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    • India: Socio-economic change holds new challenges for the insurance industry 

    • A wealth of growth opportunities for the Munich Re Group

    The socio-economic transformation of India, the world’s fourth largest economy (GDP, based on purchasing power parity), poses new challenges for its insurance industry. Forecasts show that, in ten years’ time, the country’s overall insurance market will increase to some €100bn, nearly five times its current volume. This growth will be driven by rising demand from India’s burgeoning middle class, currently numbering some 300 million people, the improvement and expansion of its infrastructure, and resultant higher levels of insurance penetration, still low compared with other emerging economies.

    Nikolaus von Bomhard sees a wealth of growth opportunities in India’s booming insurance market for the Munich Re Group. The ERGO Insurance Group opened a representative office in Mumbai in May 2007, underlining its keen interest in entering the Indian market. ERGO plans to win life and non-life insurance joint-venture partners in India and is currently involved in promising talks with potential candidates. DKV, with its Apollo Hospitals Group joint-venture partner, has just positioned itself in the specialist health insurance market, another class of business offering excellent growth prospects. Fewer than 10% of India’s 300-million-strong middle class currently have health insurance. The country’s very young population structure, increased life expectancy and positive economic development will usher in a steep rise in medium-term healthcare spending.

    Nikolaus von Bomhard: "The global risk market is no longer divided into insurance risks and reinsurance risks. We have long regarded the risk market as a single entity, and systematically keep the focus within the Group on both insurance and reinsurance. We use the different growth and result cycles of insurance and reinsurance to maintain steady Group results. This reinforces our long-term financial stability, benefiting our clients, employees and shareholders." In India, as in every other market, Munich Re conducts its insurance and reinsurance operations independently of one another, adopting a strictly "arm’s length" approach. "We take very seriously the responsibility that we as reinsurers owe to our primary insurance clients."

    Private-sector companies have been present in India’s primary insurance market since 2000, almost exclusively in the form of joint ventures with foreign partners. They hold a maximum of 26% of the share capital, the current participation threshold for foreign investors. This limitation considerably restricts capacity to write risks in the booming market. A central task of politicians and industry will be to ensure the inflow of sufficient foreign capital to safeguard India’s phenomenal growth and increasing concentration of values and to cover the related economic risks.

    Reinsurance in India continues to be heavily regulated, and the state-owned reinsurer occupies a quasi-monopolistic position. Freedom of establishment in the subcontinent, for which the statutory requirements have yet to be created, would allow international reinsurers to make available risk capital and expertise on a much greater scale than at present. Munich Re has been actively supporting these reform plans for many years in regular contacts with Indian policymakers. Speaking in New Delhi, Nikolaus von Bomhard stressed Munich Re’s resolute commitment to India’s reinsurance market: "We believe it is necessary for the stability of the booming insurance market that the nascent liberalisation of India’s primary insurance market be extended to include international reinsurance business. As soon as legal circumstances permit, we will establish a reinsurance base in India."

    Munich Re has earned widespread trust in India’s insurance sector, being acknowledged as a responsible reinsurance partner in business relations going back to 1950. It opened a representative office in Kolkata in 2000. This was followed by the creation of a life reinsurance service company in Mumbai in 2004. Munich Re also collaborates, for example, with the National Insurance Academy (NIA) in Pune, near Mumbai. The NIA has a central role in the international integration of India’s insurance industry. The Academy is an important motivating force behind the ongoing modernisation of India’s insurance sector. Munich Re experts regularly organise courses at the Academy on topics ranging from "reinsurance and capital markets" to the effects of climate change, and thus play a major part in the transfer of knowledge.

    Nikolaus von Bomhard: "We aim to further strengthen the trust placed in us and play a stabilising role in India’s booming insurance market with our risk-adequate prices, terms and conditions. We are convinced that this business policy approach will benefit our clients, the economy as a whole and our shareholders." s, shareholders, and staff."

    The telephone conference at which you can put your questions about India to Nikolaus von Bomhard will take place at 12.30 CET today. If you wish to take part in the conference, the number to dial is shown below. The lines will be opened 10 minutes before the conference start. +49 (69) 5007 1316

    Münchener Rückversicherungs-Gesellschaft
    signed Dr. von Bomhard           signed 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. In 2006, 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 in 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.
    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.