After its partial utilisation in 2003, Authorised Capital Increase 2002
adopted by the AGM on 17 July 2002 now totals €89,662,858.24. To enable the
Company to further strengthen its shareholders' equity by means of this
instrument if required in the coming years, the Supervisory Board and the Board
of Management propose the following:
a) Cancellation of the authorisation of 17 July 2002
The authorisation granted by the AGM on 17 July 2002 regarding Authorised
Capital Increase 2002, as laid down in Article 4 para. 1 of the Articles of
Association, shall be cancelled as soon as this resolution becomes effective
through entry in the Commercial Register.
b) Authorisation
The Board of Management shall be authorised, with the consent of the
Supervisory Board, to increase the Company's share capital at any time up to 25
May 2009 in one or more stages by an amount of up to €280 million by issuing new
registered no-par-value shares against cash or non-cash contribution (Authorised
Capital Increase 2004).
In the case of capital increases against cash contribution, shareholders
shall be granted a subscription right. However, the Board of Management is
authorised, with the consent of the Supervisory Board, to exclude the
shareholders' subscription rights in the following cases:
– in order to exclude fractional amounts from the subscription rights;
– insofar as this is necessary to grant the bearers of warrants or
convertible bonds or bonds with warrants, issued by the Company or by one of its
dependent Group companies, pre-emptive rights to the extent to which they would
be entitled as shareholders after exercising their warrants or after the
conversion requirements from such bonds have been satisfied; or
– if the issue price of the new shares is not significantly lower than the
stock market price and the shares issued with exclusion of the shareholders'
subscription rights pursuant to Section 186 para. 3 sentence 4 of the German
Stock Companies Act do not exceed a total of 10% of the share capital either at
the time this authorisation becomes effective or at the time it is exercised.
This maximum limit shall include shares sold or issued, or to be issued, during
the term of this authorisation on the basis of other authorisations with
exclusion of subscription rights, directly or indirectly pursuant to Article 186
para. 3 sentence 4 of the German Stock Companies Act.
In addition, the Board of Management shall be authorised, with the consent of
the Supervisory Board, to exclude subscription rights in the case of capital
increases against non-cash contribution.
The Board of Management shall also be authorised, with the consent of the
Supervisory Board, to determine all other rights of the shares and the terms of
issue.
c) Amendment to the Articles of Association
Article 4 paragraph 1 of the Articles of Association shall be reworded as
follows:
"(1)The Board of Management shall be authorised, with the consent of the
Supervisory Board, to increase the Company's share capital at any time up to 25
May 2009 in one or more stages by an amount of up to €280 million by issuing new
registered no-par-value shares against cash or non-cash contribution (Authorised
Capital Increase 2004).
In the case of capital increases against cash contribution, shareholders
shall be granted a subscription right. However, the Board of Management shall be
entitled, with the consent of the Supervisory Board, to exclude fractional
amounts from such subscription rights and insofar as this is necessary to grant
the bearers of warrants or convertible bonds or bonds with warrants, issued by
the Company or by one of its dependent Group companies, pre-emptive rights to
the extent to which they would be entitled as shareholders after exercising
their warrants or after the conversion requirements from such bonds have been
satisfied. The Board of Management shall also be entitled, with the consent of
the Supervisory Board, to exclude subscription rights if the issue price of the
new shares is not significantly lower than the stock market price and the shares
issued with exclusion of the shareholders' subscription rights pursuant to
Section 186 para. 3 sentence 4 of the German Stock Companies Act do not exceed a
total of 10% of the share capital either at the time this authorisation becomes
effective or at the time it is exercised. This maximum limit shall include
shares sold or issued, or to be issued, during the term of this authorisation on
the basis of other authorisations with exclusion of subscription rights,
directly or indirectly pursuant to Article 186 para. 3 sentence 4 of the German
Stock Companies Act.
In addition, the Board of Management shall be authorised, with the consent of
the Supervisory Board, to exclude the shareholders' subscription rights in the
case of capital increases against non-cash contribution.
The Board of Management shall also be authorised, with the consent of the
Supervisory Board, to determine all other rights of the shares and the terms of
issue."
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, 19 May 2004, and is entered in the register of shareholders.
The shares entered in the register of shareholders on 19 May 2004 shall be
material for establishing the right to participate and voting rights.
As part of our service, we are again offering shareholders the opportunity to
be represented at the AGM – in accordance with their instructions – by one of
the proxies nominated by the Company. These proxies will exercise the voting
rights solely in accordance with the instructions they receive from the
shareholders. The proxies may be appointed in writing by means of the form sent
to shareholders, or via the internet at www.munichre.com/AGM2004. Instructions
issued to the proxies via the internet may be changed on the day of the AGM at
www.munichre.com/AGM2004 right up to the end of the general debate.
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 neither a bank nor a shareholders'
association is authorised in this way, authorisation should be granted in
writing, by fax using number +49 (89) 38 91-92 16, or via the internet at
www.munichre.com/AGM2004.
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 authorisation to do
so from the shareholders concerned.
Shareholders may use the internet (www.munichre.com/AGM2004) to order
admission cards or to appoint proxies nominated by the Company. 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.
Transmission of the AGM on the internet
We are again offering shareholders who are unable to attend the AGM in person
the chance to follow the whole AGM live on the internet (also at
www.munichre.com/AGM2004), using their shareholder number and the
relevant AGM access code. The opening of the Annual General Meeting by the
Chairman of the Meeting and the report of the Chairman of the Board of
Management can be publicly viewed live on the internet
(www.munichre.com/AGM2003) and will be available after the AGM as a
recording. There will be no recording of the whole live transmission.
Address for enquiries or motions from shareholders
Enquiries from shareholders regarding 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
This is also the address to which motions and any election proposals from
shareholders must be sent; motions and election proposals sent to other
addresses cannot be considered. Any countermotions or election proposals that
reach us by 24.00 hrs on 11 May 2004 will be published on the internet at
www.munichre.com/AGM2004. Any comments by the Supervisory Board and the Board of
Management on such proposals will also be published at the above-mentioned
internet address.
Munich, 16 April 2004
The Board of Management
For the Annual General Meeting on 26 May 2004
Report of the Board of Management on the exclusion of subscription
subscription rights proposed under items 6 and 7 of the agenda (in accordance
with Section 186 para. 4 sentence 2 in conjunction with Sections 71 para. 1 item
8 and 203 para. 2 sentence 2 of the German Stock Companies Act)
1) Re item 6 on the agenda
At past AGMs, resolutions were adopted authorising the Company to buy back
and sell its own shares. The latest of these authorisations is due to expire on
11 December 2004. Owing to the expiry of this authorisation in the current
business year, the proposed resolution is designed to replace the current
authorisation granted by the AGM on 11 June 2003. Apart from a few small
changes, the new proposal corresponds to the previous authorisation.
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 buy back shares not only
via the stock exchange but also through a public offer to shareholders of the
Company or through a public invitation to tender such an offer. The Company is
also to be given the possibility 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 German 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 authorisation to exclude
subscription rights in the sale of own shares, pursuant to Section 186 para. 3
sentence 4 of the German Stock Companies Act, insofar as together with existing
authorisations 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 Section 186 para. 3
sentence 4 of the German Stock Companies Act – namely 10% of the Company's share
capital – is not exceeded.
The authorisation 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
globalisation of the economy increasingly require this type of acquisition
financing. The proposed authorisation 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 jeopardising negotiation outcomes once they have been reached.
The Company will have the possibility 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 authorisation, with an exclusion of
shareholders' subscription rights to this extent.
Finally, the authorisation 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.
In addition, the Company is to be enabled to issue employee shares to staff
of the Company or of its affiliated enterprises.
The authorisation 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 authorisation is also to include shares acquired on the basis of the
authorisations adopted by earlier AGMs pursuant to Section 71 para. 1 item 8 and
Section 71d sentence 5 of the German 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 German
Stock Companies Act. In accordance with item 3 of Section 237 para 3 of the
German Stock Companies Act, newly introduced as a result of the Transparency and
Public Disclosure Act of 19 July 2002, the AGM may resolve to retire
no-par-value shares without reducing the share capital. The proposed
authorisation provides for this option in addition to retirement with a share
capital reduction. If own shares are retired without reducing the share capital,
the proportion of the share capital represented by each of the other
no-par-value shares automatically increases. The Board of Management is
therefore also to be authorised to make the necessary amendment to the Articles
of Association to take account of the resultant reduction in the number of
no-par-value shares.
If the authorisation is utilised, the Board of Management will inform
shareholders about the details at the next AGM following the utilisation.
2) Re item 7 on the agenda
The proposal being made to the AGM is that a new authorisation be granted for
increasing the share capital by a total of up to €280 million (Authorised
Capital Increase 2004) to replace Authorised Capital Increase 2002, granted
until 17 July 2007 and now amounting to €89,662,858.24 after the capital
increase last November.
In the case of utilisation of Authorised Capital Increase 2004 through
capital increases against cash contribution, the shareholders will generally
have a subscription right.
The Board of Management is to be authorised, with the consent of the
Supervisory Board, to exclude subscription rights in capital increases against
cash contribution if the shares are issued in accordance with Section 186 para.
3 sentence 4 of the German Stock Companies Act at an amount that is not
significantly lower than the 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 authorisation 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 authorisation
becomes effective nor at the time of its execution may this capital increase
exceed 10% of the current share capital. This maximum of 10% of the share
capital includes shares issued, or to be issued, within the term of this
authorisation by excluding subscription rights, indirectly pursuant to Article
186 para. 3 sentence 4 of the German Stock Companies Act, to service convertible
bonds or bonds with warrants. It also includes own shares insofar as they are
sold within the term of this authorisation by excluding subscription rights
pursuant to Article 71 para 1 item 8 in conjunction with Article 186 para. 3
sentence 4 of the German 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 of the respective issue.
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 access quickly. We also want to be able
to use the proposed authorised capital increase for this. The amount of the new
authorisation for capital increases is designed to ensure that major
acquisitions can be financed, be it through cash contribution or in return for
shares.
Munich, 16 April 2004
The Board of Management
