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Munich Re Returns to Profit Zone for Q2

Posted on 04 Aug 2011

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Following very high claims costs for natural catastrophes in the first quarter of 2011, Munich Re returned to the profit zone in the second quarter with a result of €738m (same period last year: €709m). For the first half-year overall, however, Munich Re nevertheless posted a consolidated loss of €210m, compared with a profit of €1,194m in the same period last year. Munich Re still aims to achieve a profit for 2011 as a whole.

Nikolaus von Bomhard, Chairman of the Board of Management, commented as follows on the high claims burden from natural catastrophes in the first half-year: "It was an exceptional accumulation of major losses, but that is precisely what reinsurance is for. After all, a well-developed and functioning insurance and reinsurance system helps to overcome disasters of this scale." There were high losses from natural catastrophes in the second quarter as well, particularly from several series of tornadoes in the US.

Von Bomhard emphasised the advantages of Munich Re's integrated business model: "Primary insurance provides stable earnings and balances the burdens that occur in reinsurance due to high claims costs for natural catastrophes or major industrial risks."

ERGO came in for criticism in the first half-year, mainly because of an incentive event for intermediaries which had taken place in Budapest in 2007, and the handling of flawed application forms for Riester pensions. While regretting the events at ERGO, von Bomhard stressed: "The mistakes of the past demonstrate that the path now being taken by ERGO was – and still is – both necessary and correct. ERGO will show that customer focus, high-quality advice, transparency and candour are key to success."

With regard to the financial year 2011 as a whole, von Bomhard emphasised: "Despite the exceptionally heavy claims burdens, we aim to achieve a positive result for the year." He added that this still applied even if there were additional major losses in the further course of the year, provided these did not significantly exceed the average figure to be expected