Despite Q2 Profits Munich Re Posts $297 Million 1st Half Loss

August 5, 2011

Munich Re, the world’s largest reinsurer, bounced back into the black during the second quarter of 2011, making profits of €738 million [$1.042 billion], an increase over the €709 million [$1 billion] posted during the same period in 2010.

However, the result wasn’t enough to overcome the losses from the catastrophes that hit insurers and reinsurers during the first quarter. Munich Re posted a €210 million [$297 million] loss for the first six months of 2011, compared to a profit €1.194 billion [$1.69 billion] for the first half of 2010.

Other key figures include the following:
 Gross written premiums rose 10.3 percent for the 1st half 2011 to €24.94 billion [$35.36 billion], compared to €22.613 billion [$32.06 billion] in 2010
 The operating result for the period was a €437 million [$620 million] loss, compared to a €2.219 billion [$3.147 billion] profit for the first six months of 2010
 In the reinsurance sector, which includes both life and non-life, Munich Re posted a €132 million [$186.5 million] overall loss, and a €679 million [$960 million] operating loss, compared to a €1.057 billion [$1.5 billion], and a €1.697 billion [$2.398 billion] profit respectively for the first half of 2010.
 The combined ratio for the 1st half was 133.1 percent, compared to 106.4 percent in 2010.
 In its primary operations, mainly ERGO, the group posted an increase in gross premiums written of 0.9 percent to €8.948 billion [$12.68 billion] from €8.86 billion [$12.572 billion] in the same period of 2010.
 The primary operations also posted an overall profit of €358 million [$505.8 million] {€639 million [$903 million] operating}, compared to €293 million [$414 million] {€627 million [$886 million] operating} in 1st half 2010.
 The combined ratio in the sector was 96.5 percent, slightly lower than the 96.6 percent in 2010.

Nikolaus von Bomhard, Chairman of the Board of Management, commented on the catastrophes of the first quarter, indicating that it was “an exceptional accumulation of major losses, but that is precisely what reinsurance is for. After all, a well-developed and functioning insurance and reinsurance system helps to overcome disasters of this scale.”

The report also noted that there “were high losses from natural catastrophes in the second quarter as well, particularly from several series of tornadoes in the U.S.”

With regard to the financial year 2011 as a whole, von Bomhard stated: “Despite the exceptionally heavy claims burdens, we aim to achieve a positive result for the year.” He added that this still applied even if there were additional major losses in the further course of the year, provided these did not significantly exceed the average figure to be expected.

The bulletin said the Group anticipates that its gross premium volume for the current financial year 2011 in the reinsurance segment will be around €26 billion [$36.74 billion]. In primary insurance, gross premiums written of between €17 billion [$24 billion] and €18 billion [$25.43 billion] are expected.

Total premium income in primary insurance (including the savings premiums of unit-linked life insurance and capitalization products) should range between €19 billion [$26.85 billion] and €20 billion [$28.26 billion]. Gross premiums written of around €6 billion [$8.48 billion] are anticipated for Munich Health.

Munich Re said it is “now proceeding on the assumption that its total gross premiums written in primary insurance, reinsurance and Munich Health (total consolidated premium) will be in the order of €48 to €50 billion [$67.8 billion to $70.65 billion], provided that exchange rates remain stable.”

The full report and additional information is available on the Group’s website.

Source: Munich Re

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