Despite losses from Winter Storm Kyrill, Munich Re remains confident about hitting its targets for the year

In the first three months of 2007 Munich Re recorded a profit of €982m (up from €979m in Q1 2006). Its operating result decreased by 10.2% to €1,321m (€1,471m in Q1 2006), whilst gross premiums written remained flat at €10.0bn. Shareholders' equity has risen to €26.5bn since the beginning of the year. Winter Storm Kyrill cost the group less than originally expected, amounting to €450m before tax, approximately €390m in reinsurance and around €60m in primary insurance.

The company also launched its "Changing Gear" programme, through which it plans to increase earnings per share annually by an average of more than 10% from 2007 up to and including 2010. Changing Gear also includes a clear commitment to continuing the Group's active capital management. As a first step, Munich Re will buy back shares with a volume of up to €2bn before the AGM in April 2008. The intention is to then retire these shares. Munich Re also aims to continue paying high dividends – the dividend payout for the financial year 2006 totalled nearly €1bn. "With dividends at this level and a share buyback programme of over €5bn, we would pay out more than €8bn to shareholders by the end of 2010", stated von Bomhard.

Although the operating result in the company's reinsurance segment fell by 14.2% to €1.1bn (down from €1.2bn in Q1 2006), reinsurance still contributed €798m (down from €841m) to the group profit. Large gains on real-estate sales, initiated last year, had a particularly positive effect, partially compensating for the windstorm losses caused by Kyrill. The combined ratio amounted to 101.8% (up from 91.6% in Q1 2006), of which 12.2 (2.2) percentage points were attributable to natural catastrophes (11.2 percentage points of these to Kyrill).

Compared with the same period last year, premium income showed a reduction of 2.8% to €5.8bn (€6bn in 2006), but this was chiefly due to changes in exchange rates – without these currency translation effects, it would have risen by 1.6%. Munich Re's primary insurers made a good start to the year 2007, increasing their operating result by 39.7% to €324m (up from €232m in Q1 2006) and their profit by 87% to €258m (up from €138m). The ERGO Insurance Group, which writes about 92% of the gross premiums in Munich Re's primary insurance segment, improved its profit by 78% to €258m (up from €145m). But its combined ratio climbed to 101.2% (96.1% in Q1 2006) owing to Kyrill, which also impacted the combined ratio for the whole primary insurance group.

Von Bomhard remains confident of achieving the group's targets for the financial year 2007, despite the claims costs for Winter Storm Kyrill in the first quarter: "We are on track for the year as a whole," he said.