The chairman of the board of management of Munich Re talks to Lee Coppack.

Even the chairman admits that to an outsider, the headquarters of the Münchener Rückversicherungs-Gesellschaft at 107 Köningstrasse, Munich, looks quite imposing, if not actually daunting. As a boy growing up in Munich, Hans-Jürgen Schinzler cycled past a building that looked like “a sort of palace” hundreds of times on his way to school only a few hundred metres away. He had heard of Munich Re, to use the more familiar name. It was, he knew an institution whose shares were regarded as only a little less than gilt edged securities. How a reinsurance company actually made its money, he no more knew than the vast majority of the population. It was not, he confesses, a particularly attractive place to a schoolboy.

So when in 1959, Hans-Jürgen went first to Munich and later Würzburg universities to study law, he certainly had no ambition to make reinsurance his career. Returning to Munich 10 years later at the age of 27, the new Dr (jur.) Schinzler was looking for a job, but beyond knowing that he wanted it to have an international flavour, he had no fixed idea what it should be.

Unusually, as a student at gymnasium (high school) in Munich, Dr Schinzler had spent the 1957-58 year at an American high school in Pasadena, California, a culture shock for a young man born in 1940 whose childhood was spent in growing up in Germany during and just after the second world war. He also spoke English, French and Spanish.

Dr Schinzler made a round of visits to his parents' friends and acquaintances. He considered the diplomatic service or maybe an academic career, when he thought of the export credit company, Hermes, then owned by Munich Re. He was able to get an interview at Hermes, but it was something of a disappointment because it soon emerged that export credit insurance was entirely a desk job in those days and the employees were not expected in those times to work outside the office, let alone travel.

Fortunately, the people at Hermes knew that Munich Re was looking for someone new in the investment department. Dr Schinzler had spent a year training in banking after finishing his studies and he crossed the threshold of Munich Re for the first time to discuss the job.

Clearly, both sides were satisfied with what they saw. Dr Schinzler felt that even if he did not want to make a life long commitment to the investment department, he would be able to change jobs within the company, something he says Munich Re was very open about. His desire for an international element in his job was satisfied. Munich Re had always been internationally oriented, although it was only allowed to resume international business in 1954 after the war, which explains why the company had built up such a large book of domestic business.

In any case, Dr Schinzler remained on the investment side of the company until 1981, when he joined the board and his responsibilities expanded. He began to gain experience of the reinsurance side of the business, including credit reinsurance. He eventually even became chairman of the supervisory board of Hermes, which had served inadvertently as his door into reinsurance, and today remains a member of its advisory board. In 1993, Dr Schinzler was appointed chairman of the board of management of Munich Re.

He has presided over a great period of change in the company's history. Among the most significant developments have been the acquisition of American Re in 1996 to increase both the geographical and business spread of the group and the following year the merger of its shareholdings in Victoria/DAS and Hamburg-Mannheimer/DKV to form the direct insurance group ERGO. The aim of the latter move is to balance the volatility of reinsurance earnings with the greater stability of long term direct business. Most recently, Munich Re has set up Munich Ergo Asset Management (MEAG) to expand its asset management activities.Since 1993/94, Munich Re's total premium income has risen from DM 28.6 billion to DM 49.8 billion in 1998/99 and profits have risen from DM 300 million to DM 1.197 billion in the most recent year, even though a change in the balance sheet date meant only six months of investments were consolidated. Munich Re remains the largest reinsurance company in the world. During that time the number of shareholders has increased more than threefold to over 50,000.Less obvious from the outside have been changes effected internally, most significantly making the group company less hierarchical. Among Dr Schinzler's early steps on taking over as chairman of the board of management was to reduce the number of levels of management from 12 to three. The change involved lengthy discussion with employees and managers; Dr Schinzler places great emphasis on team work. Another part of his strategy is to bring out the extensive expertise which Munich Re has built up and encourage its application in an entrepreneurial way.

With the management of funds and investor relations such important an aspect of reinsurance today, would Dr Schinzler recommend that his successor be more of an investment than an underwriting manager? That is too prescriptive, he believes. So many criteria are needed today for a successful reinsurance manager that it really depends on the individual. It needs someone with the right personality who has competence not just in investments, reinsurance and economics but also leadership skills and the ability to build teams, not just at management level but within the company. Dealing with the media has also become increasingly important, but this is a role which Dr Schinzler admits he does not find easy.

He is a little surprised that the need for a certain public profile has become important for a company that is comparatively remote from the consumer and performing well. Although a public company for many years, Munich Re has been discrete and conservative, its advertising straightforward and monochrome. The group even had among its directors Prince Burchard of Prussia, a grandson of Kaiser Wilhelm II, which he said made him a very effective ambassador for the company in emerging markets.

A 25% reciprocal shareholding with Allianz and one of 5% with Commercial Union was combined with a stable domestic shareholder population. The company could concentrate on its clients, knowing that its shareholders were not anxious for short term results, particularly since they knew the assets behind its balance sheet were dramatically understated in terms of their market value as a result of German accounting rules.

There is no question that the shares remain blue chip. They form part of the important DAX 30 share index as one of the largest companies in Germany and last year rose more than 20% in value compared to 18% for the index as a whole.

Munich Re has also enacted a number of “shareholder friendly capital measures” to make its shares “more transparent, more liquid and, thus even more attractive for German and foreign shareholders,” as Dr Schinzler put it in his annual letter to shareholders.

For example, bearer shares are being converted into registered shares, so that from December 1999, only registered shares will be listed, instead of both. This also allows the company to be more personal in its communication with shareholders. The shareholders are responding with interest to the extent that this July, Munich Re hired the Munich Messe, the city's new trade fair centre, to accommodate more than 2,000 of them for the annual general meeting.

In May 2000, the company will present consolidated accounts prepared for the first time to International Accounting Standards (IAS), and it will hold a meeting for analysts. There may even be a roadshow next year, though whether Dr Schinzler would take part is undecided. He has reservations, not because he does not communicate with investors, but because he is not a showman by nature nor does he want to be seen as the personification of Munich Re when he believes in team work.

He understands why General Re chose to shelter within Berkshire Hathaway from the vicissitudes of the stock market. Munich Re, he says, is looking forward with “some reluctance” to quarterly reporting, which it will begin in 2001 at the latest. Reinsurers' results always trail behind those of their ceding companies, many of whom will report only half yearly or even annually, so a large proportion of the quarterly figures will have to be estimated. He does not believe it will do the business any harm, but neither does it seem to make a great deal of sense.

Dr Schinzler is at pains to point out that Munich Re has always given shareholder value a high priority, but for a reinsurer, serving the customer is the predominant means of satisfying the shareholder, and this is a long term objective. He is wary of the effect that pressures for short term performance on the stock market can have on a company's strategic decision making. Although he does not use the word stakeholder, as a European, Dr Schinzler sees the company's responsibilities in that way. He believes Munich Re has to be concerned not just about shareholders but about customers, employees and the environment in which it operates.

Like a number of other German reinsurance companies, Munich Re, is a supporter of contemporary art. Its historic headquarters is full of interesting objects, and its Walking Man, the Borofsky sculpture which stands outside the new Munich Re building in Leopoldstrasse, is a familiar logo. In addition to the predictable directorships and memberships of insurance and insurance related organisations, Dr Schinzler is also sought after as a director by art and cultural organisations in Munich and Bavaria. He is also the treasurer of the foremost scientific institute in Germany, the Max-Planck Society for the Promotion of Sciences, with which Munich Re has close ties, and sits on the supervisory board of several important German public companies.

At the end of his list of desirable attributes for a successful reinsurer, mainly business related and unsurprising, Dr Schinzler also says that the person should have openness to other cultures and a certain curiosity about everything around them. He himself lists tennis, skiing, hiking in the mountains, classical music, contemporary literature and twentieth century art as his interests outside work.

Today, Munich Re is active in around 150 countries and 50 capital markets and has international organisations in more than 60 places. Dr Schinzler seems to have achieved his goal of finding a career with an international dimension.

Lee Coppack is co-editor of Global Reinsurance. E-mail: