Munich Re 2013 Profits Fall; Targets $4.1+ Billion for 2014

Munich Re posted the following summary of its results for the financial year 2013:

— Operating result of €4.4billion from (€5.3 billion) [$6.07 billion from $7.32 billion].

— Despite low interest rates and the adverse effects of exchange rates, shareholders’ equity decreased in 2013 by only around €1.2 billion [$1.657 billion] to €26.2 billion [$36.188 billion] from €27.4 billion [$37.8 billion] – mainly thanks to the high profit for the year.

— Return on risk-adjusted capital (RORAC) was 12.2 percent (13.2 percent), whilst the return on IFRS equity (RoE) amounted to 12.5 percent (12.5 percent).

— Gross premiums written by the Group in the financial year 2013 fell slightly to €51.1 billion [$70.518 billion] from €52.0 billion [$71.823 billion] owing to currency effects.

Munich Re also noted that it reinsurance business field contributed €2.8 billion [$3.867 billion] down from €3.1billion [$4.282 billion] to the consolidated result. This was “partly due to the lower income from investments; the operating result decreased from €4.3 billion [5.94 billion] to €3.5 billion [$4.834 billion].

Munich Re is aiming for a profit of €3 billion [$4.1437 billion] in 2014, as CEO Nikolaus von Bomhard expressed his optimism about the further development of the Group’s business prospects this year.

Munich Re’s 2013 profit was €3.3 billion [$4.558 billion], the third-best result in the Company’s history. As a result the world’s largest reinsurer has announced a dividend increase – subject to shareholder approval – to €7.25 from €7.00 [$10.01 from $9.67] per share. In addition, Munich Re announced another share buy-back with a volume of up to €1 billion [$1.381 billion] are again to be repurchased before the Annual General Meeting in 2015.

Von Bomhard said: “The result for 2013 is an indication of how we have positioned ourselves competitively – we have strategically prepared Munich Re for foreseeable challenges which we can now tackle from a position of strength.” These challenges included the lingering low-interest-rate environment, increasing competition in reinsurance, and changes in demand from clients in primary insurance.

“We have done our homework in recent years. Our capital base is more than solid, in reinsurance we are committed to solution-finding competence, and in primary insurance we are bringing a visionary concept to the German market with our new generation of life insurance products”, emphasized von Bomhard. “We want our shareholders to participate in Munich Re’s success.”

Concerning the target for 2014 von Bomhard described it as an “ambitious objective,” as it takes into account a continuation of the low interest-rate levels in 2014 and the consequent lowering of regular income from investments. He also noted that a normal tax burden is expected again for 2014, after Munich Re posted a very low effective tax rate in 2013 due to the recalculation of tax for prior years and the utilization of loss carry-forwards

Source: Munich Re

Topics Profit Loss Reinsurance