Munich Re 1Q profits drop on high levels of disaster claims
Thursday May 8, 6:34 am ET
Munich Re sees 19 percent drop in 1Q net profit on market losses and high disaster claims
FRANKFURT, Germany (AP) -- German reinsurance company Munich Re saw a 19 percent drop in first-quarter net profit on market losses and high disaster claims, the company said Thursday.
Munich Re, the world's second-largest reinsurer by gross premiums, said net profit fell to 775 million euros ($1.2 billion) in the quarter from 958 million euros in the same period the year before.
Still, Chief Financial Officer Joerg Schneider confirmed an expected profit range of 3 billion euros to 3.4 billion euros ($4.63 billion to $5.25 billion) for 2008.
"We are adhering to our most important target for 2008: to achieve a return on risk-adjusted capital of at least 15 percent," he said in a statement.
Gross income on the quarter, which ended March 31, fell 1.8 percent to 9.84 billion euros ($15.18 billion) from 10.02 billion euros in the same period last year, which the company blamed on the sharp decrease in worth of the U.S. dollar.
"At unchanged exchange rates, premium volume would have increased by 1.9 percent in the first three months," the company said.
Munich Re's bottom-line decrease was largely attributable to investment results, where price losses on the stock markets required write-downs of equity investments of 587 million euros ($906 million), the company said. These losses were partially offset by gains of 468 million euros ($722 million) from derivatives acquired for hedging purposes.
The company was also hit in the quarter by what it called "a random cluster of major losses."
Those included claims from the flooding of coal mines in the Australian state of Queensland and from a storm, dubbed "Emma" in German-speaking countries, that hit Europe in early March.
Reinsurance companies sell backup coverage to other insurers, spreading risk so the system can handle losses from major disasters.
Your World Is As BIG as You Make It!!!
AI
