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Munich Re, the world’s second-biggest reinsurer, plans to increase its dividend more than expected after fourth-quarter profit remained unchanged from a year earlier.
The company plans to raise the dividend to 8.25 euros ($9.14) a share for 2015 compared with a payout of 7.75 euros for 2014, it said in a statement on Thursday. That compared to a Bloomberg Dividend Forecast of 8 euros per share. Based on preliminary figures, net income was unchanged at about 700 million euros [$767.4 million] in the quarter, matching the average estimate of six analysts compiled by Bloomberg.
Reinsurers including Munich Re, Swiss Re AG and Hannover Re sell backup coverage to insurance companies, protecting them against big risks such as natural catastrophes. While natural catastrophe losses last year fell to the lowest since 2009 last year, earnings in the industry continue to be squeezed by record-low interest rates and declining prices for coverage.
“Due to the fact that the market environment is so challenging, the 2015 result is pleasing,” Chief Financial Officer Joerg Schneider said in the statement. “The good result is mainly due to our operational profitability and rock-solid balance sheet.”
Munich Re’s primary insurance unit Ergo swung to a loss of about 200 million euros [$219.3 million] last year after a year-earlier profit of about 200 million euros following additional expenses of 452 million euros [$495.5 million] from the revaluation of goodwill. The sale of Ergo Italia in November led to a loss of about 100 million euros [$109.6 million], Munich Re said.