Munich Re Predicts Successful 2007

by Carla Johnson, Investors Offshore.com, London

07 November 2007

With a profit of over EUR3.3bn (against previous year profits of EUR2.9bn) in the first nine months of this year, the Munich Re Group is heading for a record result in 2007, it announced this week.

"In the third quarter, we again posted excellent results, and are now harvesting the fruits of our strict profit orientation", stated CFO Jörg Schneider.

At the same time, Schneider stressed that:

"By focusing consistently on profitability and active capital management, we are generating shareholder value."

He went on to reveal that 70% of the ongoing second share buy-back had been completed, and highlighted further progress in the Changing Gear programme, particularly the realignment of business in the US market, through the fundamental reorganisation of Munich Re America.

This step is intended to significantly increase Munich Re’s profits in the world’s largest insurance market.

Schneider also emphasised the importance of capital management to the Group, announcing that: "We are keeping to our plans of giving back at least EUR8bn to our shareholders by 2010."

The Munich Re Group's reinsurance business performed successfully in the first nine months of 2007. Although the operating result fell by 13.0% to EUR3.2bn, reinsurance still contributed EUR2.8bn to the Group's profit, of which EUR314m is apportionable to the special tax factor.

Primary insurance business also performed successfully in the first nine months of 2007. The primary insurers in the Munich Re Group significantly increased their post-tax profit to EUR752m, the one-off tax effect contributing EUR118m. At EUR923m, the operating result was close to the previous year’s figure.

For 2007, the Munich Re Group has again set itself a target of at least a 15% return on risk-adjusted capital (RORAC).

Schneider concluded by stating that:

"We are very confident that we will clearly exceed this objective. Due to the excellent performance of our business in the first nine months, we could at the end of the year even be slightly above the targeted profit margin of EUR3.5–3.8bn announced in August. This would be again a record result."

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