Press release

• Investors' Day conference in London: Munich Re Group presents its internal risk model 
  
  
• Diversification internationally and across business segments provides advantages for shareholders and clients
  
  
• Integrated risk management supports selective and return-oriented business policy

Today the Munich Re Group publishes detailed information on its internal risk model. This shows that the Group's available financial resources rose by €1.9bn to €22.6bn in the business year 2004. At the same time, the required risk capital determined on the basis of the model fell by €3.1bn to €14.4bn. This development confirms and reinforces the Munich Re Group's excellent economic capital position. Regulatory and rating agency capital requirements are largely based on other criteria, to which insurers and reinsurers have to gear their financial positions.

Jörg Schneider, whose responsibilities on Munich Re's Board of Management include Integrated Risk Management, says: "The improvement in our economic capital position is the result of our long-standing strategy of balancing risks worldwide and across business segments. Our strength is the way we diversify risks in both reinsurance and primary insurance. In addition, we have systematically reduced the concentration risks in our investment portfolio by cutting back our shareholdings in German financial institutions such as BHW, Allianz and Commerzbank. Internal risk models like Munich Re's explain relationships which cannot be derived from published balanced sheets. The benefits of broad risk diversification, which are identifiable with the risk model, are gaining in recognition and acceptance worldwide."

Munich Re discusses this topic today at an Investors' Day conference in London. With its model, the Munich Re Group determines the risk capital necessary to withstand two one-in-100-year losses in a given calendar year. Munich Re's Integrated Risk Management Division uses the findings gained from the modelling to assess and limit risks.

Nikolaus von Bomhard, Chairman of Munich Re's Board of Management: "Today we are providing a significant increase in transparency regarding the excellent economic capital position of our Group. This is also an important step towards developing risk-based return targets. For 2005, our target remains a return on equity of 12%. To achieve this, we are continuing to take a selective and risk-commensurate approach in our markets. With our flexible dividend policy, shareholders are already profiting from our success. We are aiming at a dividend rate that is normally not below 25% of the profit for the year. In the longer term – with due regard to supervisory rules and rating requirements – there is the prospect of the whole spectrum of active capital management options available, from flexible dividend policy to share buy-backs."

Münchener Rückversicherungs-Gesellschaft
signed von Bomhard           signed Küppers

This newly established central division advises and supports the Board of Management in implementing the risk strategy of the Munich Re Group using a three-pronged approach:

• Asset derisking (especially concentration risks)
  
• Diversification of insurance risks
• Portfolio optimisation