NU Online News Service, Oct. 1, 3:24 p.m. EDT
Munich Reinsurance Company said today it will resume its share buy-back program from Oct. 1 extending until its annual meeting on April 28, 2010 at the latest.
Munich Re said it intends to buy back shares for a total purchase price of up to EUR1 billion ($1.46 billion). On the basis of the current share price, this would amount to around 9.2 million shares, or 4.7 percent of the share capital. The repurchased shares are to be retired.
Nikolaus von Bomhard, chairman of Munich Re's board of management, said: "We are keeping our word and are resuming our share buy-back program after a seven-month break. In our view, the economic environment has now stabilized sufficiently. We are consequently returning unneeded capital to our shareholders."
Mr. von Bomhard stressed: "Our capitalization is such that it enables us to continue taking selective advantage of opportunities for profitable growth despite the share buy-back. And we are still well equipped even if there should be a setback in the economic recovery."
The resumption of the share buy-back program was proof of Munich Re's flexibility, he added.
Since November 2006, Munich Re said it has carried out share buy-backs with a total volume of EUR4 billion ($5.85 billion), including EUR1 billion in 2006-2007.
As part of its Changing Gear program in May 2007, it announced share buy-backs of more than EUR5 billion ($7.32 billion). Of this amount, share buy-backs totaling EUR3 billion ($4.39 billion) have already been completed: EUR2 billion ($2.92 billion) in 2007-2008 and EUR1 billion ($1.46 billion) in 2008-2009.
In May 2007, Munich Re announced it was issuing a subordinated bond, a perpetual bond callable by Munich Re from 10 years after the date of issue.
Up to then, Munich Re said it would have a fixed coupon rate and thereafter a floating rate. Munich Re said that under certain conditions, which it would fulfill with the issue, subordinated bonds are treated by supervisory authorities and rating agencies as equity.
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