Munich Re Group Annual Report 2006 (PDF, 1.8

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Notable events in 2006 / Letter to shareholders / Members of the Board of Management / Report of the Supervisory Board / Munich Re shares / Strategy Munich Re Group in 2006 Risk, in all its facets, remains our core business. Through active diversification and excellent management, we systematically transform it into value.
Dear Shareholders, The financial year 2006 was another excellent one for the Munich Re Group. We succeeded in posting a record result for the third year in a row: €3.5bn, after €2.7bn in the previous year and €1.9bn in 2004. Thus we markedly exceeded our original expectation of €2.6–2.8bn for 2006. The same applies to RORAC, our return on risk-adjusted capital, where we had set ourselves a target of 15%. What we actually achieved was 20.3%. On the basis of this result, we will propose to the Annual General Meeting that the dividend be increased by 45% to €4.50 (3.10), which would mean a payout of €988m (707m) to shareholders. Together with the successfully concluded share buy-back of €1bn, we are consequently giving the capital markets nearly €2bn, or 58% of the consolidated profit for the year, by the end of April. The result for the past financial year, with our outstanding component results in both primary insurance and reinsurance, vindicates our strategy. The profit increase at ERGO from €786m to €906m is a notable achievement. The excellent combined ratio of 90.7% (92.3%) in property-casualty insurance underscores once again the high quality of ERGO’s business. The reinsurance result – with a profit of €2.7bn (1.4bn) and a combined ratio of 92.6% (111.7%) – was also very positive. Admittedly, we were largely spared major natural catastrophes in 2006, unlike in 2005 with its severe hurricanes. But it is still apparent that we are reaping the rewards of our very selective and risk-commensurate underwriting, where we consistently give priority to profitability over growth in volume. We therefore have every cause to be satisfied with the development of the last few years, and especially with the result of the past financial year. The path we have taken is proving to be the correct one. This applies particularly to our business model of conducting primary insurance as well as reinsurance in our Group: our success should convince even those who take a sceptical view of this strategy. For me, what is now important is to sustain this profit level whilst ensuring that our business grows more strongly again, without lowering our standards with regard to quality and earnings. Munich Re Group in 2006_Letter to shareholders Dr. Nikolaus von Bomhard Chairman of Munich Re’s Board of Management 29
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Page 3 and 4: The Munich Re Group Our operations
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Quarterly figures Balance sheet 31.
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© 2007 Münchener Rückversicherun
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Munich Re Group Annual Report 2006 (PDF, 1.8

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