NU Online News Service, Aug. 4, 2:33 p.m. EDT
Munich Re Group reported second-quarter net income increased 12 percent over the same period last year on improvements in investments and cost cutting.
Second-quarter net income rose by EUR75 million (U.S. $108 million) to EUR703 million ($1.01 billion) over the prior year. Gross premium written increased 15 percent, or EUR1.31 billion ($1.89 billion), to EUR10.3 billion ($14.85 billion).
"We were able to benefit further from our capital strength and exploit our scope for profitable growth," said Mikolaus von Bomhard, chairman of the board for the Munich, Germany-based insurer, in a statement. "We regard the effects of the economic crisis as limited in extent for Munich Re Group."
For its insurance operating segments, reinsurance combined ratio deteriorated by 2.9 points to 98.1. Primary insurance dropped 0.3 points to 93.1.
For the first half of the year, Munich Re reported net income fell 20 percent compared to last year, or EUR282 million ($406 million), to EUR1.12 billion ($1.61 billion). Gross premiums written rose 10 percent, or EUR1.84 billion ($2.65 billion), to EUR20.69 billion ($29.8 billion).
Reinsurance combined ratio for the first six months of the year improved with a 1.8-point decrease to 97.7, but primary insurance rose 4 points to 94.7.
Munich Re noted that return on investment for the first half of the year came in at 4 percent and its annualized return on risk-adjusted capital amounted to 13 percent.
"Despite the economic adversities, we continue to post good technical results," said Torsten Oletzky, chief executive officer of ERGO, Munich Re's primary insurance division. "It helps that we did our homework in good time–for example, on the cost side. Our falling costs curb the effect of slightly higher loss ratios."
He noted that while growth is pleasing in most of its business segments, "the downward trend in motor insurance continues–if you want to make a profit here, you currently have to forgo premium."
The company said natural catastrophe losses "remained manageable," but man-made loss events rose in the first six months to EUR453 million ($653 million) from EUR352 million ($507 million) in the prior year. A substantial amount of those claims–EUR217 million ($313 million)–came from claims in credit and surety reinsurance businesses, the company said.
This was also the first report that included the earnings from Munich Re's acquisition of the Hartford Steam Boiler Group.
Munich Re said renewals in property and casualty reinsurance showed price increases totaling more than 7 percent at April 1 and more than 4 percent at July 1.
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