• Increasing interconnection of the global economy creates growth areas for insurers and reinsurers with experience in complex risk management
  
  
• Munich Re develops innovative solutions for industrial enterprises as protection against selected enterprise risks
  
  
• The claims experience in 2007 so far shows that risk-commensurate prices, terms, and conditions are necessary
   

Munich Re estimates that, in the years to come, the insurance industry will continue to grow more strongly than the global economy. The driving forces are, on the one hand, developments in the economic and technological spheres, which persistently give rise to new demand for insurance. A major role will be played here in particular by emerging countries. On the other hand, growth will also be promoted by innovative insurance products. With the increasing interconnectedness of industries internationally, risks are becoming more and more complex, calling for the development of intelligent and creative solutions. This results in growth opportunities for insurers and reinsurers that have outstanding risk management capabilities.

Within the framework of the Changing Gear programme, Munich Re has set up a special unit to devise innovative products for protection against selected enterprise risks. In conjunction with qualified primary insurers, Munich Re will provide these products to globally operating industrial enterprises. As from the fourth quarter of 2007, the new unit for Special Enterprise Risks will begin developing products which are at the interface between conventional insurance and the enterprise risk. The target clients are large companies with a growing need for special covers to protect them against risks resulting from, for instance, political changes, unexpected market developments, or loss of reputation. These include companies that make long-term investments or have very long product development processes. Each company will be assessed in terms of its own specific risk situation and a tailor-made cover devised that addresses its own particular needs. Enterprise risks are traditionally considered to be difficult to insure if they depend on how well or how badly a company is managed. This approach is too general, however, since it disregards risks over which the company itself has no influence. This is where the new initiative comes in. Dr. Torsten Jeworrek, member of Munich Re's Board of Management and Chairman of the Reinsurance Committee: "We see considerable potential in this area. The challenge involved in these new products will be to define the triggers and scope of cover exactly. This alone will give clients the planning certainty they need and establish the parameters for our own risk management. Special Enterprise Risks is a further example of how we want to generate profitable growth."

The new initiative arising out of Changing Gear was presented by Torsten Jeworrek at this year's Rendez-Vous de Septembre in Monte Carlo, the annual meeting of reinsurers that starts the run-up to the main renewal season as at 1 January. The discussions focus, as every year, on the question of how prices, terms, and conditions are developing. The claims experience in 2007 so far: there have been a large number of regional loss-producing events like Winter Storm Kyrill, the storm in New South Wales (Australia), the floods in the UK and Switzerland, hurricanes Dean and Felix, and the earthquake in Peru. All these events add up to a very large claims burden for the insurance industry. Following the increase in retentions and the growing trend towards non-proportional reinsurance in recent years, the primary insurers had to bear a larger share of the strain than was the case when similar developments took place in the past. All in all, higher loss potentials again emphasise the significance of risk-adequate prices, terms, and conditions.

The attack on the World Trade Center made it very clear just how high the loss potentials are from acts of terrorism. The established solutions for covering terrorism risks have again come under discussion in various countries. In the United States and Germany, the further existence of the terrorism pools TRIEA and Extremus is under negotiation, whilst in France changes in the terms and conditions of GAREAT are being discussed. In Belgium, on the other hand, a new pool is being planned. As before, Munich Re supports pool solutions involving state guarantees for peak risks. This is the only means of making sufficient capacity available and spreading the risk over many different shoulders. Moreover, it is evident that investors shy away from locations where there is no clear ruling on how the risk of terrorism is to be handled.

Board member Dr. Torsten Jeworrek: "We will continue to make use of our flexibility and creativity to find solutions for complex risk situations. However, risk-adequate prices, terms, and conditions are a prerequisite for maintaining stable income and financial strength over the long term in the interests of our clients, shareholders, and staff."

Munich Reinsurance Company
signed Dr. Jeworrek           signed Dr. Lawrence

The Munich Re Group operates worldwide, turning risk into value. In the financial year 2006, it achieved a profit of €3,519m, the highest in its corporate history. Its premium income amounted to approximately €37bn and its investments to around €177bn. The Group operates in all lines of business, with around 37,000 employees at over 50 locations throughout the world and is characterised by particularly pronounced diversification, client focus and earnings stability. With premium income of around €22bn from reinsurance alone, it is one of the world's leading reinsurers. Its primary insurance operations are mainly concentrated in the ERGO Insurance Group. With premium income of almost €17bn, ERGO is one of the largest insurance groups in Europe and Germany. ERGO is Europe’s market leader in health and legal protection insurance, and 33 million clients in 25 countries place their trust in the services, competence and security it provides.

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.