3 July 1997
Press Release
Munich Re welcomes merger of VICTORIA/D.A.S. and Hamburg-Mannheimer/DKV to form ERGO Versicherungsgruppe / Rounding off of Munich Re's direct insurance group
We would like to inform you of the full contents of the ad hoc statement which we have issued in accordance with para. 15 of the German Securities Trading Act.
The insurance groups of VICTORIA/D.A.S. and Hamburg-Mannheimer/DKV today announced that they intend to merge under the name of ERGO Versicherungsgruppe AG. Munich Re supports this move. The merger of these companies as complementary, equal partners is in the interests of their clients, staff and shareholders alike. Their established brand names and successful products put the new group in an ideal position in the insurance markets of both Germany and Europe.
Munich Re has a shareholding of 80% in Hamburg-Mannheimer AG, Hamburg, (previously: Hamburg-Mannheimer Versicherungs-AG) and in addition has a stake of around 40% in Hamburg-Mannheimer Sachversicherungs-AG, Hamburg, as well as a shareholding of around 60% in DKV Deutsche Krankenversicherung AG, Cologne.
Munich Re has also held participations for decades in companies of the VICTORIA Group. It currently holds shares of 18.2% directly and 5.3% indirectly, via two investment companies, in VICTORIA Holding AG, Duesseldorf, and 12% in its subsidiary D.A.S. Deutscher Automobilschutz Allgemeine Rechtsschutz-Versicherungs-AG, Munich.
Subject to approval by the general meetings of shareholders due to take place in November as well as by the competent authorities, the amalgamation of the groups of companies will be effected through the merger of VICTORIA Holding AG and Hamburg-Mannheimer AG. Prior to this, the stakes held by Hamburg-Mannheimer AG in the share capital of Hamburg-Mannheimer Sachversicherung-AG and DKV Deutsche Krankenversicherung AG, currently amounting to nearly 40% each, will both be increased to around 100% through capital increases in return for stock. The new group will operate under the holding company resulting from the merger - ERGO Versicherungsgruppe AG with its registered seat in Düsseldorf.
The values of VICTORIA Holding AG and Hamburg-Mannheimer AG will be fixed in a legally prescribed procedure on the basis of valuations drawn up by auditing firms. According to provisional valuations, this will produce a ratio of between 45:55 and 40:60 and thus a majority interest for Munich Re in the holding company of the new group.
On the basis of the accounts for the year 1996 alone, the merger would result in an increase of around DM 5 in Munich Re's earnings per share. Through the inclusion of the VICTORIA Group in the Munich Re's group of consolidated companies, the gross consolidated premium income will increase by some DM 8.4bn to around DM 46.6bn (without premiums from provisions for policyholders' dividends). This means that reinsurance and direct insurance will contribute approximately equally to the Group's premium income.
What is more important: for Munich Re's interests in German direct insurance, the new group means a strengthening in the personal lines market with its stable results. At the same time the merger constitutes a valuable contribution to a continued positive development of the Munich Re Group's premium income and results in the future.
There will not be any change in Munich Re's traditional function as reinsurer of the German and international insurance industries. On the contrary, the transaction will improve the risk balance in the Munich Re Group, thus providing additional security for our reinsurance clients, too, and altogether creating more stability.
Munich Reinsurance Company
Board of Management