Munich Re Posts $1.25 Billion Q1 Profit

May 10, 2006

Despite slightly higher claims costs of €274 million ($350 million) Munich Re’s first quarter net profits rose 41.7 percent to €979 million ($1.25 billion) after tax. Operating profits were up by 29.4 percent to €1.47 billion ($1.88 billion). The earnings announcement attributed the good results to “strict profit orientation and prudent underwriting policy.”

The earnings report also noted that premium income was down slightly to €10 billion ($12.789 billion) compared to €10.2 billion ($13 billion)in Q1 2005. Equity increased to €25.1billion ($32.1 billion). Munich Re improved its combined ratio to 92.2 percent from 96.5 percent in the same period of 2005 with natural catastrophes accounting for 2.0 percentage points compared to 2.4 last year.

Board of Management member Jörg Schneider, who presented the quarterly figures, noted: “With a profit of €979 million in the first three months, we are in an even better position than at this point last year, despite the fact we had more major losses in this year’s first quarter. The excellent quarterly result is a big step towards achieving our target for 2006 — a post-tax return of 15 percent on risk-adjusted capital. Thanks to very good results from our underwriting business and investments, we are already more than a third of the way there. And that’s good, as experience shows that later quarters are more highly exposed. ERGO [The Group’s main primary insurer] also fully met our expectations with a very much improved quarterly profit of €145 million [$185.5 million] (€70 million [$89.5 million] in Q1 2005). In all areas of the Group, we are continuing to focus on profitability — the indispensable basis for healthy growth.”

Looking at the rest of the year, Munich Re indicated that the “very positive treaty renewals in property-casualty reinsurance at the turn of year were followed by similarly successful renewals at the beginning of April with cedants in Japan and South Korea and with a number of global clients.

“The Group expects its premium income to show a slight increase, with continuing high profit potential. In primary insurance, it estimates that premium development will be stable when adjusted for the premium income of the companies sold last year.

For its business operations as a whole, the Munich Re Group again anticipates a premium volume of between €37 billion and €38 billion [$47.3 billion to $$48.5 billion], with €22-23 billion [$28.13 – $29.41 billion] coming from reinsurance and €16.5-17 billion $21.1 – $21.7 billion] from primary insurance (before consolidation in each case).”

The entire report and analysts’ presentation may be obtained on the Group’s Website at:

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