Munich Re Net Profits Up 11%

NU Online News Service, May 10, 3:20 p.m. EDT

Munich Re reported a 2010 first-quarter net profit of EUR485 million ($620 million at current exchange rate), an 11 percent increase over the 2009 first-quarter net profit of EUR437 million ($558.6 million).

The Munich-based global reinsurer said high investment profits were the basis for the good quarterly result, offset some by the "unusually high" natural catastrophe burden in the quarter.

J?rg Schneider, Munich Re chief financial officer, said, "It was an eventful start to the financial year 2010, with earthquakes, storms and volatility on the capital markets. The natural catastrophe losses were offset by high investment profits. Overall, I am very satisfied with our result for the quarter."

The company also announced a share buy-back program where shares with a volume of up to EUR1 billion ($1.3 billion) are to be repurchased before April 20, 2011.

"We are using this instrument to return unneeded capital," Mr. Schneider said. "Our good capitalization enables us to continue taking selective advantage of opportunities for profitable growth despite the share buy back."

The company reported gross premiums written in the 2010 first quarter of EUR11.7 billion ($15 billion), a 12.4 percent increase from 2009 first-quarter gross premiums written of EUR10.4 billion ($13.3 billion).

Net earned premiums increased 12.8 percent in the quarter to EUR10.2 billion ($13 billion).

For its reinsurance operations, 2010 first-quarter gross premiums written increased 9.7 percent to EUR5.9 billion ($7.5 billion).

The combined ratio for reinsurance increased to 109.2 in the quarter compared to 97.3 in the 2009 first quarter. Natural catastrophes accounted for 208 percentage points, Munich Re said.

Claims costs from natural catastrophe losses totaled around EUR700 million ($895 million).

The catastrophe losses helped contribute to a 37.5 percent decline in quarterly profit for reinsurance to EUR424 million ($542 million). The 2009 first-quarter quarterly profit was EUR678 million ($866.7 million).

Primary insurance gross premiums written increased 5.5 percent to EUR4.7 billion ($6 billion), the company said.

The combined ratio increased to 98.7 compared to the 2009 first-quarter combined ratio of 96.3. The company again pointed to natural hazard events such as Winter Storm Xynthia and the harsh winter.

Primary insurance quarterly profit totaled EUR165 million ($210.9 million) compared to a quarterly loss of EUR59 million ($75.4 million) in the previous year's first quarter.

Munich Re said its 2010 first-quarter investment result improved 80 percent to EUR2.5 billion ($3.2 billion).