R+V Versicherung AG Annual Report

Transcription

1 R+V Versicherung AG Annual Report

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3 2001 R+V Versicherung AG Annual Report Taunusstrasse 1, Wiesbaden, Germany, Tel: +49 (0) Registered with the Wiesbaden Local Court under HRB 7934 Presented to the Ordinary General Meeting on July 10, 2002

4 R+V at a Glance R+V Group Simplified presentation R+V Consolidated Group R+V Versicherung AG R+V Allgemeine Versicherung AG R+V Lebensversicherung AG R+V Rechtsschutzversicherung AG KRAVAG- LOGISTIC Versicherungs- AG KU Filar S.A., Polen R+V Poistovna a.s., Slowakei R+V Krankenversicherung AG R+V Luxembourg Lebensversicherung S.A. Assimoco S.p.A., Italien KRAVAG- LEBEN Versicherungs- AG KRAVAG- ALLGEMEINE Versicherungs- AG Assimoco Vita S.p.A., Italien Domestic companies International companies R+V Lebensversicherung a. G. R+V Pensionsversicherung a. G. Vereinigte Tierversicherung a. G. R+V Consolidated Group R+V Group Gross premiums written million 6,332 5,949 6,523 6,219 Premiums resulting from bonus and rebate provision million million 6,652 6,254 6,878 6,554 Claims incurred million 4,503 4,087 4,608 4,288 Current investment income million 1,864 1,924 2,000 2,056 Investments million 31,372 28,972 33,594 30,903 Number of policies Mio Number of employees as at Dec ,748* 11,882 11,664 11,979 * reduction in comparison to the previous year also due to changes among the consolidated companies. 4

5 Content Annual Report 2001 Management Report 6 Proposal on the Appropriation of Profits 32 Annual Financial Statements Balance Sheet 34 Income Statement 38 Notes 41 Audit Opinion 54 Report of the Supervisory Board 55 5

6 Management Report R+V Versicherung AG acts as both the parent company of the R+V Group and the reinsurer for the Group s direct insurance companies. R+V Versicherung AG also operates independently on the international reinsurance market. The reinsurance business is primarily run from the head office in Wiesbaden, Germany. The Group s interests in Southeast Asia are managed by its Singapore branch, which was established in R+V Versicherung AG s 2001 annual financial statements include all reinsurance business assumed from the R+V Group companies in the 2001 calendar year. In contrast, reporting of the majority of business assumed from other domestic and foreign cedents is deferred by one year and therefore relates to calendar year Investment income as well as all other income and expenses relate to calendar year Financial statements prepared in euros for the first time R+V Versicherung AG converted its accounting system to euros one year before the end of the dual currency phase, with the result that it was able to prepare its annual financial statements in euros for the first time. For the most part, the prior-year balance sheet figures were recalculated using the bottom-up method; the figures in the income statement were calculated using a divisor of Development of the German insurance sector Reinsurance business assumed from the R+V Group companies was impacted by the overall development of the German insurance sector in calendar year Following a period of encouraging economic development in 2000, the situation in the German insurance sector deteriorated once again in fiscal year 2001, resulting in only moderate economic growth of 0.5%. This was primarily triggered by the downturn in the US, where the boom of the 1990 s came to a standstill, as well as the slump on the stock markets. Finally, the terrorist attacks in the US dealt another blow to the global economy, bringing it to the brink of recession. Germany suffered an added burden with the outbreak of BSE and the threat of foot-and-mouth disease at the beginning of the year. In addition to these economic factors, the German pension reform adopted in fiscal year 2001 was the key event in the domestic insurance sector, which nevertheless held its own in what proved a turbulent year overall. German direct insurers collected premiums of billion, an increase of 2.8%. As in the previous year, this growth was again due to property and casualty insurance, which appears to have temporarily reversed the long-term negative trend. The sector s overall solid growth was also due to private health insurance, which recorded a clearly above-average increase. 6

7 Developments in the German life insurance sector in the past fiscal year were completely overshadowed by the pension reform, which significantly increased the demand for additional personal pension provision: the state benefits for occupational and professional disability provided within the framework of the statutory pension plan were sharply reduced at the beginning of 2001, particularly for individuals under the age of 40. The Altersvermögensgesetz (German Old-Age Provision Act) adopted in May 2001 provides for state subsidization of private retirement pensions as of Many Germans are using the time until then for in-depth consultation. The majority of the policies eligible for government support that have been sold will only start to generate premiums as of Nevertheless, life insurers collected premiums totaling 62.4 billion in 2001, an increase of 1.9% against the previous year. In new business, around 8.5 million new policies were sold, of which pension insurance and unit-linked life insurance continued to make up a large share. However, occupational disability insurance experienced the most dynamic growth the cuts in state pensions due to the pension reform had a noticeable impact here. The number of life insurance policies increased slightly to 89 million main insurance policies as of the end of the year. The other types of insurance experienced highly disparate growth in Private health insurance the second largest type of personal insurance after life insurance recorded a strong 4.8% increase in premium income to 21.7 billion. In particular, comprehensive and additional insurance premiums recorded aboveaverage growth for the sector, rising 5.5% to 19.7 billion. In contrast, nursing care insurance premiums decreased 2.5% to 2.0 billion. Property and casualty insurance also saw further premium growth in 2001, with premium income in the German direct insurance business rising 2.9% to 49.8 billion. This increase was particularly due to motor insurance, which represents the largest composite insurance class. Despite continued fierce competition, premiums were up significantly by 4.9% to 21.4 billion. For the first time in years, property insurance also recorded a slight increase of 1.2% to 12.4 billion. For example, industrial property insurance premiums grew 3.5% to 3.1 billion after a slump lasting several years. However, industrial fire insurance premiums dropped sharply, falling 5.0% to 1.0 billion. Comprehensive residential insurance, the strongest general property insurance class in terms of premiums, recorded a slight increase of 0.5% to 3.5 billion despite stiff competition. Comprehensive home contents insurance premiums also rose 1.0% to 2.4 billion. Positive developments were recorded in the classes of general liability insurance (+1.5% to 6.0 billion), private accident insurance, (+1.2% to 5.5 billion) and legal insurance, which was up slightly 0.6% to 2.7 billion. Marine insurance also grew by 3.0% to 1.7 billion. Total benefits in the insurance sector rose by 3.5% in 2001 to billion, slightly faster than premiums. However, these figures do not include losses incurred by the terrorist attacks in the US, which particularly affected reinsurers. 7

8 Life insurance was once again responsible for more than half of the total benefits, which include payouts to policyholders in addition to provisions for existing and future claims incurred as well as for premium refunds. Total life insurance benefits decreased by 6.6% to 82.2 billion, while claim payments increased by 5.9% to 52.3 billion. Although benefit reserves set up on behalf of policyholders rose to 29.9 billion, this increase is 22.7% down on the prior-year figure. In the area of private health insurance, total benefits for health and compulsory nursing insurance increased by 8.3% to 26.1 billion, while claim payments rose 7.5% to 14.6 billion. The situation in motor insurance eased as a result of a 2.5% drop in claims expenses to 19.8 billion and a 3.0% decrease in the number of claims. The high prior-year loss ( -1.8 billion) was reduced to -0.6 billion. The absence of extraordinary natural disasters meant that property insurance recorded only a slight increase in claims expenses, which rose 2.0% to 9.1 billion. Developments on the international reinsurance markets Business assumed from cedents outside the R+V Group was affected by developments on the international reinsurance markets. Because most property and casualty insurance business is deferred by one year, the following paragraphs primarily present the situation as it was in calendar year Economic environment While the global economy s high growth rate increased once again in H1 2000, many countries experienced a slowdown in their economies as the year continued. In particular, the increase in oil prices and the tightened monetary policy adopted by the US and European central banks had a dampening effect. Economic growth in the US, Western Europe and Japan slowed at the end of 2000, with the US downturn acting as a catalyst. After signs that the American economy was over-heating at the beginning of the year, fears of recession took hold in Q4. Nevertheless, the US generated a 4.1% increase in gross domestic product and proved itself the growth driver of the global economy once again. The weak upturn in Japan stabilized, resulting in growth of 1.7%. Western Europe experienced a comparatively moderate slowdown over the course of the year and reported economic growth of 3.4% after 2.3% in the previous year. While this growth rate remained below the US rate, it was still Western Europe s highest since In the euro-zone, the economic upturn stabilized and general order levels developed positively. Compared with Japan and the US, the euro-zone reaped particularly large benefits from economic growth in the emerging markets as a result of its high market share in these regions. The weak euro provided an additional boost to exports. Stimulated by keen foreign demand and in part favored by expansionary economic policy, the emerging markets in Asia and Latin America continued to recover from the crises of 1997/98 and, for the most part, achieved high growth rates. 8

9 German GDP increased by 3.1% to a level that was twice as high as the average for the past decade. Germany thus generated its strongest economic growth since the 1991 reunification boom. As in the previous year, this growth occurred on the back of increasing demand. As the year progressed, however, domestic demand increasingly lost momentum the decline in purchasing power became particularly apparent as rising oil prices caused an increase in the cost of living. The strong economic growth had a positive impact on the labor market, causing a drop in the unemployment rate from 8.3% to 7.8%. Western Europe While the member states of the European Monetary Union achieved export-driven economic growth of 3.4% in 2000, this region also saw the signs of a slowdown in H2. Particular drains on the economy were the high year-on-year increase in oil prices and the total of seven interest rate increases implemented by the European Central Bank since November Ireland followed by Luxembourg and Finland once again recorded the strongest growth in Western Europe, while Germany attained only a middle ranking with 3.1% was a year of upheaval for the European insurance markets as well. The driving forces behind the far-reaching changes were market deregulation and advances in the area of information technology. Competition intensified as material insurance rate regulation was abandoned in favor of solvency regulation and the national insurance markets within the EU were opened up. In addition, the euro capital market has been contributing to the increasing permeability of national borders since the beginning of Both developments have accelerated the trend towards consolidation and led to economic concentration on the EU market. As a result, concentration processes continued in the insurance sector, too. In particular, the large European direct insurers stepped up their consolidation strategy on the European markets. While personal insurance developed positively, property and casualty insurance stagnated. This led to initial consolidation successes, particularly in the motor and property insurance classes. In the other insurance classes, competition with respect to prices and conditions remained fierce in most countries. In contrast to the previous year, which saw an unusually high number of large claims, 2000 was characterized by a noticeable decrease in natural disaster claims. Nevertheless, a number of major events occurred in the year under review: fall storms and flooding plagued Northern Italy, and a hail storm descended on Austria in July, resulting in the largest insurance claims in the country s history. In addition, several individual claims arose due to events such as the explosion of a fireworks factory in Enschede, the Netherlands, a major fire in a US manufacturing plant owned by Swedish telecommunications manufacturer Ericsson, and a fire at one of Scottish & Newcastle s Center Parcs in the Netherlands. At the same time, the number of basic claims increased, and these were augmented by several large facultative claims. It also became clear over the course of the year that many insurers had underestimated the financial consequences of the natural disasters that occurred in 1999, particularly the heavy storms in Europe at the end of December, and this resulted in unexpected costs in fiscal year Competition also remained intense due to over-capacity, causing unsatisfactory premiums and policy conditions. 9

10 Eastern Europe General institutional conditions continued to improve in the Central European and Baltic countries, not least with regard to their proposed EU accession. Overall economic production expanded significantly over the course of the year. For the first time since the reform process began, gross domestic product increased simultaneously in all transition economies. This development was partly attributable to strong private demand and the stimulating effects of foreign trade, which flourished as a result of the boom in Western Europe. Russia s economy experienced particularly strong growth. The level of economic activity was clearly higher than before the outbreak of the 1998 crisis, partly because Russia benefited greatly from the increase in the global market prices for crude oil and natural gas. In addition, Russian companies price competitiveness improved after the rouble s significant real devaluation in Strong export growth and improved terms of trade led to a growing balance of trade surplus. Investment surged in light of the favorable corporate earnings situation, and private consumption increased noticeably. Slovenia and Hungary also recorded unusually dynamic development with economic growth of 4.9% and 5.3%, respectively. Developments on the direct insurance markets were primarily based on the expansion of compulsory motor insurance. Average annual growth in non-life business over the past few years thus amounted to an encouraging 7.6% after adjustment for inflation. Measured by premium income as a percentage of GDP, the premium volume totaled around 1.7%, almost half of the figure for Western Europe. Market entry by new foreign insurers fueled competition and impaired the expansion of local companies. This development was particularly noticeable against the background of the abolishment of the monopoly on motor vehicle liability insurance in the Czech Republic. As in the previous year, consolidation and the associated increase in retentions meant that reinsurers saw only moderate growth in the year under review. North America The US economy slowed considerably more than even mid-year forecasts had predicted. In H2 2000, the annual growth rate for overall economic demand and production sunk to a mere 1.5% after clearly above-average expansion of more than 5% in the first half of the year. This proved a marked change of course, not least because the investment boom that had been the primary growth driver came to an abrupt end. After featuring double-digit growth rates through mid-2000, investments in equipment and software declined considerably as the year came to a close. Private consumption also began to slow noticeably as higher oil prices and a more muted increase in the number of jobs dampened the increase in real available income. While non-life premiums developed a certain amount of momentum in the US, growing by 1.9%, this figure continued to remain below the economic growth rate of 4.1%. Non-life markets found themselves transitioning from an extremely soft market to the beginning of a hard market phase in the year under review: although industrial insurance premium rates began to rise in 2000, private insurance rates did not follow suit. As a result, for the first time in more than ten years, overall market growth in the year under review was driven by high real growth of 4.2% in industrial insurance business and accelerated growth in the accident and health insurance market (+4.2%), while private insurance recorded a real decrease of 1.5%. 10

11 After the US insurance sector suffered at the hands of entirely unsatisfactory premium levels and high claims expenses in 1998 and 1999, direct insurers and reinsurers began achieving rate increases again in H In particular, property, motor and workers accident insurance recorded premium growth. However, this positive development in certain sub-markets was far from sufficient, as was also apparent in the reinsurance sector. The trend toward multi-year policies came to an end, and higher retentions were introduced almost across the board. Whereas, in the past, the only way to produce positive annual results was by making massive reductions in the reserve ratio, reserves must now be built up again to an adequate level. The attack on the World Trade Center on September 11, 2001 left the insurance sector facing the single largest claim in its history estimates put it at USD 50 billion, at least. This event has impacted a multitude of individual insurance classes, customers and products, with general liability, workers compensation, property, business interruption and aviation expected to be hit the hardest. Personal insurance has also been affected. In Canada, non-life premium growth was practically unchanged against the previous year at 2.6%. The Canadian non-life market has recorded stronger growth than its US equivalent over the past ten years. This is because commercial classes made up a smaller overall share of the Canadian market, making it more resilient to falling prices in these classes. In addition, a significantly lower number of industrial customers switched over to alternative risk transfer mechanisms, thus keeping demand for traditional insurance solutions steady. Latin America The global upturn also spread increasingly to Latin America over the course of the year. Argentina was the only country which did not experience a substantial economic recovery its economy suffered particularly from the high real external value of the peso, which was pegged to the US dollar by a national currency board and thus impaired the competitiveness of domestic manufacturers. In contrast, the economy in the rest of South America recovered increasingly from the recession of the previous year. Of particular importance was the fact that the Brazilian government was able to introduce a program of fiscal consolidation that allowed a substantial lowering of interest rates. The situation was also helped by the rise in the price of raw materials, which was partly responsible for the clear increase in the region s export revenues. Strong US demand provided an additional boost to Mexico, which enjoyed particularly rapid production growth. 11

12 Motor insurance continued to play a starring role in the direct insurance sector in Latin America. Almost all countries successively introduced motor vehicle liability insurance as compulsory insurance. However, some of the required amounts of coverage were very low, a fact that was also reflected in premium volumes throughout the region, with the exception of Brazil and Mexico. Comprehensive motor insurance covered certain natural disaster claims that were not appropriately reflected in rates. The situation in Argentina worsened due to several court rulings. Judges granted compensation at levels corresponding to US precedents, which proved particularly alarming to reinsurers. As a result of Latin America s high exposure to natural disaster, the fire insurance class and its inherent additional risks are heavily reinsured, since many direct insurers are relatively poorly capitalized, and consequently, have a low retention capacity. After a phase of immense pressure on reinsurance conditions and correspondingly poor results, claim events initiated a market turnaround. The high costs incurred in the previous year by the storms Mitch and Georges, as well as flooding in Venezuela and the earthquake in Columbia, caused an increase in original premiums and paved the way for improved reinsurance conditions. However, since these positive developments only came about in the course of 2000, they had relatively little impact on the results of the year under review. Asia Three and a half years after the devastating Asian crisis erupted, the region s economies stabilized again. The individual countries experienced various degrees of recovery. Although South Korea and Singapore recorded the greatest improvement, Malaysia and Thailand also reported a higher level of overall economic production than before the crisis. In contrast, Indonesia s tangled political situation prevented rapid economic recovery. Its structural problems that were partly responsible for the crisis have yet to be solved. The increase in oil prices also affected the individual countries and regions differently. While the terms of trade in countries such as Thailand, the Philippines and South Korea worsened substantially, they improved in net oil exporters Indonesia and Malaysia. Export growth in the industrializing country of Malaysia, Southeast Asia s second growth star after Singapore, was driven by the boom on the global electronics markets. The Korean insurance sector was also impacted by the economic crisis. The need for a more rapid and radical restructuring of this sector was reflected in the introduction of stricter solvency standards, similar to those commonly applied in other developed markets, and in the accelerated rate at which deregulation continued to be driven forward. Foreign insurers were allowed to intensify operations in the country. The barriers to entry for foreign investors were abolished to a very large extent, and domestic insurers, unable to handle the increased demand for capital on their own, turned to foreign investors. In China, which was only indirectly impacted by the Asian crisis, the economic motor revved up again after five years of declining growth rates. 12

13 The Japanese economy found itself on a moderate growth path after a sustained period of weakness. This recovery was attributable on the one hand to exports Japan particularly benefited from the dynamic growth in the Asian emerging markets and, on the other hand, to the marked increase in domestic demand. The fundamental trend for private investment was positive because the earnings situation improved despite the increase in oil prices. Private consumption also recovered from its previous dramatically low levels as real wages increased once again. After the Japanese insurance and reinsurance market was hit hard by typhoon Bart in 1999, it developed satisfactorily in However, insufficient premium rates continued to prevail on the direct and reinsurance markets. The number of mergers also continued in 2000, reducing still further what was already a small number of local direct insurers for the size of the market. The reinsurance market in Taiwan was dominated by the withdrawal of several competitors. This resulted in a decrease in offerings, which coincided with increased demand for disaster insurance in the wake of the serious earthquake in September This led in turn to a clear improvement in reinsurance conditions. In addition, motor insurance continued to constitute one of the key business segments. Australia/New Zealand Despite the introduction of a goods and services tax in July 2000 and the return to normal after the Olympic Games, Australia s unique period of positive, multi-year economic development continued at a slightly slowed pace. The slowdown was due to the construction sector s sharp decline, high interest rates, increased prices of imported goods resulting from the weak Australian dollar, and the high price of crude oil. Australia s insurance sector continued to be characterized by increasing consolidation. In addition, changes were made with respect to the taxation and regulatory systems. The trend toward consolidation was accompanied by a significant restructuring of the market (demutualization, cooperation, etc.). At the end of 2000, changes to the Australian solvency system were announced that required Australian insurers to maintain increased capital resources. This was compounded by the introduction of value-added tax in mid- 2000, which led to substantial additional costs for insurers and reinsurers alike. Australia s only international reinsurer, REAC, discontinued its operations in However, the domestic reinsurance market remained competitive and financially strong. While conditions on the direct insurance market continued to feature premium rates that were well below a technically sufficient level, the reinsurance market showed the first signs of improvement. After the Asian crisis triggered a recession in New Zealand in 1998, the country s economy accelerated in H and clearly recovered in Private consumption, investments and exports all developed positively over the course of the year. The economic revival caused the unemployment rate to drop to 5.6%, while the inflation rate rose from 0.4% in 1999 to 4.0% in

14 New Zealand s insurance market was surprised by the newly-elected government s decision to reverse the privatization of the workers compensation insurance business after less than one year of implementation. Insurers thus had to write off the substantial investments they had made in preparation for this business. Africa South Africa s economy is the largest, most diverse and most modern on the African continent. While it depended on gold mining and other extraction industries in the past, its base is now much broader. Finance, the largest sector, contributed 19% to the country s GDP in 2000, followed by manufacturing and trade. South Africa continued to generate the continent s highest export income as a result of its mining industry. At the same time, however, this industry s contribution to GDP declined, and the low price of gold had a negative effect on foreign currency revenues. Africa s insurance markets recorded positive growth in South Africa generated approximately 55% of Africa s non-life premium income. However, the South African non-life insurance market suffered under high crime rates and claim payments arising from floods and storms in spring Development in the other African countries was uneven. While premium income experienced real growth in Morocco and Tunisia, it shrank in Egypt, Kenya and Mauritius. Business development and position of the Company Premium income Gross premium volume up more than 18% foreign business records growth of over 27% R+V Versicherung AG s gross premium income rose by 18.3% in the fiscal year to 1,029 million. 0.9% of this increase was attributable to exchange rate effects. However, after adjusting for this, the Company still recorded a significant increase in premiums of million. Increases in the retentions of direct insurers within the R+V Group resulted in reduced premiums from domestic business in fire, all-risk, engineering and fidelity insurance. In contrast, premiums increased in motor insurance as well as in the marine, aviation and livestock insurance classes due to new underwriting business and portfolio growth. The premium volume generated by business assumed from domestic cedents not belonging to the R+V Group also grew by 23.6 million or 17.6%. Overall, domestic business saw a 12.1% increase in premiums. Premium income from foreign business recorded above-average growth of 95.6 million or 27.7%. This meant that foreign business accounted for 42.8% (previous year: 39.7%) of the total premium volume. The main contributors to the premium volume were the traditional reinsurance markets of North America, Italy, the UK, Spain and France, along with the Singapore branch. In addition to the expansion of business activities, exchange rate movements also had an effect on foreign premium growth. The total net premium volume increased year-on-year by million, or 26.7%, to million. Retention increased to 59.6% (previous year: 55.6%). 14

15 The following table shows the Company s premium income broken down according to key insurance classes: Premiums written Change Change Gross m Gross m Gross % Net m Net m Net % Life Accident Liability Motor Fire Other property Marine and aviation Others Total 1, Technical result Natural disaster claims from the previous year dragged down results for fiscal year Global concentration processes continued in the year under review. The improved capital resources of the market s remaining direct insurers tended to result in a reduced need for reinsurance. In addition, new market participants and different sales channels led to heightened competitive pressure on many markets. Although many markets saw a decline in available reinsurance capacity, rates remained at inadequate levels. Furthermore, the 1999 winter storms occurred too late in the year to have any influence on the renewal negotiations for Since price-competitive reinsurance capacity was still available on the market, there was no pressure to increase original insurance and reinsurance rates. After the unsatisfactory earnings situation in the reinsurance sector had been significantly impaired by natural disaster claims over the past few years, 2000 saw a substantial decline in such claims. Premiums written in million Gross premiums written Net premiums written However, the earnings situation was compromised by major events such as fall storms and flooding in Southern England, flooding in Northern Italy in the fall, and a hailstorm in Austria in July. 15

16 In addition, several claims of exceptional magnitude arose due to events such as the explosion of a fireworks factory in Enschede, The Netherlands, a major fire in a US manufacturing plant owned by Swedish telecommunications manufacturer Ericsson, and an explosion at a refinery in Kuwait. At the same time, the year under review was characterized by a high number of basic claims. It also became clear that the claims expenses for storms Lothar and Martin that occurred at the end of 1999 were well above the estimates provided by previous insurers, thus negatively impacting results for the fiscal year. Together, these circumstances led once again to high gross claims expenses of 77.6% in the year under review (previous year: 73.6%) in the non-life classes. Not even retrocessions could provide relief, and the net loss ratio for the fiscal year totaled 77.1% (previous year: 76.1%). In contrast, the gross expense ratio improved from 31.9% to 29.6%, while the net ratio improved from 33.4% to 31.3%. Total non-life business Gross loss ratio % Gross expense ratio % Gross combined ratio % After clear improvement in the previous year, the earnings situation in the motor insurance class worsened again in the year under review. This was primarily due to developments in motor vehicle liability insurance. However, the negative prior-year result recorded by motor insurance was significantly reduced. Only motor vehicle accident insurance recorded a slight profit in the fiscal year. Accident insurance clearly exceeded its prior-year technical profit. Fire insurance recorded the highest loss of the property insurance classes. Although natural disaster claims dropped sharply, other major claims remained at the prioryear level. In addition, a departure was made from the usual accounting practice of deferral by one year in order to set up provisions for the terrorist attacks on the World Trade Center in New York that occurred on September 11, These provisions had a pronounced impact on the result for the year under review. Engineering insurance continued to develop negatively. However, policy conditions led to a clear reduction in the loss recorded in the year under review. After a slight profit in the previous year, aviation insurance reported a negative result in the fiscal year due to an increased level of claims as well as precautionary provisions for the events of September 11, 2001 in New York. The unsatisfactory situation in marine insurance continued. Insufficient rate levels and increased net loss ratios led to another technical loss in the year under review. The slight overall loss recorded by the remaining insurance classes in the year under review was clearly below the prioryear level. The individual classes demonstrated differing trends: storm and tempest insurance recorded a substantially reduced loss in comparison with the previous year, as did credit and bonds. Livestock insurance recorded a significantly higher surplus than in the previous year. Liability business developed positively, generating a clear profit in the fiscal year after a slight loss in the previous year. 16

17 Life insurance again recorded a technical surplus that exceeded the prior-year profit. Health insurance also closed the year under review with a slight surplus. Development of investments in million 1500 Overall, reinsurance business ended the fiscal year with a loss of million (previous year: million) before allocations to the equalization provision and other similar provisions As a result of improved net loss ratios in the year under review, allocations were made to the equalization provision in general accident, liability, storm and tempest, technical equipment, construction services, livestock, hail/crop and bond/construction guarantee. Allocations were also made in motor vehicle liability and burglary and theft insurance, despite the deterioration of the net loss ratios in these classes. Meanwhile, the earnings situation in the other classes led to withdrawals and reversals. All in all, allocations of 10.9 million (previous year: 6.9 million) were made to the equalization provision and similar provisions. After allocation to the equalization provision and similar provisions, the technical loss amounted to million (previous year: million). Investment portfolio The Company s investments (excluding deposits with ceding undertakings) increased by million, or 12.3%, in the past fiscal year to a total of 1,369.2 million at the balance sheet date. Within the portfolio, shares in affiliated companies represented the majority of holdings, increasing from 53.6% in the previous year to 56.1% The increase in this item was due on the one hand to capital increases at the Company s German and Italian subsidiaries, and, on the other hand, to the 100% interest in R+V Lebensversicherung AG obtained via the purchase of R+V Lebensversicherung a.g. s share in that company. As a result of the Company s inclusion in DZ Bank AG s basis of consolidation in the period under review, it was also necessary to reclassify amounts previously reported under fixed-income securities as Loans to affiliated companies. With respect to new investments, preference was also given to fixed-income securities. The valuation reserves in the assets carried at cost increased by million to 1,124.6 million. The reserve ratio for the entire investment portfolio thus grew from 76.0% in the previous year to 82.1% at the end of

18 Investment result Current investment income (excluding interest on deposits) decreased by million to million in the year under review after the exceptionally high prior-year level, which was due to special dividends paid within the framework of a pay-out, take-back procedure. Taking into account current expenses of 4.3 million, an ordinary result of million was generated. At 1.1 million, the extraordinary result played only a minor role in the year under review. The net investment result the balance of all income and expenses related to investments totaled million. This was down on the prior-year result of million, which was due to the special factors mentioned above. However, the net interest return remained at an overall high level, totaling 7.9%. Including interest on deposits and after deduction of the allocated investment return, the Company recorded an investment result of million in the past fiscal year, compared with million in the previous year. Overall result Including the technical result ( million), the investment result ( million), other income ( 14.6 million) and other expenses ( 29.5 million), R+V Versicherung AG generated earnings before tax of 44.4 million in 2001 as compared with million in the previous year. The main reason for the year-on-year decline in earnings was the absence of the special dividends paid out by the Company s subsidiaries within the framework of the pay-out, take-back procedure. After deduction of taxes on income and other taxes, net income for the year totaled 36.6 million (previous year: million). 1.6 million was withdrawn from other revenue reserves and appropriated to the reserve for own shares for the shares held in the parent company DZ BANK AG. As a result, the Company s net retained profits of 36.6 million corresponded to its net income for the year under review. A proposal will be made to the General Meeting to distribute 30.5 million of the net retained profits to shareholders through payment of a regular dividend of 3.5 for each no-par value share and to appropriate 6.1 million to other revenue reserves. Other income and expenses A large proportion of other income, which totaled 14.6 million (previous year: 12.4 million), resulted from services performed for other companies within the R+V Group. However, this increase was offset by an equal amount of expenses. Other expenses also contained interest expenses of 14.0 million (previous year: 10.3 million). 18

19 Guarantee funds Guarantee funds m m Share capital Capital reserves Revenue reserves Net retained profits Shareholders equity Unearned premiums Aggregate reserve Reserve for loss and loss adjustment expenses Policyholders reserves Equalization provision and similar other insurance reserves Total insurance reserves Guarantee funds 1, ,606.8 Based on the net premiums written, the guarantee ratio declined year-on-year but remained high at 286.6% (previous year: 332.3%). Of this percentage, the equity ratio totals 124.4% (previous year: 162.2%), and the reserve ratio amounts to 162.2% (previous year: 170.1%). Business developments in the individual insurance classes Life Terrorist attacks on the World Trade Center in New York impacted results only marginally Life Gross premiums in million With the exception of the Asian region, life insurance was also characterized by growth in The growth rates in the industrialized countries were attributable to the shift in retirement and healthcare provision from the public to the private sector, which also benefited reinsurers. In Latin America and Eastern Europe, changes in the social security system and dwindling confidence in state institutions led to increased demand for retirement provision products. Reinsurers participated in this process by transferring knowledge in order to accelerate product development in emerging markets and by ensuring the solvency necessary for the sector to grow. 19

20 The passing of the German pension reform legislation in May 2001 is expected to open up a new market for private funded retirement provision, as well as stimulate occupational pension provision with the introduction of pension funds. State benefits for occupational and professional disability were already reduced to such an extent as of January 1, 2001 that a new market opened up here as well. However, the introduction of the "Riester pension as of January 1, 2002 kept market growth down at 1.9% in It can be assumed that consumers will abandon their wait and see attitude in the next few years. Life insurance recorded a profit of 3.2 million at the end of the fiscal year (previous year: 2.5 million). The result for the fiscal year also includes provisions for the terrorist attacks on the World Trade Center in New York that occurred on September 11, In terms of sums insured, the portfolio developed as follows: m m Reinsurance business assumed Sum insured Capital 14, ,747.0 Annuity 4, ,969.7 Business ceded Sum insured Capital 2, ,664.7 Annuity 1, ,422.0 Retained for own account R+V Versicherung AG s life insurance portfolio increased Sum insured Capital Annuity 11, , , ,547.7 by million to a total insured sum of Accident 19.3 billion. This represents growth of 3.0%. The net portfolio rose 5.9% to a total Growth in foreign business insured sum of 15.5 billion. Gross premiums from domestic business increased 3.8% to million in the year under review, while net premiums rose 10.7% to million. Accident Gross premiums in million 40 Gross premium income from foreign business, which also benefited from exchange rate movements, increased by 14.7 million, or 11.0%, to million. Retained premiums grew by 2.0% to 70.0 million Overall, gross premiums increased by 22.5 million, or 6.7%, and net premiums rose by 11.1 million or 7.0%

21 Gross loss ratio % Gross expense ratio % Gross combined ratio % Liability Reduced expense and loss ratios significant growth in foreign business Accident insurance saw a slight decline in the gross premium volume from domestic business: after totaling 22.9 million in the previous year, premium income fell by 0.5 million, or 1.9%, to 22.4 million in the fiscal year. In contrast, retained premiums remained almost unchanged from the prioryear level at 22.3 million (previous year: 22.2 million). As in the previous year, growth in this class was due to foreign business. While gross premiums rose by 3.5 million, or 32.8%, to 14.1 million, net premiums jumped 36.9% to 12.5 million. Overall, gross premium income grew by 9.1% to 36.5 million, with the net figure rising 11.1% to 34.8 million. Liability Gross premiums in DM million General accident ended the year with a net profit of 10.4 million (previous year: 0.9 million). The decline in the loss ratio led to an allocation to the equalization provision. In the final result, this class recorded a profit of 8.6 million (previous year: -3.5 million). The premium volume from motor vehicle accident insurance was due almost exclusively to domestic business and, in gross terms, was 34.5% below the prior-year level as a result of the higher retentions of primary insurers in the R+V Group. In contrast, lower cessions meant a 48.4% increase in retained premiums. The class ended the year with a profit of 0.3 million (previous year: 0.1 million) Gross loss ratio % Gross expense ratio % Gross combined ratio % Liability insurance recorded another substantial increase in gross premium volume in the fiscal year. This was entirely attributable to foreign business. While domestic premium income decreased slightly by 0.6% to 30.9 million, foreign business surged 107.9% to 19.1 million. Retained premiums were up 53.0% to 26.5 million in domestic business, and 32.0% to 8.6 million in foreign business. Overall, gross premium income rose by 9.8 million or 24.2% to 50.0 million, while net premiums increased by 11.3 million to 35.1 million. 21

22 There was a noticeable decrease in claims expenses in the fiscal year. The net loss ratio improved from 73.4% in the previous year to 60.7%, and the net expense ratio fell by 4.5 percentage points in the year under review. Lower claims expenses, combined with increased premium income, led to a profit of 5.2 million (previous year: -0.6 million) in the balance on technical account. This resulted in a loss of 2.7 million (previous year: -3.1 million) after allocation to the equalization provision. Motor Growth in domestic and foreign business unsatisfactory earnings development respectively, premium income from foreign business increased 93.4% to 55.7 million, gross, and 89.9% to 51.0 million, net. Overall, gross premium income rose from million to million, an increase of 86.3 million or 68.8%. Among the individual classes of motor insurance, the primary growth driver was motor vehicle liability insurance, which recorded an increase of 72.4 million or 82.8%. After 87.4 million in the previous year, premium income totaled million in the fiscal year. Net premiums also grew in a similar way to the development of gross premium income, increasing by 45.9 million, or 83.5%, from 54.9 million to million. Motor Gross premiums in million Motor vehicle cover showed the same trend. The gross premium volume increased by 13.9 million, or 36.6%, to 51.8 million. Retained premiums rose by 7.7 million, or 38.9%, to 27.4 million. Motor vehicle liability insurance recorded a loss in both domestic and foreign business; the figure of -9.3 million exceeded the prior-year loss by 6.2 million. After allocation to the equalization provision, the loss rose to million (previous year: million) Gross loss ratio % Gross expense ratio % Gross combined ratio % Gross premium income in motor insurance in the fiscal year was significantly up on the prior-year figure. Both domestic and foreign business recorded increases. While gross and net domestic business grew by 61.5% to million and 77.2 million, In the comprehensive motor insurance class, the loss arising from both domestic and foreign business was reduced. The loss recorded in the fiscal year totaled -1.0 million and was thus clearly less than the prior-year level ( -2.2 million). The overall balance on technical account in the motor insurance class was once again negative at million (previous year: -5.3 million). After factoring in the equalization provision, the loss rose to million (previous year: million). 22

23 Fire Strong growth in foreign business Disaster claims from the previous year dragged down result for the fiscal year Fire Gross premiums in DM million %. The share of premium income attributable to foreign business increased to 77.7% after 60.3% in the previous year. The technical result in the fire insurance class suffered under the effects of negative settlement results from the natural disasters that occurred in the previous year, resulting in a net loss of million (previous year: -4.1 million). After withdrawal from the equalization provision, the loss fell to million (previous year: million). Marine and aviation Growth in foreign business Increased loss ratio 50 Marine and aviation Gross premiums in million Gross loss ratio % Gross expense ratio % Gross combined ratio % Gross premium income from fire insurance underwent a slight decline in the fiscal year. The premium volume fell by 3.8 million, or 3.0%, from million to million. This development was exclusively attributable to domestic business and was due to increases in the retentions of the primary insurers within the R+V Group. Gross premiums in this business segment decreased by 23.0 million or 45.5% from 50.6 million to 27.6 million. In contrast, foreign business recorded positive development, with premiums increasing by 19.2 million or 25.0% to 96.1 million. After retrocessions, retained premiums from domestic business rose by 0.7 million, or 4.5%, to 17.2 million, while a premium volume of 75.0 million was retained from foreign business. This represented a growth rate of Gross loss ratio % Gross expense ratio % Gross combined ratio % In the past fiscal year, the marine insurance class again generated a considerable increase in premiums. Premium income rose in both gross and net terms. While growth of 17.3 million or 51.5% to 50.8 million gross was recorded, net premiums rose by 9.3 million or 31.7% to 38.6 million. 23

24 Domestic business contributed a 10.5 million or 87.2% increase in gross premiums to 22.5 million and a 3.7 million or 39.7% retention premium rise to 13.0 million. In gross terms, foreign business grew by 6.8 million or 31.4% to 28.2 million and by 5.6 million or 28.0% to 25.6 million net. The marine class ended the fiscal year with a loss in both domestic and foreign business. In total, the net technical loss amounted to million (previous year: -7.4 million). As there was no change in the calculation of the equalization provision during the year under report, the technical loss remained at 14.0 million (previous year: -5.3 million). Increased shareholdings, new underwriting business and the development of the US dollar drove the gross premium volume in aviation and aerospace insurance up by 6.8 million or 152.0% year-on-year to 11.2 million. Parallel to the development in gross premium income, the retention premium rose by 5.8 million or 131.4% to 10.3 million. Despite the first indications of an upward trend in premium rates, the level of premiums which remained unsatisfactory overall and increased loss ratios in the year under report resulted in a loss in the technical account of 1.4 million (previous year: 0.1 million profit). Following withdrawals from the equalization provision, this loss was reduced to 0.6 million (previous year: -0.3 million). Other insurance classes Improvement in total loss ratio Growth in premium volume Other classes Gross premiums in million This growth was mainly due to foreign business. In this segment, the premium volume climbed by 5.0 million or 172.0% to 7.9 million, and by 4.9 million or 168.0% to 7.8 million in net terms In gross terms, domestic business grew by 1.7 million or 113.9% to 3.3 million, and by 0.9 million or 61.6% to 2.5 million net Gross loss ratio % Gross expense ratio % Gross combined ratio % After a slight drop in premium volume in the previous year, growth was recorded again in this fiscal year. Premium income rose in gross terms by 17.4 million or 10.5% to million and by 11.9 million or 13.0% to million net. 24

25 Gross and net growth in premium volume was generated in both domestic and foreign business. While domestic business grew by 7.8 million or 7.4% to million gross and by 4.2 million or 10.8% to 43.0 million net, gross foreign business rose by 9.7 million or 15.8% to 70.9 million and net foreign business by 7.7 million or 14.7% to 60.0 million. Key contributions to the premium volume came from the credit and bonds, storm, livestock, hail/crop, legal protection, comprehensive home contents, fidelity and engineering insurance classes. There was some variation in the development of loss ratios as against the previous year. While improvements were made in net loss ratios on the balance sheet for the comprehensive home contents, storm, engineering, livestock, hail/crop, credit and bonds and health insurance classes, the opposite was true for the comprehensive residential, burglary and theft, water damage, all-risk, fidelity and legal insurance classes. Profits were generated in the livestock, legal, health and fidelity insurance classes, while technical losses were recorded in the comprehensive home contents, comprehensive residential, burglary and theft, storm and tempest, credit and bonds, engineering and hail/crop insurance classes. Overall, the other insurance classes generated a net loss of -2.4 million (previous year million) in the year under report. Following transfers from the equalization reserve, the loss rose to -8.2 million (previous year: -4.9 million). Staff development As of December 31, 2001, the number of employees as against the previous year was as follows: 216 people were employed Total number of employees of which: Full-time Part-time Employees with time contracts 6 7 at the head office in Wiesbaden as in the previous year, and nine people (previous year: eight) were employed at the branch office in Singapore. Internet site The R+V companies Web site ( was completely redesigned as of May 1, The heart of the new Web site is the theme park, replacing the previous Web pages that did not go beyond presenting the companies and their products. The R+V companies are involved in the development of the union of cooperative banks bancassurance portal VR-NetWorld ( This will enable customers to settle all their financial transactions using a single portal. 25

26 Contractual relations within the R+V Group Members of the Boards of Management of different R+V Group companies have overlapping responsibilities at other R+V Group companies. R+V companies have concluded service agreements within the Group. In line with these agreements, cross-enterprise services are performed by one of the following companies R+V Versicherung AG, R+V Allgemeine Versicherung AG, R+V Lebensversicherung AG or Rhein-Main Assistance GmbH. The services performed for the other companies primarily extend to the following areas: sales, investments, asset management, accounting, premium collection, financial control, legal, auditing, communications, personnel management, general administration and IT. The companies receiving these services are charged after these have been provided; they have rights of instruction and control over the areas spun off. In addition, the companies of the R+V Group have completed an agreement on central cash management and a central financial clearing system. Shareholder structure As of the balance sheet date, shares in R+V Versicherung AG were held indirectly or directly by the following shareholders belonging to the union of cooperative banks: DZ BANK AG Deutsche Zentral- Genossenschaftsbank, Frankfurt/Main WGZ-Bank Westdeutsche Genossenschafts-Zentralbank eg, Düsseldorf Bayerische Raiffeisen Beteiligungs-AG, Munich Beteiligungs-AG der Bayerischen Volksbanken, Munich Genossenschaftliche Beteiligungsgesellschaft Kurhessen AG, Kassel Norddeutsche Genossenschaftliche Beteiligungs-AG, Hanover 587 branches of Volksbank and Raiffeisenbank throughout Germany Merger to form DZ BANK AG The merger of the central banks DG BANK AG and GZ-Bank AG to form DZ BANK AG Deutsche Zentral-Genossenschaftsbank, which occurred in 2001, was an important step towards bundling forces within the union of cooperative banks. DZ BANK AG holds more than 78% of shares in R+V Versicherung AG, the parent company of the R+V subgroup. The R+V subgroup is to be included in the higher-ranking consolidated financial statements of DZ BANK AG for the first time as of December 31, Related parties 26 In the report prepared in accordance with section 312 of the Aktiengesetz (AktG German Public Companies Act) on related parties, the Board of Management declared that, according to the circumstances known to it at the time the transactions mentioned in the report were performed, the Company received adequate consideration for each transaction, and that it did not take or fail to take any other measures subject to disclosure.

27 Risks of future development Risk management process The Gesetz zur Kontrolle und Transparenz im Unternehmensbereich (KonTraG - German Act on Control and Transparency in Business) that became effective on May 1, 1998 details the duties of the Board of Management to report on the risks of future development and to provide appropriate risk management. In this context, risk management covers all systematic measures involved in recognizing, evaluating and controlling risks. The risk management process, its organizational structure including the relevant risk officers and the risk principles are documented in a risk management manual. Since the middle of 2000, risks have been managed and analyzed with the aid of an IT application. R+V Versicherung AG has a number of systems at its disposal to manage and control risks. These systems are further developed and supplemented on an ongoing basis. The regular risk conferences and central risk reporting to the Board of Management guarantee that risks to future development that could impact the Company as a going concern are identified, analyzed and controlled in a timely manner. In addition to global market risks and operating risks, technical risks, investment risks and strategic risks in particular are tracked. The latter relate to market and partner risks, risks involved in the core activities of planning and control and risks involved in project organization. Special risk situation in 2001 An extraordinary risk conference was held as a result of the general political and economical situation on the capital markets in the wake of the terrorist attacks in the US. The conference analyzed the effects on the R+V Group s risk situation. A corresponding catalog of measures has been approved by the Board of Management. Technical risks: The main technical risks for a reinsurer lie in an unbalanced portfolio, inappropriate liability for catastrophic loss and serious changes in the basic trends on the main markets. R+V Versicherung AG counters these risks by continuously tracking the markets. Particular importance is attached to maintaining a balanced portfolio both in terms of diversification on a global scale and across different classes of insurance. Risks are assumed within prescribed underwriting boundaries that limit liability for both individual and cumulative losses. The level and frequency of possible impacts from catastrophic losses are analyzed and tracked on an ongoing basis using wellestablished software, and with additional verification by the Company itself. Liabilities assumed, particularly in the area of cumulative losses, are reinsured on national and international reinsurance markets with companies with first-class credit ratings. Technical provisions are maintained at appropriate levels. Based on net premiums written, the Company has a high guarantee funds and shareholders equity ratio. 27

28 Investment risks: In order to create insurance coverage products, insurance companies expose themselves to risks such as changes in market prices, credit ratings and liquidity in their investment activities. R+V Versicherung AG counters these risks by systematically implementing statutory and supervisory law requirements. In this context, capital investments follow the general guideline of the greatest possible security and profitability while maintaining the liquidity of the insurance company at all times. In particular, investment policy aims to minimize risks by maintaining an appropriate mix and diversification in investments. Derivative financial instruments and socalled structured products are only used in accordance with supervisory law provisions. In addition, the way they are handled is explicitly regulated by an internal directive, which lays down conditions on volumes and counterparties in particular. Thanks to extensive and prompt reporting, the different risks are regularly monitored and displayed transparently. The effects of unfavorable market movements on the investment portfolio are simulated using standard and worst-case scenarios. At an organizational level, R+V Versicherung AG counters investment risks with the strict functional separation of trading, settlement and financial control. As a result of R+V Versicherung AG s function as a holding company, the largest share of investments relates to investments in affiliated and associated companies (2001: 59.8%). The risk of permanent impairment of the investment portfolio is minimized by efficient financial control for group companies and associates. Currency risks: As far as possible, liabilities in foreign currencies arising from reinsurance business are matched with investments in these foreign currencies. This allows exchange rate gains and losses to be largely offset by the correlative effect. Risk provisions for major projects and investments: R+V Versicherung has laid down binding procedures for the planning and implementation of projects and investments. In line with these specifications, an investment committee regularly examines major projects and investments for material events, possible problems and measures. Necessary changes of course are implemented immediately. The EURO project, for example, was set up in good time and ensured smooth conversion to the euro. IT risks: In the IT area, the security of programs, data storage and system operations is guaranteed by comprehensive access controls and safety precautions. A particular risk would be the partial or complete failure of the IT systems. The R+V Group has made provisions against this by establishing two separate data center locations, each with special access protection, sensitive fire protection measures and a secure power supply based on emergency power generators. A defined restart procedure to be used in the event of a disaster is tested for its effectiveness in exercises on a regular basis. Data is stored in different R+V buildings in high security areas as well as at additional external locations. The telecoms infrastructure has been designed with a high level of redundancy, both internally within buildings and externally to ensure access to external networks. 28

29 Internal control system: R+V Versicherung AG protects against the risk of errors and fraudulent activities in its administration by regulating and implementing controls in its specialist departments and by carrying out internal audits. As far as is possible, payment flows and undertakings are handled by computer. Additional security is provided by predefined powers of attorney and authorization rules that are filed on computer. Manual processing is conducted according to the dual control principle. The functionality of the risk management system developed in accordance with the KonTraG was first tested by the Group audit department. A catalog of measures, the implementation of which has been approved, was produced on the basis of the findings made. The performance of these measures is sustained by the Group audit and the risk conference. Summary of the risk situation: The instruments and methods of analysis outlined here show that R+V Versicherung AG has a comprehensive system that satisfies the requirements that it identifies and analyzes risks within the meaning of efficient risk management. To date, it has not identified any developments that could have a material long-term effect on the Company s net assets, financial position and results of operations. Significant events and outlook There were no significant events after the end of the fiscal year. The result for fiscal 2002 is affected by the inclusion in accounting one year in arrears of business assumed from domestic and foreign cedents outside the R+V Group in the non-life sector in Therefore, the following notes on the situation of the economy as a whole and the development of the insurance sector largely relate to Developments in the US will be critical for the development of the world economy. Just as developments in the US fanned economic growth in the face of advancing globalization in the past, its weakness is also impacting the current world economy. The poor sales and earnings prospects of American corporations will probably have a negative effect on corporate investments, which means that economic growth in the US is likely to be significantly lower than in the previous year. A new economic program is expected to prevent a drop in public-sector investments in Japan, but there can be no talk of a recovery yet. While the economic situation in the emerging markets of East and Southeast Asia and South America has improved, there are still considerable structural problems. Some companies are still highly indebted, and losses on the stock markets at the beginning of the year have led to increased capital costs for these companies. In addition, the rising price of oil in many emerging countries has led to a sharp deterioration in their balance of payments. 29

30 In the euro area, the underlying economic tendency will be towards stagnation as a result of strict fiscal policy and the economic downturn. This will be intensified by the dampening effects of the rise in the price of oil and the more restrained development in demand from abroad. On the other hand, fiscal measures could have a stimulating effect, as several countries have lowered taxes in Developments in the insurance sector are expected to be in line with economic data. On the one hand, slight improvements in conditions were achieved in contract negotiations with partners in key markets; on the other hand, the desired level of rates has not yet been met. However, many economic indicators are suggesting that market developments will lead to adequate premiums and conditions, the effects of which will be seen in the financial statements for The terrorist attacks on the World Trade Center in New York on September 11, 2001 have created a completely new scenario for direct insurers and reinsurers, particularly in fire and industrial insurance, which will lead to significantly higher premium levels and changes in conditions. However, due to the fact that business assumed from cedents outside the R+V Group is reported one year in arrears, this development will not affect the annual financial statements until Provisions have already been made for claims expenses as a result of the events of September 11 in the annual financial statements for 2001, so that claims expenses should have only a marginal effect on the result for A moderate rise in gross premiums is forecast for the current year. Retention increases for direct insurers in the R+V Group will be more than offset by new underwriting business and increases in the share of non-group business. As a result of the growth in premiums in low-retroceded non-group business, we are forecasting a rise in net premium volume in excess of gross growth rates. Taking the investment result into consideration, R+V Versicherung AG expects its earnings situation to remain stable in the future. Wiesbaden, April 12, 2002 The Board of Management 30

31 Appendix to the Management Report In the fiscal year, the Company was active in the following fields of domestic and foreign reinsurance: Life Health Accident Liability Motor Aviation Legal Fire and allied perils Burglary and theft Water damage Glass Storm Comprehensive home contents Comprehensive homeowners Hail Livestock Engineering Marine Credit and bonds Other 31

32 Proposal on the Appropriation of Profits Net retained profits for the fiscal year amount to 36,627,976. We propose to the General Meeting that the net retained profits be used as follows: 3.50 dividend per no-par value share for 8,701,000 shares 30,453,500 Transfer to the revenue reserves 6,150,000 Retained profits brought forward 24,476 36,627,976 32

33 R+V Versicherung AG Annual Financial Statements 2001

34 Balance Sheet as of December 31, 2001* Assets A. Unpaid contributions to subscribed capital thereof: called up: ( ) B. Intangible assets I. Start-up and business expansion costs II. Goodwill III. Other intangible assets 154, , , ,849 C. Investments I. Land, land rights and buildings including buildings on third-party land 4,242,230 4,299,096 II. III. Investments in affiliated and associated companies 1. Shares in affiliated companies 767,460, ,130, Loans to affiliated companies 72,671,048 2,100, Investments in associates 51,332,602 50,880, Loans to associates 891,464,131 58,611,704 Other financial investments 1. Shares, investment certificates and other variable-yield securities 92,057,798 91,548, Bearer securities and other fixed-income securities 128,774,977 89,489, Receivables from mortgages, land charges and annuity land charges 4. Other loans a) Registered bonds 166,387, ,726,321 b) Notes receivable and loans 66,802,483 66,802,483 c) Loans and advance payments on insurance policies d) Miscellaneous loans 5,112, ,302,966 10,225, Deposits with banks 10,787,457 10,423, Miscellaneous investments 3,548, ,471,241 25,607 IV. Deposits with ceding undertakings 1,079,938,052 1,007,056,547 2,449,115,654 2,226,321,854 * With reference to the thereof remarks, the figures for the previous year are given in brackets. 34

35 D. Assets held to cover linked liabilities E. Debtors I. Debtors arising out of direct insurance operations II. Debtors arising out of reinsurance operations 108,450, ,479,098 thereof: affiliated companies 23,258,661 ( 6,563,285 ) associates ( ) III. Other debtors 133,773, ,480,322 thereof: affiliated companies 57,833,573 ( 132,839,318 ) associates ( ) 242,224, ,959,420 F. Other assets I. Tangible assets and inventories 543, ,425 II. Cash with banks, checks, and cash on hand 8,989,880 12,807,478 III. Own shares Notional value: ( ) IV. Miscellaneous assets 5,143,394 15,413 14,676,553 13,411,316 G. Prepaid expenses I. Accrued interest and rent 12,580,573 10,692,100 II. Other prepaid expenses 1,481,809 1,964,905 14,062,382 12,657,005 H. Anticipated tax relief for future financial years in line with section 274 (2) HBG I. Deficit not covered by shareholders equity 2,720,233,164 2,557,322,444 35

36 Equity and Liabilities A. Shareholders equity: I. Subscribed capital 226,000, ,000,000 II. Capital reserves 429,590, ,468,228 III. Revenue reserves: 1. Legal reserve 2. Reserve for own shares 1,583, Statutory reserves 4. Reserve in accordance with section 58 (2a) AktG 5. Other revenue reserves 68,408,087 69,991,545 69,991,545 IV. Net retained profits 36,627, ,950,000 thereof profits brought forward: ( 30,762) 762,209, ,409,773 B. Participation certificates C. Subordinated liabilities 76,693,782 76,693,782 D. Special tax-allowable reserves E. Technical provisions I. Unearned premiums 1. Gross 80,617,725 62,806, less: reinsurance amount 18,019,219 62,598,506 14,605,032 II. III. IV. Mathematical provision 1. Gross 1,018,388, ,840, less: reinsurance amount 617,762, ,625, ,189,026 Claims outstanding 1. Gross 810,192, ,557, less: reinsurance amount 387,405, ,786, ,961,930 Provision for bonuses and rebates 1. Gross 67, , less: reinsurance amount 67,980 56,400 V. Equalization provision and similar provisions 105,027,706 84,540,938 VI. Other technical provisions 1. Gross 3,419,504 1,760, less: reinsurance amount 410,030 3,009, , ,116, ,416,339 36

37 F. Technical provisions for linked liabilities G. Other provisions I. Provisions for pensions and similar obligations 15,505,184 13,673,690 II. Tax provisions 64,529,960 83,677,262 III. Provisions for anticipated tax years charges in future years in line with section 274 (1) HGB IV. Other provisions 5,082,724 4,133,512 85,117, ,484,464 H. Deposits received from reinsurers 627,417, ,292,075 I. Other liabilities I. Creditors arising out of direct insurance operations II. Creditors arising out of reinsurance operations 119,524, ,704,030 thereof: affiliated companies 9,342,063 ( 48,616,726) associates 43,080 ( 18,129) III. Bonds 19,896,405 20,499,556 thereof convertible ( ) IV. Liabilities to banks V. Other creditors 35,078,141 20,612,370 thereof: taxes 2,444,031 ( 1,607,868) social security contributions 271,272 ( 270,345) affiliated companies 25,970,820 ( 7,947,419) associates 887,304 ( 3,497,023) 174,498, ,815,956 K. Deferred income 178, ,055 2,720,233,164 2,557,322,444 37

38 Income Statement for the period from January 1 to December 31, 2001* I. Technical account 1. Premiums earned net: a) Gross premiums written 1,028,543, ,279,420 b) Reinsurance premiums ceded 415,809, ,733, ,740,103 c) Change in provision for unearned premiums gross 17,558,066 1,750,188 d) Change in provision for unearned premiums reinsurers share 3,416,120 14,141,946 5,811, ,591, ,477, Allocated investment return 13,365,604 12,554, Other technical income net 4,252,062 1,287, Claims incurred net a) Claims paid aa) Gross 589,354, ,402,150 bb) Reinsurers share 255,307, ,046, ,311,644 b) Change in provision for claims outstanding aa) Gross 86,277,406 2,805,703 bb) Reinsurers share 8,207,058 78,070,348 25,860, ,117, ,145, Change in other technical provisions net a) Mathematical provision net 46,484,166 42,791,032 b) Other technical provisions net 1,641,383 1,198,131 48,125,549 41,592, Bonus and rebates net 105,674 65, Operating expenses net a) Operating expenses gross 300,735, ,205,658 b) less: reinsurance commissions and profit participations received 112,143, ,906, ,592, ,298, Other technical expenses net 557, , Subtotal 33,288,643 28,995, Change in the equalization provision and similar provisions 10,909,718 6,922, Balance on technical account 44,198,361 35,917,805 * With reference to the thereof remarks, the figures for the previous year are given in brackets. 38

39 II. Non-technical account 1. Investment income a) Income from investments 32,163, ,857,868 thereof: from affiliated companies 31,466,306 ( 234,298,858) b) Other investment income thereof: from affiliated companies 28,756,194 ( 25,285,813) aa) Income from land, land rights and buildings including buildings on third party land 531, ,405 bb) Miscellaneous investment income 69,580,098 70,111,261 62,355,494 c) Income from write-ups 544, ,611 d) Realized gains on investments 1,785, ,810 e) Income from profit pooling and profit transfer agreements 40,324,700 f) Income from the release of special tax-allowable reserves 834, ,929, ,301, Investment expenses a) Investment management expenses, interest expenses and other investment expenses 4,215,745 3,977,708 b) Write-downs on investments 1,319,842 79,527 c) Realized losses on investments 3,235 d) Expenses for losses assumed e) Allocation to special tax-allowable reserves 5,535,587 4,060, ,394, ,241, Allocated investment return 35,848,288 34,337, ,546, ,903, Other income 14,568,164 12,406, Other expenses 29,500,508 22,863,705 14,932,344 10,457, Non-technical result 88,613, ,446, Result from ordinary activities 44,415, ,528,288 39

40 Extraordinary income 9. Extraordinary expenses 696, Extraordinary result 696, Taxes on income 7,744,496 60,962,390 thereof reallocation within fiscal entity: 18,490,058 ( 28,604,721) 12. Other taxes 42,935 18,981 thereof reallocation within fiscal entity: 129,232 ( 46,220) 7,787,431 60,981, Income from losses assumed 14. Profit transferred as a result of profit pooling and profit transfer agreements 15. Net income for the year 36,627, ,850, Retained profits brought forward from the previous year 30, Withdrawals from capital reserves 18. Withdrawals from revenue reserves a) from legal reserve b) from reserve for own shares c) from statutory reserves d) from other reserves 1,583,458 27,069,038 1,583,458 27,069, Transfers from participation certificates 20. Appropriations to other revenue reserves a) to legal reserve b) to reserve for own shares 1,583,458 c) to statutory reserves d) to other revenue reserves 1,583, Transfers to participation certificates 22. Net retained profits 36,627, ,950,000 40

41 Notes Accounting policies Basis of preparation The annual financial statements of R+V Versicherung AG for 2001 were prepared in accordance with the provisions of the Handelsgesetzbuch (HGB German Commercial Code), the Aktiengesetz (AktG German Public Companies Act) and the provisions of the Versicherungsaufsichtsgesetz (VAG German Act on Private Insurance Undertakings) as well as the Verordnung über Rechnungslegung von Versicherungsunternehmen (RechVersV German Federal Regulations on Insurance Accounting) of November 8, Use of simplification procedure The annual financial statements for 2001 also cover all business assumed by R+V Group companies in 2001, domestic and foreign third-party life insurance business and the business of our branch office in Singapore. As other non-life business underwritten on the international reinsurance market is often settled with the transferring parties long after the balance sheet date, the provision laid down in section 27 (1) in conjunction with section 3 of the RechVersV on approximation and simplification procedures has been applied. In line with this, business with a gross premium volume of million or a 32.2% share of total premiums written was included one year in arrears. Technical provisions were increased sufficiently to meet current and future obligations. Intangible assets were valued at acquisition cost and written down using the straight-line method over the useful life allowed by tax law. As a matter of principle, additions in the fiscal year were written down pro-rata. Land, land rights and buildings including buildings on third-party land were recorded at acquisition or manufacturing cost less write-downs. Straight-line depreciation was performed using the rate allowed by tax law. Shares in affiliated companies and associates and other investments were recorded at acquisition cost. Investments held in foreign currencies were translated using the exchange rate applicable at the time of acquisition. Investments in associates were valued according to the length of time they have been held by the Company, as were other variable-yield securities, bearer securities and other fixed-income securities, other loans and deposits with banks. Shares, investment certificates and other variable-yield securities, bearer securities and other fixed-income securities were reported in line with the strict principle of the lower of cost or market. Write-ups were made in accordance with section 280 (1) HGB. These items also include derivative financial instruments; these were combined with existing securities in the portfolio to form hedging relationships for hedge accounting purposes. The acquisition costs in euros of securities held in foreign currencies were calculated using the price of the security and the exchange rate as of the time of acquisition; the book value in euros was calculated on the basis of the price of the security and the exchange rate as of the balance sheet date. Other loans and deposits with banks were reported at their repayment value, insofar as specific valuation allowances did not have to be performed. Deposits with banks in foreign currencies were translated using the exchange rate as of the balance sheet date. 41

42 Premiums and discounts were amortized over the maturity period. The proportion relating to future years was reported as prepaid expenses. Deposits with ceding undertakings and debtors arising out of reinsurance operations were reported at their nominal value. Doubtful debtors were written down directly. Operating and office equipment was valued at acquisition cost less straight-line depreciation. Additions in the fiscal year were generally written down pro rata. Lowvalue assets were written off in full in their year of acquisition. The remaining assets are reported at nominal value. Any necessary valuation allowances were performed and deducted from assets. Technical provisions (unearned premiums, mathematical provisions, claims outstanding and other technical provisions) were generally reported in line with information provided by the cedents. If no information was available, provisions were estimated on the basis of contractual conditions and the course of business to date. We made appropriate increases to a number of our cedents loss provisions for which we felt, given our experience, that the amounts stated were too low. Correspondingly, appropriate provisions were also made for the future loss expenses expected as a result of the terrorist attacks in the US on September 11, The equalization provision and similar provisions (nuclear plants, pharmaceutical risks) were calculated in accordance with section 341 h HGB in conjunction with sections 29 and 30 RechVersV. Deposits received from reinsurers and creditors arising out of reinsurance operations were reported at the nominal amount. In line with section 6 a Einkommensteuergesetz (EStG German Income Tax Act), provisions for pensions and similar obligations were calculated using the present value method based on the 1998 mortality tables published by Prof. Dr. Klaus Heubeck, using an interest rate of 6%. The provision for early retirement was formed in line with the principles laid down in section 6 a EStG. Partial retirement provisions cover both unpaid remuneration and outstanding top-up amounts for salaries and pensions. An actuarial discount was made on the top-up amounts. The 1998 mortality tables published by Prof. Dr. Klaus Heubeck were applied to the calculation of these amounts, using an interest rate of 5.5%. The provisions for jubilee benefits were calculated using the 1998 mortality tables published by Prof. Dr. Klaus Heubeck, using an interest rate of 5.5%. The carrying amount of the remaining provisions is based on projected requirements. The remaining liabilities were recognized at the amounts payable on maturity. The reinsurers share of provisions was calculated in line with the conditions of the reinsurance agreements. 42

43 Currency translation All items in foreign currencies were translated into euros. The items listed under Assets C, Investments I to III and the other debtors, other creditors, prepaid expenses and deferred income, and income and expenses items relating to these investments were translated using the exchange rate as of the balance sheet date December 31, This does not include investments in affiliated and associated companies or other financial investments. These items were translated using the exchange rate valid at the time of acquisition. All other items on the balance sheet and in the income statement, including in particular the technical items, were translated using the exchange rate as of November 30, 2001 in order to accelerate the preparation of annual financial statements. The difference between the exchange rates as of December 31, 2001 and November 30, 2001 was insignificant for the Company s net assets, financial position and results of operations. Foreign currency gains and losses incurred in relation to a single currency were netted against each other. 43

44 List of Shareholdings Shares in affiliated companies Name and registered office of company Share of Currency Figures for Equity Result capital in% fiscal year Insurance companies Assimoco S.p.A., Segrate 40.0 EUR ,226,889 17,498,000 Assimoco Vita S.p.A., Segrate 63.6 EUR ,654,578 5,412,000 KRAVAG-ALLGEMEINE Versicherungs-AG, Hamburg 22.1 EUR ,961, ,352 KRAVAG-LEBEN Versicherungs-AG, Hamburg 23.0 EUR ,875, ,000 KRAVAG-LOGISITC Versicherungs-AG, Hamburg 45.0 EUR ,363, ,216 K.U. FILAR S.A., Szczecin 78.5 PLZ ,712, ,823 K.U. FILAR-ZYCIE S.A., Szczecin 78.5 PLZ ,538,512 1,277,566 R+V Allgemeine Versicherung AG, Wiesbaden 88.3 EUR ,024,276 68,679,388 R+V Krankenversicherung AG, Wiesbaden 81.8 EUR ,005, ,000 R+V Lebensversicherung AG, Wiesbaden EUR ,350,836 * R+V Luxembourg Lebensversicherung S.A., Strassen EUR ,553,181 1,651,613 R+V Poistovna a.s., Bratislava 88.3 SKK ,859,703 2,905,136 R+V Rechtsschutzversicherung AG, Wiesbaden 88.3 EUR ,164,860 5,461,888 R+V Reinsurance Ireland Ltd., Dublin EUR ,559,463 1,246,679 Service, holding and real estate companies carexpert Kfz-Sachverständigen GmbH, Walluf 57.4 EUR ,251, ,727 compertis Beratungsgesellschaft für betriebliches Vorsorgemanagement mbh, Wiesbaden 51.0 EUR ,702,853 3,879 GenoTel Gesellschaft für Telekommunikationsservice mbh, Frankfurt am Main 35.3 EUR , ,271 HANSEATICA Sechzehnte Grundbesitz Investitionsgesellschaft mbh & Co. KG, Hamburg 83.0 EUR , ,646 HumanProtect Consulting GmbH, Cologne ** 45.0 EUR ,330 42,330 KRAVAG Umweltschutz- und Sicherheitstechnik GmbH, Hamburg 45.0 EUR ,545 3,934 Rhein-Main Assistance GmbH Gesellschaft für Service- und Beistandsleistungen, Wiesbaden 88.3 EUR ,334,757 1,966,192 Rhein-Main Beteiligungs-GmbH, Wiesbaden 88.3 EUR ,322 71,483 R+V Allgemeine Beteiligungs-GmbH, Wiesbaden 80.0 EUR ,467,696 10,199,534 R+V Erste Anlage GmbH, Wiesbaden 88.3 EUR , R+V Erste Anlage GmbH & Co. Verwaltung KG, Wiesbaden 88.3 EUR ,984 46,480,016 R+V Immobilien GmbH, Wiesbaden EUR ,344,044 2,059,208 R+V Immobilien GmbH & Co. KG Grundbesitzverwaltungsgesellschaft Kaufingerstraße, Wiesbaden 95.3 EUR ,025,381 1,168,165 R+V Kureck Immobilien GmbH & Co. KG Grundstücksverwaltungsgesellschaft Adolfsberg, Wiesbaden EUR ,492,870 70,410 R+V Kureck Immobilien GmbH & Co. KG Grundstücksverwaltungsgesellschaft Hochhaus, Wiesbaden 88.3 EUR ,872, ,423 R+V Kureck Immobilien GmbH & Co. KG Grundstücksverwaltungsgesellschaft Sonnenberger Straße 2/2a, Wiesbaden 88.3 EUR ,364, ,521 R+V Kureck Immobilien GmbH & Co. KG Grundstücksverwaltungsgesellschaft Sonnenberger Straße 2b, Wiesbaden EUR ,398, ,120 R+V Kureck Immobilien GmbH & Co. KG Grundstücksverwaltungsgesellschaft Taunusstraße 1, Wiesbaden EUR ,215, ,101 R+V Kureck Immobilien GmbH & Co. KG Grundstücksverwaltungsgesellschaft Taunusstraße 3, Wiesbaden EUR ,112, ,874 R+V Kureck Immobilien GmbH, Wiesbaden ** 88.3 EUR ,535 11,535 R+V Real Estate Belgium N.V./S.A., Brussels EUR ,146, ,086 R+V Rechtsschutz-Schadenregulierungs-GmbH, Wiesbaden 88.3 EUR ,690 1,311 R+V Versicherungsbetriebs-GmbH, Wiesbaden 88.3 EUR ,600 44,162 Sprint Sanierung GmbH, Cologne 88.3 EUR ,952, ,198 UMB Umwelt- und Risikomanagementberatungs GmbH, Wiesbaden 88.3 EUR ,238 3,740 * A profit transfer agreement has been concluded between R+V Versicherung AG and R+V Lebensversicherung AG. ** New shareholdings 44

45 Associates Name and registered office of company Share of Currency Figures for Equity Result capital in% fiscal year Finassimoco S.p.A., Segrate 41.1 EUR ,016,001 73,611 PWR Holding GmbH, Munich 33.3 EUR ,919,696 5,629,837 R+V Zweite HG-Beteiligungs GmbH, Wiesbaden 46.7 EUR ,140, ,097 Seguros Generales Rural, S.A. de Seguros y Reaseguros, Madrid 26.5 EUR ,548,081 2,254,895 TERTIANUM - Besitzgesellschaft Berlin Passauer Straße 5-7 mbh, Munich 25.0 EUR ,424, ,910 TERTIANUM - Besitzgesellschaft Konstanz Marktstätte 2-6 und Sigismundstraße 5-9 mbh, Munich 25.0 EUR ,369, ,070 TERTIANUM Seniorenresidenzen Betriebsgesellschaft mbh, Constance 25.0 EUR ,025,170 3,962,683 Verwaltung HANSEATICA Sechzehnte Grundbesitz Investitionsgesellschaft mbh, Hamburg 43.3 EUR ,067 3,490 45

46 Notes to the Balance Sheet Statement of Changes in Asset Items B, C I to III in fiscal year 2001 Values stated for previous fiscal year thou % B. Intangible assets 1. Start-up and business expansion expenses in accordance with section 269 (1) sentence 1 HGB 2. Goodwill acquired 3. Other intangible assets 973 Total B. 973 C. Investments C. I. Land, land rights and buildings including buildings on third-party land 4, C. II. Investments in affiliated and associated companies 1. Shares in affiliated companies 653, Loans to affiliated companies 2, Investments in associates 50, Loans to associates 58, Total C II. 764, C. III. Other financial investments 1. Shares, investment certificates and other variable-yield securities 91, Bearer bonds and other fixed-income securities 89, Receivables from mortgages, land charges and annuity land charges Other loans a) Registered bonds 181, b) Notes receivable and loans 66, c) Loans and advance payments on insurance policies 0.0 d) Miscellaneous loans 10, Deposits with banks 10, Miscellaneous investments Total C III. 450, Total C. 1,219, Total 1,220,239 *) thereof currency write-ups: 3,919 thousand **) thereof currency write-downs: 301 thousand 46

47 Additions Transfers Disposals Write-ups*) Write-downs**) Values stated for current fiscal year thou thou thou thou thou thou % , ,746 1, , ,645 63,725 78,150 1, , ,434 1, , , ,825 5,113 78,549 1, , , , ,166 92, ,646 48,029 2, , , , , ,113 5, , ,522 3, ,105 5, ,323 3,048 1, , , ,872 4,463 1,621 1,369, , ,664 4,463 1,742 1,369,332 47

48 Assets C. Investments Present values of investments carried at cost Type of investment Book value Present value m m Land 4 9 Fixed-income securities Other investments 916 2,031 1,049 2,173 Generally, present values were calculated on the basis of share or market prices, or using the simplified capitalized earnings value method. All four plots of land were last appraised in Where other carrying amounts have been used in individual cases, these correspond with the provisions of section 56 RechVersV. The valuation provisions for the investments listed amount to 82.1% of total investments. C. I. Land, land rights and buildings including buildings on third-party land The balance sheet value of land used predominantly by R+V companies amounts to 3,898,120. C. III. 4.d) Miscellaneous loans This item relates exclusively to registered participation certificates. G. II. Other prepaid expenses 2001 Discount on subordinated loans 76,694 Premium on investments 1,281,689 Expenses relating to subsequent fiscal years 123,426 1,481,809 48

49 Equity and liabilities A. I. Subscribed capital 2001 Brought forward as of Jan ,000,000 Capital increase in line with the resolution by the General Meeting on August 23, 2001 by issuing 1,001,000 shares 26,000,000 As of Dec ,000,000 The subscribed capital is composed of 8,701,000 no-par value shares (registered shares). DZ BANK AG Deutsche Zentral-Genossenschaftsbank AG, Frankfurt am Main, has informed us in accordance with section 20 (4) Aktiengesetz (AktG German Public Companies Act) that it holds a majority interest in our company. A. II. Capital reserves 2001 Brought forward as of Jan ,468,228 Premium from capital increase 96,122,000 As of Dec ,590,228 A. III. Revenue reserves Reserve for own shares Brought forward as of Jan. 1. Addition 1,583,458 As of Dec. 31 1,583,458 This is a reserve for shares in DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main. DZ BANK AG was formed by the merger of DG BANK AG and GZ-Bank AG and therefore retroactively holds a direct or indirect majority interest in R+V Versicherung AG as of January 1, The shares in DZ BANK AG Deutsche Zentral-Genossenschaftsbank are reported with the corresponding amount on the asset side of the balance sheet under C. II. Shares in affiliated companies Other revenue reserves Brought forward as of Jan. 1 69,991,545 Transfer to form a reserve for shares in the majority shareholder DZ BANK AG 1,583,458 As of Dec ,408,087 K. Deferred income This relates exclusively to discounts on investments. Note There are no liabilities with a time to maturity of more than five years or liabilities secured by liens or similar rights. 49

50 Notes to the Income Statement I. 1.a) Gross premiums written Property and casualty insurance 667,508, ,780,842 Life insurance 361,034, ,498,578 1,028,543, ,279,420 I. 2. Allocated investment return ,365,604 12,554,645 This relates to interest from the collateral provided to the previous insurers in the amount of the mathematical provision and the mathematical pension provision. The reinsurers share of reserves was calculated in line with the conditions of the reinsurance agreements and deducted correspondingly. I. 4. Claims incurred net ,117, ,145,356 The settlement of the provision for claims outstanding brought forward from the previous fiscal year resulted in a loss. This was largely offset by subsequent adjustments, i.e. premiums less commissions. III. 2.b) Write-downs on investments Regular write-downs 68,115 75,950 Write-downs in line with section 253 (3) HGB 1,251,727 3,577 1,319,842 79,527 II. 9. Extraordinary expenses Remembrance, Responsibility and Future foundation 678,467 Others 18, ,717 50

51 Other Information Supervisory Board Dr. Christopher Pleister Chairman President Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.v., Berlin Ulrich Birkenstock Deputy Chairman Chairman of the Central Works Council R+V Allgemeine Versicherung AG, Koblenz branch office Dr. Peter Aubin Chairman of the Board of Management Volksbank Göppingen eg, Göppingen (as of August 23, 2001) Karl Eugen Becker Vereinte Dienstleistungsgewerkschaft ver.di (Unified Service Sector Union), Langen (until October 31, 2001) Uwe Brandenburg Chairman of the Board of Management Lindener Volksbank eg, Hanover (as of November 16, 2001) Dr. Ulrich Brixner Chairman of the Board of Management DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt/Main Ilona Brüssing Chair of the Works Council Kassel-Erfurt branch office, R+V Allgemeine Versicherung AG Andreas Dichtl Chairman of the Board of Management Volksbank Raiffeisenbank Berchtesgadener Land eg, Bad Reichenhall Carl-Christian Ehlers Chairman of the Board of Management Kieler Volksbank eg, Kiel (until August 23, 2001) Peter Frenzel Senior specialist, R+V Allgemeine Versicherung AG, Oldenburg branch office Rüdiger Habrik Chair of the Works Council Stuttgart branch office, R+V Allgemeine Versicherung AG Albrecht Hatton Chairman of the Board of Management Volksbank Dessau/Anhalt eg, Dessau (as of June 11, 2001) Peter Hermann Printer, R+V Allgemeine Versicherung AG, Wiesbaden head office Karl-Heinz Moll Member of the Board of Management WGZ-Bank Westdeutsche Genossenschafts-Zentralbank eg, Düsseldorf Manfred Nüssel President Deutscher Raiffeisenverband e.v., Bonn Gerd Rück Director, R+V Versicherung AG, Wiesbaden head office Armin Schmidt Deputy District Manager Vereinte Dienstleistungsgewerkschaft, Wiesbaden (as of November 1, 2001) Gudrun Schmidt Head of department Vereinte Dienstleistungsgewerkschaft ver.di, Frankfurt/Main Dr. Bernd Thiemann Chairman of the Board of Management DG Bank Deutsche Genossenschaftsbank AG, Frankfurt/Main (until April 30, 2001) Dieter Wössner Member of the Board of Management GZ-Bank AG, Frankfurt/Stuttgart (until August 23, 2001) 51

52 Board of Management Dr. Jürgen Förterer Chairman Wolfgang Kernbach Hans-Christian Marschler Bernhard Meyer Dr. Manfred Mücke Rainer Neumann Rainer Sauerwein Hans-Dieter Schnorrenberg Dr. Bernhard Zloch General representative of the Board of Management Dr. Christoph Bark, Lawyer 52

53 Commission and other remuneration for insurance agents, personnel expenses 1. Wages and salaries 13,899, Social security costs 1,895, Pension costs 2,011, Total expenses 17,806,666 Total remuneration of the members of the Board of Management in the fiscal year amounted to 1,576,577. Former members of the Board of Management and their surviving dependents received a total of 433,453. The provision for current pensions and pension entitlements for former members of the Board of Management and their surviving dependents amounts to 4,219,404. Expenses for the Supervisory Board amounted to 238,222 in the fiscal year. No amounts subject to disclosure in accordance with section 285 no. 9 c HGB were paid in the fiscal year. Number of employees In fiscal 2001, R+V Versicherung AG employed an average of 221 people (2000: 213), of whom 213 were employed in Germany and 8 at the Singapore branch office. Contingent liabilities and other financial obligations Liabilities due to shares in cooperatives amount to 5,113. There are no further contingent liabilities within the meaning of section 251 HGB. Additional payment obligations Additional payment obligations exist in the amount of 17,409,303 in relation to shares in affiliated companies and in the amount of 11,888 in relation to shares in German insurance companies. Consolidated financial statements R+V Versicherung AG produces subgroup financial statements in accordance with the provisions of sections 290 ff HGB. These are filed with the Wiesbaden commercial register under HRB For the first time, the subgroup financial statements of R+V Versicherung AG have been included in the higher-ranking consolidated financial statements of DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main. These are filed with the Frankfurt am Main commercial register under HRB Wiesbaden, April 12, 2002 The Board of Management Dr. Förterer Kernbach Marschler Meyer Dr. Mücke Neumann Sauerwein Schnorrenberg Dr. Zloch 53

54 Audit Opinion We have audited the annual financial statements including the accounting and the management report of R+V Versicherung AG, Wiesbaden, for the fiscal year from January 1, 2001 to December 31, The maintenance of the books and records and the preparation of the annual financial statements and the management report in accordance with the provisions of the HGB (Handelsgesetzbuch German Commercial Code) and the supplementary provisions of the Articles of Association are the responsibility of the Board of Management of the Company. Our responsibility is to express an opinion on the annual financial statements, including the accounting and the management report, based on our audit. We conducted our audit of the annual financial statements in accordance with section 317 HGB and the generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the annual financial statements in accordance with German principles of proper accounting and in the management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Company and evaluations of possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the internal accounting control system and the evidence supporting the disclosures in the books and records, the annual financial statements and the management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by the Board of Management, as well as evaluating the overall presentation of the financial statements and the management report. We believe that our audit provides a reasonable basis for our opinion. Our audit did not give rise to any reservations. In our opinion, the annual financial statements give a true and fair view of the net assets, financial position and results of operations of the Company in accordance with German principles of proper accounting. On the whole, the management report provides a suitable understanding of the Company s position and suitably presents the risks of future development. Cologne, April 15, 2002 KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft Dr. Geib Wirtschaftsprüfer Elmenthaler Wirtschaftsprüfer 54

55 Report of the Supervisory Board The Supervisory Board was regularly informed in written and oral reports by the Board of Management on the current position of the Company and particular transactions during fiscal 2001, and supervised management on the basis of these reports. The present financial statements for fiscal 2001, the management report, the consolidated financial statements and the consolidated management report for fiscal 2001 were examined by the Supervisory Board. The auditor responsible was present during the meeting of the Supervisory Board s audit committee and was available to give all additional explanations and opinions required. No reservations were made in relation to the statements. The Supervisory Board concurs with the audit opinion of the auditing firm KPMG Deutsche Treuhand-Gesellschaft AG, which was appointed in accordance with section 341 k HGB and which issued an unqualified opinion. The Supervisory Board concurs with the proposal of the Board of Management on the appropriation of the net retained profits of R+V Versicherung AG. The annual financial statements for R+V Versicherung AG prepared by the Board of Management for fiscal 2001 have been approved and hence adopted in accordance with section 172 AktG. The related parties report prepared by the Board of Management and the audit opinion on this prepared by the auditors were submitted to the members of the Supervisory Board and examined. The auditors issued the following audit opinion on the report by the Board of Management on affiliated companies: On completion of our audit in accordance with professional standards, we confirm that 1. the factual statements made in the report are correct, 2. the remuneration paid by the Company with respect to the transactions listed in the report was not inappropriately high. We concur with this opinion and raise no reservations to the closing declarations made by the Board of Management in the report on related parties. Wiesbaden, May 28, 2002 The Supervisory Board Dr. Pleister Chairman 55

56 56

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59 Addresses of R+V Insurance Companies Head Office R+V Versicherung AG Taunusstraße 1 D Wiesbaden Tel /533-0 Fax / Foreign Branch Office R+V Versicherung AG Reinsurance Singapore Branch 24 Raffles Place # Clifford Centre Singapore Tel. 00 (65) Fax 00 (65)

60