Schinzler sees a “return to reason” in reinsurance business

AGM approves dividend of €1.25 (previous year: €0.95), dividend increase number eight in ten years; Munich Re Group expects premium expansion of more than 7% for the current year and double-digit growth again in its result; Chairman of the Board of Management Schinzler sees a “return to reason” in reinsurance business; Substantial growth and earnings potential from cooperation with the HBV Group

MUNICH, July 18, 2001—At today’s Annual General Meeting of the Munich Reinsurance Company, the shareholders approved a dividend of €1.25 for the business year 2000 (previous year: €0.95). This eighth dividend increase in the last ten years amounts to a rise of over 30% in the sum distributed to shareholders, following the doubling of the overall dividend amount in the previous year. Munich Re’s shareholders have also enjoyed a very positive price performance of their stock in both absolute and relative terms: since January 2000 Munich Re shares have appreciated in value by around 30%.

For the current business year 2001 Chairman of the Board of Management, Dr. Hans-Jürgen Schinzler, expects the consolidated premium to increase by over 7% to a good €33bn. Growth among the Group’s reinsurers was being driven mainly by life business, he said, partly as a consequence of the portfolio acquired by Munich American Reassurance Company from CNA Financial Corporation; in addition, Munich Re will be expanding its life business strongly in the UK and Canada. In non-life business, the world’s leading reinsurance group also anticipates marked premium growth: with improving conditions, Munich Re will profit from a “flight to quality” as many primary insurers seek to buy covers with top security and first-class service. Schinzler qualified this by saying that despite the upward trend in the treaty renewals at the turn of the year 2000/2001, prices and conditions were still not risk-commensurate in many markets. Nevertheless, renewals of reinsurance treaties during the year, such as the recent ones in Japan, the USA, and Latin America, had shown clear signs of a “return to reason.” This meant that, barring any unexpected developments, the result situation in reinsurance business should show a distinct overall improvement as well.

In primary insurance (ERGO, Karlsruher, Europäische), premium growth will also total over 7% in the current year. The first full-year consolidation of the Italian life insurer Bayerische Vita in the Group financial statements will significantly increase both the proportion of life business and the share of ERGO’s premium from outside Germany. ERGO is already among the three largest providers in Poland and the Baltic, where it recently acquired a majority holding in the Lithuanian company Preventa.

The Munich Re Group expects substantial growth and earnings potential from its exclusive cooperation with the HypoVereinsbank (HVB) Group throughout Germany. Not only will HVB customers be offered ERGO Group insurance products and vice versa: the “partners of choice” are preparing the ground for promising business ventures in other areas as well. A joint strategic approach is also planned for regions outside Germany, where target markets are eastern Central Europe and Southern Europe. In Poland, ERGO Hestia and the banking subsidiaries of the HVB Group—number three in their respective lines of business in each case—have already concluded an exclusive cooperation agreement.

Since 1st July, following a good half year of intensive preparation, Munich Re has been operating with a completely new structure in its reinsurance business. Instead of a complex matrix organization based on regions and classes of business, Munich Re’s reinsurance clients worldwide are now served by seven operative divisions, four organized along regional lines and three with cross-regional functions.

Schinzler: “The timing was ideal both within the company and in terms of the market situation. The new organizational structure creates additional entrepreneurial scope for our staff. It clearly allocates responsibility and accountability and thus enables us to respond even better to our clients’ needs.”

Munich Reinsurance Company