Munich Re has posted a €3.5 billion ($5.77 billion) net profit for 2006 despite asbestos claims and tax costing its US operations more than $US1.5 billion ($1.86 billion).

American Re, the group’s US unit, lost $US600 million ($746 million) in asbestos claims and almost $US1 billion ($1.24 billion) in tax, according to Munich Re’s annual report.

But a sale of American Re isn’t on the agenda, despite CEO Nikolaus Bomhard warning that non-profitable divisions will be cut loose to allow more focus on stronger markets.

The company is expecting net profit for 2007 to be between €2.8 billion ($4.62 billion) and €3.2 billion ($5.28 billion).