The Supervisory Board and Board of Management propose that the Articles of Association be amended as follows:
a) To adjust the Articles of Association to an expected change in the German Stock Companies Act with regard to Company announcements, the word "electronic" shall be inserted before "Bundesanzeiger" in Article 2.
Article 2 shall be worded as follows:
"The public announcements of the Company shall be published in the electronic Bundesanzeiger."
The Board of Management shall be instructed to file the amendment to Article 2 for entry in the Commercial Register as soon as a change in the German Stock Companies Act has entered into force that provides for the Company's announcements to be published in the electronic Bundesanzeiger.
b) To further facilitate the exercising of voting rights by shareholders at the AGM, the use of modern communication media for granting proxies shall be extended.
Article 7 shall therefore be reworded as follows:
"Voting rights may be exercised by proxy. The proxy may be given in writing, by fax, electronically, or in another form, details of which shall be specified by the Company in each case. The individual information necessary for granting these proxies shall be sent together with the invitation to the General Meeting."
c) To enable us to already take advantage at the next AGM of an expected change in the German Stock Companies Act with regard to the transmission of annual general meetings, Article 8 of the Articles of Association shall be amended now.
The following paragraph 3 shall be added to Article 8:
"(3) Subject to prior announcement in the invitation to the General Meeting, the person taking the Chair at the General Meeting may permit audio-visual transmission of the General Meeting in a form to be specified by him or her in more detail."
The Board of Management shall be instructed to file this amendment to the Articles of Association for entry in the Commercial Register as soon as a change in the German Stock Companies Act has entered into force that allows audio-visual transmission of the Annual General Meeting.
d) The Supervisory Board shall be enabled to adopt resolutions using modern communication media. The German law on registered shares – NaStraG – which entered into force last year, opens up the possibility for such resolutions.
In Article 13 the words "in writing" shall be deleted after the word "vote", so that Article 13 reads as follows:
"Once the Chairman of the Supervisory Board has been elected, a meeting of the Supervisory Board shall be quorate if all its members have been invited to the meeting or called upon to vote and if 10 members including the Chairman or alternatively 15 members participate in the vote."
Preconditions for attending the Annual General Meeting
Every shareholder may attend the Annual General Meeting in person or be represented by a proxy, provided the shareholder has given notice of his or her intention to participate to the Board of Management of the Company not later than Wednesday, 10 July 2002, and is entered in the register of shareholders. The shares entered in the register of shareholders on 10 July 2002 shall be material for establishing the right to participate and voting rights. All shareholders who have fulfilled these conditions will receive an admission card for the AGM, which they should bring with them to the meeting.
As a special service, we offer our shareholders the opportunity to be represented at the AGM – in accordance with their instructions – by one of the proxies nominated by the Company. The proxies may be appointed in writing by means of the form sent to shareholders, or via the Internet. They will exercise the voting rights solely in accordance with shareholders' instructions.
Shareholders may also exercise their voting rights through a proxy appointed in writing, a bank or a shareholders' association. In these cases the proxies must give due notice of their intention to attend or arrange for the shareholders to give such notice for them. If a bank is entered in the shareholders' register, it may only exercise the voting rights for shares that it does not own if it has an authorization to do so from the shareholders concerned.
Shareholders may again use the Internet (www.munichre.com/AGM2002) to order admission cards or to appoint proxies nominated by the Company. We also offer shareholders the chance to follow the whole AGM live on the Internet (also at www.munichre.com/AGM2002). To do so, they will need their shareholder number and the relevant AGM access code. This and other information for registering, issuing proxies and following the AGM on the Internet will be sent by post to all shareholders entered in our shareholders' register.
Enquiries or motions from shareholders for the AGM should be sent to the following address only:
Münchener Rückversicherungs-Gesellschaft
ZA/G – Aktienregister
80791 München
Germany
Fax: +49 (89) 38 91-92 16
or by e-mail to
shareholder@munichre.com
Munich, 6 June 2002
The Board of Management
For the Annual General Meeting on 17 July 2002
Report of the Board of Management on the exclusion of subscription subscription rights proposed under items 6, 7 and 8 of the agenda (in accordance with Section 186 paragraph 4 sentence 2 in conjunction with Sections 71 para. 1 item 8, 203 paragraph 2 sentence 2, and 221 paragraph 4 sentence 2 of the German Stock Companies Act)
1) Re item 6 on the agenda
At past AGMs, resolutions were adopted authorizing the Company to buy back and sell its own shares. The latest of these authorizations is due to expire on 18 January 2003. The proposed resolution is designed to replace the current authorization granted by the AGM on 18 July 2001. It will enable the Company or dependent Group companies, or enterprises in which the Company has a majority shareholding, or third parties acting for its or their account, to buy back shares up to a total amount of 10% of the Company's current share capital.
For this purpose, the Company is to be enabled to offer not only cash but also shares in other listed companies by way of exchange, which for shareholders can be an attractive alternative to a public purchase offer. It gives the Company additional options for optimally structuring share buy-backs, which is also in the interests of the shareholders. In this regard, a specific exchange ratio is to be determined, which may be supplemented by a cash benefit as an additional payment to the exchange offered or as compensation for any fractional shares. Shares which the Company buys back may be sold again via the stock exchange or a public offer to all shareholders. This takes account of the legal requirement of equal treatment (Section 53a of the German Stock Companies Act).
Besides this, the Company may also limit the shareholders' subscription rights and, pursuant to Article 186 para. 3 sentence 4 of the Stock Companies Act, may sell the Company's own shares to institutional investors, for example, or launch the shares on foreign stock exchanges. This is in the interest of the Company and puts it in a position to react quickly and flexibly to favourable stock market situations. The shares may only be sold at a price which does not significantly undercut the current stock market price. The Board of Management will endeavour – taking into account current market circumstances – to keep any discount on the stock market price as low as possible. The Board of Management will only avail itself of the authorization to exclude subscription rights in the sale of own shares, pursuant to Article 186 para. 3 sentence 4 of the Stock Companies Act, insofar as together with existing authorizations to issue shares from capital approved for this purpose, excluding shareholders' subscription rights, or as a result of an issue of convertible bonds or bonds with warrants, the limit provided for under Article 186 para. 3 sentence 4 of the German Stock Companies Act – namely 10% of the Company's share capital – is not exceeded.
The authorization also gives the Company the option of having own shares available to offer as a consideration in connection with mergers, acquisitions of companies or the purchase of shareholdings. International competition and the globalization of the economy increasingly require this type of acquisition financing. The proposed authorization is intended to give the Company the necessary scope to take quick and flexible advantage of opportunities that arise for acquiring companies or shareholdings. This is reflected in the proposed exclusion of subscription rights. In determining the valuation ratios, the Board of Management will ensure the interests of the shareholders are appropriately considered. As a rule, when measuring the value of the shares offered as a consideration, it will take as a basis the stock market price of Munich Re shares. However, a systematic coupling of the valuation to a stock market price is not provided for, in particular to prevent fluctuations in the share price from jeopardizing negotiation outcomes once they have been reached. The Company currently also has Authorized Capital Increase III (due to become Authorized Capital 2002 in future, subject to adoption of the resolution proposed under agenda item 7 and its entry in the Commercial Register) available for the acquisition of companies or shareholdings. The type of share procurement used to finance such transactions will be decided on by the Board of Management, with the consent of the Supervisory Board, its decision being guided by the interests of the Company
After adoption of the resolution proposed under agenda item 8 and its entry in the Commercial Register, the Company will be authorized to issue convertible bonds or bonds with warrants against both cash and non-cash payment. To service these bonds, it may be expedient to use own shares in part or in full, instead of a capital increase. This is also provided for in the authorization, with an exclusion of shareholder's subscription rights to this extent
Finally, the authorization allows the possibility, in the event of own shares being sold by means of an offer to all shareholders, for shareholders' subscription rights to be partially excluded in favour of the holders of convertible bonds or bonds with warrants. This enables the holders of convertible bonds or bonds with warrants to be granted a subscription right as protection against dilution, instead of a reduction of the exercise or conversion price
The authorization regarding the uses to which own shares may be put is to apply not only in respect of shares acquired on the basis of this resolution. Rather, the authorization is also to include shares acquired on the basis of the authorizations adopted by earlier AGMs pursuant to Section 71 para. 1 item 8 and Section 71d sentence 5 of the Stock Companies Act. It is advantageous for the Company and creates further flexibility to be able to use these own shares in the same way as those acquired on the basis of the above resolution.
Own shares acquired on the basis of this resolution and earlier resolutions may be retired without requiring a new resolution of the AGM. This shall not apply to shares acquired on the basis of Section 71d sentence 5 of the Stock Companies Act.
If the authorization is utilized, the Board of Management will inform shareholders about the details at the next AGM following the utilization.
2) Re item 7 on the agenda
The proposal being made to the AGM is that a new authorization be granted for increasing the share capital by a total of up to €220 million (Authorized Capital Increase 2002), combining the current authorizations for increasing the share capital, granted until 19 July 2005 (in the case of Authorized Capital Increase I) and 5 November 2003 (Authorized Capital Increases II and III). The amount of Authorized Capital Increase 2002 is to remain below the combined amount of €222,258,376.24 authorized under the current Authorized Capital Increases I, II and III. In the interests of greater flexibility, Authorized Capital Increase 2002 is to be granted for capital increases against both cash and non-cash contribution.
In the case of utilization of Authorized Capital Increase 2002 through capital increases against cash contribution, the shareholders will generally have a subscription right.
This subscription right is to be excluded, with consent of the Supervisory Board, firstly if the shares are issued in accordance with Article 186 paragraph 3 sentence 4 of the German Stock Companies Act at a price that is not significantly lower than the market price and if the total amount does not exceed €45 million. The amount of €45 million remains below the limit of 10% of the share capital stipulated in Article 186 paragraph 3 sentence 4 of the German Stock Companies Act. The authorization will enable the Company to cover any capital needs at very short notice in order to take swift and flexible advantage of market opportunities in different fields of business. The exclusion of subscription rights enables the Company to act quickly and place the shares at a price close to the market price, i.e. without the discount usual in rights issues. Neither at the time the authorization becomes effective nor at the time of its execution may this capital increase exceed 10% of the current share capital. This 10% includes shares issued or sold by excluding subscription rights pursuant to Article 186 para. 3 sentence 4 of the Stock Companies Act. Through this limitation, account is taken of the shareholders' need for protection against dilution of their stock. As the new shares will be placed at a price close to the market price, shareholders wishing to maintain their proportionate holding in the Company always have the possibility of buying the requisite number of shares at approximately the same conditions on the stock market.
In addition, subscription rights are to be excluded to the extent that is necessary to grant holders or creditors of bonds a subscription right for new shares if the conditions of the bonds provide for this. To facilitate their placement on the capital market, such bonds have a protection against dilution which provides for the holders or creditors to be granted a subscription right for new shares in subsequent share issues. They are thus treated as if they were already shareholders. In order to equip the bonds with such protection against dilution, the subscription right of shareholders must be excluded in respect of these shares. This makes it easier to place the bonds and thus accords with the shareholders' interest in an optimum financing structure for the Company.
Subscription rights are also to be excluded for fractional amounts. This is to facilitate the handling of issues with a general subscription right for shareholders. Such fractional amounts may result from the volume of the respective issue and the fixing of a practicable subscription ratio. The value of the excluded rights per shareholder is usually small, whereas the expenditure for an issue without such exclusion rights would be markedly higher. In other words, such subscription rights are excluded for reasons of practicability and efficiency.
Subscription rights are also to be excluded for capital increases against non-cash contribution. We want to continue to be in a position to acquire companies, parts of companies, shareholdings or assets connected with such investments, in order to strengthen our competitiveness and to increase our earnings power and corporate value. It has become apparent that ever greater units are involved in such investments. In many cases, very high considerations have to be paid. Often these need to be or may be of a non-cash nature – for example, in order to achieve an optimum financing structure. Frequently sellers insist on receiving shares as a consideration, as this is more favourable for them. The option of using own shares for acquisition financing gives the Company the necessary scope to take quick and flexible advantage of acquisition opportunities that arise. It enables the Company to acquire larger units by transferring shares. There should also be the opportunity to acquire assets in return for shares. For both eventualities, it has to be possible to exclude shareholders' subscription rights. As such acquisitions have to be effected at short notice, they cannot be approved by an Annual General Meeting taking place only yearly. They require capital which the Board of Management – with the consent of the Supervisory Board – can have access to quickly. The amount of the new authorization for capital increases is designed to ensure that major acquisitions can be financed, be it through cash contribution or in return for shares.
3) Re item 8 on the agenda
We are proposing that the AGM grant a new authorization and a new contingent capital for issuing convertible bonds or bonds with warrants; the existing authorization, due to expire on 5 November 2003, and the existing contingent capital for this purpose are to be cancelled.
Appropriate capitalization is an essential basis for a company's development. One financing instrument that may be used for this purpose is issuing convertible bonds or bonds with warrants which raise third-party capital for the Company at a favourable interest rate. The premiums received on the conversion rights or warrants accrue to the benefit of the Company. To give the Company the continued necessary flexibility in procuring capital for investments, we are proposing a new authorization.
Authorization is to be granted to issue bonds with a total value of up to €3 billion. To service them, shares totalling up to €30 million of the share capital are to be made available.
Our shareholders are generally to be granted a subscription right in respect of these bonds. This gives them the chance to invest their capital in the Company and at the same time to maintain their participation quota. However, as hitherto, pursuant to Article 186 para. 3 sentence 4 of the Stock Companies Act, the Board of Management is to be authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights if the issue price for the bonds is not significantly lower than their market price. This exclusion of subscription rights is necessary if a bond is to be placed quickly in order to exploit a favourable market situation. Due regard is given to the interests of shareholders through the fixing of the issue price at a level not significantly lower than the market price, so that the value of a subscription right would be practically zero. This possibility is restricted to bonds carrying subscription rights for shares amounting to a maximum of 10% of the share capital, both at the time the authorization becomes effective and at the time it is utilized. This 10% includes shares issued or sold by excluding subscription rights pursuant to Article 186 para. 3 sentence 4 of the Stock Companies Act. Through this limitation, account is taken of shareholders' need for protection against dilution of their stock.
In addition, subscription rights are to be excluded in respect of fractional amounts or to satisfy the subscription rights of holders of previously issued bonds. The exclusion of subscription rights for fractional amounts is expedient and customary, since the costs of handling subscription rights for fractional amounts are out of all proportion to the gain for shareholders. It is also customary in the market to give the holders of bonds a subscription right for future bond issues, so that bonds with conversion rights and warrants can be placed more easily. Shareholders' subscription rights have to be excluded for both purposes.
The Board of Management is also to have the possibility of excluding subscription rights in issues of bonds against non-cash payment. This will only happen if the value of the non-cash payment corresponds to the issue price of the bond and is not significantly lower than the bond's market value, determined according to recognized methods of financial mathematics. The issue of bonds against non-cash payment is intended, in particular, to give us the opportunity to use such bonds in connection with the acquisition of companies, parts of companies, shareholdings or assets connected with such investments. The Company wants to continue to have the chance to strengthen its competitiveness and to increase its earnings power through such acquisitions. Often considerations for these may be or need to be of a non-cash nature. Frequently sellers insist on receiving a consideration in another form. An attractive alternative here can be to offer convertible bonds or bonds with warrants instead of, or in addition to, shares or cash. This option creates additional flexibility and increases the Company's competitive chances in acquisitions. The Board of Management will examine carefully in each case whether the acquisition and the issuing of bonds against non-cash payment is in the interests of the Company. Only then will it exclude the shareholders' subscription rights.
The exercising of conversion rights and warrants resulting from such bonds issued against non-cash payment cannot be satisfied from the contingent capital, but requires access to own shares or a non-cash capital increase. For this – assuming approval by the AGM – the newly proposed authorized capital increase will be available.
Munich, 6 June 2002
The Board of Management
Re item 5 on the agenda:
Elections to the Supervisory Board
1. Re the Supervisory Board's proposal that the following gentlemen be elected to the Supervisory Board as representatives of the shareholders:
a) Professor Karel Van Miert
born in Oud-Turnhout (Belgium) on
17 January 1942
Degree in diplomatic sciences (Ghent)
Postgraduate studies at the European
University Centre, Nancy
President of the University of Nyenrode
Seats held on supervisory boards of other German companies:
Fraport AG
RWE AG
Membership of comparable bodies of German and foreign business enterprises:
Agfa-Gevaert NV, Mortsel
Anglo American plc, London
De Persgroep, Asse
DHV Holding BV, Amersfoort
Royal Philips Electronics NV, Amsterdam
Wolters Kluwer NV, Amsterdam
b) Dr. e.h. Dipl.-Ing. Bernd Pischetsrieder
born in Munich on 15 February 1948
Degree in mechanical engineering
Chairman of the Board of Management of Volkswagen AG
Seats held on supervisory boards of other German companies:
METRO AG
Audi AG (Chairman)*
Membership of comparable bodies of German and foreign business enterprises:
Rolls-Royce and Bentley Motor Cars Ltd. Crew
Tetra Laval Group, Pully
SEAT, S.A., Barcelona (Chairman)*
Appointed to the Munich Re Supervisory Board by resolution of the Munich Registry Court with effect from 17 April 2002.
2. Re the Supervisory Board's proposal that the following gentlemen be elected as substitute members for the representatives of the shareholders:
a) Dr. jur. Fedor Nierhaus
born in Dortmund on 28 March 1936
Degree in law
Former Member of the Board of Management of the Munich Reinsurance Company
Seats held on supervisory boards of other German companies:
Membership of comparable bodies of German and foreign business enterprises:
b) Hans Rathnow
born in Berlin on 30 December 1934
Degree in business management
Former Member of the Board of Management of the Munich Reinsurance Company
Seats held on supervisory boards of other German companies:
Membership of comparable bodies of German and foreign business enterprises:
*Own group companies
Information in accordance with Section 128 para. 2 sentences 6 to 8 of the German Stock Companies Act:
1. Members of the Boards of Management of banks or employees of banks who hold seats on the Munich Reinsurance Company's Supervisory Board:
Dr. jur. Rolf-E. Breuer,
Chairman of the Supervisory Board
of Deutsche Bank AG
Dr. jur. Albrecht Schmidt,
Spokesman of the Board of Management of Bayerische Hypo- und Vereinsbank AG
2. Banks on whose Supervisory Boards members of the Munich Reinsurance Company's Board of Management or employees hold seats:
Dresdner Bank AG, Frankfurt am Main
3. Banks in which the Munich Reinsurance Company has a shareholding notifiable under Article 21 of the German Securities Trading Act:
Bayerische Hypo- und Vereinsbank AG,
Munich
Dresdner Bank AG, Frankfurt am Main
4. Banks which were members of a syndicate responsible for handling the most recent issue of the Company's securities in the past five years:
Deutsche Bank AG, Frankfurt am Main
J. P. Morgan AG, Frankfurt am Main
