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Munich Re well positioned for turnaround in the cycle



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    Difficult capital market environment and higher losses can accelerate a turnaround in the cycle. Munich Re is committed to consistent cycle management and differentiated pricing in reinsurance.

    "Munich Re will maintain its underwriting discipline in every phase of the cycle", said Torsten Jeworrek, member of Munich Re’s Board of Management. Cycle management is the key topic for Munich Re at this year’s round of renewals, which are heralded in by the Rendez-vous de Septembre in Monte Carlo. Renewals over the past few years were marked by a surfeit of capacity and growing competition. However, a drop in investment income in the past months has led to shortfalls in profit and lower equity capital in the insurance industry. Munich Re anticipates that this will have a positive impact on the cycle and accelerate a turnaround in the trend.

    In underwriting business, escalating claims costs underline the importance of risk-adequate pricing. Globalisation, the related distribution of labour, and soaring raw material prices are inflating claims, especially from business interruption. The number of large individual losses is on the increase. Exposure from natural hazards such as windstorms in Europe, hurricanes in the Atlantic, and inundation remains high and continues to trend upwards. Social and medical developments are causing an increase in severe personal injuries, above all in the USA and Europe. All of these developments are typical of the challenges we face in reinsurance business and are accounted for in Munich Re’s models. The important point is that such factors are consistently implemented in our underwriting.

    Munich Re will maintain its clear, profit-oriented underwriting policy and accept risks only at commensurate prices, terms and conditions. It will not waver from its commitment to differentiated prices. "If you offer more security and better service, you should be paid the right price for what you provide", said Jeworrek. "This gives our clients the opportunity to select the reinsurance which they consider best meets their individual needs."

    As a result of its global access to markets and risks, Munich Re can recognise trends at an early stage and react accordingly. This excellent market know-how and risk expertise as well as financial strength make Munich Re a much sought  after partner that finds customised solutions together with its clients.

    Jeworrek: "For us, underwriting knowledge that translates into a clear underwriting policy geared to the cycle is the key factor that allows us to operate our business successfully. Munich Re consistently pursues this strategy, thus ensuring that it can sustainably fulfil the expectations and financial demands of its clients and at the same time create value for its shareholders."

    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 around 43,000 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.
    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.