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15 April 2004
MUNICH – Reinsurance company Munich Re, rebounding from last year’s losses, will not be a player in any consolidation in the German banking sector but does see reducing its stake in insurance concern Allianz, new company boss Nikolaus von Bomhard said Thursday.
At a press conference discussing the 2003 figures and the outlook this year at the world’s largest reinsurer, Bomhard said Munich Re despite its holdings in both HypoVereinsbank and Commerzbank would not be an active participant in any reshaping of the bank landscape.
“We do not regard ourselves as a kingmaker in the banking landscape,” he said.
Under HVB’s most recent capitalisation increase, Munich Re did not participate, so that the reinsurer’s stake was reduced to 18.4 percent from 25.7 percent.
But Bomhard did foresee a further disengagement from fellow Munich-based insurance group Allianz, in which Munich Re currently holds a 12.2 percent stake.
“The Allianz stake is no longer a strategic holding. It can be reduced at any time,” he said.
Bomhard said Munich Re is sticking with its previous target of posting EUR two billion profits this year amid its drive to boost profitability.
He said that every division at Munich Re was operating at a profit, adding to the company’s confidence of meeting its earnings forecast.
In 2003, Munich Re posted a consolidated loss of EUR 434 million, its first red-ink year since 1949-50.
The company said last year’s losses were the result of high portfolio write-downs, losses at the insurance unit Ergo, goodwill costs at HVB, and high tax charges of EUR 1.8 billion. In 2002 the company had achieved a profit of EUR 1.1 billion.
The 2003 losses came on gross premium income of EUR 40.4 billion , up slightly from EUR 40 billion the year before.
Bomhard said that the company was boosting profitability, with work going on in the three areas of reinsurance, improving the performance of insurance subsidiary Ergo and doing better in the area of risk management.
“We are rolling up our sleeves,” Bomhard said. Among others, cost reduction efforts at Ergo will produce annual savings of EUR 300 million starting in the year 2005, he predicted.
On the Frankfurt Stock Exchange, investors gave mild approval to the Munich Re chairman’s comments, with company shares at mid- afternoon up by 0.9 percent to EUR 94.21. Allianz shares were running virtually unchanged at EUR 92.62.
DPA