Munich Re’s annual general meeting (AGM) produced some good news for the shareholders of the world’s largest reinsurer. It announced a dividend increase to €6.25 [$9.138] per share for the financial year 2010, up from €5.75 [$8.40] last year, more than €1.1 billion [$1.608 billion] in total.
In making the decision, CEO Nikolaus von Bomhard took into account both the significant impact of the natural catastrophes – floods in Australia, earthquakes in New Zealand and Japan – that have marked 2011 so far, as well as the highly successful results the group achieved in 2010.
“Last year, I held out the prospect to you of a result of over €2 billion for the financial year 2010,” von Bomhard stated. “In November 2010, we were able to raise this forecast to €2.4 billion [$3.513 billion] . With our final result of €2.43 billion [$3.55679 billion], we succeeded in just topping that amount. Our pleasing profit is the result of hard work in a challenging year.” He also noted that Munich Re had repurchased around €1 billion [$1.4637 billion] of its own shares in a buyback program launched in May 2010.
Commenting on the events in Japan, von Bomhard stated: “The images of the earthquake and nuclear disaster in Japan will remain with all of us for a long time. In this context, we should not forget that insurers and reinsurers help economies to recover more quickly from such events and assist people on the ground in rebuilding their lives. We are duty bound to learn from catastrophes of this magnitude and to share our findings – not only with our clients but also with governments and interested organizations.”
As a result of the first quarter’s disaster, Munich Re has estimated that it will pay out a total of around €2.7 billion [$3.95 billion] after retrocession and before tax. The losses were broken down as follows: €1.5 billion [$2.194 billion] to the earthquake in Japan; €1.1billion [$1.61 billion] from the severe natural catastrophes in Australia and New Zealand.
The losses led to Munich Re announcing at the end of March that it would not be able to maintain its profit guidance of around €2.4 billion [$3.51 billion] for the financial year 2011. Von Bomhard described the losses from natural catastrophes in the first quarter as “clearly negative.” The share buyback program has also been shelved for the near future in view of the losses.
Despite these strains, von Bomhard expressed continued confidence. He noted: “In reinsurance, our proximity to markets and clients and our underwriting policy geared solely to the risk have proved their worth.
“In primary insurance, we have successfully launched the ERGO brand on the German market and its result trend is continuing to point upwards. In Munich Re’s youngest field of business, Munich Health, income has grown and consolidation is on track.
“All in all, I am therefore very satisfied with the Group’s development.” No figures are available yet on the treaty renewals in reinsurance at 1 April 2011 (Japan, Korea and the USA, plus individual global clients).
“Munich Re had agreed with some Japanese clients to hold them covered under earthquake treaties at existing terms and conditions for a few weeks in view of the ongoing claims assessments. That is one of the reasons why it is not yet possible to make any conclusive statements about the development of terms and conditions,” von Bomhard added. “At any rate, we expect general price increases in the current financial year.”
The results of the annual general meeting are available.
Source: Munich Re
Topics Catastrophe Reinsurance Japan
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