Munich Re First-Quarter Profit Jumps Led by Reinsurance Revenue

Munich Re, the world’s biggest reinsurer, said first-quarter profit jumped 25 percent, beating estimates, after reinsurance revenue rose and it reported no major losses from natural catastrophes.

Net income climbed to 972 million euros ($1.27 billion) from 780 million euros a year-earlier, the Munich-based company said in a statement today. That compared with a 932 million-euro median estimate of seven analysts surveyed by Bloomberg.

Munich Re, led by Chief Executive Officer Nikolaus von Bomhard is benefitting from the absence of major catastrophes and stable prices. While lower interest rates depress revenue, prices will be unchanged this year, according to a report from Aon Benfield, the world’s largest reinsurance broker.

“There happened to be lower claims burdens from major losses, but the Group’s operating earnings also proved to be robust,” Chief Financial Officer Joerg Schneider said in the statement. “After this good start, we are optimistic of achieving our profit target for the year of close to 3 billion euros.”

Munich Re’s shares rose 8.7 percent this year, valuing the company at 26.5 billion euros. That compared with a 12 percent increase for the 28-company Bloomberg Europe 500 Insurance Index and an 11 percent advance for Zurich-based Swiss Re Ltd, (SREN) the world’s second-biggest reinsurer.

The firm’s reinsurance unit posted a profit for the first quarter rising 30 percent to 827 million euros. Premium income advanced 1.8 percent to 7 billion euros. Natural catastrophe losses were 24 million euros compared with 41 million euros a year previously, while man-made losses fell to 81 million euros from 223 million euros.

Investment income fell to 2 billion euros from 2.24 billion euros in the first quarter of 2012, matching the 2 billion-euro median estimate of nine analysts surveyed by Bloomberg. A return on investments of 3.6 percent for the quarter compares with a full-year target of about 3.3 percent.

The company’s combined ratio in property and casualty reinsurance improved to 86 percent from 95 percent a year ago. A ratio above 100 percent means claims and costs exceed premium income, leaving a loss from underwriting.

To contact the reporter on this story: Annette Weisbach in Frankfurt at aweisbach1@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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