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Munich Re continues active capital management / Subordinated bond issue of around €1bn

2007/05/25

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    Munich Re is preparing to issue a subordinated bond. It will be a perpetual bond and callable by Munich Re from ten years after the date of issue. Up to then, it will have a fixed coupon rate and thereafter a floating rate. Under certain conditions, which Munich Re will fulfil with this issue, subordinated bonds are treated by supervisory authorities and rating agencies as equity.

    The volume of the issue and other features of the bond, such as coupon rate and offering price, will be determined in a book-building process. This is scheduled to take place – subject to market developments – after a roadshow in the week ending 1 June 2007 to present the issue to institutional investors in several European financial centres. The Company is planning a "benchmark size" issue, which in the euro market includes a volume of €1bn or over.

    The transaction is part of Munich Re's active capital management in its Changing Gear programme. "We are following up our words with actions. Raising subordinated capital is one way of optimising our capital structure and hence our cost of capital", said Jörg Schneider, Munich Re's CFO. "In doing this now, we are taking advantage of the favourable capital market environment."

    Munich, 25 May 2007

    Münchener Rückversicherungs-Gesellschaft

    gez. Dr. Schneider           gez. Dr. Lawrence

    The Munich Re Group operates worldwide, turning risk into value. In the financial year 2006, it achieved a profit of €3,536m, the highest in its 126-year corporate history. Its premium income amounted to approximately €37bn and its investments to around €177bn. The Group is characterised by particularly pronounced diversification, client focus and earnings stability. It has approximately 37,000 employees at over 50 locations throughout the world and operates in all lines of insurance. With premium income of around €22bn in the year 2006 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 legal expenses cover. The ERGO Insurance Group is present in 25 countries, and 33 million clients place their trust in the services, competence and security it provides.

    Disclaimer
    The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States, except in a transaction not subject to or pursuant to an applicable exemption from the registration requirements of the Securities Act. This press release and the information contained herein may not be distributed or sent into the United States of America and should not be distributed to U.S. persons or publications with a general circulation in the United States.

    This press release is for information purposes only and is not an offer to sell, or the solicitation of an offer to buy, any securities in the United States. There won't be a public offer of the securities in the United States.

    In the United Kingdom, this press release is directed exclusively at persons who fall within Article 19 or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or to whom this announcement may otherwise be directed without contravention of Section 21 of the Financial Services and Markets Act 2000. The Bonds referred to in this press release shall be issued only to such persons.

    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.

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    Disclaimer

    This press release is prepared for the purpose of public announcement of the insurance solution provided by Munich Re in connection with the issuance of the bonds referred to herein (the "Bonds") and does not constitute or form part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment therefore.

    All of the Bonds have been sold and this announcement is a matter of record only. The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any state or foreign securities law and the issuer is not and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act").

    The Bonds were offered and sold only to investors who are qualified institutional buyers in accordance with Rule 144A under the Securities Act and who, in the case of U.S. persons (as the term is defined in Regulation S under the Securities Act), are also qualified purchasers for purposes of Section 3(c)(7) of the Investment Company Act and may not be re-offered or re-sold except in compliance with all applicable transfer restrictions. Any purported transfer in violation of those restrictions will be null and void. In addition, the Bonds may be held only in certain permitted jurisdictions.

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

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