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Cat losses drag on Munich Re earnings

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Munich Re has recorded a decline in first-quarter net profit to €633 million ($1.01 billion) from €827 million ($1.33 billion).

The German reinsurer blames higher basic losses and greater expenditure on claims from previous years that “prevented a repeat of the extraordinary result” recorded in the corresponding quarter of last year.

However, the April renewals were encouraging, with the business achieving price increases of 1.4% while premium volume went up 10.3% to €1.8 billion ($2.89 billion).

“It was possible to selectively tap growth opportunities in certain markets, especially in India and Japan,” Munich Re says.

“These two markets account for one-third of the business renewed in April.”

The property and casualty (P&C) arm suffered a 28.9% decline in first-quarter profit to €420 million ($673 million), despite premium volume rising to €5.48 billion ($8.78 billion) from €5.32 billion ($8.53 billion).

Major loss expenditure increased sharply to €479 million ($767.8 million) from €62 million ($99.4 million), which affected P&C business.

An additional €267 million ($427 million) in losses from Typhoon Jebi contributed to the losses. The P&C combined operating ratio deteriorated to 97.9% from 88.6%.

The group is maintaining a profit forecast of about €2.5 billion ($4 billion) for the year.

“Munich Re continues to grow organically in its core business of property and casualty reinsurance,” CFO Christoph Jurecka said. “The April renewals were the sixth consecutive round of renewals in which we were able to expand our business robustly in some areas.

“Prices for reinsurance coverage have continued to rise following the high losses in previous years.”