Financial services provider Munich Re has reported a record E3.5 billion profit for fiscal 2006, largely driven by improvement in its reinsurance and primary insurance divisions. As a result, the group has raised its dividend by almost 50%.

Despite its reinsurance profit almost doubling to E2.7 billion for the year, the group witnessed a 4% decline in its reinsurance division for the fourth quarter, which suggests that it experienced pricing pressures.

Nikolaus von Bomhard, chairman of Munich Re’s board of management, said: There is substantial demand for financial protection among our clients in reinsurance and primary insurance, which enables us to selectively expand our profitable business in promising growth segments and regions at the right moment. Our shareholders will also benefit from this.

He also added that the group expects a profit of between E2.8 billion to E3.2 billion for fiscal 2007, an additional 10% from the previous prediction of between E2.6 billion to E2.8 billion a year ago.