24 July 1998

Letter to shareholders

Dear Shareholder,

In our letter to shareholders dated 29 June 1998 we announced a series of measures relating to our share capital, beginning this year and extending into 1999. These measures, which we have once more designed in a particularly shareholder-friendly way, are geared to preparing Munich Re shares for the euro. The business press has reported on them in detail. The first of these measures, a rights issue, is now about to be carried out. Before you receive the documents for exercising your subscription right, which you will shortly be obtaining via your depositary bank, we wish to inform you about the details.

Munich Re's Board of Management, with the consent of the Supervisory Board, has resolved to utilize part of the capital authorized for such purposes to increase the company's share capital by DM 35 million to DM 869,598,400. The company will be issuing 3,500,000 new registered shares with a par value of DM 10 each, paid up to DM 5. You will be able to acquire the new shares, which will be entitled to dividend as from 1 July 1998, for a price of DM 600 per share - markedly less than the current market price for Munich Re shares. You can subscribe for them via a syndicate of banks led by Dresdner Bank AG between 29 July and 11 August 1998 at a rate of one new share for every 25 held. To make this measure even more attractive, the Board of Management has also resolved, with the consent of the Supervisory Board, to issue the new shares with warrants for further new Munich Re registered shares, as in the very successful 1994 rights issue. Every new share will have one such warrant attached to it.

Four warrants will entitle the holder, against payment of an exercise price of DM 635, to subscribe for one further Munich Re registered share with a par value of DM 10, paid up to DM 5. After completion of the measures planned for the end of 1998 and the beginning of 1999 - the full paying-up of the partly paid-up registered shares followed by a split and conversion into no-par-value shares - four warrants will entitle the holder to subscribe for two fully paid-up no-par-value registered shares against payment of an exercise price of DM 635 plus DM 5, i.e. a total of DM 640. It will be possible to exercise the warrants from 1st September 1998 to 3rd June 2002. Should the market price of the registered shares at the end of this period be lower than the exercise price, the warrant conditions provide for the exercise period to be extended by a maximum of two years.

Further details may be obtained from the appended terms of subscription, headed "Rights issue", and the warrant conditions, which are also enclosed.

The warrants attached to the new shares can either be kept by the subscribing shareholders and, during the exercise period, used to acquire new Munich Re registered shares or they can be sold on the stock exchange at any time. The warrants will be separated from the new shares at the end of the subscription period and traded on the stock exchanges in Munich and Frankfurt am Main as from 17 August 1998.

We would also like to point out the following with regard to the warrants: the stock market price of our warrants will reflect both the difference between the exercise price and the current price of the registered shares and any "premium" the stock market adds to take account of possible future rises in the price of the registered shares during the warrant exercise period.

All experience indicates that the warrants will participate fully, and possibly overproportionately, in price movements of the registered shares. In the case of a price increase in the registered shares, the warrants thus offer the chance of realizing capital gains without having to sell Munich Re shares.

With the 1998 rights issue we want to strengthen our capital base further so as to be able to take advantage of additional chances for growth and improving earnings in a dynamic market. Besides this, with the favourable issue price of the new shares and the warrant attached to each new share, we are again offering our shareholders an attractive subscription right and a particularly interesting investment vehicle.

Yours sincerely,

Munich Reinsurance Company

Munich, 24 July 1998