Natural disasters slash 2017 profits at Munich Re

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German reinsurer Munich Re said Thursday that costs from natural disasters slashed profits in 2017, but it assured shareholders it would not cut its dividend.

Munich Re said in a statement that net profit plunged by 85 percent year-on-year to 375 million euros ($466 million), its lowest level since 2005, and a far cry from the 2.0-2.4 billion euros it had originally been eyeing.

At the time of the publication of its third-quarter results, the reinsurer had already downgraded its forecast for 2017 to a "small net profit".

Analysts at Factset, for their part, had been pencilling in a figure of 436 million euros.

Nevertheless, Munich Re said it planned to pay out the same dividend as last year to investors, at 8.60 euros per share.

"Our dividend is reliable. Thanks to our capital strength, we were well able to withstand the high losses from natural catastrophes," said finance director Joerg Schneider.

Hurricanes Harvey, Maria and Irma alone cost Munich Re 2.7 billion euros in payouts, out of a total of 3.7 billion euros for a year that also included a devastating Mexican earthquake and other man-made disasters.

Operating or underlying profit plummeted by 70 percent to 1.2 billion euros last year, while gross premiums -- the equivalent of revenue in the insurance industry -- increased by 0.5 percent to 49.1 billion euros.

Looking ahead to the current year, Munich Re offered no concrete forecast for 2018.

But finance chief Schneider noted that "reinsurance prices improved slightly in large sections of the market at the January renewals -- a trend likely to strengthen in coming renewal rounds."

Areas that had been worst affected by natural disasters saw the biggest increase in prices, Munich Re added.

© 2018 AFP

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