Munich Re, the world's biggest reinsurer, said profit this year is expected to decline 9.1% as prices charged by the industry are in decline.
The estimate for net income this year of 3 billion euros ($4.2 billion) compares to profit before minorities of 3.3 billion euros in 2013, the Munich-based reinsurer said in a statement today. Munich Re also said it plans to buy back shares worth 1 billion euros before its 2015 shareholder meeting.
Reinsurers, which help primary insurers shoulder risks, are increasing payouts to investors as strong balance sheets and lower-than-average losses from natural disasters led to an abundance of capital available for coverage. The strong supply of capital brought rates for property-catastrophe policies down 11% in January, while prices also fell for most other types of coverage, according to Guy Carpenter, the reinsurance broker of Marsh & McLennan Cos.
In January, when Munich Re renewed “slightly more than half” of its non-life reinsurance contracts, it saw prices falling by about 1.5%, the company said last month.
Munich Re, led by Chief Executive Officer Nikolaus von Bomhard, said last month it plans to boost its dividend for 2013 to 7.25 euros a share from 7 euros after fourth-quarter profit beat estimates on lower catastrophe-related costs. It announced plans last year to buy back 1 billion euros of stock by a shareholders' meeting scheduled for April 30.
Hannover Re, the world's third-biggest reinsurer, dropped the most in eight months in Frankfurt trading on March 11 after fourth-quarter operating profit missed analysts' estimates. Swiss Re Ltd., the world's second-biggest reinsurer, raised its proposed dividend payout to shareholders for 2013 after posting fourth-quarter profit that exceeded analysts' estimates.
Munich Re said yesterday that Doris Hoepke and Pina Albo will become members of its management board this year. The only woman on the board before them was Edith Lukas, who was a member from 1976 until 1993.
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