NU Online News Service, March 10, 1:44 p.m. EST

Munich Re Combined Ratio 2009-2010 Munich Re said its 2010 net income dropped 5 percent as it took a hit from natural catastrophe losses that were higher than average.

The Munich, Germany-based insurance company reported profit of €2.4 billion (U.S. $3.4 billion at the current exchange rate), a drop of €134 million ($185) on the year.

Gross premiums written increased 10 percent, or €4 billion ($6 billion), to €45.5 ($63 billion) for the year.

The results were helped by a close to 10 percent increase in its investment results, rising €759 million ($1.05 billion) to €8.6 billion ($11.9 billion).

“It was not an easy year given the high burdens from major losses, but we were nevertheless able to bring it to a successful close,” said Nikolaus von Bomhard, chairman of the board. “With a profit of €2.43 billion, we even slightly surpassed the target we had set ourselves.”

Munich Re's reinsurance segment reported a drop in profit of close to 19 percent, or €477 million ($660 million), to €2.1 billion ($2.9 billion). Gross premium written rose 8 percent, or €1.8 billion ($2.5 billion), to €24 billion ($33 billion). The combined ratio rose 5.2 points to 100.5.

Property and casualty insurance profit rose 79 percent, or €289 million ($399 million), to €656 million ($907 million). Gross written premiums increased more than 5 percent, or €885 million ($1.2 billion), to €17 billion ($24 billion). The combined ratio rose 3.6 points to 96.8.

The company said it estimates claims from the earthquake in New Zealand; floods in Brisbane, Australia; and Cyclone Yasi that hit that region will total around $1.5 billion. The New Zealand earthquake alone will account for $1 billion, the company said. Claims losses from the floods and cyclone will amount to around $485 million.

Discussing the rise in the combined ratio for its property and casualty insurance segment, Munich Re said market problems in Turkey, Poland and South Korea “along with natural hazard events such as the long, harsh winter and flood losses were responsible” for the increase.

The overall figure for the year contains 11 percentage points for natural catastrophe, which the company called “a major loss burden” citing that the number is well above the average of 6.5 percent.

The company noted that its largest 2010 loss event was the earthquake in Chile coming in at close to $1 billion after retrocession and before tax.

On a positive note, Munich Re said reinsurance treaty renewals were “very satisfactory” at the beginning of the year and there was the “potential for profitable growth” as clients seek to transfer more risk through insurance with strong companies.

Gauging the future, the carrier said it believes gross premium for 2011 will range between €24 billion and €25 billion ($33 billion and $35 billion). P&C segment gross premiums are expected to range between €17 billion and €18 billion ($24 billion and $25 billion). Total premium income from the p&c segment should range between €19 billion and €20 billion ($26 billion and $28 billion). The company's consolidated profit should come in around €2.4 billion ($3.3 billion.).

Special Reports /

Munich Re Profit Drops 5% On Natural Catastrophes

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