Quarterly Report 3/2008 (PDF, 308 KB) - Munich Re

Interim management report Key parameters
exacerbation of the financial market crisis. By the end of the quarter, major
share price indices such as the EURO STOXX 50 had fallen by more than 9%
since the beginning of the quarter and by just under 31% since the start of the
year. The rapid decline in share prices steepened still further in October, with
key stock indices posting further double-digit price losses up to 30 October.
For the rest of the year and for 2009, we expect a further considerable slowing
down of global economic growth for the time being as a result of the financial
crisis. This increases the risk of a recession in the USA and Europe. A revival
of economic stimuli does not appear possible here until the middle of 2009.
However, the continuing financial market crisis entails particularly great
imponderables for the economic outlook. Besides this, the global economy
faces further risks in the form of the volatile oil price, the still comparatively
high rate of inflation, and geopolitical tensions.
The insurance and reinsurance markets were also affected by the financial
market crisis to an increased extent in the quarter under review. Particularly
the quasi-nationalisation of the American International Group in the USA,
one of the world’s leading insurers, and the difficulties encountered by Fortis
in Europe had a major impact on the market environment.
If the anticipated economic slowdown occurs, this would also have consequences
for the demand for risk protection in insurance and reinsurance.
In the current environment, the fact that the capitalisation of many primary
insurers is being impaired by the financial market crisis could boost demand
for reinsurance with high security. The subsequent increased importance of
security and stability, particularly in reinsurance relations, will bring about a
trend reversal in which prices will rise again.
Munich Re Group Quarterly Report 3/2008
5