Munich Re’s Australia and NZ business will miss its profit target for 2011 as a result of the company’s exposures to the region’s recent natural catastrophes.

Munich Re Australia and NZ MD Heinrich Eder says the profit targets for the region for this year “cannot be achieved because of these immense claims”.

The company does not release regional financial figures.

Munich Re’s estimated claims cost from the second Christchurch earthquake is $1 billion, with an additional $500 million in claims from this year’s Queensland and Victoria floods and Cyclone Yasi.

Mr Eder told insuranceNEWS.com.au the five-year profit targets for the Australia and NZ business have not been altered, so the 2011 shortfall will need to be recouped in future years. 

“Our long-term profit target remains unchanged.”

He declined to put a figure on rate increases expected in the region at the July 1 renewals, but says the impact of catastrophes – which have cost Munich Re around $2 billion over the past two years – will be factored into both pricing and terms and conditions.

Munich Re’s board director with responsibility for Asia-Pacific and Africa, Ludger Arnoldussen, recently told the Australian Financial Review that Australian insurers should expect rate increases above the 15% experienced in 2010 and 2009 at July 1.

“These recent losses are significantly larger, so I think there is potential for more,” Mr Arnoldussen said.

However, Mr Eder says that despite the recent events Munich Re is not looking at pulling back from the region. “Our capacity is available, we are not withdrawing from the market, we remain committed,” he said.

The impact of the Japanese earthquake, tsunami and nuclear crisis will also affect reinsurance rates in the region, though Mr Eder declined to quantify the increases.

“Any reinsurance market is a function of both the local and the global market,” he said. “They’re pretty big scenarios which we have been seeing recently and I’m sure they will be factored in.

“Overall, there can be no doubt that for our part we have to ask for consideration of these risks which have now materialised.”

Munich Re is yet to release details of its losses from the Japanese earthquake.

On March 10 – prior to the Japanese earthquake – Group CEO Nikolaus von Bomhard said the company was on track to produce “a more or less unchanged consolidated result of around €2.4 billion for 2011”.

“This target will only remain achievable, however, if random losses in the further course of the year remain below expectations.”