Goal “remains ambitious” given cat losses

German reinsurer Munich Re made a €1.19bn net profit for the first half of 2010, meaning it is on track to hit the $2bn profit target it has set itself for the full year. The group warned that hitting the target “remained ambitious” following large catastrophe losses in the first half of the year, but added that given normal loss experience and continued investment results it is achievable.

The first-half profit was €60m or 6.5% up on last year’s first-half profit of €1.13bn.

Munich Re’s second-quarter profit of €709m, which was 1.7% up on the €697m it made last year, beat analysts’ expectations. James Shuck, equities analyst, European insurance at investment bank Jefferies, wrote in a research note that the profit was “well ahead” of consensus and beat Jefferies’ own estimate of €484m.

Shuck said he was encouraged that the bulk of the performance came from operating profit driven by an better-than estiomated property/casualty combined ratio and “surprisingly resilient” regular investment income.

Munich Re made a €1.45bn operating profit in the second quarter, compared with €1.37bn in the same period last year. Half year 2010 operating profit was €2.2bn versus €2.1bn in the same period last year.

The second quarter reinsurance combined ratio deteriorated to 106.4% from 97.9% in the first half and to 103.8% from 98.4% in the second quarter. The primary insurance combined ration worsened to 96.6% from 94.7% in the first half of the year, and to 94.5% from 93.3% in the second quarter.