Natural disasters hit reinsurer Munich Re's results
14 March 2006, MUNICH - The world biggest reinsurer Munich Re said Tuesday that record payouts for the disastrous hurricanes that swept across the Gulf of Mexico last year cut into its 2005 earnings.
14 March 2006
MUNICH - The world biggest reinsurer Munich Re said Tuesday that record payouts for the disastrous hurricanes that swept across the Gulf of Mexico last year cut into its 2005 earnings.
However, net profit last year beat analysts' forecasts to rise 45 per cent to 2.74 billion euros (3.3 billion dollars) compared to 1.89 billion euros in the previous year with income from asset sales helping to offset the impact of the cost of last year's hurricane season.
Nevertheless, claims resulting from last year's massive US storms including Katrina which flattened cities such as New Orleans, reduced Munich's 2005 pre-tax profit by 2.3 billion euros.
As a result, Munich was forced to boost the reserves of its US offshoot, American Re.
Analysts had expected full-year pre-tax earnings to come in at 2.6 billion euros.
"Our solid basic business makes the achieved level of profitability sustainable," said Munich chief Nikolaus von Bomhard. "We therefore expect a profit for the current year of the same level as in 2005."
Rival Swiss Re reported this month a 41 per cent slump in earnings on the back of the high claims emerging from last year's hurricane season.
But Munich said that the natural disaster claims were compensated by off-loading stakes in giant insurer Allianz AG, banking group Commerzbank AG and industrial group MAN AG as well as Milan-based banking group Unicredito Italiano SpA.
The Munich-based company said fourth-quarter net earnings came in at 1.36 billion euros compared with 306 million euros in the same period a year earlier.
A strong performance by Munich's main insurance arm, Ergo Versicherungsgruppe AG, also helped to bolster the reinsurer's earnings. Ergo's profit more than tripled to 782 million euros last year partly as a result of cost-cutting.
Munich Re shares edged up by 0.4 per cent to 114.53 euros in early trading Tuesday.
Subject: German news