Munich Re Outlines U.S. Growth Strategy

Munich Re said it is moving along with a new long-term profitable growth strategy to increase direct and broker reinsurance and primary insurance in the U.S. property-casualty market.

A new Munich Re America management team will be in place Jan. 1, 2008 to further implement the plan, the company said during an online press conference which took place in conjunction with the Council of Insurance Agents & Brokers meeting at the Greenbriar in West Virginia yesterday.

Torsten Jeworrek, head of the Munich Re Group's worldwide reinsurance operations, said the Hurricane Katrina U.S. damage in 2005, at this point in time, is the biggest loss for Munich Re and "underlines that Munich Re as a group is fully committed to provide substantial and very high capacity for this important market."

Munich Re affirmed that with more than $50 billion in reinsurance premiums and nearly $500 billion in insurance premiums, the U.S. non-life reinsurance market is a core market and one of the largest and most competitive in the world.

Mr. Jeworrek said that a program begun in March called the "Changing Gear Program" was initiated to improve earnings per share for the long-term profitability of shareholders for insurance and reinsurance.

Part of the initiative, the Capital Efficiency program, he said, is Munich Re's counterpart for cycle management. The program is already underway, he said, noting that the company is committed to a capital return of at least 8 billion euros ($11.3 billion) by the end of 2010.

Mr. Jeworrek said the goals of the Changing Gear initiative include achieving the full potential of the U.S. p-c market; sustainable, profitable growth over the course of the market cycle; and increased profitability from direct and broker reinsurance and primary insurance.

With its new structure, Munich Re Group said it will increase profitability from direct and broker reinsurance as well as primary insurance by:

o Employing a client-centric approach to develop client strategies and reinsurance solutions that leverage the Munich Re Group's expertise and risk appetite.

o Developing closer broker relationships to support clients' needs.

o Building a dominant presence in niche primary insurance segments.

In implementing the client-centric reinsurance strategy, the Munich Re Group said it will align its U.S. business model along client lines.

Each U.S. property-casualty reinsurance client will have a single Munich Re group client manager to ensure a consistent groupwide approach across business units and channels (direct and broker).

The client manager will serve a client's needs throughout the reinsurance life cycle, including reinsurance placement structuring, underwriting, actuarial, claims and other services for that client, the company said, adding that each reinsurance brokerage firm will be assigned a dedicated broker manager who will focus on fostering greater respective organizational alignment and on mutual growth opportunities.

Peter Roeder, the company's newly appointed board member, said in a statement that regarding global clients in the U.S. and Canada non-life reinsurance operations, "our coordinated approach will significantly improve efficiencies in serving our clients and brokers, and will emphasize the alignment of Munich Re America with the group's underwriting standards and methodologies."

He said this will mean "providing consistent risk appetite, pricing, combined capabilities and above all the whole group capacity to all Munich Re Group clients regardless of distribution channel."

Changes to structure and the management team are to begin Jan. 1, 2008, the company said.

Currently, Munich Re America is structured by distribution and product type, such as treaty and facultative. Starting next year, Munich Re America said it will have a new structure and management team aligned by client type.

Among other changes:

o A new National Clients division led by Pina Albo will have account management responsibility for all Munich Re Group U.S. national property-casualty clients placing business both directly and through reinsurance brokers.

o A new Regional Clients division led by Dominic Addesso will have responsibility for all Munich Re Group U.S. regional property-casualty clients who prefer to do business on a direct basis.

o The Broker Market division headed by Gregory Coda will continue to have responsibility for all Munich Re Group U.S. regional property-casualty business written through reinsurance brokers, as well as managing overall strategic relationships with brokers.

o Munich Re America's Specialty Markets division led by Craig Smiddy will continue to have responsibility for all U.S. alternative market and primary property-casualty insurance business. The company Specialty Markets will aim to build a dominant presence in U.S. niche primary insurance segments by using a repeatable model for successfully evaluating, entering and competing in each specialty insurance area.