Munich Re quantifies hybrid exposure – No cause for concern

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."