German reinsurer profit down €572m in first nine months

Jörg Schneider, Munich Re CFO

Munich Re has announced a €1bn ($1.35bn) share buy-back programme as profits fell €572m in the first nine months of 2013.

The share buyback is scheduled to be completed before the 30 April 2014 annual general meeting, and would mark €6bn in share buy-backs since November 2006, Munich Re said in its quarterly results statement. Munich Re’s last share buyback finished in April 2011.

The German reinsurer posted a 21% drop in consolidated profits to €2.158bn for the first nine months of 2013 (2012: €2.73bn).

Investors reacted negatively to the results, as Munich Re’s share price fell through the morning, dropping 2.75% to 150.25 by 9:07 GMT.

Munich Re chief financial officer Jörg Schneider said: “It is another good result, even when the influence of one-off effects is factored out. We are holding our own in spite of a difficult business environment.”

Gross written premium (GWP) was down 1.1% to €38.6bn for the first nine months of 2013 (2012: €39.0bn).

The group’s results for the first nine months of 2013 were hit by major losses across a number of segments.

Premium income across all primary insurance segments fell 2.3% in the first nine months of 2013 to €13.6bn (2012: €13.9bn) and GWP dropped 1.7% to €12.6bn for the first nine months of the year (2012: €12.8bn).

The combined operating ratio (COR) for the property/casualty segment (including legal protection insurance) fell slightly to 97.1% for the first nine months of 2013 (2012: 96.9%).

GWP fell slightly to €21bn in the first nine months of 2013 (2012: €21.2bn) in Munich Re’s reinsurance division. Operating revenues were down €577m to €2,332m for the first nine months of 2013 (2012: €2,909m).

The COR for the first nine months of 2013 was 93.1% (2012: 93.6%) of net earned premiums.

The group’s investment returns were down 9.7% to €5.7bn for the first nine months of 2013 (2012: €6.3bn). The result means the portfolio has a 3.4% annualised return.

Munich Re also experienced €276m losses on currency movements in the first nine months of 2013 (2012: -€38m).