Press release

• Quarterly profit of €513m for Munich Re, despite heavy burdens industry-wide from natural catastrophes
  
  
• Outstanding investment result of €3,078m and further good development of primary insurance group in the third quarter 
  
  
• Outlook for the year as a whole: "Return target of 12% within reach, dividend increase possible"

"Although natural hazard events caused losses far in excess of what was to be expected, we are able to post a high profit for the exceptional quarter from 1 July to 30 September. In view of the excellent investment result in prospect and the generally good performance of our underwriting business, we should reach our annual target of a 12% return on equity after tax. The precondition for this is that there are no more completely exceptional major losses in the last seven weeks of the year and that the capital markets continue to develop normally", said Jörg Schneider, member of the Board of Management, during the presentation of the quarterly figures.

The results for the first nine months of this year were also marked by very positive experience in the Group's basic reinsurance and primary insurance business. Hurricane Katrina additionally demonstrated the key importance of a prudent retrocession policy: the Munich Re Group had purchased retrocession covers for extreme peak risks, enabling it to cede a substantial portion of its gross loss burden to its retrocessionaires. It sees retrocession – alongside budgeting and liability limits – as a significant component of its risk management.

Summary of the quarterly figures (see attachment for details):
Given the heavy burdens from natural catastrophes and other major losses, the Munich Re Group's profit for the third quarter was very satisfactory overall, totalling €513m (third quarter 2004: €386m). This is mainly due to the further improvement in the result of the ERGO Insurance Group and to sales proceeds from the continued restructuring of investments to reduce concentration risks. The overall investment result amounted to a very good €3,078m (1,667m). Written premiums remained almost unchanged compared with the same quarter last year, totalling €9.2bn. Shareholders' equity^* shows a rise of €1.9bn to €22.7bn since the beginning of the year.

Reinsurance: Quarterly profit of €344m despite the storm losses
The tropical cyclone season in the Atlantic started uncommonly early this year in mid-July, when Hurricanes Dennis and Emily, the first of an unprecedented series of major losses, gave rise to a claims burden for the Munich Re Group of around €30m.

Hurricane Katrina, with wind speeds reaching peak gusts of 350 km/h, was one of the severest tropical cyclones of the past 150 years in the Gulf of Mexico and in the Louisiana and Mississippi region. However, retrocession covers will significantly limit the claims costs for the Munich Re Group, with the net burden of just over €800m before tax being considerably lower than the gross burden (€1.2bn).

With a comparable strength and track to Katrina's, Hurricane Rita had a similar loss potential but did not hit such high concentrations of values. Therefore it ultimately caused significantly lower losses. At present, the Munich Re Group anticipates losses from this event of around €260m before tax.

Altogether, the Group's burden from the Atlantic cyclones in the third quarter of 2005 was €1.5bn before retrocessions and €1.1bn after; the post-tax impact on the result was around €750m.

The Group also had to cope with flood losses in Europe and Asia in the quarter under review. Extremely heavy rains in August triggered very serious flooding in the northern Alpine region in Germany and Austria and above all in central Switzerland, resulting in the largest-ever natural catastrophe loss in Swiss insurance history. The floods are expected to produce a burden of approximately €115m on the Group's pre-tax result. In addition, the Indian city of Mumbai was ravaged by floods caused by the heaviest monsoon rains in nearly 100 years, resulting in hundreds of fatalities and substantial property damage. This natural catastrophe will probably cost the Munich Re Group around €30m.

The total cost burden from natural catastrophes for the third quarter of 2005 is thus far above average, amounting to €1.2bn net before tax – almost 33% of net earned premiums – and reflected in an exceptionally high combined ratio of 124.6% (105.8%).

The third-quarter operating result in reinsurance business was down 16.5% to €313m. The reinsurers' consolidated result amounted to €344m, positively influenced by lower writedowns, lower losses on disposals, and higher gains from sales of shareholdings, including €563m from the sale of Allianz shares.

Primary insurance: Improved result compared with same period last year / Normal claims experience in the third quarter
The primary insurers in the Munich Re Group – ERGO, Karlsruher, Europäische Reiseversicherung and the Watkins Syndicate – achieved a segment result of €137m in the third quarter, surpassing the profit for the same period last year by 59.3%. The ERGO Insurance Group increased its profit in the third quarter to €149m (previous year: €83m). With unchanged gross premiums written of €3.7bn, ERGO earned a good 90% of the premium income in the primary insurance segment.

Overall, premium income in primary insurance grew by 0.7% to €4.13bn (4.10bn) in the third quarter, with an increase of 0.5% to €2.9bn in the life and health segment. For the ERGO life insurers new business in Germany in the first quarter of 2005 had been 8.2% down on the same quarter last year, as was to be expected after the year-end boom in 2004, despite some of these policies not being placed to account until the new year. Since then, new business has noticeably recovered: although for the first nine months it was still 3.6% down on last year, it showed a 5.2% year-on-year increase for the third quarter. The property-casualty segment (including legal expenses insurance) recorded slight premium growth of 1.3% for the third quarter and was up 0.2% to €4.2bn for the first nine months.

Despite the flooding in the Alpine region, claims experience in the third quarter of 2005 was normal in Munich Re's primary insurance business. Including legal expenses insurance, the combined ratio remains very good at 91.4% (90.0%) and is thus, as expected, only slightly higher than the ratio for the same period last year, in which exceptionally low claims costs were incurred.

The primary insurers' investment result totalled €1.6bn (0.9bn) in the third quarter. Advantage was taken of the favourable capital market environment to realise capital gains on securities and to systematically improve diversification through the further reduction of investments in the financial sector. Net unrealised gains increased compared with the end of 2004, owing to the favourable development of the stock markets and in particular to the fall in interest rates.

Investments: Significant growth in the portfolio
As at 30 September 2005, the Munich Re Group's investments amounted to €186.6bn (178.1bn). The portfolio has grown by 4.8% since the beginning of the year, mainly due to investment of the cash flow from the Group's underwriting business in fixed-interest securities and loans and to increases in the market prices of existing securities items. The investment result at 30 September totalled €8.1bn (5.7bn).

Outlook for the business year 2005 as a whole: "Well equipped for the risks of the future"
The year to date has been marked on the one hand by very positive experience in basic reinsurance and primary insurance business and on the other hand by the exceptionally high burdens from the hurricane season. There is also the post-tax burden of €750m from strengthening American Re's reserves in the second quarter.

At the end of October, Hurricane Wilma struck the Mexican Yucatan peninsula and the State of Florida with terrible force and bringing torrential rain. According to initial estimates, the total insured loss in Mexico and Florida is around US$ 10bn-14bn. Munich Re currently estimates that it will have to bear around US$ 400m of this. The severe earthquake in the northern border region of Pakistan and India has so far claimed some 75,000 lives and left around 70,000 people badly injured. Owing to the low insurance penetration in the areas affected, however, this catastrophe will not have any major consequences for the insurance industry.

The Group expects substantial capital gains in the fourth quarter from the exchange of its HVB shares into UniCredit stock, assuming this transaction is completed this year as planned. On completion of the exchange offers to HVB shareholders and the shareholders of HVB's subsidiaries, the Munich Re Group's stake in UniCredit would be between 6.5% and 7% as things stand at present, approximately half of which will be held by Munich Re and half by the ERGO Insurance Group. The transaction gain, the exact amount of which is not yet certain, should help achieve a markedly higher Group result than last year. For ERGO, too, the HVB/UCI gains will contribute significantly to the profit for the year, thus leading to a considerable result improvement not yet foreseeable mid-year.

In the fourth quarter, Munich Re is selling its 90%-plus stake in Karlsruher Lebensversicherung AG, the parent of the Karlsruher Insurance Group. It proved possible to find a good partner for Karlsruher Leben with its strong regional orientation. The sale to Württembergische Leben is subject to the approval of the regulatory authorities.

Schneider is confident with regard to the result target for the business year 2005:
"The heavy cost burdens, not least from the hurricanes, will be compensated by the excellent investment result. The underlying earnings strength in our basic underwriting business is also impressive. If there are no further negative surprises, our result target of 12% return on equity after tax is within reach. That would also make a higher dividend possible."

Renewal of reinsurance business: Again geared to profitability
In the ongoing renewals of treaty business in non-life reinsurance, Munich Re continues to reckon with risk-adequate prices and conditions. Board member Torsten Jeworrek: "Anything else would be incomprehensible. The major events of 2004 and 2005 have more than clearly demonstrated the substantially increased loss potentials. We will agree on what is necessary with our clients. With our know-how and well-diversified portfolio, we and they are well equipped for the risks of the future."

The Munich Re Group
The Munich Re Group operates worldwide, turning risk into value. In the business year 2004, it achieved a profit of €1,833m, the highest in its 125-year corporate history. Its premium income amounted to approximately €38bn and its investments to around €178bn. The Group is characterised by particularly pronounced diversification. It has more than 40,000 employees in 60 countries throughout the world and operates in all lines of insurance. It is both the world's leading reinsurer and, through the ERGO Insurance Group, the second-largest provider in the German primary insurance market.

The quarterly report 3/2005 and the presentation for the media telephone conference (at 9.30 a.m. today) can be viewed in German and English at www.munichre.com.

Münchener Rückversicherungs-Gesellschaft
signed Schneider           signed Küppers

Given the heavy burdens from natural catastrophes and other major losses, the Munich Re Group's profit for the third quarter was very satisfactory overall, totalling €513m (third quarter 2004: €386m). This is mainly due to the further improvement in the result of the ERGO Insurance Group and to sales proceeds from the continued restructuring of investments to reduce concentration risks. The overall investment result amounted to a very good €3,078m (1,667m). Written premiums remained almost unchanged compared with the same quarter last year, totalling €9.2bn. Shareholders' equity* shows a rise of €1.9bn to €22.7bn since the beginning of the year.

The tropical cyclone season in the Atlantic started uncommonly early this year in mid-July, when Hurricanes Dennis and Emily, the first of an unprecedented series of major losses, gave rise to a claims burden for the Munich Re Group of around €30m.

Hurricane Katrina, with wind speeds reaching peak gusts of 350 km/h, was one of the severest tropical cyclones of the past 150 years in the Gulf of Mexico and in the Louisiana and Mississippi region. However, retrocession covers will significantly limit the claims costs for the Munich Re Group, with the net burden of just over €800m before tax being considerably lower than the gross burden (€1.2bn).

With a comparable strength and track to Katrina's, Hurricane Rita had a similar loss potential but did not hit such high concentrations of values. Therefore it ultimately caused significantly lower losses. At present, the Munich Re Group anticipates losses from this event of around €260m before tax.

Altogether, the Group's burden from the Atlantic cyclones in the third quarter of 2005 was €1.5bn before retrocessions and €1.1bn after; the post-tax impact on the result was around €750m.

The Group also had to cope with flood losses in Europe and Asia in the quarter under review. Extremely heavy rains in August triggered very serious flooding in the northern Alpine region in Germany and Austria and above all in central Switzerland, resulting in the largest-ever natural catastrophe loss in Swiss insurance history. The floods are expected to produce a burden of approximately €115m on the Group's pre-tax result. In addition, the Indian city of Mumbai was ravaged by floods caused by the heaviest monsoon rains in nearly 100 years, resulting in hundreds of fatalities and substantial property damage. This natural catastrophe will probably cost the Munich Re Group around €30m.

The total cost burden from natural catastrophes for the third quarter of 2005 is thus far above average, amounting to €1.2bn net before tax – almost 33% of net earned premiums – and reflected in an exceptionally high combined ratio of 124.6% (105.8%).

The third-quarter operating result in reinsurance business was down 16.5% to €313m. The reinsurers' consolidated result amounted to €344m, positively influenced by lower writedowns, lower losses on disposals, and higher gains from sales of shareholdings, including €563m from the sale of Allianz shares.

The primary insurers in the Munich Re Group – ERGO, Karlsruher, Europäische Reiseversicherung and the Watkins Syndicate – achieved a segment result of €137m in the third quarter, surpassing the profit for the same period last year by 59.3%. The ERGO Insurance Group increased its profit in the third quarter to €149m (previous year: €83m). With unchanged gross premiums written of €3.7bn, ERGO earned a good 90% of the premium income in the primary insurance segment.

Overall, premium income in primary insurance grew by 0.7% to €4.13bn (4.10bn) in the third quarter, with an increase of 0.5% to €2.9bn in the life and health segment. For the ERGO life insurers new business in Germany in the first quarter of 2005 had been 8.2% down on the same quarter last year, as was to be expected after the year-end boom in 2004, despite some of these policies not being placed to account until the new year. Since then, new business has noticeably recovered: although for the first nine months it was still 3.6% down on last year, it showed a 5.2% year-on-year increase for the third quarter. The property-casualty segment (including legal expenses insurance) recorded slight premium growth of 1.3% for the third quarter and was up 0.2% to €4.2bn for the first nine months.

Despite the flooding in the Alpine region, claims experience in the third quarter of 2005 was normal in Munich Re's primary insurance business. Including legal expenses insurance, the combined ratio remains very good at 91.4% (90.0%) and is thus, as expected, only slightly higher than the ratio for the same period last year, in which exceptionally low claims costs were incurred.

The primary insurers' investment result totalled €1.6bn (0.9bn) in the third quarter. Advantage was taken of the favourable capital market environment to realise capital gains on securities and to systematically improve diversification through the further reduction of investments in the financial sector. Net unrealised gains increased compared with the end of 2004, owing to the favourable development of the stock markets and in particular to the fall in interest rates.

The year to date has been marked on the one hand by very positive experience in basic reinsurance and primary insurance business and on the other hand by the exceptionally high burdens from the hurricane season. There is also the post-tax burden of €750m from strengthening American Re's reserves in the second quarter.

At the end of October, Hurricane Wilma struck the Mexican Yucatan peninsula and the State of Florida with terrible force and bringing torrential rain. According to initial estimates, the total insured loss in Mexico and Florida is around US$ 10bn-14bn. Munich Re currently estimates that it will have to bear around US$ 400m of this. The severe earthquake in the northern border region of Pakistan and India has so far claimed some 75,000 lives and left around 70,000 people badly injured. Owing to the low insurance penetration in the areas affected, however, this catastrophe will not have any major consequences for the insurance industry.

The Group expects substantial capital gains in the fourth quarter from the exchange of its HVB shares into UniCredit stock, assuming this transaction is completed this year as planned. On completion of the exchange offers to HVB shareholders and the shareholders of HVB's subsidiaries, the Munich Re Group's stake in UniCredit would be between 6.5% and 7% as things stand at present, approximately half of which will be held by Munich Re and half by the ERGO Insurance Group. The transaction gain, the exact amount of which is not yet certain, should help achieve a markedly higher Group result than last year. For ERGO, too, the HVB/UCI gains will contribute significantly to the profit for the year, thus leading to a considerable result improvement not yet foreseeable mid-year.

In the fourth quarter, Munich Re is selling its 90%-plus stake in Karlsruher Lebensversicherung AG, the parent of the Karlsruher Insurance Group. It proved possible to find a good partner for Karlsruher Leben with its strong regional orientation. The sale to Württembergische Leben is subject to the approval of the regulatory authorities.

The Munich Re Group
The Munich Re Group operates worldwide, turning risk into value. In the business year 2004, it achieved a profit of €1,833m, the highest in its 125-year corporate history. Its premium income amounted to approximately €38bn and its investments to around €178bn. The Group is characterised by particularly pronounced diversification. It has more than 40,000 employees in 60 countries throughout the world and operates in all lines of insurance. It is both the world's leading reinsurer and, through the ERGO Insurance Group, the second-largest provider in the German primary insurance market.

Disclaimer
This media information contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of Munich Re. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.