Brought to you by:

Writedowns bite into Munich Re profit

Investment writedowns have squeezed Munich Re’s profit.

The last-quarter profit of €100 million ($191.3 million) brought the reinsurer’s full-year figure to €1.5 billion ($2.8 billion), down 60% on the €3.9 billion ($7.4 billion) recorded for the corresponding period in 2007.

The company says writedowns on equity portfolios were cushioned by write-ups of derivatives. The overall balance of write-ups and net gains on disposal of equities and derivatives amounted to €700 million ($1.3 billion) in the final quarter, and put the full-year cost at €200 million ($A380 million).

It says natural catastrophes and man-made losses took their toll in the past year. The combined ratio for property/casualty reinsurance business was 99.5%, compared with 96.4% in 2007.
 
Munich Re is upbeat about the year ahead, saying the market is showing distinct signs of hardening.