Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006
Price rally in the second half of the year
Our excellent business performance and share buy-back
programme led to further price gains for Munich Re shareholders.
Overall, our shares climbed in value by 14% in
2006.
The major international stock markets developed favourably
in 2006, especially in the second half of the year. Back
in May, there had been substantial setbacks triggered by
high energy and commodity prices and fear of interest-rate
hikes. Nevertheless, most indices finished the year with a
pronounced rally due mainly to strong company profits,
ebbing worries about inflation, and the high degree of
Share price performance
1 January 2006 = 100, Source: Datastream
130
120
110
100
90
80
38
Munich Re shares
DAX 30
Morgan-Stanley insurance index (MSCI) in €
Munich Re Group in 2006_Munich Re shares
liquidity in the markets. Closing 2006 at 6,597 points, the
DAX was up 22% for the year. The most important German
stock market barometer thus rose considerably more than
the EURO STOXX 50. After a weak 2005, the US stock
exchanges also achieved marked gains.
Insurance stocks advanced as well in 2006, the MSCI
insurance index (in euros) increasing by 4.5% in the course
of the year.
J F M A M J J A S O N D
With a gain of 14% and a year-end price of €130.42, Munich
Re shares performed better than the MSCI insurance index,
but not as well as the DAX. They started 2006 at just under
€115. During the first half of the year, our share price fell
and reached its year low of €97.15 in mid-June. Thereafter
it rose strongly, with investors rewarding the excellent
performance of our business and the prospect of another
record result coupled with a higher dividend. The growth
in our share price was supported by our share buy-back
programme and a rating upgrade from Standard & Poor’s
towards the end of the year.
As with the insurance sector in general, a likely reason
for the weaker performance of our shares compared with
the DAX in 2006 is the assumption by some investors that –
after the lower claims burdens in 2006 – the scope for
further premium increases is small. However, Munich Re
will continue to adhere closely to its “profit before growth”
strategy, which should benefit our shareholders.
Analysts see potential for further price gains
More than 40 analysts regularly evaluate Munich Re shares.
At the end of the financial year 2006, around half of them
rated our shares positively, in some cases seeing substantial
scope for further price gains. Only 9% of analysts gave
the shares a negative assessment.