The FINANCIAL — According to provisional calculations, Munich Re improved its consolidated result in 2013 to €3.3bn (previous year: €3.2bn).
In the fourth quarter, it posted a profit of €1.2bn (0.5bn). Shareholders are to participate in last year's success through a higher dividend: subject to approval by the Supervisory Board and Annual General Meeting, the dividend will rise to €7.25 (7.00) per share, according to Munich Re.
Owing to a reduced investment result, the Group posted a lower, but still pleasing operating result of €4.4bn (5.3bn) in 2013, some €1.3bn (1.6bn) of this in the fourth quarter. Currency translation effects had a negative influence of –€0.3bn (–0.2bn) in 2013. Tax on income amounted to only €0.1bn (0.9bn) in 2013, with the fourth quarter producing tax relief of €0.2bn on balance, whereas the result for the fourth quarter of 2012 incurred tax on income of €0.4bn. Despite the adverse effects of interest rates and exchange rates, shareholders' equity decreased in 2013 by only around €1.2bn to €26.2bn (31.12.2012: €27.4bn) – mainly thanks to the high profit for the year – with a rise of around €0.4bn in the fourth quarter. The return on risk-adjusted capital (RORAC), which serves as the core target for the Group as a whole, developed satisfactorily at 12.2% (13.2%), whilst the return on equity (RoE) amounted to 12.5% (12.5%). For the fourth quarter, an annualised RORAC of 17.5% (7.8%) and an RoE of 18.4% (7.0%) were achieved. Gross premiums written by the Group in the financial year 2013 fell slightly to €51.1bn (52.0bn) owing to currency effects.
With a book value of €209.5bn (market value of €217.7bn; previous year €224.5bn), total investments at 31 December 2013 were down on the year-end 2012 figure of €213.8bn. The Group's investment result fell to €7.7bn (8.4bn). This result represents a return of 3.5% in relation to the average market value of the portfolio, according to Munich Re.
The reinsurance segment contributed €2.8bn (3.1bn) to the consolidated result. Owing to the lower income from investments, the operating result decreased by €0.8bn to €3.5bn. Gross premiums written were down to €27.8bn (€28.2bn). This was due to the development of exchange rates, which accounted for over 4 percentage points of the reduction in premiums.
The result from life reinsurance business was adversely affected in the third quarter by negative impacts from Australian disability business, but otherwise again performed well. Life reinsurance contributed €0.4bn (0.5bn) to the consolidated result, according to Munich Re.
Property-casualty reinsurance accounted for €2.4bn (2.6bn) of the consolidated result for the full year. The combined ratio for 2013 amounted to a very good 92.1% (91.0%) of net earned premiums, and totalled 89.2% (83.2%) for the fourth quarter. As a consequence of Munich Re’s customary review of reserves, the combined ratio for the full year includes a total of around €0.8bn net from the reduction of claims provisions for prior years, which is equivalent to around 5 percentage points in relation to net earned premiums. Munich Re is adhering to its conservative approach in measuring loss reserves and in adjusting them over the course of time, so the safety margin for the reserves remains high.
Natural catastrophe losses impacted the full year with €764m (1,284m), and man-made major losses with €925m (515m). The two largest losses in 2013 were the floods in central Europe in early summer (€178m) and the intense rain and hailstorms in Germany in June and July (€174m). Overall claims expenditure for major losses in 2013 totalled €1,689m, while the figure for the fourth quarter was €384m (745m), of which €119m (708m) was for natural catastrophes and €265m (38m) for man-made losses. In relation to net earned premiums, the major-loss burden for the full year was, at 10.4% (10.8%), below the average expected figure of 12%, and amounted to 9.2% (18.0%) for the fourth quarter, according to Munich Re.
In its primary insurance business, Munich Re showed a significantly higher profit of €0.4bn (0.2bn) based on preliminary figures. The operating result fell by around 20% to €0.7bn. Gross premiums written in 2013 decreased by over 2% to €16.7bn (17.1bn). The combined ratio in property-casualty insurance improved to 97.2% (98.7%) for the full year, amounting to 97.5% (104.0%) in the fourth quarter. In both international and German business, the combined ratio for the year improved, despite the severe flood catastrophe in central Europe in the second quarter and the losses due to intense rain and hailstorms in Germany in the third quarter.
The business field of Munich Health posted a profit of €0.15bn in 2013 (previous year: loss of €0.09bn). The operating result grew by over 50% to €0.17bn. This was mainly due to the restructuring of US Medicare business and to the fact that the balance sheet provision made in 2012 for anticipated further expenditure was not required. In September 2013, Munich Re announced the sale of the Windsor Health Group (WHG) to US health primary insurer WellCare Health Plans, Inc. The sale was completed as at 31 December 2013. Owing to negative currency effects, Munich Health's premium income in 2013 was down by around 2% to €6.6bn (6.7bn). The combined ratio for 2013 amounted to 98.3% (100.2%), according to Munich Re.
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