03 Our shares
Munich Re founder Carl Thieme decided that "Munich Re has to be a joint-stock company". For this legal form allowed him to make available the necessary guarantee capital. He started off with 3,000 shares. Today the number of shares in circulation is around 230 million. Here we look at the turbulent history of our shares that are now 125 years old.
Three million marks start-up capital
Munich Re was launched in April 1880 with a capital stock of three million marks, subdivided into 3,000 shares. 1,000 shares were acquired by the Bank für Handel und Industrie, Berlin and Darmstadt, 1,000 by Klett & Co., 500 by Merck, Finck & Co. and 100 each by the five founder members Finck, Pemsel, von Schauss, Schmidt-Polex and Thieme. 40% of the capital stock had to be paid up, and the remainder was used as the risk reserve. For security the shareholders deposited a promissory note, or obligation to pay the whole amount. The shareholding was strictly controlled. Every transfer of shares to another person had to be approved by the Supervisory Board. If it did not agree, it could simply reject the application without giving any reasons.
In 1886 the volume of business had grown to such an extent that the capital stock had to be increased to 4.8 million marks. The nominal value of the shares was increased to 1,600 marks, while the paid-up amount remained the same.
Initial public offering
On 21 March 1888 Munich Re's shares were first traded on the stock exchange - in Munich of course. Bankers Merck, Finck & Co. introduced the shares at a price of 700 reichsmarks. In 1895 the capital was increased to 10 million marks, and in 1898 to 20 million marks. The company had by now become so well-known and respected that it could afford to request a 1,200 mark premium over and above the 400-mark paid-up amount on each share. Munich Re shares were a big hit on the stock exchange: On 2 January 1890, Munich Re's shares were traded at 990 marks, ten years later at 2,435 marks.
The dividends were respectable. In the first year the pay-out was 4%, ten years later 7.5%, and in the 1900/1901 business year it had gone up to 20%. And in 1914 the Annual General Meeting voted to pay out a dividend of 40%.
Wars, crises, catastrophes
World War I meant great losses for Munich Re, especially the loss of business in all territories of our war opponents at that time. Our capital in these states was confiscated and later given back only by the USA.
One cannot say much about the price development of our shares at this time as the bourses were closed from July 1914 to December 1917. The first reliable figures we have are from 31 July 1918, the share price being 2,968 marks.
In 1923, Munich Re introduced fully paid-up bearer shares, thus doubling the capital to 120 million marks. At this time inflation was rampant. At a ratio of 1:10 the capital was converted to the stable gold mark. The loss on the stock exchange remained tolerably acceptable for shareholders: On the market as a whole, they lost about a fifth of their assets whereas "owners of paper money" lost practically everything they have. The share price of Munich Re shares at the end of 1924 was 289 gold marks. In 1925 the reichsmark replaced the gold mark at a ratio of 1:1.
World War II hit Munich Re much harder than the First World War. The company lost business and assets not only in countries embroiled in the war but also in neutral countries and in German territories in the east. Munich Re suffered additional losses through the devaluation of the reichsmark, German securities ("reichstitel") and other German investments. The share price on 28 December 1945 was 275 reichsmark.
On 21 June 1948 the deutschmark was introduced. The nominal value of our shares was set at DM 150. The first share price we have dates from 29 December 1950 and is DM 59. Not until 1956, after the securities validation process is completed, are shareholders asked to exchange their old reichsmark share certificates for DM certificates.
Large loss events repeatedly impact the movement of our share price. The prime example is 11 September 2001. Within less than 24 hours after the attack, at a time when no one was able to quantify the extent of the loss, the share price fell from €285 to €207. This corresponds to a market value loss of €14bnor almost 30% of our total market value. When we issued our first estimates of the total loss burden to Munich Re at 3 p.m. on 12 September, the negative mood among analysts and investors slowly changed. Our Investor Relations Division worked round the clock up to the end of September, when the share price regained its former level.
Boom and slump
At €381, the Munich Re share price reached its peak on 29 December 2000 when the stock exchange was booming. The sustained slump caused the share price to sink to €52 in March 2003. In March 2005 the share price is back where it was prior to the boom. There are just under 230 million Munich Re shares in circulation, with around 180,000 shareholders. Over 80% of our shares are in free float - an important figure for the weighting of our share in various share indices. Our shares are listed in the most important sustainability indices and are traded as securities of one of the world's most recognised listed companies in successfully reconciling economy and ecology.