Munich Re Quarterly Net Profit Increases Seven-fold

Published: Wed 03 Feb 2010

Perry Begay

Munich Re AG, a German reinsurance corporation, announced on Tuesday that it experienced a more than seven-fold increase in net profit for the fourth quarter to euro780 million, or $1.1 billion. Munich attributed the prodigious increase to "exceptionally low claims" from natural disasters.

The figure contrasted with a euro110 million profit in the fourth quarter of 2008.

Headquartered in Munich, Munich Re did not report all of its figures for the fourth quarter, but the company is scheduled to release its full earnings for 2009 on March 10, 2010.

The reinsurance company, which provides back-up policies to insurance companies in the event of massive losses or catastrophes, reported that profit for 2009 as a whole rose by 63 percent to euro2.6 billion from euro1.6 billion in 2008.

Likewise, gross premiums written, another sales metric, rose almost ten percent in 2009 to euro41.4 billion from euro37.8 billion in 2008.

The reinsurer did not offer a detailed prediction for the coming year aside from announcing that the corporation will "continue to place high emphasis on reliability and predictability on the basis of low-volatile earnings."

"This is another good result that demonstrates Munich Re's earnings strength," said Joerg Schneider, chief financial officer, in a report.

"We are realistic in our expectations and remain dependable for investors. We want our shareholders to participate in this success through a further increase in our already high dividend."

The corporation reported that it would increase its dividend by 4.5 percent to euro5.75 from euro5.50 per share, pending approval by the shareholders.

Munich Re said its income from reinsurance premiums increased almost 14 percent for 2009 to euro25 billion from euro22 billion the year before as a result of increases in treaties of large volumes ended by primary insurance companies.

The company said that the reinsurance industry benefited from unusually low claims costs for natural disasters, which totaled to only 1.4 percent of net earned premiums for 2009.

Increases in reinsurance premium growth were also aided by the consolidation of the Hartford Steam Boiler Group, integrated into Munich Re's financial statements since April of 2009. The HSB Group provides engineering risk inspections and specialty insurance. Munich Re purchased the corporation in 2008.

Munich Re also offers traditional life, property, and health insurance policies. In the business of primary insurance, Munich Re enjoyed a 3-percent rise in gross premiums for 2009 to euro17.5 billion from euro17 billion in 2008.