Disasters, rocky markets put brakes on Munich Re
NATURAL disasters and a tough market environment cut into profits at German reinsurance heavyweight Munich Re in the second quarter, the company announced.
The reinsurer achieved “above average” net profits “despite higher natural catastrophe expenditure in the second quarter – arising from wildfires in Canada and earthquakes in Japan”, chief executive Nikolaus von Bomhard said.
Net profit fell to 974 million euros (US$1.08 billion) in the second quarter, down 9 percent compared with net profit over the same period in the previous year.
“We are well on track to reach our annual target of 2.3 billion euros” in net profit despite the setbacks, Mr von Bomhard said – although the company in May lowered that benchmark from an inital estimate of between 2.3 and 2.8 billion after weak first-quarter results.
Gross income from insurance premiums was down in the second quarter at 11.93 billion euros – a 4.3pc drop compared with April to June 2015.
Meanwhile, Munich Re’s operating profit plunged by 19.5pc to 1.46 billion euros.
The company said that it had “successfully withstood capital market turbulence in the wake of the Brexit referendum”, in part by selling off equities in the run-up to the June 23 ballot.
But monetary policy interventions continue to make life difficult for the insurer, Mr von Bomhard told Bloomberg TV.
“We are quite concerned with the actions of the ECB and other central banks in Europe.”
The European Central Bank and others are crowding investors out of bond markets and keeping interest rates low, making for a challenging environment for financial firms, he added.
But the CEO said he was confident that “inflation will sooner or later start to go up”. –