It may have suffered significant exposure to the devastating North American hurricane season, but the world’s largest reinsurer is still well in the black. Munich Re has announced a record consolidated profit for 2005, clearing €2.7 billion ($4.53 billion) over the year. This was up 45% on its €1.887 billion ($3.16 billion) result in 2004.

“We have thus slightly exceeded our target,” Chairman Nikolaus von Bomhard said. “Our solid basic business makes the achieved level of profitability sustainable. We therefore expect a profit for the current year of the same level as in 2005.”

The annual result included a €1.4 billion ($2.35 billion) profit from reinsurance activities. While hurricane payouts accounted for €2.3 billion ($3.86 billion) worth of current and expected claims (15.4% of Munich Re’s combined ratio), the company’s broad “high quality” portfolio and “very solid” basic business meant its exposure to hurricanes could be offset by more profitable lines.

While Munich Re has weathered much of the storm, hurricanes have left a big dent in American International Group’s (AIG) results for 2005. That, coupled with the fallout from New York Attorney-General Eliot Spitzer’s investigations into its accounting practices, pushed AIG’s fourth quarter result down to $US444 million ($603 million). This was down more than 70% on its $US1.6 billion ($2.17 billion) result over the last three months of 2004.

The results included a $1.15 billion ($1.56 billion) charge to cover the settlement with Mr Spitzer and the Securities and Exchange Commission and the $1.15 billion cost of increasing the company’s net reserve levels.

Despite the poor quarter, AIG still ended the year with profits of more than $US10 billion ($16.78 billion).