Munich Re’s consolidated profit came in at €1.59 billion ($1.85 billion) in the six months to June 30, putting it well on the way to beating its full-year target of €2.5 billion ($2.91 billion).

Gross premiums were up 3.8% to €25.9 billion ($30.22 billion), equity rose 8.8% to €25.4 billion (29.64 billion) and the value of the group’s investments rose 3.7% to €209 billion ($243.9 billion).

Munich Re Chairman Nikolaus von Bomhard described the result as “very satisfactory”.

“Claims expenditure was significantly lower than in the same period last year, which had been affected by exceptionally severe natural catastrophes.”

However, Dr von Bomhard sees danger in the economic environment. “The sovereign debt and banking crisis remains the greatest challenge facing the insurance industry,” he said.

Reinsurance premiums written in the half totalled €13.7 billion ($15.98 billion), with life reinsurance premiums coming in at €7.9 billion ($9.21 billion). The combined ratio improved to 95.7% from 134.2% a year earlier.

The technical profit on the insurance business was €1.7 billion ($1.98 billion), compared with the previous corresponding period’s loss of €1.22 billion ($1.42 billion), reflecting the fall in catastrophe claims.

However, a series of tornadoes in the US cost the business €135 million ($157.56 million).

North America provided 64% of gross premium income, northern, eastern and central Europe 18%, southern Europe and Latin America 11%, the Middle East and Africa 4% and the Asia-Pacific 3%.

Total premium income for the full year is expected to be between €50 billion ($58.35 billion) and €52 billion ($60.69 billion) and full-year return on investments is predicted to be 3.5%. A reserve of €160 million ($186.74 million) has been set aside to cover drought losses in the US.

The company spent €101 million ($118.87 million) buying solar generation businesses in southern Europe in the half-year.