(Bloomberg) -- Munich Re, the world’s biggestreinsurer, reported a bigger-than-expected drop infourth-quarter earnings as claims from natural disasters rose whileprices continue to fall.

Net income declined to about 500 million euros ($530 million)from about 700 million euros a year earlier, according to astatement Tuesday. That missed the 630 million-euro estimate ofnine analysts surveyed by Bloomberg. The company proposed adividend of 8.60 euros a share for 2016, after paying out 8.25euros for the prior year.

Reinsurers, which help primary insurers shoulder risks, arereturning cash to shareholders as years of low claims from naturalcatastrophes reduce demand for coverage. Renewed premium volumedeclined by 4.9 percent and prices fell by about 0.5 percent inJanuary, when Munich Re renews about half of its non-lifereinsurance business. That’s even after Hurricane Matthew, which battered the U.S. EastCoast in October after devastating parts of the Caribbean, pushedup claims during the fourth quarter.

“Market conditions for the renewals were once again challenging,even though the trend towards price reductions had continued toslow,” Torsten Jeworrek, who heads the property and casualtyreinsurance unit, said in the statement. “We withdrew from businessthat no longer met profit expectations — for instance, inChina — and built up or expanded profitable business, eitherthrough new acquisitions or by strengthening existing clientrelationship.”

Munich Re paid 232 million euros for Hurricane Matthew and 251million euros for an earthquake in New Zealand in the fourthquarter. As a a result, the combined ratio at the property andcasualty reinsurance unit, its most important in terms of earnings,worsened to 101.9 percent in the quarter from 78.6 percent a yearago. The ratio measures premium income against claims andcosts.

Net income at the reinsurance unit decreased to about 400million euros in the fourth quarter from 1.4 billion euros a yearearlier.

Munich Re fell 2.2 percent at 9:41 a.m. in Frankfurt trading,bringing losses this year to 4.3 percent. Hannover Re, thethird-biggest reinsurer, rose 0.7 percent after reporting higherfull-year profit.

Ergo restructuring

Hannover Re’s full-year net income rose to 1.17 billion euros from1.15 billion euros in 2015, helped by “a further improvement in theunderwriting result in property and casualty reinsurance,” theHanover, Germany-based company said Tuesday. It didn’t givefourth-quarter earnings.

Munich Re’s full-year profit declined about 16 percent to 2.6billion euros, missing the 2.7 billion-euro estimate of 20 analystssurveyed by Bloomberg. Munich Re said in November that full-year2016 earnings may “substantially” exceed a reduced target of 2.3billion euros.

The company, which plans to report more detailed results onMarch 15, said in June that full-year earnings would include a 1billion-euro restructuring plan for its Ergo primary insuranceunit. As part of the plan, the Dusseldorf-based business will cutabout 13 percent of its workforce and modernize its computersystems to boost profitability.

Ergo reported a full-year loss of about 40 million euros, aftera shortfall of 200 million euros a year earlier. The unit, led bymanagement board member Markus Riess, “is making good progress” onits restructuring and staff reductions, the company said.

“From now on I’m confident that we will see positive figures,”Munich Re Chief Financial Officer Joerg Schneider said in aninterview with Bloomberg TV, adding that the company paid about 250million euros for the unit’s revamp last year.

Munich Re Chief Executive Officer Nikolaus von Bomhard willhand over the CEO post to management board memberJoachim Wenning in April.

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