Munich Re declares €350m exposure to Lehman

by David Masters

Story link: Munich Re declares €350m exposure to Lehman

Munich Re, one of the largest reinsurers in the world, has announced that its exposure to the collapsed Lehman Brothers bank totals €350 million.

Lehman filed for bankruptcy on Monday, prompting its insurer AIG to request assistance from the U.S. Federal Reserve and the state of New York.

A spokesperson for Munich Re confirmed that its exposure to the failed bank is €350 million, and added that it includes derivatives used for hedging risk.

She said the company could not comment any further on the nature or the structure of its exposure.

Munich Re has also confirmed that its exposure to Lehman’s primary insurer American International Group’s (AIG’s) ‘isn’t significant’, although the exact level of exposure was not revealed.

The company added that these developments will not affect its share buyback strategy.

Germany’s other international reinsurer, Hannover Re, has declared its exposure to Lehman at just €23 million, made up of €20 million in senior bonds and €3 million in equities.

Four cat bonds have been placed on credit watch negative by Standard and Poor because Lehman was their swaps counter party.

The four include Newton Re, Willow Re and Ajax Re.

Over the next week, many more reinsurers are expected to declare their exposure to Lehman’s collapse.