Munich Re AG (MUV2.XE) announced Tuesday that profit dropped 9% in the second quarter on higher costs related to payouts for natural disasters partly cushioned by the reinsurer’s improved income from investments and the release of reserves.
Net profit fell to 974 million euros ($1.08 billion) in the three months to end-June from EUR1.07 billion in the same period last year, better than the EUR556 million analysts were expecting according to a Wall Street Journal poll. Analysts hadn’t factored in higher net income from investments, which rose 9.1% to EUR2.75 billion. Analysts had forecast a 27% decline to EUR1.85 billion.
Munich Re said revenue fell 4.3% to EUR11.93 billion.
The world’s biggest reinsurer by revenues said it remained on track to hit its previously lowered full-year earnings target after reporting aftertax profit of 2.3 billion after the first six months.
Munich Re had to pay some EUR542 million for major disasters in the quarter, including the wildfires in Canada, earthquakes in Japan, floods and hailstorms. That was more than twice the year-earlier figure of EUR207 million.
The reinsurer had cut its full-year profit guidance in May to the current EUR2.3 billion, the lower end of its previous target range.
The world’s biggest reinsurer by revenues said it remained on track to hit its previously lowered full-year target for aftertax profit of EUR2.3 billion. In “Munich Re Profit Drops on Payouts For Wildfires, Quakes and Floods,” at 0631 GMT, the full-year aftertax profit target was mistakenly referred to as first-half aftertax profit in the fourth paragraph.