Munich Re posts 45.9% drop in 1st qtr profit

FRANKFURT: Germany's biggest re-insurance group, Munich Re, posted on Wednesday a 45.9-pct drop in first-quarter net profit, mainly as a result of stock market losses.

The group said net profit fell to 415 million euros (550 million dollars), from 777 million euros in the same period a year earlier.

Operating profit shed 37.5 percent to 746 million euros, a statement added.

"In view of the difficult economic parameters, the results are highly satisfactory," finance director Joerg Schneider said in a statement.

"We are well prepared for the challenges of the current year," he added. "Where opportunities present themselves, we are exploiting them -- but with great discipline." Munich Re's results were hit by "significant price losses on the capital markets and their impact on the investment result," the statement said.

Analysts polled by Dow Jones Newswires had forecast a net profit of 478 million euros and an operating profit of 792 million.

But the group said gross premiums paid by clients had gained 5.3 percent to 10.4 billion euros, allowing the insurer to raise its forecast for 2009.

Munich Re now expects them to reach 39-41 billion euros, compared with a previous estimate for a maximum of 39.5 billion. Looking ahead, the group maintained its 2009 target of 15 percent net return on risk-adjusted capital.

Breaking down the first quarter results, the company said its core business of reinsurance showed a slight operating profit gain of 0.8 percent to 851 million euros owing to fewer than expected natural catastrophes.

In the insurance sector however, operating results plunged to 77 million euros from 314 million in the first quarter of 2008 because the group was forced to write down the value of some assets amid the financial turbulence.

Earnings from investments fell by 18.5 percent to 1.4 billion euros.