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Reinsurer Munich Re Says 2009 Profit Up 62%

Source: AFP

Posted on 02 Feb 2010

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Reinsurer Munich Re reported Tuesday that net profit soared 62 percent last year, exceeding the group's own forecast owing to a sharp decline in natural disasters.

Munich Re posted a net profit of 2.56 billion euros (3.56 billion dollars), up from 1.58 billion euros in 2008, and said it would raise its dividend by 4.5 percent to 5.75 euros.

In November, it had estimated full-year profit at 2.2-2.5 billion euros.

"The reinsurance business profited from exceptionally low claims costs for natural catastrophes," a statement said.

Gross premiums written by the group -- the industry benchmark -- rose almost 10 percent to 41.4 billion euros, while the direct insurance activities suffered from the effects of the global financial crisis.

This year has begun as unusual with the renegotiation of re-insurance contracts, which Munich Re acknowledged were "more difficult than in the previous year" since competition has increased as insurance groups pull out of the crisis.

The volume of renewed business has fallen by 6.7 percent to around 7.4 billion euros because "Munich Re resolutely adhered to its profit-oriented underwriting policy and was prepared to forgo business if necessary," it said.

"In areas where there is currently little prospect of profitable results, such as sectors of the motor business in eastern Europe, China and Germany, but also in credit reinsurance and selected US liability segments, capacity was systematically reduced."a