Munich Re Ratings Unaffected by Dividend, Share Buyback, Says S&P

May 7, 2007

Standard & Poor’s Ratings Services said Munich Re’s plans to return more than €8 billion ($10.88 billion) to shareholders through a combination of dividends and share buybacks “has no immediate impact on the ratings and outlook on Munich Re.” S&P currently rates the German reinsurer “AA-” with a stable outlook.

S&P said it based its statement “on the expectation that the group will maintain very strong capitalization as measured by Standard & Poor’s and will show continued strong, positive earnings momentum while maintaining a conservative risk profile.”

The rating agency did indicate that it would “closely monitor the group’s implementation of its ‘Changing Gear’ initiative and its potential impact on its financial strength. The program is expected to promote a consistent performance-oriented culture across the organization and–if successfully implemented–should significantly enhance its prospects for profitable growth.

“The stable outlook on Munich Re and its rated core subsidiaries reflects Standard & Poor’s expectation that Munich Re will continue to generate strong earnings through the cycle, and maintain a very strong competitive position and capitalization,” the bulletin concluded.

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