Munich Re Group / American Re
- Increased expenditure of Euro 0.4bn for the Munich Re Group due to high reserve strengthening of US subsidiary
- Group's profit target for 2005 confirmed nevertheless.
The Munich Re Group's result for the second quarter will be reduced by Euro 0.4bn. The starting point: American Re has increased its reserves mainly for the accident years 1997 to mid-2002 by US-Dollar 1.6bn (after deduction of relief from extra-Group retrocessions). The impact of this additional expenditure will only be partially felt at Group level, where general provision had already been made for long-tail losses.
The Group's envisaged target of 12% return on equity after tax for the business year 2005 still stands, says Nikolaus von Bomhard, Chairman of Munich Re's Board of Management.
Reserve strengthening at American Re
Capital strengthening and improved retrocession cover for American Re
The relevant figures for the Munich Re Group in detail
|Expenses for strengthening reserves for American Re for own account as per US GAAP||US-Dollar 1.43bn|
|+ Munich Reinsurance Company's share of retrocessions||US-Dollar 0.20bn|
|= Subtotal for American Re and Munich Reinsurance Company or in balance sheet curency||US-Dollar 1.63bn|
|(excenge rate US-Dollar/Euro1.2588)||Euro 1.29bn|
|- Already covered by long-tail provisions at Group level||Euro 0.90bn|
|= Net Group expenses before tax||Euro 0.39bn|
Aktiengesellschaft in München
This announcement contains and refers to statements relating to the future. Such forward-looking statements are based on current expectations, estimates, forecasts and prognoses as well as assessments and assumptions of the management of Munich Reinsurance Company. Such statements contain in particular comments regarding plans, strategies and outlooks. Words such as "expect" and similar expressions characterise such forward-looking statements. These statements are no guarantee that results will actually materialise in the future and they are subject to risks, uncertainties, and assumptions that are difficult to foresee. Therefore, actual consequences and results could deviate substantially from those anticipated in these forward-looking statements.