Business as Unusual

The Story of Munich Re in Africa

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F O R E W O R D

Foreword When Munich Re took the decision in 1968 to

From the arrival of Ernst Kahle as deputy

expand into Africa, the venerable German com-

general manager in 1972 to his retirement

pany chose South Africa as its base. The choice

after nearly two decades as general manager,

came with some major challenges.

Munich Re South Africa (MRSA) was deeply

There were already reinsurance companies

involved in the struggle to turn the apartheid

operating in South Africa. Gaining a foothold

state into a country where all races were

in that market would not be easy. Nor would it

treated equally and all had the same opportuni-

be easy doing business in a land in the grip of

ties to rise. His successors have continued to

apartheid, for South Africa then was very differ-

build on his legacy.

ent from the country one finds today.

Apartheid was at its height. The separation

Consequently, in a charging post-apartheid South Africa, Munich Re leads its peers in

of the races ranged from drinking fountains

transformation, as can be seen in its staff pro-

designated “white” and “non-white” to universi-

file. A representative board with a black chair-

ties set aside for different race groups. The bet-

person, two women, and five black, seven local

ter neighbourhoods and medium-to-high-level

and two international directors. Similarly our

jobs were reserved for whites. Black participa-

management team, led by a black CEO with a

tion in business was also severely restricted to

staff composition of 63% black, 28% white and

designated areas, goods and services.

9% foreign national, is indicative of a diverse

Liberation movements that were challeng-

and global organisation. Focus throughout the

ing this situation had been banned. Detention

organisation is on training and development.

without trial was written into law. Opponents of

During this period the business has registered

apartheid were imprisoned, banned and exiled.

record growth and expansion.

In the same year, 1968, the National African

Today Munich Reinsurance Company of

Federated Chamber of Commerce (NAFCOC)

Africa Limited is easily the major reinsurer on

was formed by Sam Motsoenyane to campaign

the continent. Munich Re is firmly planted in

for reforms that would allow greater participa-

projects from the top of Africa to its southern

tion by blacks in the economy.

tip and expanding its influence across the con-

The leaders of any multinational intending

tinent. With its focus on infrastructure, financial

to operate in South Africa had to face these

solutions and life products, it is well positioned

realities in their quest to run a normal company

to own the future.

in an abnormal society. And they needed to ponder a crucial question: What was the busi-

Sipho M Pityana

ness of business? Was it simply to build a suc-

Chairman of the Board

cessful company? Or was it to build a nation?

Munich Reinsurance Company

For Munich Re in South Africa, it was both.

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of Africa Limited – March 2013

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Soweto houses 1975

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S O W E T O ,

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1 Soweto, June 16

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{

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Apartheid signs

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C H A P T E R

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S O W E T O ,

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Chapter 1:

Soweto, June 16

On the chilly morning of June 16, 1976, hun-

that criss-crossed the skies above the

dreds of Soweto high school students set

township.

out for a rally at Orlando Stadium to protest against the introduction of Afrikaans as a medium of instruction. As they made their way

As night fell, scores of young people lay dead.

The violence continued for several days

through the dusty township streets, young

in Soweto and in Alexandra township, north

people came from all directions to join them. It

of Johannesburg. It spread to other cities

was a remarkable sight: the marchers swelled

across the country before damping down some

to a crowd of 15 000, most of them in school

months later. The toll was heavy: close to 600

uniforms.

people had been killed in clashes between

The students never reached their destina-

unarmed students and police, or caught in the

tion. Police formed a wall to block their prog-

crossfire, or killed by being in the wrong place

ress, and fired teargas. Students retaliated with

at the wrong time.

stones. Then policemen fired live ammunition

By the end of the year, the country seemed

into the crowd – and the peaceful streets of

quiet. Students were back in school. Police had

Soweto were turned into a war zone.

returned to their normal duties. The govern-

It was a day of pitched battles. The students rampaged throughout the township, destroying apartheid symbols – administrative

ment banned a range of people, from academics and clerics to labour leaders.

There was a lot of activity under the

offices and, especially, the municipal beer halls,

surface. Quietly, in townships and tertiary

where their fathers spent the money that paid

institutions across the country, activists were

the salaries of the government officials who

organising. Meanwhile, many of the students

administered the hated apartheid system. They

who had participated in the uprising fled into

set fire to cars and looted shops.

exile; some were sent for military training in

Police brought in anti-riot vehicles and

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eastern Europe.

dropped tear-gas canisters from helicopters

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Protesting students

It would take nearly two decades before apartheid was destroyed. But June 16 was the beginning of the end.

Munich Re had been in business in South Africa for nearly eight years by then – and it would not be long before Munich Re of South Africa would become involved in the struggle for democracy.

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T H E

B E G I N N I N G

2 The beginning

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C H A P T E R

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T H E

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Chapter 2:

The Beginning A century earlier, Carl von Thieme, the Bavarian

Pemsel, banker Philipp Schmidt-Polex and

representative of German insurance company

banker and politician Friedrich von Schauss.

Thuringia, was working out the details of a new way of doing business.

Reinsurance was a gamble – and a very

In 1880, the Münchener RückversicherungsGesellschaft was founded – modestly, in a tworoom office with a staff complement of four.

risky one. German reinsurance companies were

More than a century later, the staff would have

tied to primary insurers. When the primary

grown to 47 000, in branches and subsidiaries

companies sank – and they did, with disturbing

around the world.

regularity – the reinsurers headed for the rocks.

Munich Re’s first client was, not surprisingly,

By the end of the 1870s, two-thirds of Germa-

Thuringia, but it was not the only one. The firm

ny’s reinsurance business went to foreign firms.

soon found customers abroad, starting with a

Von Thieme had a better idea. Why not

Danish firm, and, by 1886, they had opened a

establish an independent reinsurance com-

Paris office to deal with clients in Belgium and

pany? And, further, why not spread the risk

Spain. Offices were opened in St Petersburg,

across a range of areas and markets? When

specialising in marine reinsurance, in Copenha-

one market or region sailed into difficulties –

gen and Stockholm.

due, perhaps, to an earthquake or a shipping

Meanwhile, in 1889, Von Thieme and Von

disaster – the resources of another could be

Finck founded their own primary insurance com-

brought in to keep it afloat.

pany, Allianz Versicherungs-Aktiengesellschaft,

He convinced a number of investors to

initially specialising in third-party and personal

join him in his new venture. Most important,

accident insurance before its focus shifted to

initially, was Theodor von Cramer-Klett, the

property.

founder of one bank and co-founder of another,

Munich Re grew by leaps and bounds – a

as well as a manufacturer – his engineering

London office was opened, then one in the

works produced everything from steam engines

United States. Its interests spread to “machinery

and bridges to guns. Banker Wilhelm von Finck,

insurance” – the beginning of an engineering

in business with Von Cramer-Klett, put money

division.

into the new firm, and so did lawyer Hermann

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Then came the 1906 San Francisco earth-

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quake. It measured 7.8 on the Richter scale, killed more than 3 000 people, destroyed buildings and infrastructure over 100 hectares

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But by 1937 the company was back to its pre-war level. And then came World War II. In a prescient move, Munich Re had

and dealt a heavy blow to Munich Re. It was

established the Union Reinsurance Com-

the company’s most costly natural catastro-

pany in Zurich and the Swiss office was able

phe – but afterwards, Munich Re was known as

to maintain the firm’s international business

the only reinsurer that remained solvent after

during the war. However, when the war ended,

paying out the claims. “Thieme is money...” was

the Allied forces prohibited German reinsurers

reputed to be the buzz word among claimants,

from operating outside the country. Munich Re

referring to the Munich Re founder, in recog-

lost its assets in countries involved in the war,

nition of the company’s outstanding claims-

in neutral countries, and in what became East

paying reputation.

Germany. At the same time, currency reform

The company’s growth was often beset with difficulties not of its own making.

Munich Re had moved on to travel, motor

cost the company dearly, and fires and heavy storms wiped out a large portion of its profit.

But in 1950, when the prohibition against

and aviation risks and begun doing business in

international business was lifted, Munich Re

Japan when World War I broke out, affecting

began to grow again.

much of its foreign business, with customers

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In 1959, a subsidiary for life reinsurance

not allowed to trade with a German company.

was founded in the United States, and a year

The end of the war did not bring a restoration

later a subsidiary was opened in Canada. An

of its previous status: the Treaty of Versailles

office was opened in Hong Kong in 1963 and a

closed off Russia, France, Britain and the

liaison office was founded in Japan in 1967.

United States to German companies, including

In 1968, Munich Re moved into Africa.

Munich Re.

Original Munich Re Logo in use up until 2009

Current logo since 2010

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