Munich Re has lifted its full-year profit guidance off the back of encouraging third-quarter figures.

The German reinsurer now expects to generate a full-year profit for the year to December 31 of “around €3 billion” ($3.7 billion), compared to its previous forecast of €2.5 billion ($3.1 billion).

The company lifted its guidance due to “unusually low” claims costs for natural catastrophes in the first nine months of 2012, along with strong investment returns and solid underwriting results.

The optimism comes despite Hurricane Sandy, which recently tore through populated areas of the US east coast and will affect the reinsurer’s fourth-quarter results.

Munich Re CFO Jorg Schneider says that while the insured losses from Sandy are “still unquantifiable”, the company expects its share of the loss to come in at around €500 million ($612 million).

Mr Schneider says the revised full-year forecast is provisional on its exposure to Hurricane Sandy and other potential major loss events in the last quarter remaining “within the currently expectable range”.

The reinsurer posted total gross written premium of €13.2 billion ($16.2 million) for the quarter, up 8.3% on the third quarter of 2011.

Its consolidated profit for the quarter was €1.1 billion ($1.3 billion), compared to €290 million ($355 million) for the corresponding period last year.

The reinsurance division accounted for the majority of the total third-quarter consolidated profit, at €1 billion ($1.2 billion).

In property-casualty reinsurance, the company says rate increases for natural catastrophe covers and rising premium income owing to new business in agricultural reinsurance had a “particularly positive effect”.

Looking ahead to the January 1 renewals, Munich Re's Reinsurance CEO Torsten Jeworrek said Hurricane Sandy might affect prices in the US market, but that on the whole the company is expecting flat renewals. 

“There is still sufficient capacity available in the reinsurance markets,” he said. “We estimate that prices, terms and conditions will at least remain stable in the forthcoming renewals in most markets.

“In particular, the low interest-rate level needs to be considered in pricing.”