Munich Re announced last week that it would boost reserves for its American Re subsidiary by $1.6 billion to cover U.S. casualty and asbestos policies.
Chief Executive Officer Nikolaus von Bomhard said Munich Re will maintain its targeted return on equity of 12 percent. He said the Princeton, N.J.-based American Re will remain the core for its parent company.
The increase will cut second-quarter profits by $480 million, he noted. “The effects of the reserve strengthening on our group results are limited due to early provision made through group [incurred but not reported] reserves,” he said during an analysts' conference call.
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