Munich Re decides to buy back shares / Excellent business performance in the first three quarters
- Share buy-back of EUR 1bn
- Excellent reinsurance business performance in the first three quarters
- Primary insurance: ERGO with outstanding result
- Return on risk-adjusted capital at 16.5% after three quarters / Target of 15% for the year will be clearly surpassed as things stand at present
- Given normal claims experience and stable capital markets until the end of the year, consolidated profit in the range of EUR 3.2-3.4bn achievable
- Another dividend increase in prospect
Munich Re decides to buy back shares
Today, the Board of Management of Munich Reinsurance Company ("Munich Re") decided that up to 11,000,000 Munich Re shares will be acquired via the stock exchange in the period between 8 November 2006 and, at the latest, the Annual General Meeting on 26 April 2007. The share buy-back will be restricted to a total purchase price (excluding additional charges) of EUR 1bn; on the basis of the share price level on 2 November 2006, this would be nearly eight million shares or 3.4% of the share capital.
The Board of Management is thus availing itself of the authorisation to buy back shares granted by the Annual General Meeting on 19 April 2006. The purpose of the share buy-back is to retire the repurchased shares in order to optimise the Company's capital structure.
The buy-back will be carried out in accordance with Section 14 para. 2 and Section 20a para. 3 of the German Securities Trading Act in conjunction with the rules of Commission Regulation (EC) No. 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments.
Summary of the Munich Re Group's Q1-Q3 figures
Reinsurance: High profit of EUR 2,361m / Below-average claims burdens
The result in reinsurance business benefited from risk-adequate prices, terms and conditions. In contrast to the same period last year, Munich Re was also largely spared major losses from natural catastrophes in the first three quarters of the current year.
The operating result increased to EUR 3,694m (2,154m) in the first nine months, and reinsurance contributed EUR 2,361m (1,030m) to the Group profit. Buoyed by positive developments in exchange rates, premium income was up slightly by 0.6% to EUR 16.8bn (16.7bn).
In the life and health segment, premium income was around last year's level at EUR 5.8bn, and the segment contributed EUR 429m (682m) to the profit.
In property-casualty reinsurance, premium grew slightly to EUR 11.0bn (10.9bn), whilst the result jumped to EUR 1,932m (348m). The combined ratio came to an excellent 92.1% (108.2%).
Primary insurance: Substantial profit increase at ERGO / Very good combined ratio
Investments: Result at a high level of EUR 7.0bn
Outlook for the business year 2006 as a whole: Premium volume at last year's level / Positive business development in primary insurance and reinsurance / Improved combined ratios
Munich Re is confident of achieving a combined ratio of below 95% for reinsurance in 2006. In primary insurance, another combined ratio of around 93% should be achievable for 2006.
As things stand at present, the RORAC target of 15% for 2006 will be clearly surpassed. Provided the capital markets and claims experience remain within normal bounds up to end of the year, the consolidated profit should be between EUR 3.2bn and EUR 3.4bn. Given the excellent business performance, the Board of Management sees the possibility of increasing the dividend again, unless there are exceptional adverse developments in the fourth quarter.
Further details may be obtained from the press release.
Aktiengesellschaft in München
This announcement contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.