Munich Re followed its announcement that its net profit for the 1st half of the year almost doubled to $1.18 billion with the announcement that it had structured an innovative event cancellation policy for the 2002 Soccer World Cup in Japan with AXA Colonia and Berkshire Hathaway.
Strong growth in premium income – 16 percent on its reinsurance operations to $9.2 billion, and 8 percent on its primary insurance operations, which now includes Ergo, to $7.1 billion. The world’s biggest reinsurer increased its forecasts for the full year’s total premium income to $31 billion.
It also unveiled an innovative derivative linked cancellation policy it had put together with AXA Colonia and Warren Buffet’s Berkshire Hathaway to protect FIFA, Soccer’s governing body, against earthquake related risk occurring during next year’s World Cup to be held in Japan and Korea.
The coverage, which is estimated to total around $50 million, is backed by derivative securities underwritten by Berkshire Hathaway, the first time this type of securitization has been used for a sporting event. It protects all the stadiums hosting games for the World Cup, and is triggered by the strength of an earthquake, rather than the actual damages caused.
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