30 April 2003
Press Release
Munich Re Group 2002: Operative business further improved / Figures affected
by writedowns, despite high realised capital gains on investments / "Clear
precedence of profitability over growth"
The Munich Re Group benefited in 2002 from the marked upswing in the reinsurance
market and from stable earnings in the operative business of its subsidiaries
in property-casualty insurance; these positive trends intensified in the first
quarter of 2003. On the other hand, high writedowns triggered by the bear market
caused a slump in the investment result, even though the Group recorded significant
capital gains on the sale of investments. Dr. Hans-Jürgen Schinzler, Chairman
of Munich Re's Board of Management, commented on the end-result as follows: "The
substantially increased profit for the year of €1.1bn (previous year: €0.25bn)
cannot mask the fact that Munich Re still has to work hard to return to its
former earnings level." "Clear precedence of profitability over growth - this
is the strategy behind the improvements to date and also signals the way forward",
said Schinzler at the balance sheet conference.
In view of the difficult situation on the stock markets and low interest rates,
the Group does not expect investments to contribute as much to the overall
result in the coming period as in the last few years; therefore the result
for the year will have to be earned mainly from the Group's underwriting business.
In reinsurance, Munich Re has geared its prices and conditions for the current
year to achieving a combined ratio of under 100%. In primary insurance, the
Group's focus remains on insurances of the person and personal lines business
in Europe, which offer stable earnings; it also intends to continually reduce
costs.
Total bond volume of €3.4bn as an expression of confidence
The euro and pound-sterling bonds placed in mid-April, with a total volume
of €3.4bn, met with a very favourable response from the market and had
significantly strengthened Munich Re's capital base, said Schinzler. The
high demand among investors for both bonds, where total subscription orders
had exceeded €6bn, was a clear expression of the capital market's confidence
in the Munich Re Group.
Progress in reinsurance and primary insurance despite major burdens from investments
The provisional figures for the business year 2002 were announced on 27 March.
Dr. Jörg Schneider, Munich Re Board member responsible for Accounting
and Controlling, focused on segment reporting in his presentation of the
detailed figures. In reinsurance, property-casualty business was again the
main growth driver: €18.9bn (16.3bn) of total premium income came from
this segment, whilst life and health reinsurance contributed €6.5bn
(5.9bn). The improvement in the result, which was also due to capital gains,
was most marked in property-casualty reinsurance: here there was a swing
from a €1.2bn loss in the previous year to a €1.4bn profit in the
year under review. Life and health reinsurance increased their profit for
the year from €1.2bn to €1.7bn.
In primary insurance, where growth was fuelled by the successful partnership
between ERGO and HypoVereinsbank, the Munich Re Group's premium income rose
from €4.6bn to €4.8bn in property-casualty insurance and from €11.1bn
to €11.8bn in life and health insurance. However, these two segments recorded
negative results for the year of €341m and €681m respectively, since
otherwise good business experience was overshadowed by high writedowns on security
portfolios.
Further improvement in operative business in the first quarter of 2003
Munich Re will report on its results for the first quarter 2003 on 2 June.
Writedowns in the triple-digit million euro range have already been announced
in this connection. On the other hand, Schinzler and Schneider are convinced
that substantial improvements in operative business will make themselves
felt.
For the rest of the business year 2003, Munich Re expects continuing improvement
in its underwriting results in both reinsurance and primary insurance. If,
in contrast to last year, Munich Re is not hit by heavy costs for major natural
catastrophe losses in 2003, the Group says it will be able to counter the after-effects
of the stock market crash with a convincing and profitable performance in its
underwriting business.
>
Enclosure: Munich Re Group's Business figures for 2002 (PDF, 77 KB)>
Annual Report 2002 (PDF, 7.0 MB)
Note for editorial departments:
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or Florian Wöst on
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Munich, 30 April 2003
Münchener Rückversicherungs-Gesellschaft
gez. Dr. Schneider gez.
Küppers