Two new Munich Re publications

"Topics Geo – Annual review: Natural catastrophes 2005" provides a detailed summary and analysis of last year's natural events.

The insurance industry's balance sheets are dominated by tropical cyclones in the North Atlantic. In response to these developments, Munich Re and American Re have brought out a special publication entitled "Hurricanes – More intense, more frequent, more expensive".

With overall losses of approximately US$ 210bn and insured losses exceeding US$ 90bn, 2005 was the most expensive natural catastrophe year ever for the insurance industry. There were more than 100,000 fatalities. With some 650 loss events, the number of documented natural catastrophes was in line with the average of the last ten years.

In January, Winter Storm Erwin, Europe's fifth most expensive storm of the past 50 years, crossed Scotland and southern Scandinavia on a path that took it as far as Russia. Its wind speeds were the highest recorded in Norway for over ten years and in Sweden for over 30 years.

For the first time since its introduction in 1953, the official list of 21 names chosen at the start of the hurricane season was not long enough to cover the 27 severe tropical cyclones that occurred in the Atlantic. The windstorms caused record losses. In late November, Delta became the first tropical cyclone to hit the Canary Islands since records began in 1851.

In the past year, there were 70 damaging earthquakes and 13 volcanic eruptions around the world, which is in line with the average for the past few years. The border area between Pakistan and India experienced an earthquake that lasted a mere 50 seconds. However, this was enough to cause one of the worst human catastrophes of the last 100 years: 88,000 people were killed and over 2,000 settlements were destroyed.

In August 2005, profuse rainfall caused floods in nearly all countries in the northern Alps. This was the largest loss incurred by the Swiss Natural Perils Pool in its 30-year history.

Mumbai, a megacity on the west coast of India with over 15 million inhabitants, saw almost as much rain within the space of 24 hours as would normally fall in a whole year. The torrential rain swamped many districts of the city up to a depth of 3 metres.

Other extreme events, namely droughts and forest fires, hit southern Europe in the summer of 2005. Portugal experienced one of its worst periods of drought in the past 100 years. Water rationing had to be introduced in Spain and France. There were widespread crop failures throughout southern Europe.

The picture was similar in Brazil. The usually water-abundant Amazon Basin experienced its worst drought for over 60 years, with many stretches of river drying up.

In the North Atlantic, surface temperatures fluctuate naturally between colder and warmer phases each lasting about 30 years (Atlantic Multidecadal Oscillation, AMO). The number and intensity of tropical cyclones have increased in this current warm phase (since 1995). However, this factor alone does not entirely explain the greater frequency of hurricanes in 2005. There is apparently at least a second, man-made factor at work.

Hurricane Katrina presented a new dimension in terms of damage caused by both wind and water. The primary hazard of windstorm was compounded by the secondary hazards of storm surge and inland flooding. Overall losses of some US$ 125bn and insured losses of over US$ 45bn are ample testimony to these new loss dimensions.

As the current warm phase in the North Atlantic will continue for some years, the increased hurricane risk will also remain with us. Global warming, which is speeding up, could well see tropical cyclones reach southwest Europe in the future.

Torsten Jeworrek, a Munich Re Board member: "All loss records were broken in 2005 – which presents a huge challenge to the insurance industry worldwide. Munich Re will continue to offer clients its know-how and financial strength, but only at prices and conditions which are commensurate with the increasing exposures."

The publications " Topics Geo – Annual review: Natural catastrophes 2005" and " Hurricanes – More intense, more frequent, more expensive" are now available online at www.munichre.com. The printed versions of these publications are scheduled to appear in mid-March 2006.

Münchener Rückversicherungs-Gesellschaft
signed Dr. Jeworrek           signed Küppers

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This media information 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.