Dr. Nikolaus von Bomhard, CEO of Munich Re, has issued a muscular statement, detailing the Group’s strengths in the face of the ongoing global financial turmoil. “We will emerge stronger from the crisis,” he stated.
In a bulletin on the Group’s web site (www.munichre.com), von Bomhard noted: “Munich Re remains stable and very well capitalized – despite the market turmoil. With the insolvency of Lehman and the quasi-nationalization of AIG, the financial crisis has recently assumed dramatic proportions. How serious are the consequences for Munich Re? Might the Group be endangered? Our answer is a clear ‘No’.”
The bulletin went on to assert that the Group “will emerge from the crisis stronger in relative terms,” due to its “risk expertise, risk management and financial strength.” All of which “have increased in significance as a result of recent developments.”
Munich Re said it believes that a “re-evaluation of risks will be reflected in greater demand for cover from financially strong insurers and reinsurers like us, and in a markedly higher overall price level for reinsurance protection.”
Von Bomhard noted that “major losses or crises like the present one are also a test for our business model. And we are passing this test. The correct assessment and active management of risks on the investment and insurance side are proving their worth. With this strength, the Munich Re Group will decisively utilize the opportunities arising from the upheavals in the financial industry.”
However, he also indicated that “as a leading player in primary insurance and reinsurance, we have not been left unscathed by the recent falls on the capital markets or major losses such as the recent hurricanes. But our financial strength remains intact; the substance of our Group is strong.”
Certain aspects of the financial crisis have actually produced “very attractive short-term chances for our business,” he continued. “The erosion of many primary insurers’ capital and the resulting risk assessment and increased demand for secure reinsurance are virtually overnight putting Munich Re back in a hard market with rising prices. Many opportunities are also presenting themselves in the primary insurance sector.”
He echoed the general consensus that the underlying cause of the “current crisis has to do with lack of risk management and inadequate evaluation and consideration of risks in operative business, along with strategic decisions geared too strongly to short-term results.
“The lesson for the financial services industry is that when evaluating returns, the risks entered into have to be scrupulously and honestly assessed and made transparent. The expertise and management philosophy necessary for this are core competencies of the Munich Re Group. That is why we have the right set-up in the current crisis; and we will be in a stronger position relative to other market players at the end of it.”
Source: Munich Re
Topics Reinsurance
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