(Bloomberg) -- Munich Re, the world’s second-biggestreinsurer, reported second-quarter profit that beat analysts’expectations as gains from currencies and investments cushionedhigher claims from natural disasters and restructuring charges atits Ergo primary-insurance unit.

Net income declined to 974 million euros ($1.08 billion) from1.1 billion euros a year earlier, the Munich-based company said ina statement on Tuesday. That compares with the 479 million-euroaverage of eight estimates compiled by Bloomberg. Munich Reconfirmed its full-year earnings target of 2.3 billion euros,having cut it in May.

“After a rather disappointing first quarter, our net result inthe second quarter was strong,” Chief Financial OfficerJoerg Schneider said in a statement. “To a large extent,this was driven by non-recurring effects that were — onbalance — positive.”

Gains from selling investments and currency effects followingthe U.K.’s Brexit vote in June helped offset higher claims in thequarter. Munich Re’s major claims bill more than doubled to 542million euros from 207 million euros a year ago. Losses includedwildfires in Canada and earthquakes in Japan. Still, industrylosses from such natural disasters were in line with the 10-yearaverage for the first six months of the year, according to MunichRe estimates.

Pricing pressure

As a result, demand for reinsurance which primary insurers buyto help them shoulder risks, is still subdued. Rates declined ineight of the past 10 years, according to the Guy Carpenter WorldProperty Catastrophe Rate-on-Line Index. “Pressure on prices, termsand conditions remained high in this renewal round,” Munich Resaid.

Munich Re’s earnings from investments rose 9.1 percent to 2.75billion euros in the quarter, helped by disposals of fixed-incomesecurities, the company said. The reinsurer also booked a currencygain of 342 million euros, mostly related to U.S. dollar andBritish pound positions, it said.

“Despite the significant headline beats, we believe that theunderlying performance of the business remains in line with ourexpectations,” Citigroup analysts Andrius Budnikas and James Oramwrote in a note to clients. Guidance for 2016 net income “may nowbe rather conservative,” they said.

Restructuring plan

Munich Re, led by Chief Executive Officer Nikolaus vonBomhard, said in June that its annual earnings would include a1 billion-euro restructuring plan for loss-making Ergo, Germany’s second-biggestprimary insurer. As part of the plan, the Dusseldorf-based unitwill cut about 13 percent of its workforce and modernize itscomputer systems. The revamp is expected to reduce the earnings byabout 300 million euros this year, Munich Re has said.

The reinsurer booked a net charge of 164 million euros forErgo’s restructuring in the quarter as the primary insurer reporteda net loss of 34 million euros after a profit of 215 million eurosa year ago.

The shares rose as much as 2.8 percent, and were 2.6 percenthigher at 156.55 euros at 9:35 a.m. in Frankfurt. Munich Re hasdropped 15 percent this year, valuing the company at about 25billion euros. The Bloomberg Europe 500 Insurance Index has lost 19percent during the same period.

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