Press release

• Earnings per share to rise by more than 10% on average from 2007 to 2010 – Munich Re launches Changing Gear initiative for further profit growth 
  
  
• More share buy-backs of over €5bn planned up to 2010, with €2bn by 2008 Annual General Meeting – Important component of active capital management 
  
  
• CEO von Bomhard: "Together with the planned dividend payments, we are talking about a volume of more than €8bn by the end of 2010." 
  
  
• Successful first quarter in reinsurance and primary insurance: despite Kyrill, quarterly profit of €982m at last year's high level 
  
  
• Von Bomhard now sees 2007 profit target at €3.0–3.2bn, given normal claims experience and stable capital markets until end of year
   

With its Changing Gear programme, the Munich Re Group intends to achieve further improvements in its key figures. From 2007 up to and including 2010, it plans to increase earnings per share annually by an average of more than 10%. To this end, processes and structures will be streamlined so that opportunities for profitable growth can be exploited more decisively. "In the past three years, we have systematically made Munich Re fit, with integrated risk management and strict underwriting discipline. Changing Gear now follows as the necessary next step. In the preparatory phase, we first listened – to our clients, shareholders and staff – and from this process of intensive dialogue, we drew conclusions for the further development of our strategy", said Nikolaus von Bomhard, Chairman of the Board of Management, when presenting the business figures for the first quarter. Changing Gear is our response to the challenges and opportunities in our market, the global market of risks."

Changing Gear includes a clear commitment to continuing the Group's active capital management. "We are keeping our promise to shareholders and consistently returning capital that we do not need for profitable growth." As a first step, Munich Re will buy back shares with a volume of up to €2bn before the Annual General Meeting in April 2008 – at the current share price level, this would be about 15 million shares or 6.75% of the share capital. The intention is to then retire these shares. Munich Re also aims to continue paying high dividends – the dividend payout for the financial year 2006 totalled nearly €1bn. "With dividends at this level and a share buy-back programme of over €5bn, we would pay out more than €8bn to shareholders by the end of 2010", stated von Bomhard.

With regard to the focus of Changing Gear, von Bomhard said: "It concerns changes in reinsurance, but similar initiatives have been and will be realised in primary insurance as well." The Group's objectives were clearly defined, he continued, summarising them as follows: "We want to be the most profitable reinsurer worldwide. As a primary insurer, we intend to exploit business segments and markets with major growth potential, particularly abroad. In the international health market, we aim to be among the market leaders worldwide with our integrated approach." All this could only be achieved "if we actively promote a change in culture within Munich Re and place even more emphasis on enterprise in the way we think and act."

Von Bomhard stressed that Changing Gear in no way ran counter to the current approach of consistent profit orientation: "Risk-commensurate prices and conditions are still essential. They are the only way of achieving profitable growth", he noted. In reinsurance, Munich Re aims to boost growth through new business models and coverage concepts.

Despite the burden from Winter Storm Kyrill, the Group's reinsurance business performed pleasingly overall in the first quarter of 2007. Although the operating result fell by 14.2% to €1.1bn (1.2bn), reinsurance still contributed €798m (841m) to the Group profit. Large gains on real-estate sales, initiated last year, had a particularly positive effect, partially compensating for the windstorm losses caused by Kyrill.

The combined ratio amounted to 101.8% (91.6%), of which 12.2 (2.2) percentage points were attributable to natural catastrophes (11.2 percentage points of these to Kyrill).

Compared with the same period last year, premium income showed a reduction of 2.8% to €5.8bn (6.0bn), but this was chiefly due to changes in exchange rates – without these currency translation effects, it would have risen by 1.6%. The life/health segment accounted for €1.8bn (1.9bn), and property-casualty for €4.0bn (4.0bn).

Munich Re's treaty renewals in property-casualty reinsurance at 1 April in Australia, India, Japan and Korea reflected the Group's profit-oriented approach. Board member Torsten Jeworrek: "In Japan and Korea, our premium volume remained almost stable. In the USA, we were able to win additional profitable business in selected segments." For the forthcoming renewals at 1 July in parts of the US portfolio, Australia and the Latin American markets, the approach will not change: "Profitability is our yardstick."

The Munich Re Group's primary insurers made a good start to the year 2007, increasing their operating result by 39.7% to €324m (232m) and their profit by 87% to €258m (138m).

The ERGO Insurance Group, which writes about 92% of the gross premiums in Munich Re's primary insurance segment, improved its profit by 78.0% to €258m (145m). Its combined ratio (for property-casualty business including legal expenses insurance) climbed to 101.2% (96.1%) owing to Kyrill, which also impacted the combined ratio for the whole primary insurance group, i.e. including Europäische Reiseversicherung and the Watkins Syndicate, raising it to 102.1% (97.0%).

Gross premiums written in the Munich Re Group's primary insurance business advanced to €4.8bn (4.6bn). The growth came mainly from international business, particularly in property-casualty insurance, and from the health segment.

The life and health insurers wrote premium of €2.9bn (2.9bn), with health insurance business showing a 5.1% increase. Premiums written in property-casualty insurance (including legal expenses insurance) rose to €1.9bn (1.7bn). This gratifying 10.8% growth is largely due to foreign business, which was given additional momentum by the acquisition of the Turkish Isviçre Group in 2006.

Compared with year-end 2006, the Munich Re Group's investments increased to around €179bn (177bn). The excellent investment result of €3.2bn includes gains of €514m on the real-estate sales initiated last year. Besides this, gains of €1.2bn were achieved through sales of shares. As a consequence, the percentage of investments in equities fell to 14.1% compared with 14.6% at the end of 2006. Owing to the rise in market interest rates, net unrealised gains on securities available for sale decreased to €8.5bn (9.3bn), but nevertheless remained at a high level.

MEAG MUNICH ERGO AssetManagement GmbH – the asset manager of Munich Re and the ERGO Insurance Group – had Group assets of €173.5bn (172.4bn) under management at 31 March 2007.

Together with its quarterly figures, the Munich Re Group has published European Embedded Value (EEV) figures for its business in life and health primary insurance and in life reinsurance for the financial year 2006.

The marked increase in the Munich Re Group's European Embedded Value to €10.1bn (EEV at 31.12.2005: €8.8bn) is largely due to the high value of new business and a good result from in-force business totalling €2.0bn.

Von Bomhard remains confident of achieving the Group's targets for the financial year 2007, despite the claims costs for Winter Storm Kyrill in the first quarter: "We are on track for the year as a whole." In 2007, the Munich Re Group is looking to record another combined ratio of below 97% in reinsurance. Owing to the claims expenditure for Kyrill, Munich Re anticipates a natural-hazards claims burden of 7% of net earned premiums for the year. In primary insurance, the combined-ratio target is under 95% again.

Given the strong euro, Munich Re envisages Group premium income for 2007 of between €36.5bn and €37.5bn, – with reinsurance providing approximately €21–21.5bn (before consolidation) and primary insurance around €17–17.5bn.

The Munich Re Group aims to achieve a return of at least 15% on risk-adjusted capital (RORAC) again in 2007. In the light of the first quarter, von Bomhard expects a profit of €3.0–3.2bn for the financial year 2007. "Up to now, our assumption has been a range of €2.8–3.2bn. I now firmly reckon with a 'three' before the decimal point, provided the capital markets and claims experience develop normally up to end of the year."

The quarterly report 1/2007 and the presentation for today's media telephone conference can be viewed in German and English at www.munichre.com.

Münchener Rückversicherungs-Gesellschaft
signed Dr. von Bomhard           signed Dr. Lawrence