The FINANCIAL — In the second quarter of 2013, Munich Re achieved a consolidated profit of €543m. Performance in primary insurance and reinsurance was good as a whole, although the second quarter was marked by claims burdens of €230m from the floods in Germany and neighbouring countries and by above-average major losses. In the first half-year, the Group achieved a profit of €1.5bn, according to Munich Re.
"Unlike the first quarter of 2013, the second quarter was significantly affected by major losses. The business environment remains difficult, owing to the low interest rates. Against that background, the half-year result is very satisfactory." With regard to Munich Re's result target for 2013 as whole, von Bomhard emphasised: "With this half-year profit, we are well on track to achieving our target of close to €3bn." According to the CEO, the very different claims experience in the first two quarters again showed "how careful one has to be in basing long-term result estimates on the basis of just one quarter," said CEO Nikolaus von Bomhard.
From January to June, the Group recorded an operating result of €1,982m (2,304m), according to Munich Re. In the second quarter, it posted an operating result of €594m. There was tax income of €165m (same quarter last year: tax expenditure of €164m), mainly due to a reduction of provisions for prior years necessary for accounting reasons. Negative impacts came from interest payments of €113m on back tax payments for prior years, and currency translation effects of –€92m (previous quarter: +€153m).
Owing to the increase in interest rates, the on- and off-balance-sheet valuation reserves decreased to a still-high level of €16.7bn; equity declined by 6.5% compared with the year-end figure, falling to €25.7bn. The annualised return on risk-adjusted capital (RORAC) in the first six months amounted to 11.1% and the return on equity (RoE) to 11.2%. Gross premiums written were up 1.0% to €26.1bn (25.8bn), with €12.8bn (12.6bn) attributable to the second quarter. If exchange rates had remained the same, premium volume would have increased by 2.1% compared with the same period last year. Primary insurance: Result of €275m
In the first six months of the year, the primary insurance field of business posted an operating result of €410m (550m), of which €187m (293m) was attributable to the second quarter, according to Munich Re. The consolidated result totalled €275m (295m), with the second quarter contributing €148m (150m). ERGO's profit was just below the previous year's level at €236m (255m), of which €116m derived from the second quarter.
In Germany, ERGO launched a new generation of products in life insurance on the market with effect from 1 July 2013.
"The new ERGO Annuity Guarantee offers our clients an innovative combination of security, earnings opportunities and flexibility. With a capital guarantee of the gross premiums paid up to the start of the benefit phase, a guaranteed annuity factor, and the classic guaranteed interest rate in the benefit phase, the product has major guarantee components," said Torsten Oletzky, CEO of the ERGO Insurance Group.
"We achieve the premium-related guarantee at the beginning of the benefit phase through an innovative investment concept, and safeguard it through a reinsurance contract. In the event of premature surrender in the capital accumulation period, we offer the client additional security by also paying out the value covered under this reinsurance. The new product sets new standards in terms of transparency regarding disclosure of costs and projection methods. After one month of marketing the product, we are satisfied with the initial sales figures," he added.
The combined ratio in property-casualty insurance (including legal protection business) amounted to 96.0% (95.2%) in the first half-year. In the second quarter, the combined ratio of 96.1% was only one percentage point higher than the figure for the same period last year, despite high expenditure for the floods. In the first half-year, an increased combined ratio of 94.5% (92.8%) in Germany contrasted with a slightly improved figure of 98.6% (98.9%) in international business.
The primary insurers' loss burden from the floods is estimated at around €50m net, according to Munich Re.
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