Markets, floods hit profits at Munich Re
FRANKFURT, Germany (AP) — German reinsurer Munich Re saw its first-quarter net profit fall 33 percent to 543 million euros ($722 million) as losses from floods in central Europe weighed on earnings.
The company said Tuesday it paid out 230 million euros in claims for the June floods, which hit eastern Germany, Czech Republic and Austria. The burden on earnings from major losses rose to 605 million in the April-June quarter from 452 million a year earlier.
Gross premiums rose 1.6 percent to 12.81 billion euros.
The company’s results fell short of analysts’ predictions for net profit of 570 million euros as compiled by financial information provider FactSet.
Company CEO Nikolaus von Bomhard said the company remained on track to reach its earnings goal for the year and that “unlike the first quarter of 2013, the second quarter was significantly affected by major losses. ”
Reinsurance companies provide backup coverage to primary insurers so that the industry can handle losses from major disasters. The company also has a primary insurance business. Earnings there slipped by 1.3 percent to 148 million euros, and premium revenue also fell, by 2.8 percent.
The company also saw smaller returns on its investments, which are mostly in bonds and other fixed-income securities. The company’s investment result fell by 250 million euros to 1.56 billion euros and it had increased write-downs on interest rate derivatives and options.