Munich Re to Post $3.57 Billion 2009 Profit; 95.3% Combined Ratio

February 2, 2010

Munich Re announced that according to its “preliminary calculations” consolidated profits increased “significantly” in 2009 to €2.56 billion [$3.57 billion, compared to €1.58 billion [$2.2 billion] in 2008.

Profits for the fourth quarter of 2009 were €780 million [$1.087 billion], compared to €110 million [$153 million] in Q4, 2008.

As a result the world’s largest reinsurer announced a raise in its dividend to €5.75 [$8.01] from €5.50 [$7.665] per share.

CFO Jörg Schneider described the “good result” as a demonstration of the Group’s “earnings strength.” He also noted that, “despite the challenges posed by the market environment in 2009, we were even able to slightly exceed our ambitious return target of 15 percent on risk-adjusted capital after tax.”

Gross premiums written by the Group in the financial year 2009 rose strongly by slightly less than 10 percent to €41.4 billion [$57.7 billion], compared to €37.8 billion [$52.6 billion] last year. The combined ratio in reinsurance for the full year was 95.3 percent, below the 99.4 percent for 2008. For the fourth quarter it was 92.5 percent “This includes 3.6 percentage points – or €500 million [$697 million] – for recession-related major losses, just under €200 million [$278.7 million] of which was incurred in the fourth quarter,” said the bulletin.

“However, the reinsurance business profited from exceptionally low claims costs for natural catastrophes (only 1.4 percent of net earned premiums),it added. “In primary insurance, the 2009 combined ratio for the property-casualty segment (including legal expenses insurance) amounted to 93.1 percent (90.9 percent). Its level in the fourth quarter was particularly good at 90.0 percent (93.8 percent).”

In the group’s primary insurance segment gross premiums written in 2009 rose 3 percent to €17.5 billion [$24.39 billion] with €4.5 billion [$6.27 billion] attributable to the fourth quarter – an increase of slightly less than 6 percent. The bulletin noted that the “ERGO Insurance Group posted a significantly improved consolidated result of €173 million [$241 million], compared to €73 million [$101.7 million] in 2008, of which €100 million |$139.4 million] was earned in the fourth quarter.

Reinsurance business performed very satisfactorily in 2009. Compared with the previous year, premium income grew by slightly less than 14 percent to €24.8 billion [$34.56 billion] from €21.9 billion [$30.52 billion], nearly €6.1 billion [$8.5 billion] of which came from the fourth quarter.”

Munich Re also benefitted from the acquisition of the Hartford Steam Boiler Group, which has been consolidated into the financial statements since April 1, 2009. “With the acquisition of the HSB Group, one of the world’s leading providers of specialty insurances and inspections of engineering risks, Munich Re is consistently implementing its US strategy,” said the bulletin.

Schneider commented: “Bearing in mind that the financial crisis reached its climax in the first quarter, we can be very satisfied with the figures for the year. The substantial increase in profit means shareholders can enjoy a good return on capital and approve a solidly earned dividend increase at the AGM.”

The full report and additional information may be obtained on the Group’s web site at: www.munichre.com.

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