Munich Re expects lower 2010 profit
The world's biggest reinsurer, Munich Re, said Tuesday that net profit soared 62 percent last year but added that it would probably not do as well in 2010.
Frankfurt--"I would be very surprised if we can repeat such gains this year," finance director Joerg Schneider told a telephone news conference, owing to increased competition and falling global demand for reinsurance coverage.
He forecast a net profit of some EUR two billion (USD 2.78 billion) for the group's current year but also cautioned that that was "far from sure," following which the group's stock fell in Frankfurt.
For 2009, Munich Re posted a net profit of EUR 2.56 billion, up from EUR 1.58 billion in 2008, and said it would raise its dividend by 4.5 percent to EUR 5.75.
"The reinsurance business profited from exceptionally low claims costs for natural catastrophes," a statement said, while Munich Re also benefitted from the integration of previous acquisitions and higher rates as a result of the global financial crisis.
This year has begun with renegotiations of re-insurance contracts that Munich Re acknowledged were "more difficult than in the previous year" since competition has increased as insurance groups pull out of the crisis.
The volume of renewed business has fallen by 6.7 percent to around EUR 7.4 billion because "Munich Re resolutely adhered to its profit-oriented underwriting policy and was prepared to forgo business if necessary," it said.
Shares in the group slipped 0.55 percent to EUR 108.75 in midday Frankfurt trading, while the DAX index on which they are listed was 0.55 percent higher overall.
Schneider said he did not rule out the purchase of additional Munich Re shares by US investor Warren Buffett, who has holdings in several reinsurance companies.
Buffett was not considered a rival, Schneider added, and his Munich Re investment "is not at all hostile."
As of 22 January, the US billionaire controlled directly or indirectly 5.22 percent of the shares in Munich Re.