Global reinsurance giant Munich Re has posted a profit of €3.2 billion ($4.3 billion) for 2012, up from €0.71 billion in 2011, saying it is satisfied with its renewals going into this year.
For 2012, the company posted an operating result of €5.4bn. At press time, 1 euro was equal to $1.35.
“This very pleasing profit is founded on our rigorous risk management, disciplined underwriting policy and the realisation of profitable business opportunities,” Munich Re CFO Jörg Schneider said in a statement on the preliminary figures.
“Our core business in insurance and reinsurance is healthy, while the claims burden from major losses was slightly below average. We also achieved a good investment result. 2012 thus brought good progress, allowing us to further strengthen our capital resources.”
In its primary insurance business, Munich Re showed a profit of €0.25 billion, up from €0.16 billion in 2011.
Gross premiums written in the financial year 2012 fell by 2.1% to €17.1 billion (17.4 billion in 2011). The combined ratio in property and casualty insurance was 98.7% for 2012 as a whole, compared with 99.1% the year before.
The reinsurance segment contributed €3.1 billion to the consolidated result, with the operating result up by €3.9 billion to €4.3 billion, the company said. Compared with the previous year, premium income grew by over 8% to €28.2 billion. The combined ratio in property and casualty reinsurance was 91.0% of net earned premiums for the year as a whole and 83.2% for the fourth quarter.
The company’s natural catastrophe losses amounted to around €1.3 billion for the entire year, and man-made losses to €0.5 billion. The year’s biggest loss event was Hurricane Sandy, causing insured losses in the range of $25 billion (not taking national flood insurance into consideration) and costing Munich Re around €800 million net before tax, it noted.
The company also said it was satisfied with the results from its Jan. 1 renewals. At that time, more than half of its non-life business was up for renewal, with only 10% not renewed. New business with a volume of approximately €880 million was also acquired at that time.
“Demand for reinsurance cover remains relatively constant, and sufficient capacity is available,” Torsten Jeworrek, Munich Re’s Reinsurance CEO commented in a statement. “In a still-challenging economic environment, a consistent underwriting policy and active cycle and portfolio management are vital for the profitability of our portfolio.”