Munich Re announced first quarter 2009 profits of €420 million ($560 million), compared to €777 million ($1.035 billion) in the same period of 2008. However, the Group’s bulletin forecast premium increases in 2009.
CFO Jörg Schneider stated: “In view of the difficult economic parameters, the results are highly satisfactory. We are well prepared for the challenges of the current year, especially with our broad set-up and diversification. Where opportunities present themselves, we are exploiting them – but with great discipline.”
Munich Re posted an operating result of €746 million ($994 million), compared to €1.193 billion ($1.589 billion) in Q1 2008, a decrease of 37.5 percent. Gross premiums written, however, rose by 5.3 percent to €10.4 billion ($13.866 billion) during the period from €9.9 billion ($13.19 billion). The bulletin noted if “exchange rates had remained the same, premium volume would have increased by 5.2 percent compared with the same period last year.”
Munich Re said its primary insurance operations “still suffered from the effects of the financial crisis.” The operating result amounted to €77 million ($102.5 million), compared to €314 million ($418.3 million) in Q1 2008. Nonetheless,”despite the long and hard winter, the combined ratio in the property-casualty segment remained acceptable at 96.3 percent (87.8 percent in Q1 2008) in the first quarter of 2009, last year’s figure having been exceptionally low,” said the bulletin.
In its reinsurance sector, Munich Re had a “combined ratio of 97.3 percent, with average cost burden from major losses. The reinsurance business performed satisfactorily overall in the first quarter of 2009. The operating result grew by 0.8 percent to €851 million, from €844 million [$1.134 billion from $1.1245 billion].
Munich Re said “major losses in the first quarter remained manageable in number. For Winter Storm Klaus, which caused severe damage particularly in France and Spain, Munich Re established provisions of around €80 million [$106.5 million].
“A second notable major loss was the devastation caused by the bush fires in the Australian state of Victoria, for which Munich Re expects a claims burden of approximately €65 million [$86.5 million]. The combined ratio amounted to 97.3 percent (103.7 percent in Q1 2008), with 5.6 (10.7) percentage points attributable to natural catastrophes.
“Premium income was up 6.5 percent on the same period last year, rising to €5.9 billion from €5.6 billion [$7.856 billion from $7.456 billion], predominantly due to acquisitions. Adjusted to eliminate the effects of changes in exchange rates, it increased by 5.0 percent.”
In conclusion, Munich Re said its outlook for 2009 remains unchanged with a target of around 15 percent. However it cautioned that the “uncertainties resulting from the economic crisis apply to both underwriting business and investments, making a serious projection of the annual profit for 2009 impossible.”
“All in all, we remain confident with regard to the Munich Re Group’s value-based corporate development and are adhering to our long-term objective of a 15 percent RORAC after tax across the cycle”, added CFO Schneider. “This goal was quite ambitious considering the currently difficult economic environment and major uncertainties involved.”But because it relates to risk-based capital, it means we are not induced to take irrational risks”, he explained.
The full report, additional information and access to the earnings conference call may be obtained on the Group’s web site at: www.munichre.com.
Source: Munich Re
Topics Trends Profit Loss
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