Among asset managers, MEAG may well be the envy of its peers. It manages more than EUR 256 billion of assets, yet suffered no direct damage in the financial crisis. This is almost certainly due to the risk management culture at the firm and its heritage as part of Munich Re.
Only a small portion of the assets under its management are from Munich Re companies and, as Dr. Peter Schenk explains, insurance companies do things differently. “The assets of insurance companies have to behave differently than assets belonging to other types of investors. The assets must back the liabilities of the insurance company. What is more, life insurance company assets have to be structured completely differently than those of a composite insurer or firms that reinsure storm risks. The risk content and asset behavior mean that they have to match, or approximately match, this liability structure. Any deviation has to be deliberate. This means that when you manage assets for insurance companies, you have to talk about risk. The liabilities are risks. Insurance companies deal with risk. Munich Re’s mission statement is ‘We turn risk into value’. So that’s where we start from. We have to understand the investor’s risk concept.”