz-Versicherungs-Aktiengesellschaft, Munich1)
D.A.S. Deutscher Automobil Schutz Versicherungs-Aktiengesellschaft,
Munich2)
DKV Deutsche Krankenversicherung Aktiengesellschaft, Cologne 3)
ERGO International Aktiengesellschaft, Düsseldorf 3)
ERGO Pensionsfonds Aktiengesellschaft, Düsseldorf 4)
Hamburg-Mannheimer Pensionskasse AG, Hamburg
Hamburg-Mannheimer Rechtsschutzversicherungs-Aktiengesellschaft,
Hamburg 2)
Hamburg-Mannheimer Sachversicherungs-Aktiengesellschaft,
Hamburg 3)
Hamburg-Mannheimer Versicherungs-Aktiengesellschaft, Hamburg 3)
KarstadtQuelle Krankenversicherung AG, Fürth
KarstadtQuelle Lebensversicherung AG, Fürth
KarstadtQuelle Versicherung AG, Fürth
Neckermann Lebensversicherung AG, Fürth
Neckermann Versicherung AG, Nuremberg
Victoria Krankenversicherung Aktiengesellschaft, Düsseldorf 3)
Victoria Lebensversicherung Aktiengesellschaft, Düsseldorf 3)
Victoria Pensionskasse AG, Düsseldorf 5)
Victoria Versicherung Aktiengesellschaft, Düsseldorf 3)
Vorsorge Lebensversicherung Aktiengesellschaft, Düsseldorf
25.53
74.47
236,338
–
100.00
100.00
55,988
466,550
1,957,172
4,417
31,177
–
–
–
– 71
– 4,315
100.00
13,307
–
202,598
403,536
44,400
58,695
42,340
11,696
8,511
72,025
739,007
47,204
528,424
29,530
–
–
3,961
8,350
1,039
1,000
2,312
–
–
– 5,897
–
3,570
90.00
110,057
34,945
100.00
100.00
99.90
99.95
100.00
4,491
2,423
2,451
2,287
2,346
47
312
14
434
– 109
99.98
100.00
100.00
44,513
4,890
3,027
6,099
133
8
99.98
99.90
8,580
2,037
1,791
– 510
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
49.00
10.00
10.00
100.00
51.00
90.00
100.00
90.00
Foreign companies 6)
Bank Austria Creditanstalt Versicherung AG, Vienna
D.A.S. Defensa del Automovilista y de Siniestros – Internacional,
S.A. de Seguros, Barcelona
D.A.S. HELLAS Allgemeine Rechtsschutz-Versicherungs-AG, Athens
D.A.S. Jogvédelmi Biztosíto Részvénytársaság, Budapest
D.A.S. Luxemburg Allgemeine Rechtsschutz-Versicherung S.A., Strassen
D.A.S. Oigusabikulude Kindlustuse AS, Tallinn
D.A.S. Österreichische Allgemeine Rechtsschutz-VersicherungsAktiengesellschaft, Vienna
D.A.S. poist’ovna právnej ochrany, a.s., Bratislava
D.A.S. pojišt’ovna právní ochrany, a.s., Prague
D.A.S. Société anonyme belge d’assurances de Protection Juridique,
Brussels
D.A.S. Towarzystwo Ubezpieczen Ochrony Prawnej S.A., Warsaw
Control and profit transfer agreement with Victoria Versicherung AG, Düsseldorf
Control and profit transfer agreement with D.A.S. Deutscher Automobil Schutz Allgemeine Rechtsschutz-Versicherungs-Aktiengesellschaft, Munich
Control agreement with ERGO Versicherungsgruppe AG, Düsseldorf
4)
Control agreement with ERGO Versicherungsgruppe AG
5)
Control agreement with Victoria Lebensversicherung AG, Düsseldorf
6)
The foreign currency amounts in income were converted at the average rate for the year and the shareholders’ equity was converted at the year-end closing rate.
7)
Figures refer to the most recent available annual accounts.
1)
2)
3)
DAS Legal Expenses Insurance Company Limited, Bristol
DAS Nederlandse Rechtsbijstand Verzekeringmaatschappij N.V.,
Amsterdam
DAS Rechtsschutz-Versicherungs-AG, Lucerne
DKV BELGIUM S.A., Brussels
DKV Luxembourg S.A., Luxembourg
DKV Seguros y Reaseguros, Sociedad Anónima Española, Saragossa
ERGO Assicurazioni S.p.A., Milan
ERGO Daum Direct Auto Insurance Co. Ltd., Seoul
ERGO Élétbiztosító Zrt., Budapest
ERGO Elukindlustuse AS, Tallinn
ERGO Generales Seguros y Reaseguros, S.A., Madrid
ERGO Kindlustuse AS, Tallinn
ERGO Latvija Lebensversicherung AG, Riga
(ERGO Latvija Dziviba Apdrosinasanas Akciju)
ERGO Latvija Versicherung AG, Riga
(ERGO Latvija Apdrosinasanas Akciju Sabiedriba)
ERGO Lietuva draudimo UADB, Vilnius
ERGO Lietuva gyvybes draudimas, Vilnius
ERGO Life N.V., Brussels
ERGO Previdenza S.p.A., Milan
ERGO RUSS Versicherung AG, St. Petersburg
ERGO Shisn, Moscow
ERGO Vida Seguros y Reaseguros, Sociedad Anónima, Saragossa
ERGO Zavarovalnica d.d., Ljubljana
ERGO životná poist’ovňa, a.s., Bratislava
ERGOISVICRE Emeklilik ve Hayat A.S., Istanbul
ERGOISVICRE SIGORTA A.S., Istanbul
Gemeinsame Belarussisch-Deutsche Versicherung AG BASO, Minsk
MTU Moje Towarzystwo Ubezpieczeniowe S.A., Sopot
Quelle Lebensversicherung AG, Schwechat
Sopockie Towarzystwo Ubezpieczen na Zycie
Ergo Hestia Spolka Akcyjna, Sopot
Sopockie Towarzystwo Ubezpieczeniowe Ergo Hestia Spolka Akcyjna,
Sopot
Unión Médica la Fuencisla, S.A., Compañia de Seguros, Saragossa
VICTORIA General Insurance Company S.A., Athens
VICTORIA Life Insurance Company S.A., Thessaloniki
Victoria Zivotno osiguranje d.d., Zagreb
VICTORIA-Seguros de Vida, S.A., Lisbon
VICTORIA-Seguros S.A., Lisbon
VICTORIA-VOLKSBANKEN Biztosító Zrt., Budapest
VICTORIA-VOLKSBANKEN Eletbiztosító Zrt., Budapest
VICTORIA-VOLKSBANKEN Poist’ovna, a.s., Bratislava
VICTORIA-VOLKSBANKEN pojišt’ovna, a.s., Prague
VICTORIA-VOLKSBANKEN Versicherungsaktiengesellschaft, Vienna
Vorsorge Luxemburg Lebensversicherung S.A., Munsbach
1)
direct
indirect
equity 1)
in € 000
in € 000
100.00
52,480
7,855
100.00
100.00
100.00
75.00
100.00
100.00
65.00
100.00
100.00
100.00
100.00
51,087
6,777
57,129
19,097
106,348
65,216
15,616
15
4,738
23,571
42,265
16,680
897
14,267
1,501
19,802
4,744
3,626
–
95
4,994
6,795
100.00
4,186
– 259
100.00
100.00
100.00
100.00
93.09
99.93
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
100.00
7,212
15,915
7,259
71,114
320,489
4,037
3,472
26,236
4,000
133
10,792
72,060
15
13,540
5,793
715
3,214
222
6,733
43,243
47
– 1,755
2,033
–
–
– 3,886
12,915
12
3,112
84
100.00
16,586
3,590
100.00
100.00
100.00
100.00
95.00
100.00
100.00
74.80
74.80
74.80
74.54
74.63
100.00
156,445
7,152
19,647
5,630
3,052
26,805
21,988
2,730
3,784
10,367
10,397
46,028
12,585
30,058
458
3,626
123
–
3,644
3,803
14
80
198
32
3,687
1,866
direct
indirect
equity 4)
in € 000
in € 000
Domestic companies
carexpert Kfz-Sachverständigen GmbH, Walluf
HighTech Beteiligungen GmbH und Co. KG, Düsseldorf
KarstadtQuelle Finanz Service GmbH, Düsseldorf
MCAF Verwaltungs-GmbH & Co. KG, Düsseldorf
MEAG Cash Management GmbH, Munich
MEAG MUNICH ERGO AssetManagement GmbH, Munich
MEDICLIN Aktiengesellschaft, Frankfurt/Main
MEGA 4 GbR, Berlin
Rendite Partner Gesellschaft für Vermögensverwaltung mbH,
Frankfurt/Main
RP Vilbeler Fondsgesellschaft mbH, Frankfurt/Main
Sana Kliniken AG, Munich
Star Growth GmbH & Co. Beteiligungs KG, Munich
TERTIANUM Besitzgesellschaft Berlin Passauer Straße 5–7 mbH,
Munich
TERTIANUM Besitzgesellschaft Konstanz Marktstätte 2–6 und
Sigismundstraße 5–9 mbH, Munich
TERTIANUM Besitzgesellschaft München Jahnstraße 45 mbH, Munich
TERTIANUM Seniorenresidenz Betriebsgesellschaft München mbH,
Munich
TERTIANUM Seniorenresidenzen Betriebsgesellschaft mbH, Konstanz
VEREINSBANK VICTORIA Bauspar Aktiengesellschaft, Munich
VV Immobilien GmbH & Co. United States KG, Düsseldorf
VV Immobilien GmbH & Co. US City KG, Munich
VV Immobilien Verwaltungs GmbH & Co. Zentraleuropa KG, Munich
25.00
23.10
50.00
50.00
40.00
40.00
23.15
13.70
11.87
20.55
5,449
94,325
105,071
110,000
34
199,196
144,582
78,456
43
– 1,357
– 5,490
80
4
40,780
4,322
– 1,185
33.33
40.00
21.70
48.28
223
253,351
161,028
7,727
146
5,414
10,322
–1
25.00
29,157
– 8,280
25.00
33.33
36,092
45,760
– 19,844
1,463
33.33
25.00
30.00
28.95
23.10
20.41
1,236
1,894
64,326
41,940
145,137
45,818
– 81
– 355
1,060
5,678
– 14,207
11,325
49.99
26.00
42.30
27.54
20.30
33.33
13,977
15,237
50,062
12,035
116,904
– 204,854
3,666
– 2,667
– 2,790
717
– 49,392
– 17,406
Foreign companies 1)
D.A.S. Difesa Automobilistica Sinistri, S.p.A. di Assicurazione, Verona
HDFC ERGO General Insurance Company Ltd., Mumbai
Millennium Entertainment Partners II L.P., New York 2)
Millennium Entertainment Partners L.P., New York 3)
Millennium Partners LLC, New York
MPE Hotel I L.L.C., New York
1)
2)
3)
The foreign currency amounts in income were converted at an average rate for the year and the shareholders’ equity was converted at the year-end closing rate.
Variation in voting right: 42.30 %
direct
indirect
equity 1)
in € 000
in € 000
MPE Hotel I Tenant Holdings L.L.C., New York
PICC Health Insurance Company Limited, Beijing
Property Finance France S.A., Luxembourg
SAS Le Point du Jour, Paris
Seaflower Health Ventures III L.P., Waltham
Storebrand Helseforsikring AS, Oslo
VICTORIA-VOLKSBANKEN Pensionskassen Aktiengesellschaft, Vienna
VICTORIA-VOLKSBANKEN Vorsorgekasse AG, Vienna
1)
33.33
19.00
45.46
50.00
28.84
50.00
47.50
50.00
– 26,415
81,461
14,987
43,898
27,794
7,309
12,647
3,094
– 1,272
– 13,336
74,727
2,801
– 2,457
1,951
1,148
101
The list of shareholdings as at 31 December 2008 in accordance with Section 313
para. 2 of the German Commercial Code
(HGB) has been published on the website of
the German Corporate Register.
Auditor’s report
We have duly audited the consolidated
annual accounts comprising balance
sheet, income statement, changes in equity, cash-flow statement, and notes to the
consolidated annual accounts, prepared
by ERGO Versicherungsgruppe AG in Duesseldorf for the financial year from 1 January
2008 to 31 December 2008. The responsibility for preparing consolidated annual
accounts in line with the International
Financial Reporting Standards (IFRS), as
adopted by the EU, and the additional provisions stated in § 315 a (1) of the German
Commercial Code (HGB) lies with the
Company’s Board of Management. Our
task is to form, on the basis of our audit, an
assessment of the consolidated annual
accounts.
We conducted our audit of the consolidated
annual accounts in accordance with § 317
HGB, paying due regard to the generally
accepted German standards concerning
accounting principles as set out by the
Institute of Public Auditors in Germany
(IDW). These standards require that we
plan and perform the audit such that misstatements materially affecting the presentation of net assets, financial position and
earnings situation in the consolidated
annual accounts in accordance with the
applicable financial reporting framework
are detected with reasonable assurance.
When determining the audit procedures,
the knowledge of the Group’s field of business, its economic and legal environment
and expectations regarding possible mistakes have to be taken into account. During
the audit the effectiveness of the accounting-related internal control system as well
as evidence supporting the disclosures in
the consolidated annual accounts and
Group management report are judged primarily on the basis of spot checks. The
audit comprises the assessment of the
annual accounts of the individual companies included in the consolidated annual
accounts, definition of consolidated group,
accounting and consolidating principles
used and significant estimates made by
the Board of Management, as well as an
evaluation of the overall presentation of the
consolidated annual accounts and Group
management report. We believe the audit
we have conducted provides a sufficiently
secure basis for our professional opinion.
We have no objections to raise following
our audit.
In our opinion, based on the results of our
audit, the consolidated annual accounts
conform to the IFRS, as adopted by the EU,
and the additional provisions stated in
§ 315 a (1) HGB and give a fair and true
view of the net assets, financial position
and earnings situation of the Group in accordance with these provisions. The Group
management report is in keeping with the
consolidated annual accounts and provides an accurate overall picture of the
Group’s situation and suitably portrays the
opportunities and risks inherent in future
development.
Munich, 26 February 2009
KPMG Bayerische Treuhandgesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Martin Berger
Chartered
accountant
Rainer Husch
Chartered
accountant
Declaration of the Board of Management
Declaration of the
Board of Management
“To the best of our knowledge, and in
accordance with the applicable reporting
principles, the consolidated financial statements give a true and fair view of the
assets, liabilities, financial position and
profit or loss of the Group, and the Group
management report includes a fair review
of the development and performance of the
business and the position of the Group,
together with a description of the principal
opportunities and risks associated with the
expected development of the Group.”
Düsseldorf, 18 March 2009
ERGO Versicherungsgruppe Aktiengesellschaft
Dr. Torsten Oletzky
Dr. Bettina Anders
Günter Dibbern
Christian Diedrich
Dr. Ulf Mainzer
Dr. Jochen Messemer
Dr. Rolf Ulrich
Jürgen Vetter
Addresses
Austria
Bank Austria Creditanstalt Versicherung
Schottenring 27–29, A-1010 Vienna
Tel. +43/1/31383-0, Fax +43/1/31383-27490
office@ba-cav.at, www.ba-versicherung.at
D.A.S.
Hernalser Gürtel 17, A-1170 Vienna
Tel. +43/1/40464, Fax +43/1/40464-1288
office@das.at, www.das.at
ERGO Austria International
Kölblgasse 8-10, A-1030 Vienna
Tel. +43/1/27430, Fax +43/1/27430-102
info@ergo-austria.at
Victoria-Volksbanken
Schottengasse 10, A-1013 Vienna
Tel. +43/1/31341-0, Fax +43/1/31341-216
office@victoria.at, www.victoria.at
Belgium
D.A.S.
Avenue Lloyd George 6, B-1000 Brussels
Tel. +32/2/64551-11, Fax +32/2/64077-33
info@das.be, www.das.be
DKV
Boulevard Bischoffsheimlaan 1–8, B-1000 Brussels
Tel. +32/2/2876-411, Fax +32/2/2876-412
contact@dkv.be, www.dkv.be
ERGO
Boulevard Bischoffsheimlaan 1–8, B-1000 Brussels
Tel. +32/2/5355-711, Fax +32/2/5355-700
info@ergolife.be
www.ergolife.be
China
Representative Office
ERGO
Beijing Representative Office, Room C810
Beijing Lufthansa Center
No. 50, Liangmaqiao Road, Chaoyang District
Beijing, 100125 China
Tel. +86/10/6462 7675, Fax +86/10/6462 5292
info.china@ergo.de
DKV
Shenzhen Representative Office, Room 4801
Shun Hing Square Di Wang Commercial Centre
Nr. 5002, Shennan Road East
518008 Shenzhen, P. R. China
Tel. +86-755-2583 2349, Fax +86-755-2583 2350
info@dkv.cn, www.dkv.cn
Addresses
PICC Health Insurance
8 Floors, South Wing, Building No. 11
Feng Hui Yuan, Tai Ping Qiao Street
Xi Cheng District
100032 Beijing, P. R. China
Tel. +86/10/5833 2526/5836 2576
Fax +86/10/5833 2500
service@picchealth.com, www.picchealth.com
Croatia
Radnicka cesta 80/16, HR-10000 Zagreb
Tel. +385/1/6397-640, Fax +385/1/6397-688
www.victoria-osiguranje.hr
Czech Republic
D.A.S.
Benešovská 40, CZ-10100 Prague 10
Tel. +420/2/67990-711, Fax +420/2/67990-722
das@das.cz, www.das.cz
Francouzská 28, CZ-12000 Prague 2
Tel. +420/2/2158-5111, Fax +420/2/2158-5555
victoria@victoria.cz, www.victoria.cz
Estonia
D.A.S.
Veerenni 58 A, EE-11314 Tallinn
Tel.+372/6799-450, Fax +372/6799-451
info@das.ee, www.das.ee
ERGO
Lauteri 5, EE-10114 Tallinn
Tel. +372/6106-500, Fax +372/6106-501
info@ergo.com.ee, www.ergo-kindlustus.ee
Germany
D.A.S.
Thomas-Dehler-Straße 2, D-81737 Munich
Tel. +49/89/6275-1681, Fax +49/89/6275-1650
info@das.de, www.das.de
DKV
Aachener Straße 300, D-50933 Cologne
Tel. +49/1801/358100, Fax +49/180/5786000
service@dkv.com, www.dkv.com
ERGO International
Victoriaplatz 2, D-40198 Düsseldorf
Tel. +49/211/4937-0, Fax +49/211/4937-1556
info@ergo.de, www.ergo-international.com
ERGO Pensionsfonds
Tel. +49/211/4937-0, Fax +49/211/4937-3737
info@ergo-pensionsfonds.de
www.ergo-pensionsfonds.de
Europäische Reiseversicherung
Vogelweidestraße 5, D-81677 Munich
Tel. +49/89/4166-00, Fax +49/89/4166-1855
contact@erv.de, www.erv.de
Hamburg-Mannheimer
Überseering 45, D-22297 Hamburg
Tel. +49/40/6376-0, Fax +49/40/6376-3302
KSC@hamburg-mannheimer.de
www.hamburg-mannheimer.de
IDEENKAPITAL
Berliner Allee 27–29, D-40212 Düsseldorf
Tel. +49/211/13608-0, Fax +49/211/13608-55
info@ideenkapital.de, www.ideenkapital.de
ITERGO
Tel. +49/211/477-0, Fax +49/211/477-8281
info@itergo.com, www.itergo.com
KarstadtQuelle Finanz Service
Wahlerstraße 2, D-40472 Düsseldorf
Tel. +49/211/47788-00, Fax +49/211/47788-01
info@kqfs.de, www.kqfs.de
KarstadtQuelle Versicherungen
Nürnberger Straße 91–95, D-90758 Fürth
Tel. +49/911/148-1666, Fax +49/911/148-1667
presseservice@kqv.de, www.kqv.de
Longial
Immermannstraße 23, D-40210 Düsseldorf
Tel. +49/211/4937-7600, Fax +49/211/4937-7631
info@longial.de, www.longial.de
MEAG
Oskar-von-Miller-Ring 18, D-80333 Munich
Tel. +49/89/2489-0, Fax +49/89/2489-2555
info@meag.com, www.meag.com
Neckermann Versicherungen
Karl-Martell-Straße 60, D-90344 Nuremberg
Tel. +49/911/322-1666, Fax +49/911/322-1667
presseservice@neckermann-versicherungen.de
www.neckermann-versicherungen.de
Victoria
Victoriaplatz 1 und 2, D-40198 Düsseldorf
Tel. +49/211/477-0, Fax +49/211/477-2222
info@victoria.de, www.victoria.de
Vorsorge Lebensversicherung
Walder Straße 53, D-40724 Hilden
Tel. +49/2103/5879-9500, Fax +49/2103/5879-9599
info@vorsorge-leben.de, www.vorsorge-leben.de
Addresses
Great Britain
D.A.S.
DAS House, Quay Side, Temple Back
GB-Bristol BS1 6NH
Tel. +44/117/934-2000, Fax +44/117/934-2109
marketing@das.co.uk, www.das.co.uk
DKV
Plantation Place, 30 Fenchurch Street
GB-London EC3M 3AJ
Tel. +44/2077181299
UK-Branch@dkv.co.uk, www.dkv.co.uk
Greece
D.A.S.
Leoforos Sygrou 44, GR-11742 Athens
Tel. +30/210/9001300, Fax +30/210/9235875
das.athen@hol.gr, www.das.gr
Victoria
97, Vas. Sofias Ave., GR-11521 Athens
Tel. +30/210/370-5300
Fax +30/210/370-5550
victoria@victoria.gr, www.victoria.gr
Hungary
D.A.S.
Rákóczi út. 70–72, H-1074 Budapest
Tel. +36/1/486-3600, Fax +36/1/486-3601
info@das.hu, www.das.hu
Dohány utca 14., H-1074 Budapest
Tel. +36/1/4114-290, Fax +36/1/4114-295
office@victoria-volksbanken.hu
www.victoria-volksbanken.hu
India
HDFC ERGO
6th Floor, Leela Business Park
Andheri Kurla Road
Andheri East, Mumbai 400 059, India
Tel. +91/22/6658-3706, Fax +91/22/6638-3699
india@ergo.de
HERO ERGO
Devchand House, 4th Floor
Dr. Annie Besant Road
Worli, Mumbai 400 018, India
Tel. +91/22/6740-3311, Fax +91/22/6740-3300
india@ergo.de
ERGO
Devchand House, 4th Floor
Dr. Annie Besant Road
Worli, Mumbai 400 018, India
Tel. +91 (22) 6740 3333
Fax +91 (22) 6740 3300
india@ergo.de
Ireland
D.A.S.
12 Duke Lane, IRL-Dublin 2
Tel. +353/1/670-7470, Fax +353/1/670-7473
info@das.ie, www.das.ie
Italy
D.A.S.
Via IV. Novembre, 24, I-37126 Verona
Tel. +39/045/8372-611
Fax +39/045/8300-010
dasdifesalegale@das.it, www.das.it
DKV Salute
Via Nino Bixio, 31, I-20129 Milan
Tel. +39/02/92870550, Fax +39/02/91431702
info@dkvsalute.it, www.dkvsalute.it
ERGO
Via Pampuri 13, I-20141 Milan
Tel. +39/02/5744-1, Fax +39/02/5744-2068
investor.relations@ergoitalia.it, www.ergoitalia.it
Korea
D.A.S.
7th Floor, Shinsa-Building, 630-2
Shinsa-dong, Gangnam-gu
Seoul 135-895, Republic of Korea
Tel. +82/2/5177-133, Fax +82/2/5174-033
dongho_lee@das.co.kr
ERGO Daum Direct
3F, LIG Gangnam Bldg. 708-6
Yuksm-Dong, Gangnam Gu
Seoul, 135-080, Republic of Korea
Tel. +82/2/1544-2580, Fax +82/2/2050-8888
Dd1master@ergodaumdirect.co.kr
www.ergodaumdirect.co.kr
DKV
21F., S-Tower, 116 Shinmunro 1-ga
Jongro-gu, Seoul 110-061, Republic of Korea
Tel. +82/2/767-2882, Fax + 82/2/767-2755
dkvinfo@dkv-korea.co.kr, www.dkv-korea.co.kr
Addresses
Latvia
ERGO
Unijas iela 45, LV-1039 Riga
Tel. +371/7081-700, Fax +371/7081-715
info@ergo.lv, www.ergo.lv
Lithuania
ERGO
Gelezinio vilko g-ve 6a, LT-03507 Vilnius
Tel. +370/526830-51, Fax +370/526830-55
info@ergo.lt, www.ergo.lt
Luxembourg
D.A.S.
3, rue Thomas Edison, L-1445 Strassen
Tel. +352/4557-58-1, Fax +352/4557-63
info@das.lu, www.das.lu
DKV
43, avenue J.-F. Kennedy, L-1855 Luxembourg
Tel. +352/426-4641, Fax +352/426-464250
info@dkv.lu, www.dkv.lu
Vorsorge
6, Parc d’Activité Syrdall, L-5365 Munsbach
Tel. +352/2648-55-0, Fax +352/2648-55-30
vll-info@vorsorge-leben.lu
www.vorsorge-leben.lu
The Netherlands
D.A.S.
Karspeldreef 15, NL-1102 BB Amsterdam
Tel. +31/20/651-7517, Fax +31/20/691-4737
info@das.nl, www.das.nl
Norway
Storebrand Helseforsikring AS
Filipstad Brygge 1, N-0114 Oslo
Tel. +47/2231-1330, Fax +47/2231-1370
helpline@storebrandhelse.no
www.storebrandhelse.no
Poland
D.A.S.
ul. Wspólna 25, PL-00-519 Warsaw
Tel. +48/22/45300-00, Fax +48/22/45300-19
das@das.pl, www.das.pl
ERGO Hestia
MTU
ul. Hestii 1, PL-81-731 Sopot
Tel. +48/58/5556000, Fax +48/58/5556302
poczta@hestia.pl, www.hestia.pl
Portugal
Victoria
Avenida da Liberdade, 200, P-1250-147 Lisbon
Tel. +351/21/313-4100, Fax +351/21/313-4700
victoria@victoria-seguros.pt
www.victora-seguros.pt
Russian Federation
ERGO RUSS
pereulok Kvarengy 4, Smolny
RU-193060 St. Petersburg
Tel. +7/812/1020-528, Fax +7/812/1020-526
mail@ergo-russ.com, www.ergo-russ.com
ERGO Shisn
p Novotscherjomuschkinskaja 61
RU-117418 Moscow
Tel. +7/495/2251181, Fax +7/495/2251182
info@ergolife.ru, www.ergolife.ru
Singapore
ERGO
70 Anson Road, # 15-03 Hub Aynergy Point
SG-079905 Singapore
Tel. +65/6325-1738, Fax +65/6227-9126
info@ergo.sg
Slovak Republic
D.A.S.
Šumavská 34, SK-82108 Bratislava 2
Tel. +421/2/55649121, Fax +421/2/55573022
das@das.sk, www.das.sk
Lazaretska 12, SK-81108 Bratislava
Tel. +421/2/52626367, Fax +421/2/52626363
victoria@victoria-volksbanken.sk
www.victoria-volksbanken.sk
Spain
D.A.S.
Plaza Dr. Letamendi, 1 y 2, E-08007 Barcelona
Tel. +34/93/4547705, Fax +34/93/4536527
direccion.organizacion@das.es, www.das.es
DKV
ERGO Vida
Unión Médica la Fuencisla
Avenida César Augusto, 33, E-50004 Zaragoza
Tel. +34/976/289-105, Fax +34/976/289-135
dkvseguros@dkvseguros.es
www.dkvseguros.com
ergovida@ergovida.es, www.ergoseguros.com
ERGO Generales
Avenida Concha Espina, 63, E-28016 Madrid
Tel. +34/91/456-5600, Fax +34/91/456-5601
ergogenerales@ergogenerales.es
www.ergoseguros.com
Addresses
Sweden
DKV Hälsa
Ralambsvägen 17, S-10026 Stockholm
Tel. +46/8/6196200, Fax +46/8/6196280
info@dkvhalsa.se, www.dkvhalsa.se
Switzerland
D.A.S.
Av. de Provence 82
CH-1000 Lausanne 16 Malley
Tel. +41/21/6239-223, Fax +41/21/6239-159
info@das.ch, www.das.ch
Turkey
ERGOİSVİÇRE
Kısıklı Caddesi No. 28, Altunizade
TR-34662 İstanbul
Tel. +90/216/554-8100, Fax +90/216/474-1387
isvicre@ergoisvicre.com.tr
www.ergoisvicre.com.tr
ERGO financial calendar
Dates to note in 2009 and 2010
Annual General Meeting in Düsseldorf
Half Year Report 2009
Press conference on the 2009 financial year
Annual General Meeting in Düsseldorf
5 May 2009
4 August 2009
30 March 2010
12 May 2010
Your contact for shareholder information:
Investor Relations
Fax +49/211/4937-1511
ir@ergo.de
Dr. Alexander Becker
Tel. +49/211/4937-1510
alexander.becker@ergo.de
Mareike Berkling
Tel. +49/211/4937-5077
mareike.berkling@ergo.de
Andreas Hoffmann
Tel. +49/211/4937-1573
andreas.hoffmann@ergo.de
Published by:
This edition of the Group Annual
Accounts has been translated into
English from the German original.
Victoriaplatz 2
D-40198 Düsseldorf
Tel. +49/211/4937-0
Fax +49/211/4937-1500
www.ergo.com
Concept, content and design:
Photos: Robert Brembeck,
Christian Stelling
Printed and produced in Germany by:
Meinke GmbH
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Annual Report 2008 ERGO Insurance Group

Transcription

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