Munich Re Quarterly Profit Drops 29% as Investment Earnings Fall

Munich Re, the world’s biggest reinsurer, said third-quarter profit slumped 29 percent on a decline in earnings from investments.

Net income declined to 520 million euros ($565 million) in the three months through September from 733 million euros a year earlier, the company said in a statement from Munich on Thursday. That missed the 676.3 million-euro average of eight estimates compiled by Bloomberg.

Reinsurers, which help primary insurers shoulder risks for events such as natural disasters, have seen earnings squeezed by record-low interest rates and declining prices.

“The capital market turbulences have left their mark on the investment result, with below-average realized gains on disposals, write-downs of equities, and losses from derivative hedging instruments,” Joerg Schneider, the company’s chief financial officer said in the statement.

Expenses for major catastrophe losses, man-made and natural, rose to 386 million euros in the quarter from 257 million euros a year earlier, Munich Re said. The company said it expects costs of 175 million euros for the August chemical warehouse explosions in the Chinese city of Tianjin.

Swiss Re, Europe’s second-biggest reinsurer, last week reported a 13 percent increase in third-quarter profit, beating analysts forecasts, after strong underwriting and investment results and a quiet period for natural catastrophes.

Munich Re’s shares have risen 8.9 percent this year, giving it a market value of 30.1 billion euros. The Bloomberg Europe 500 Insurance Index gained 13 percent over that period.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE