Munich Re, Allianz Complete Share Sales

January 21, 2002

Munich Re and Allianz AG have completed the sales of their respective investments in several subsidiary insurance and financial groups first announced last April.

Munich Re stated that, “it now holds 25.7% of the share capital and 26.3% of the voting rights in HypoVereinsbank AG and 91.7% of ERGO Versicherungsgruppe AG. In return, it has sold its shares in Allianz Lebensversicherungs-AG and Dresdner Bank AG to Allianz AG and has reduced its interest in Allianz AG to around 20%, as planned.”

As part of the transactions Munich Re also acquired a portion of the shares in N├╝rnberger Beteiligungs-AG previously held by Deutsche Bank, thus increasing its stake to nearly 20%, and has sold its interest of 12.2% in Generali Lloyd AG to the AMB Group.

This series of transactions is the largest so far in the gradual unwinding of the cross shareholdings in Germany, which were established during the years following the end of the Second World War, as part of the country’s reconstruction efforts. New taxation rules have allowed big companies, like Munich Re and Allianz, to divest themselves of the stakes they hold in many companies without paying 50 percent of any capital gains realized in taxes. The move has spurred many companies to divest themselves on underperforming investments, and allow them to concentrate greater efforts and more capital on their core businesses.

Later this year the two companies plan to complete another unwinding of cross share holdings, originally announced in May 2000. Munich Re will sell its stakes in Bayerische Versicherungsbank AG and Frankfurter Versicherungs-AG to Allianz AG and in return will increase its stake in Karlsruher Lebensversicherung AG to 90.1%.

The moves consolidate Munich Re’s position as Germany’s second largest primary insurer, right behind Allianz.

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