BMW 2005 Annual Report Download - page 26

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Insurance business grows continuously
As an accompaniment to credit financing and leas-
ing contracts, the Financial Services segment also
operates as an agent for motor vehicle, residual lia-
bility and other vehicle related insurance policies.
This service is now offered in 29 markets via co-
operation arrangements entered into with local in-
surance companies. In 2005, the segment pursued
a strategy of expanding insurance business with
customers in new international markets, whilst also
expanding the range of products on offer in existing
markets. These measures contributed to a very
positive development in the area of car insurance
business, reflected in the 36.1% increase in the
number of new contracts signed and in the 12.5%
increase in the number of contracts in place at the
year-end. At the end of 2005, the segment had a
worldwide portfolio of 431,964 insurance contracts.
Deposit business continues to grow
Deposit business in Germany and in the USA also
developed positively over the course of 2005. The
value of deposits at 31 December 2005 amounted
to euro 6,392 million and was thus 25.3% higher
than one year earlier. The total number of customer
accounts worldwide rose during the year by 39.2%
to 521,175. The objective of encouraging deposit
customers to move into more diversified forms of
investment is successfully being realised with the
help of the tried and tested product combination
“Save& Invest” and, in Germany since October
2005, with the “Save& Plan” savings model which
enables wealth to be accumulated over time.
Fund business continues to make good progress
and to generate high net cash inflows, particularly
as a result of expanding the number of investment
funds on offer. The net cash inflow in 2005 amounted
to euro 115.2 million (+173.0%). By the year-end,
the number of custodial deposit accounts had in-
creased by 37.5% to 27,216.
The BMW Card was introduced in New Zealand
in 2005, thus increasing the number of markets on
which it is available to nine. In addition, the MINI Card
was launched in Germany and Japan in 2005. At the
end of the year under report, the Financial Services
segment was handling 291,674 credit card accounts,
12.4% more than at the end of the previous year.
Risk situation remains evenly balanced
Credit risk for credit and lease financing activities
was further reduced in 2005. Compared to the pre-
vious year, the bad debts ratio fell by 4 basis points
to 0.37%. The main contributing factor was the
on-going development and implementation of risk
management tools. The interest rate risk is managed
using a risk-return approach. Diversified value-at-
risk, as measured by the Financial Services segment
to quantify the interest rate risk*, decreased during
the year from euro 55.4 million to euro 44.2 million.
Softlab strengthens market position
During the past year, the softlab Group continued
to pursue its strategy of expanding activities whilst
focusing on Germany, Austria and Switzerland. It ac-
quired entory AG in July 2005 to add to the acquisi-
tion of axentiv AG in 2004. As a result of its acquisi-
tion of Anite GmbH in April 2005, Softlab Austria
doubled in size. The Softlab Group specialises,
amongst other areas, in customer relationship man-
agement, supply chain management, business in-
telligence, enterprise application integration and
IT services. The Softlab Group will continue in 2006
to take measures to extend its position as a leading
European IT consultant with particular expertise in
the banking, insurance, telecommunication and in-
dustrial sectors. As part of this strategy, it aims to
record significantly higher revenues with non BMW
Group entities.
*based on a 99 % confidence level and a holding period of 10 days