Munich Re achieves record profits

In its anniversary year, the Munich Re Group achieved a record profit in 2005 of over EUR2.7 billion (CD$3.75 billion).

“We have thus slightly exceeded our target,” Nikolaus von Bomhard, chairman of the board of management, said when presenting the figures. “Our solid basic business makes the achieved level of profitability sustainable. We therefore expect a profit for the current year of the same level as in 2005.”

Citing losses due to a number of natural catastrophes, Munich Re reported a combined ratio of 110.5% in reinsurance in 2005, but a “very gratifying” 93.1% in primary insurance.

“Even though it was a record hurricane year, the Group posted a profit of EUR1.4 billion (CD$1.95 billion) in reinsurance, thanks to its very solid basic business and excellent investment result,” the company reported. “The operating result before tax and finance costs was again high at EUR2.4 billion (CD$3.3 billion), despite:

* the hurricane losses of EUR2.3 billion (CD$3.19 billion) after retrocession, and

* reserve strengthening at American Re (EUR388 million before tax, and after relief of EUR906 million or CD$1.26 billion from IBNR reserves).

“Given that these two events [above] accounted for 15.4 and 2.6 percentage points of the combined ratio respectively, the overall ratio of 110.5% (98.9%) reflects the high quality of the Group’s portfolio in non-life reinsurance.”

Gross premiums written in the property-casualty reinsurance segment decreased by 2.1%, to EUR14.5 billion (CD$20.1 billion).

Besides the solid results from basic business in primary insurance and reinsurance, the greatly improved investment result of EUR10.8 billion (CD$15 billion) was an important factor in the Group’s record profit, the company said in a press release.