Munich Re reports profit slump

May 6, 2009

, FRANKFURT, May  6 – Germany\’s biggest re-insurance group, Munich Re, posted on Wednesday a 45.9-pct drop in first-quarter net profit owing to stock market losses, but said it did not face big risks from swine flu.

The group said net profit fell to 415 million euros (550 million dollars), from 777 million euros in the same period a year earlier.

Operating profit shed 37.5 percent to 746 million euros, a statement added.

"In view of the difficult economic parameters, the results are highly satisfactory," finance director Joerg Schneider said in a statement.

The head of Munich Re\’s reinsurance activities, Torsten Jeworrek, told a telephone news conference the group did not expect to suffer greatly from the global outbreak of swine flu.

"Even if it were to become a serious pandemic, our exposure would be limited, comparable with our exposure to natural disasters," Jeworrek said.

He added that Munich Re had positioned itself several years ago so that claims related to pandemics "could be financed from own funds at any time."

Schneider said in the statement that "We are well prepared for the challenges of the current year. Where opportunities present themselves, we are exploiting them — but with great discipline."

He told the news conference that Munich Re was in talks over potential acquisitions, but was not about to finalise any large transactions.

Munich Re\’s first quarter results were hit by "significant price losses on the capital markets and their impact on the investment result," the statement said.

But the group said gross premiums paid by clients had gained 5.3 percent to 10.4 billion euros, allowing the insurer to raise its forecast for 2009.

Munich Re now expects them to reach 39-41 billion euros, compared with a previous estimate for a maximum of 39.5 billion.

Breaking down the first quarter results, the company said its core business of reinsurance showed a slight operating profit gain of 0.8 percent to 851 million euros owing to fewer than expected natural catastrophes.

In the insurance sector however, operating results plunged to 77 million euros from 314 million in the first quarter of 2008 because the group was forced to write down the value of some assets amid the financial turbulence.

Earnings from investments fell by 18.5 percent to 1.4 billion euros.

Shares in Munich RE gained 1.53 percent to 102.98 euros in midday Frankfurt trades, while the German DAX index of leading shares was essentially unchanged overall.

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