Munich Re posted a 26.7 percent increase in its consolidated results for the first quarter of 2001, earning a net profit of 688 million euros ($882.7 million), compared to 543 million euros ($696.7 million) in the same period of 2004.
The added profits, however, were largely due to a one time only sale of assets ( the sale of its stake in German truck manufacturer MAN AG) which increased the company’s investment result by 32.5 percent for the period to 2.457 billion euros ($3.15 billion).
In the introduction to the earnings report Munich Re’s Chairman, Dr. Nikolaus von Bomhard, noted that the figures “lie within the expected ambitious corridor for both primary insurance and reinsurance.” While expressing satisfaction at the profit figures, he also noted that the reinsurance sector “unlike in the last three years,” had “recorded higher claims costs for major losses in the first three months, including 70 million euros ($90 million) from the European winter storm Erwin and 35 million euros ($45 million) from the Madrid skyscraper fire.”
As a result the world’s largest reinsurer’s combined ratio in its P/C sector rose slightly to 96.5 percent (96.3 percent), “though still better than our target of 97 percent for the business year as a whole,” von Bomhard added. “It speaks for the quality of our basic business, which we improved further overall in the renewals of reinsurance treaties for 2005, that a higher incidence of major losses is only marginally apparent in the combined ratio,” he continued. “The most recent treaty renewals in Japan and Korea also went according to plan. I have thus no reason to doubt that we are on course for achieving our profitability objective, with a return on equity of 12 percent after taxes on income in the business year 2005.”
Munich Re’s strict adherence to more stringent underwriting guidelines resulted in a slight drop of 1.9 percent in gross premiums written to 10.16 billion euros ($13 billion) in the first quarter from 10.358 billion euros ($13.3 billion) in the same period of 2004.
The full report and further comments on the company’s earnings are available on the Munich Re Website at: www.munichre.com.
Topics Profit Loss Reinsurance
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