Munich Re AGM Highlights Improved Results, Future Plans

Munich Re’s annual general meeting yesterday, April 26, highlighted the reinsurer’s strengthened economic position, strong 2006 and first quarter results and improving prospects for the future.

Shareholders got an added bonus with the announcement that the Group would raise its dividend payout by 45 percent from €3.10 ($4.21) to €4.50 ($6.18) per share, a total of nearly €1 billion ($1.3594 billion). Chairman of the Board of Management Nikolaus von Bomhard noted that the dividend yield is “well over 3 percent, based on the current share price, and thus in the top third of DAX companies.”

He also indicated that the “excellent [2006] consolidated result of €3.5 billion [$4.76 billion] is due to outstanding results in both reinsurance and primary insurance.”

There was also a marked improvement in all the other key figures: the return on risk-adjusted capital rose to 20.3 percent, and the Group set new “best marks” in its combined ratios, with 92.6 percent in reinsurance and 90.8 percent in primary insurance.

For 2007, von Bomhard indicated that Munich Re is aiming at a profit of €2.8 billion [$3.8 billion] to €3.2 billion [$4.35 billion], around 10 percent more than the forecasts for 2006.

With regard to the Group’s growth program “Changing Gear,” von Bomhard told the AGM: “In recent years we have listened to and registered very carefully what our clients, our investors, the media, and not least our employees, expect of us. Building on this input, we developed our strategy further with a view to tapping profitable new fields of growth. What we are concerned with now is clearing the way for this growth. That is the nucleus of Changing Gear. We will consistently remove obstacles in our structures and processes, making our organization leaner.”

He went on to say that “Changing Gear” mainly stands for a change in corporate culture. In other words, Changing Gear is not a cost-saving or staff-cutting program: “What we are demanding is creativity and innovation, along with entrepreneurial thinking by our staff. Each employee has to ask how he or she can contribute to corporate profit.”

In the reinsurance area von Bomhard said Munich Re aspires “to be the most profitable of the big five reinsurers,” and as a primary insurer, “we intend to proactively develop business segments and markets with growth potential. In the international health market, we aim to be market leader with our integrated approach.”

Munich Re will officially publish its figures for the first quarter of the current financial year on May. Von Bomhard commented on the situation as things stand at present: “So far we are on track. Apart from European Winter Storm Kyrill, it was a good quarter.” Besides this, the investment result developed positively. Gains on the sale of real estate, already initiated last year, will partly compensate for the losses sustained from Kyrill.