Munich Re Group

Known in English as Munich Re, the Münchener Rückversicherung-Gesellschaft (Munich Reinsurance [Page 1176]Company) is the second-largest reinsurance company in the world. It has its headquarters in Munich, Germany, and currently has some 5,000 customers located in 160 countries.

The company was founded on April 19, 1880, by Carl Thieme, the businessman who was also responsible for the establishment of the Allianz insurance company. With the Cologne Re established in 1846 as the first reinsurance company in the world, and another started in Thuringia in 1853, under Carl's father Julius Thieme, Carl Thieme saw an opportunity to establish a business that comes from reinsurance—essentially an insurance company for insurance companies. This allows insurance companies to “spread the risk.” The main guiding principle of the company from its foundation was that it had to be totally independent of any risks taken by insurers. This has meant that it only deals with insurance companies, not with the general public. It also refused to be connected with any insurance company. In 1886 Munich Re established an office in Paris, and later, offices in St. Petersburg, Copenhagen, and Stockholm, and eventually London in 1890, opening a branch in the United States in 1899.

Initially many insurance companies did not see it as necessary to be involved in reinsurance; they felt that this would erode some of their profits. However the claims that followed the San Francisco earthquake in 1906 changed this. With massive losses in the earthquake, spread over many companies, only six of them—four U.S. and two English—actually paid their liabilities in full; when they were asked to pay their obligations, four German insurance companies stopped trading in the United States to avoid meeting their obligations, and the Hamburg-Bremen Fire Insurance Company discounted all payments by 25 percent.

Many of the German companies had not recognized the risks from such large exposures, and this led many of them to become involved in reinsurance, with Munich Re picking up much business (as well as having to pay out 11 million marks). It soon began insuring luggage on travels, and in 1910 wrote reinsurance for aviation.

In 1914 Munich Re had annual premiums of some 204 million marks, making it the world leader in reinsurance, with Allianz contributing about a tenth of all its premiums and some 40 percent of its profits. The war, however, badly affected business, with many non-German companies not able to deal with them during the war and not wanting to deal with them afterward. By the early 1920s, the premium for Munich Re had fallen to 65 million marks, with Allianz having managed to take over rivals and double its size. It was not until 1930 that Munich Re was, once again, the leading reinsurance business in the world, with Allianz providing upward of 40 percent of its premiums and a substantial amount of its profits. During World War II, much of the foreign business of the company was transacted by Union Zurich.

After World War II, Munich Re once again faced a slump in business but steadily built it up again, and is now the second largest reinsurance company in the world. This involved work on reinsurance of installations of the petroleum industry, which led to their booklet Oil at Sea: Hazards, Liability, Insurance (1980). The company has 43,000 employees (2008) working in more than 50 locations, and has gross revenue of €37.4 billion (2006). It covers reinsurance for 5,000 insurance companies in 150 countries. Nikolaus von Bomhard is the chairman of the board of management. Munich Re was the largest reinsurer for the World Trade Center in New York City when it was destroyed on September 11, 2001. For this, it set aside $500 million to help pay for the loss. In 2005 Gerhard Berz, who had worked for 30 years on geo risks with Munich Re, wrote Weather Catastrophes and Climate Change: Is There Still Hope for Us?, published by the Munich Re Group to much acclaim.

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