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Profile: Munich Re
Munich Re was a participant or observer in the following events:
It will later be speculated that, around this time, people with foreknowledge of the 9/11 attacks short sell reinsurance company stocks that are insuring either or both the airplanes and the buildings involved in the attacks. Munich Re, the largest European reinsurance company, loses 22 percent of its value in the two month before 9/11, with about half of that taking place in the week before the attacks. German authorities will later alert the Securities and Exchange Commission of “suspect movements” with Munich Re. [Agence France-Presse, 9/17/2001] Suspicious inquiries into the short selling of millions of company shares are made in France days before the attacks. [Reuters, 9/20/2001; San Francisco Chronicle, 9/22/2001] Munich Re stock will plummet after the attacks, as they claim the attacks will cost them $2 billion. [Dow Jones Business News, 9/20/2001] There is also suspicious trading activity involving reinsurers Swiss Reinsurance and AXA. These trades are especially curious because the insurance sector “is one of the brightest spots in a very difficult market” at this time. [Los Angeles Times, 9/19/2001] A source within AXA will later say, “There are indications that the shorting has been going on for some time. People inside the company could not understand why” there had been so much shorting of the stock in recent weeks. “This could give some explanation why the stocks were going down so much when there seemed to be no apparent reason.” AXA shares drop almost 10 percent in the week before 9/11, and will plummet afterwards. The attacks will cost the company up to $400 million because of its coverage of both airplanes and buildings. [Los Angeles Times, 9/18/2001]
Recently bailed-out insurer AIG agrees to sell one of its insurance subsidiaries, Hartford Steam Boiler, for $742 million. However, this is about a third less than it paid for the unit eight years ago. [Bloomberg, 3/5/2009] The unit is purchased by the German reinsurer Munich Re, which wants to expand its US business. [Reuters, 4/17/2009] This sale is part of a program to sell business units in order to repay AIG’s bailout loans to the government (see September 18, 2008).
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