Munich Re AG, the world’s largest reinsurer by gross premiums, said Tuesday its fourth-quarter profit quadrupled and its annual earnings rose despite the furious series of hurricanes that struck the Gulf of Mexico last year.
The company said its sale of assets, including stakes in Italy’s UniCredit Italiano SPA and Germany’s Allianz AG, helped it overcome claim costs from hurricanes Dennis, Emily, Katrina, Rita and Wilma.
Reinsurance companies sell backup coverage to other insurers, spreading risk so the insurance industry can handle huge losses from major disasters.
The Munich-based company earned 1.34 billion euros ($1.59 billion) in the quarter that ended Dec. 31, compared with 306 million euros a year earlier. That beat the expectations for a profit of 1.24 billion euros ($1.47 billion) from analysts polled by Dow Jones Newswires.
For the year, the company earned 2.67 billion euros ($3.18 billion) compared with 1.83 billion euros in 2004, beating analysts’ expectations of 2.58 billion euros ($3.07 billion).
The company said its 2004 figures were restated under International Financial Reporting Standards.
For this year, the company said it aims to post a net profit of 2.6 billion euros to 2.8 billion euros ($3 billion to $3.3 billion).
“Our solid basic business makes the achieved level of profitability sustainable. We therefore expect a profit for the current year of the same level as in 2005,” said Chief Executive Nikolaus von Bomhard.
He said the profit was also the result of a strong performance by the company’s main insurance group, Ergo Versicherungsgruppe AG, which saw its profit more than triple to 782 million euros ($932.3 million) last year because of cost-cutting and the sale of its stake in UniCredit.
“Ergo is delivering strong results,” von Bomhard said, adding that it, and Munich Re, are optimistic about future renewals of policies.
“In the global health market, we have begun to network primary insurance and reinsurance more closely, with the aim of tapping substantial growth and earnings potentials,” he said.
Shares of Munich Re were flat at 114.03 euros ($135.94) in Frankfurt trading.
The insurance industry was racked with claims from the 2005 hurricane season, which Munich Re said last month likely caused $90 billion in damages. Katrina, which hit the U.S. at the end of August, likely caused insured losses of as much as $60 billion, it added.
Despite those figures, Munich Re said its reinsurance business posted a profit of 1.4 billion euros ($1.6 billion), compared with 1.7 billion euros a year earlier, because of its investments and strategic planning, as well as an increase in premiums from markets in China, Taiwan and Hong Kong.
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