18 December 1998

Press Release

Munich Re and Allianz restructure shareholdings:

Munich Re to increase its shareholding in ERGO to over 60%
Allianz to become majority shareholder of Allianz Leben
Munich Re to become sole owner of American Re, and Allianz sole owner of Allianz of America

The restructuring of various insurance interests held by Munich Re and Allianz, announced some time ago, is now set to take place. Munich Re will increase its shareholding in American Re to 100%, while Allianz will become the sole shareholder of Allianz of America. In addition, Allianz will transfer a portion of its ERGO shares to Munich Re, which in return will reduce its interest in Allianz Leben and give Allianz control of that company.

The details: Munich Reinsurance Company will transfer to Allianz AG a stake of around 15.6% in the US insurance group Allianz of America and a stake of nearly 3.9% in Allianz Lebensversicherungs-AG; in return it will receive shares of just under 6.5% in ERGO Versicherungsgruppe AG and around 6.9% in American Re Corporation. The individual transactions are to be carried out in two steps in 1998 and 1999.

In future Munich Re will hold around 60.6% of ERGO, 100% of American Re and approx. 40.6% of Allianz Leben. The Allianz Group will control 100% of Allianz of America and around 50.3% of the share capital of Allianz Leben, retaining only a residual holding of around 3.7% in ERGO.

The Chairman of Munich Re's Board of Management, Dr. Hans-Jürgen Schinzler, and his counterpart at Allianz AG, Dr. Henning Schulte-Noelle, see the move as further enhancing the strategic positions of both groups in Germany and in the USA.

Munich Re CEO Schinzler: "It is very positive for Munich Re that we will be American Re's sole shareholder in future and that we are increasing our majority shareholding in ERGO. The disposal of our stakes in Allianz Leben and Allianz of America allows us to achieve our corporate goals without any new capital injection."

And Allianz CEO Schulte-Noelle: "The transactions are a further step towards a clear arrangement of the insurance interests of our groups and the logical consequence of similar restructurings in previous years."

Details of the companies involved

Allianz of America, Inc., Westport, Connecticut, into which US property-casualty insurer Fireman's Fund was incorporated in 1991, wrote gross premiums of around $8.2bn in 1997 and posted a net income of $340m.

American Re Corporation, Princeton, New Jersey, with its subsidiaries, has been under Munich Re's control since 1996. The American Re Group wrote gross premiums of around $3.1bn in 1997 and posted a net income of $221m. Allianz's stake in American Re resulted from the 1997 merger of the company with Munich American Reinsurance Company, New York, in which Allianz had an interest of 40%.

ERGO Versicherungsgruppe AG, Düsseldorf, whose group includes VICTORA, Hamburg-Mannheimer, DKV and D.A.S., is the number two in the German insurance market, with gross premiums of DM 21.3bn in 1997. Its 1997 profit for the year totalled DM 535m. ERGO currently tops the M-DAX share index with a market capitalization of nearly DM 20bn.

Allianz Lebensversicherungs-AG, Stuttgart, with gross premiums of around DM 12.5bn in 1997 and a profit for the year of DM 212m, is the biggest German life insurer.