MUNICH Re expects lower profit for 2016

26 May 2016 — Vlad BOLDIJAR
MUNICH Re reported a profit of EUR 436 million for 1Q2016, down 44.8% y-o-y due to lower investment results and a loss in its insurance unit - ERGO. "It is now aiming for a profit of EUR 2.3 billion for the full financial year; until now, its forecast had been in the range of EUR 2.3-2.8 billion", the reinsurer announced in a statement .

The operating result of EUR 726 million was below the figure for the same quarter last year (EUR 995 million), while the value of gross premiums written declined by 4.0% to EUR 12,511 million.

"The result for the first quarter is below our expectations. The first three months of the year were marked by a below-average random incidence of major losses. However, we had to cope with significant strains on our investment result", said CFO Jorg SCHNEIDER.

With a view to the profit guidance for 2016, Jorg SCHNEIDER said: "The decrease in profits in the first quarter has dampened our optimism with regard to the annual result. It is looking more and more likely that there will be high costs for implementing the strategy programme at ERGO. The amount is not yet definitive, but it is unlikely that ERGO will post a positive annual result this year. In view of these strains, we now envisage a consolidated result of EUR 2.3 billion, which is at the lower end of our predicted profit guidance" .

Per divisions, the reinsurance field of business contributed EUR 445 milion (vs. EUR 668 million) to the consolidated result. The operating result was down by EUR 243 million to EUR 514 million, while gross premiums written decreased by 3.9% to EUR 6,733 million.

In the first quarter, the ERGO field of business generated a negative result of -EUR 25 million (vs. EUR 102 million), while gross premiums written decreased by 2.0% y-o-y to EUR 4,495 million.

The MUNICH Health field of business generated a profit of EUR 16 million (vs. EUR 21 million) in the period from January to March, while the value of GWP showed a year-on-year contraction of 11.1% to EUR 1,283 million.

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