Ad-hoc announcement from 20 March 2003

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20 March 2003 | Translation of the German ad-hoc announcement

Munich Re and Allianz to reduce their reciprocal shareholdings further

Munich Reinsurance Company and Allianz AG will reduce their reciprocal shareholdings to around 15%. The existing long-term partnership between the two groups is to be continued on this basis.

Munich Re intends to reduce its shareholding by performing an opération blanche in the capital increase announced by Allianz today. An opération blanche involves the shareholder taking part in a capital increase to the extent that no new funds are invested and the investment is maintained at the current level in value terms. Allianz will redeem its MILES bonds issued in 2000 by exchanging them for Munich Re shares, thus reducing its stake in Munich Re from around 22% (end of 2002) to a level of between 16% and 18% before the end of 2003. The effect of reducing shareholdings on both sides will be that the respective participations are no longer valued at equity; consequently, Munich Re will in future book the dividend of Allianz instead of the proportional result for the year in its income statement. Furthermore, the groups' free floats and thus the weightings of their shares in stock market indices will increase.

Munich Re is not planning any capital increase at this time. Rather, it shortly intends to strengthen its capital base through the issue of subordinated bonds. The specific features of this hybrid capital mean that it is recognised by the markets, supervisory authorities and rating agencies as equity capital. Through this issue Munich Re can target new groups of investors outside the stock market worldwide and further strengthen its position on the international reinsurance markets in the present upward phase.

As announced, Munich Re will be publishing its main figures for the business year 2002 on 27 March; additional information on the bond issue will also be provided on this occasion.

Munich, 20 March 2003
Munich Reinsurance Company
Board of Management


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