German reinsurance titan Munich Re has become the latest global risk insurer to reveal record profits despite the severe impact of last year's US hurricane season as investments and divestments offset high exposure.
Munich Re delivered record profit of over E2.7 billion for 2005 compared to E1.9 billion in 2004, despite experiencing an alarming combined ratio of 110.5% in reinsurance due to its natural catastrophe exposure during the year.
Even though it was a record hurricane year, the group posted a profit of E1.4 billion in reinsurance, thanks to its very solid basic business and excellent investment results, the company said in a statement.
Gross premiums written in the reinsurance segment remained virtually stable at E22.3 billion. In life and health, premium rose to E7.8 billion, whereas in property-casualty reinsurance it decreased by 2.1% to E14.5 billion.
With a profit of E1.2 billion, the primary insurance segment exceeded original expectations, Munich Re reported. Low claims burdens and consistent cost reduction enabled the primary insurers to record another excellent combined ratio of 93.1%. Gross premiums written in primary insurance grew by a further 0.3% to E17.6 billion.
The group expects gross premiums written of E37–38 billion for 2006, with about the same volume coming from reinsurance as in the previous year (between E22 billion and E23 billion). In primary insurance, gross premiums of between E16.5 billion and E17.0 billion are forecast.
In non-life reinsurance business, the goal is to outperform the combined ratio target of 97%. The primary insurance business again aims to achieve a combined ratio of under 95%.