Just a few days before the Japan earthquake and tsunami, Munich Re Chairman Nikolaus von Bomhard warned shareholders the group would only be able to maintain profit if major losses remained below average for the rest of the year.

He estimates Munich Re’s losses from Cyclone Yasi, the Brisbane floods and February earthquake in Christchurch will total around $1.5 billion, with NZ alone accounting for $1 billion.

Munich Re made a profit of €2.43 billion ($3.34 billion) in 2010, down 5%, and expects a similar result again this year, subject to the warning on major losses.

The group increased gross written premium (GWP) by 9.9% to €45.5 billion ($62.7 billion) in 2010, with reinsurance GWP up 8% to €23.6 billion ($32.5 billion) and primary insurance GWP up 5% to €17 billion ($23 billion).

The combined ratio from reinsurance was 100.5% compared with 95.3% in 2009 while the combined ratio from primary insurance was 96.8% compared with 93.2%.

GWP from Munich Health rose 29% to €5.1 billion ($7 billion) and the combined ratio was 99.7% compared with 99.4%.

Reinsurance contributed €2.1 billion ($2.9 billion) of the profit, primary insurance €656 million ($904 million) and Munich Health €63 million ($86.8 million).

Dr von Bomhard says he is generally optimistic for the rest of 2011.

“In reinsurance, our market and client proximity is paying off. We have the capacity to design complex reinsurance solutions for our clients, a fact that sets us apart from our competitors.”

He says there is potential for profitable growth because clients increasingly want to transfer risk to financially strong reinsurers as a means of capital relief.

The group incurred natural catastrophe losses of €1.56 billion ($2 billion) in 2010, with the Chilean earthquake accounting for $US1 billion ($997 million) of that, after retrocession and pre-tax.