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Business

World's biggest reinsurer raises profit forecast

German reinsurer Munich Re has upped its profit projections after a successful second quarter. The company has already secured more than half of the earnings envisaged for 2012 despite difficult capital markets.

Logo of Munich Re reinsurer at the company's headquarters

Logo der Munich Re

The largest reinsurer in the world, Munich Re, on Tuesday reported a better-than-expected second quarter, prompting the German company to revise its 2012 profit forecast upwards.

Between April and June, Munich Re booked a 9.8-percent rise in net profit to 808 million euros ($1.0 billion) on a 5.5-percent increase in gross premiums to 12.632 billion euros.

Together with first-quarter revenues, the firm thus already secured well over half of its target of around 2.5 billion euros. "We're well on track to surpass the originally envisaged profit for the year," Chief Executive Nikolaus von Bomhard said in a statement.

Meager investment yields

Munich Re said there was every reason to be optimistic about the rest of the year despite the difficult business environment. The company pointed to historically low interest rates which made it hard for the firm to place its earnings in a safe and profitable way on financial markets.

"We've been spreading our investments as much as possible for quite some years now," von Bomhard said. "That's enabled us to deal better with developments on financial markets."

In 2011, Japan's nuclear reactor catastrophe at Fukushima ate into Munich Re's profits. But the first months of the current years have seen fewer disasters for the reinsurer to deal with. Natural disasters have so far cost the company 292 million euros in 2012, with the bulk connected with drought damages in the US and earthquakes in northern Italy.

hg/sej (AFP, dapd, dpa)