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Munich, Germany, Aug 3, 2006 Munich Re, the world's second-biggest reinsurer, expressed confidence Thursday that it could weather any costs from coming cyclone season, after a favourable first six months of the current year. The hurricane season has a habit of slamming into insurers' profits. Munich Re said in a statement that bottom-line net profit had more than doubled to 2.08 billion euros (2.65 billion dollars) in the period from January to June. "With our first-half net profit, we've already achieved two thirds of our overall target for the whole year," chief financial officer Joerg Schneider, told a news conference here. Looking ahead, however, the second half is usually tougher for reinsurers, since that was normally the period of cyclones in the Americas. "There are typically more burdens from natural catastrophes in the second half of the year," Schneider said. "The hurricane and typhoon season usually runs from late summer through autumn. And there could also be unexpected surprises in the capital markets," the finance chief cautioned. Nevertheless, "we're currently ahead of plan. If business runs normally for the rest of the year, we will surpass our targets", Schneider said. Munich Re is pencilling in net return on risk-adjusted capital of 15 percent, which corresponds to bottom-line profits of 2.6-2.8 billion euros, and gross premium income of 37-38 billion euros for the whole of 2006. In 2005, the group booked record net profit of 2.74 billion euros, buoyed by windfall gains from divestments. In the second quarter alone, the reinsurer booked a leap in profits on an annual basis because heavy charges in the same period last year had dropped out of the comparison. Second-quarter net profit increased more than sevenfold to 1.125 billion euros from just 167 million euros 12 months earlier. The previous results had been hit by the cost of the capital injection required by Munich Re's troubled US subsidiary, American Re. But this year, no such measures were needed and there had not been any large-scale natural catastrophes. Second-quarter operating profit jumped by 68.6 percent to 1.851 billion euros, despite a 2.1-percent decline in gross premium income to 9.027 billion euros. The group's reinsurance activities contributed 915.0 million euros to Munich Re's bottom line, compared with 81.0 million euros a year earlier, with the so-called combined ratio -- a measure of claims and expenses to premium income -- improved to 92.1 percent from 103 percent. The primary insurance division posted a 52.7-percent jump in net profit to 310 million euros. Its combined ratio also improved to 87.2 percent. Chairman Nikolaus von Bomhard expressed satisfaction with the renewal of reinsurance contracts for North and South America in July. "The renewals at 1 July are an early indicator for the negotiations at the turn of the year; they confirm the acceptance of our underwriting strategy of risk-adequate prices, terms and conditions", von Bomhard said. The tarifs had been increased to cover oil installations after the heavy damage wreaked by the freak hurricanes in the Gulf of Mexico last year. Munich Re said it was looking to expand under its own steam in its reinsurance business and ruled out major acquisitions. Arch-rival Swiss Re recently leap-frogged the German group to become the world's biggest reinsurer after taking over GE Insurance Solutions. Investors were cheered by the second-quarter figures and Munich Re's confident outlook, and shares in the company were showing a gain of 0.70 euros or 0.64 percent at 110.30 euros in early afternoon trading on the Frankfurt stock exchange. Community Email This Article Comment On This Article Related Links Bringing Order To A World Of Disasters When the Earth Quakes A world of storm and tempest
![]() ![]() World oil prices turned weaker on Thursday as trader concerns eased over a tropical storm in the US Gulf Coast where many American oil rigs and platforms are based, dealers said. |
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