Munich Re Annual Profits Down 22%

NU Online News Service, Feb. 2, 12:50 p.m. EST

Munich Re reports 2011 profits of €710 million ($920 million), down from €2.43 billion ($3.19 billion) in 2010, a difference of €1.72 billion ($2.25 billion).

Chief financial officer Jörg Schneider notes the number is a “Respectable profit given the exceptional burdens.”

The company notes that 2011 was marked by a series of severe earthquakes and many weather-related catastrophes. Munich Re estimates its claims costs from the earthquakes inJapanandNew Zealandat about €1.5 billion ($1.96 billion) for each event. Additionally there was a worsening of the sovereign-debt crisis in the Eurozone, the company adds.

Munich Re says its reinsurance business was marked by exceptionally high claims costs for major losses in 2011. According to its estimates, insured losses from natural catastrophes worldwide totaled $105 billion—even higher than the previous record year 2005. The reinsurance segment nevertheless contributed €770 million ($2.10 billion) to the consolidated result.

In property-casualty reinsurance, premium climbed by nearly 8 percent to €16.9 billion ($15.7 billion). The main growth drivers were again large treaties, with reinsurance used by clients primarily as an instrument for capital management. Since the beginning of the financial crisis in 2007, demand for these solutions has increased dramatically and remains at a high level, the company says.