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Munich Re to Buy Back Up to EU1 Billion of Stock

Posted on 01 Oct 2009

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Munich Re, the world's biggest reinsurer, will repurchase as much as 1 billion euros ($1.46 billion) of stock as it resumes a share-buyback program following the global financial crisis.

The Munich-based company will buy back about 9.2 million shares, or 4.7 percent of its share capital, between Oct. 10 and the annual general meeting on April 28, it said in a statement today. The shares will then be canceled.

Chief Executive Officer Nikolaus von Bomhard said last month the company may resume buying its own shares because it considers capital to be higher than necessary and doesn’t expect more risks related to the financial crisis. The company had a 14 percent increase in second-quarter profit on higher investment income and the sale of a stake in Admiral Group Plc.

“We see the buyback positively and Munich Re has a lot of excess capital,” said Thilo Gorlt, a Frankfurt-based analyst at BHF-Bank who recommends buying the stock. “Munich Re is profiting from fewer natural disasters including U.S. hurricanes and business is going well in most segments.”

Munich Re gained as much as 3.5 percent to 112.80 euros in Frankfurt trading, valuing the company at 22 billion euros.

The reinsurer earlier this year suspended a program to buy back about 2 billion euros of stock to preserve capital and allow for potential takeovers. The company has repurchased about 4 billion euros of shares since November 2006, it said today.