Renewal of property-casualty treaty reinsurance business at 1 January 2007: Munich Re resolutely adheres to risk-adequate prices, terms and conditions Core business reinsurance with continued high profit potential

At 1 January 2007, Munich Re renewed about two thirds of its property-casualty treaty business (i.e. excluding facultative reinsurance), which corresponds to a premium volume of around €9bn. The prices, terms and conditions negotiated on the reinsurance treaties were again in line with the risks.

"We are satisfied with the outcome of renewals at 1 January. All in all, the price level is attractive and commensurate with the risks. However, competition is tougher. For the market, this was not a renewal for profitable growth," commented Board member Torsten Jeworrek.

Munich Re acquired some €850m of new business with good profit potential. By contrast, where prices had come under pressure, it reduced exposures, decreased its share or, where they were inadequate, withdrew completely. Ultimately, written premium as at 1  January 2007 is expected to be approximately €300m (3%) lower than at 1 Januar 2006. The price evolution varied by line of business and region, rates for the renewed portfolio being slightly lower overall, whilst profitability levels remained good.

The share of non-proportional business in the renewed portfolio increased to 23% (21% in the previous year). Property, which is relatively short-tailed, accounted for 42% (38%) of renewed business and casualty for 41% (44%). Torsten Jeworrek: "This portfolio mix reflects current market conditions."

Despite the relatively quiet hurricane season in the Atlantic, prices for US hurricane-exposed business have risen significantly and are on a par with price levels at 1 July 2006 renewals. Major multinational treaty renewals went very well in property and casualty business, prices, terms and conditions remaining stable. There was further growth in attractive agricultural business.

Munich Re removed capacity from the market if prices, terms and conditions were not adequate, giving up, for example, considerable shares of French and German motor business and international aviation fleet business. It also terminated unprofitable proportional treaties in the highly competitive Chinese market.

Substantially less capacity was available in the international retrocession markets than in previous years, resulting in considerable price increases. Thanks to its strong capital base, Munich Re followed its course of purchasing retrocession for risk management only if it creates value. Accordingly, it retroceded considerably less business than in the past.

Globally, the reinsurers’ capital base has improved whilst competition is growing more intense. Prices are nevertheless at a profitable level on the whole. However, the effects of keener competition are likely to be evident at the other 2007 renewals (1 April: Japan and Korea; 1 July: parts of the US market; Australia and the Latin American markets). Torsten Jeworrek: "There is no alternative to risk-adequate prices, terms and conditions. Winter Storm Kyrill was a clear demonstration of the growing threat of the natural hazards risk and rising loss potentials. We believe that higher demands on risk management and capital resources and continued low interest rate levels will help to maintain market discipline on the whole."

Munich Re will report on the renewals in detail at its balance sheet press conference on 28 February.

Münchener Rückversicherungs-Gesellschaft
signed Dr. Jeworrek           signed Küppers

The Munich Re Group operates worldwide, turning risk into value. In the business year 2005, it achieved a profit of €2,743m, the highest in its 126-year corporate history. In 2005, its premium income amounted to approximately €38bn and its investments to around €177bn. The Group is characterised by particularly pronounced diversification. It has approximately 38,000 employees in over 50 countries throughout the world and operates in all lines of insurance. With premium income of around €22bn in the year 2005 from reinsurance alone, it is one of the world's leading reinsurers. Its primary insurance operations are mainly concentrated in the ERGO Insurance Group; it is the second-largest provider in the German primary insurance market and a leading player in the European insurance market in health insurance and healthcare services as well as legal expenses cover.

Disclaimer
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 Munich Re. The company assumes no liability to update these forward-looking statements or to make them conform to future events or developments.