Thursday, December 29, 2005


Munich Re to Up Dividend Despite Losses
Published: December 29, 2005

Munich Re happily report it can still maintain its 12% Dividend:

It said the company's board plans to propose an increase in the dividend to 3.10 euros ($3.67) from 2.00 euros.
Munich Re shares were up 1.1 percent at $138.80 in early trading on the Frankfurt exchange

The Company released some other estimates:

Total insured losses to the industry from natural disasters this year exceeded $75 billion, almost doubling the previous record set last year, the company said.

It put total economic losses -- including uninsured property -- at more than $200 billion, up from $145 billion a year earlier.

Study of the data begs of several questions. 2005 held record losses for the Insurance industry, coming immediately after the worst losses ever before in 2004. Still, the largest Reinsurer in the World--with potentially the largest losses of any Insurer--can still pay a 12% dividend of three Euros per share. One has to ask what level of Capital assets Insurers hold against commitments, and what this does to Insurance premiums. The Insurance industry has had back-to-back worst losses on Record, and still can pay a 12% premium. Most Business and industry absorbs Production losses as the Cost of entrepreneurship. What level of premium would Insured have to pay, if Insurers keep sufficient Reserves to pay Claims with a zero Dividend on Shares, as most Business must do in the face of acute losses. lgl

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