Re-conceptualización interdisciplinaria del indicador

Legal risks

In December 2009, Munich Re’s Spain and Portugal branch lodged an appeal against the Spanish antitrust authority (Comisión Nacional de la Competencia – CNC) with respect to an administrative order imposing a fine of €15.9m for alleged collusion restricting competition. The appeal was upheld. The CNC then appealed against the court’s decision within the prescribed period. The EU Commission has now intervened in the proceedings as an “amicus curiae”.

After the federal legislative procedure for the US Fairness in Asbestos Injury Resolution Act foundered in February 2006, several US states adopted legislative initiatives (tort reform), which we believe may have a positive effect on the settling of asbestos claims. Following revelations about often questionable asbestos-related disease diagnoses and the resultant lawsuits, a number of investigation committees are at work. Similar questionable practices have come to light in silicosis lawsuits. These developments indicate that malicious liability claims are being contested in US legal circles with increasing resolve. However, it is too early to say whether and to what extent this will have favourable implications for future loss development in the insurance industry, particularly as plaintiff attorneys are trying hard to repel the tort reform initiatives. We are currently still being affected by late-reported claims – in some cases for large sums – for asbestos-related diseases and similar liability complexes. Although the total number of asbestos claims is declining, the number of severe cases of mesothelioma and other types of cancer has remained relatively constant in recent years.

Former minority shareholders of ERGO Versicherungsgruppe AG are seeking to gain increased squeeze-out cash compensation by way of shareholder compensation complaint proceedings. The material risk is limited by the number of shares eligible for compensation (approx. 237,000) and the upper limit on the scale within which the corporate value of ERGO Versicherungsgruppe AG can be set as at the date of valuation.

Following the 2012 Annual General Meeting, three of our shareholders brought legal actions against Munich Reinsurance Company to contest resolutions and to require disclosure. Both complaints were dismissed in December 2012. The dismissal of the disclosure action is not subject to appeal, but an appeal has been submitted in relation to the contesting action. We do not believe that the appeal will be successful. Contest- ing actions to set aside resolutions of the Annual General Meeting 2013 were also filed, and these were dismissed in December 2013. It is possible that appeals may be lodged. There is legacy litigation between several former insurance intermediaries and ERGO Lebensversicherung AG, which has now mostly been concluded. In connection with far-reaching claims made by the former intermediaries, serious allegations have been levelled in the media since May 2011, including reports of misconduct on incentive trips

and errors in the sale of insurance products at ERGO. There has also been extensive internal auditing at Group level and at ERGO. ERGO has initiated the rectification of errors, and has set aside reserves for any liabilities that may arise. In relation to all these events, additional claims for damages against ERGO and Munich Re have been announced. It is also not possible to completely rule out financial burdens and

reputational damage for Group companies in the future as a result of these allegations.

Balance sheet risks

Balance sheet risk is especially the risk of our annual results being adversely affected by unforeseen reductions in the value of our assets due to provisions or write-downs or increases in our liabilities. It arises primarily out of changes in capital-market para meters or an unforeseen need to adjust assumptions relating to insurance liabilities that could lead to reserves having to be strengthened.

Tax risks

As a reaction to the financial markets and sovereign debt crisis, a trend towards increased corporate tax burdens is apparent across Europe. In Germany, discussion is focused on the introduction of a financial transactions tax and the restriction of tax privileges for investment funds. After the already implemented abolition of tax exemption for free-float dividends, it is not unlikely that in future there will be taxation of gains on disposals of free-float shareholdings. Which of these ideas will actually be realised is not yet clear. Additional annual tax burdens in the lower three-digit million range cannot be ruled out.

Regulatory developments

After many years of discussions, the European Council, European Parliament and European Commission have decided that Solvency II will come into effect on 1 January 2016. Member States must ensure that the Solvency II Directive has been implemented no later than 31 March 2015. Therefore, we should be able to apply for authorisation of our internal model as from April 2015. EIOPA has published Preparatory Guidelines for Solvency II requirement specifications for the transitional period until Solvency II is implemented.

Consultation continues in the European Parliament and the European Council on the proposals by the European Commission to revise the Insurance Mediation Directive (IMD2), the Markets in Financial Instruments Directive (MiFID2), and the Regulation on key information documents for investment products (PRIPs Regulation). Controversy remains, especially on the issues of transparency of remuneration, and prohibitions on commission. The Scandinavian countries, the Netherlands and the United Kingdom are all seeking to establish the predominance of their own regulatory environment across the EU. However, the German government favours minimum harmonisation that leaves room for national distribution structures.

Work is still in progress at a global level on additional supervisory requirements for systemically important financial institutions (SIFIs). Systemic importance is deter- mined not by the fundamental significance of a sector for the economy, but by the impact the insolvency of a company could have on global financial markets and the real economy. The insurance industry believes that the core business of primary insurers and reinsurers does not give rise to systemic risk. In fact, during the financial crisis insurers contributed towards increased stability. Nonetheless, the Financial Stability Board (FSB) has published a list of nine globally operating primary insurance com - panies that it classifies as systemically important – the global systemically important insurers (G-SIIs). A decision on the possible systemic importance of reinsurers has been postponed by one year, and is expected in July 2014. It is possible that the global debate will be followed by a national one. In addition, certain legal consequences could have an indirect effect on companies that are not classified as systemically important.

It is, for example, to be assumed that certain aspects of a recovery and resolution plan will ultimately be prescribed for all larger insurance companies. Our supervisory experts and many supervisory authorities already regard such plans as constituting an integral part of good risk management today.

The G-20 summit in Pittsburgh in 2009 resolved to make over-the-counter (OTC) derivative trading more transparent and secure. The European Market Infrastructure Regulation (EMIR) – Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories – came into force in August 2012. This introduced a clearing obligation, i.e. standardised OTC derivatives must be cleared by central counterparties (CCPs). Bilateral risk-mitigation techniques – such as the obligation to exchange collateral, or the daily valuation of outstanding contracts – apply to OTC derivatives that are not cleared by a CCP. The Regulation also requires that derivatives should be registered with a trade repository. These obligations will be substantiated in various detailed regulations (technical standards), some of which have yet to be drawn up.