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Munich Re quantifies hybrid exposure – No cause for concern


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    Recently there has been speculation on the financial markets about possible write-downs by insurance undertakings on investments in hybrid securities. Munich Re wishes to issue the following statement with regard to its own exposure in this area:

    As at the end of 2008, the Munich Re Group had participation certificates, dormant holdings and similar hybrid instruments rated as tier 1 and upper tier 2 capital amounting to a good €600m. A continuation of the crisis in particular may lead in individual cases to interest losses and capital reductions. As a precautionary measure, Munich Re has already included limited write-downs in its 2008 annual financial statements.

    In addition, we hold so-called lower tier 2 and tier 3 instruments, such as subordinated bonds with limited remaining terms, amounting to around €1.7bn. From today’s perspective, it is highly improbable that these instruments will generate any losses.

    CFO Jörg Schneider: "Altogether these make up less than 1.5% of our well diversified investment portfolio, meaning our exposure is moderate and gives no particular cause for concern."

    This press release 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.