Munich Re says first-half consolidated profit fell 4.5% to €1.5 billion ($2.2 billion), including a second-quarter claims burden of €230 million ($341 million) from floods in Europe.

“Unlike the first quarter… the second quarter was significantly affected by major losses,” CEO Nikolaus von Bomhard said. “The business environment remains difficult, owing to the low interest rates.”

Munich Re’s reinsurance operating profit was €1.48 billion ($2.19 billion) in the six months to June 30, down 13% from €1.7 billion ($2.52 billion) in the corresponding period last year.

Natural catastrophe losses totalled €338 million ($501 million), while major losses from man-made events were €373 million ($553 million).

Catastrophes included floods in Germany and nearby countries, flooding in Alberta in Canada and US tornado damage. A landslide at a Utah copper mine led to an evacuation and disrupted production, making it the largest man-made loss in the second quarter.

Munich Re has also raised its loss estimate for last year’s Costa Concordia cruise ship disaster to €100 million ($147 million) from €80 million ($117 million) previously.
 
Costs for the industry are likely to exceed $US1.1 billion ($1.2 billion) because the latest technology is being used to recover the ship, Reinsurance CEO Torsten Jeworrek says.

 “These are the highest salvage costs ever seen in the insurance industry.”

Munich Re’s reinsurance gross written premium grew 3% to €14.1 billion ($20.9 billion) in the first half, including gains in the property and casualty business and life reinsurance.

Renewals at July 1 mainly involved treaty business in the US, Australia, New Zealand and Latin America, with about €2.2 billion ($3.3 billion) up for renewal. Renewal season volumes were unchanged on last year, while rates fell about 0.9%.

“Despite sometimes substantial competitive pressure in natural catastrophe business, the price reduction for the business we wrote remained moderate,” Mr Jeworrek said.

Operating profit for the primary insurance business – including property and casualty and life – was €410 million ($608 million) for the half-year, down from €550 million ($816 million).

Munich Re says it is on course for a full-year profit of “close to” €3 billion ($4.5 billion).