Von Bomhard says company has mastered the financial climate so far

Munich Re says it has controlled its risk exposure well despite the worst financial crisis. Munich Re's bottom-line result dropped to €1.5bn (previous year: €3.9bn). In a difficult capital market environment, Munich Re says it will continue to focus on sustaining its earnings capacity based on a strong capitalisation.

Nikolaus von Bomhard, chairman of the Board of Management: "The financial year 2008 confronted companies with huge challenges – and not only in the financial sector. We have mastered the crisis comparatively well so far. We are continually adjusting the risk profile of our business portfolio to take account of the difficult environment, thus safeguarding our solid capital base and enabling us to continue implementing our strategy systematically in the individual fields of business. We remain guardedly optimistic."

With a view to the envisaged target of €18 earnings per share for 2010, von Bomhard said: "The focus is on securing sustained profitable development rather than on short-term maximisation of profits. Interest rates for low-risk investments are at a historically low level. We would not be acting in the interests of our shareholders if we tried to compensate for low returns with higher risk tolerance." Therefore, and in the light of the developments of the past year, the target of €18 earnings per share that Munich Re set itself for 2010 before the beginning of the capital market crisis is no longer realistic. Munich Re continues to adhere to the target of a 15% return on risk-adjusted capital (RORAC) over the cycle.

Von Bomhard added: "With our Changing Gear programme, we have launched a raft of initiatives to expand our business further in the last two years. This includes the acquisition of the US specialist insurer Hartford Steam Boiler. Munich Re is in good financial shape and, from this position of relative strength, can exploit opportunities in the market." At the same time, Munich Re has followed up on its announcements regarding capital management: since the start of Changing Gear in May 2007, a total of €3bn has been paid out for share buy-backs and €2bn in dividends (subject to approval of the dividend for the financial year 2008 by the Supervisory Board and the Annual General Meeting). "We are thus one of the few companies that can maintain an attractive dividend in these turbulent times", said von Bomhard.

Torsten Jeworrek, member of Munich Re’s Board of Management, had the following to say on business development in reinsurance: "Our expertise in risk assessment and risk management is now more important than ever. As a result, there are opportunities for profitable business even in the recession." Jeworrek stressed at the same time that Munich Re would reduce its business in reinsurance segments and regions that were particularly exposed to the recession. Examples he cited were D&O and professional liability. "We are basically proceeding on the assumption that the hardening of the market that began with the January renewals will continue", said Jeworrek. "We will now be able to profit especially from our capital strength and our good competitive position, and will be an even more attractive partner for our clients."

With reference to the financial market crisis, ERGO CEO Torsten Oletzky said: "The fact that we have come through the crisis reasonably well so far in primary insurance is mainly thanks to our very good underwriting. With a combined ratio of 90.7% in property-casualty insurance, we are not only well within our long-term target but are once again in the top group among our competitors. We currently see opportunities for life insurance products with guarantees, whose attractiveness grows in uncertain times."