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Munich Re again transfers European windstorm risks to the capital markets through the new "Queen Street" programme, thus securitising frequency losses for the first time

2008/03/19

Reinsurance

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    Munich Re has issued a €170m catastrophe bond through a newly established programme. Following on from previous Munich Re transactions, peak windstorm risks are again being placed on the capital market, via a first tranche with a volume of €100m. Standard & Poor’s has given the tranche a B rating.

    A second tranche with a volume of €70m securitises windstorm frequency losses (so-called aggregate XL) for the first time. The aggregate XL tranche was given a BB+ rating by Standard & Poor’s. Member of the Board of Management Dr. Thomas Blunck: "This provides relief for Munich Re when several moderately severe windstorms occur in any one year. Among our clients we also see a growing demand for such coverage of frequency losses. The Queen Street bond programme can therefore be deployed quickly and cost-effectively for our clients too."

    The bonds issued by Queen Street Ltd. are variable rate notes with a term of three years. For the first time, a substantial part of the securities – more than €50m – was placed with investors in the European Union and in Switzerland via the Munich Re subsidiary Munich Re Capital Markets.

    "Catastrophe bonds with their transparent and uncorrelated risks are currently in big demand among investors in view of the credit market crisis", said Blunck.

    Munich, 19 March 2008

    Münchener Rückversicherungs-Gesellschaft

    gez. Dr. Blunck           gez. Dr. Lawrence

    The Munich Re Group operates worldwide, turning risk into value. In the financial year 2007, it achieved a profit of €3,937m, the highest since the company was founded in 1880, on premium income of approximately €37bn. The Group operates in all lines of business, with more than 38,000 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 €21.5bn 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 over €17bn, ERGO is one of the largest insurance groups in Europe and Germany. It is the market leader in Europe in health and legal expenses insurance, and 34 million clients in 26 countries place their trust in the services and security it provides. The global investments of the Munich Re Group amounting to €176bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.

    Disclaimer
    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.

    This press release is not for publication or distribution, directly or indirectly, in, into or from the United States of America, Canada, Australia or Japan. This press release 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 therefor. All of the securities have been sold and this announcement is a matter of record only. The Notes referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 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. The Notes were offered and sold only to investors who are qualified institutional buyers in accordance with Rule 144A who are also qualified purchasers for purposes of Section 3(c)(7) of the Investment Company Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the U.S. federal securities laws and may be held only in certain permitted jurisdictions.

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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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