Cautious German reinsurer
March 20, 2014Munich Re said March 20 that it expected net profit to fall to three billion euros ($4.15 billion) this year, down from 3.3 billion euros in 2013, owing to an increasingly difficult market environment.
"It's still an ambitious objective, given the parameters," CEO Nikolaus von Bomhard said in a statement. "Munich Re is reckoning in particular with a continuation of the lowest interest-rate levels in 2014 and hence with somewhat lower regular income from investments."
The chief executive mentioned the planned renewal of reinsurance contracts in Japan and North America as of April where insurance against natural disasters had gained in importance. Von Bomhard said competition was fierce in the sector, with hedge funds and other big investors pumping billions into the reinsurance market and weighing on premiums.
Limited side effects
"But considering our strong market position, we believe there will be no major impact of this trend on our own portfolio," reinsurance chief Torsten Jeworrek commented.
Munich Re also unveiled a major share buy-back program Thursday, saying it was planning to purchase up to one billion euros worth of shares by 2015.
"We're again paying out currently unneeded earned capital to shareholders," von Bomhard explained.
The buy-back operation is meant to increase the company's share price as it reduces the number of shares outstanding.
hg/pfd (dpa, Reuters, AFP)