Chief Executive Officer Nikolaus von Bomhard says that while profits will be “not as good” as the amounts posted a year ago, he does forecasts a quarter he terms as “pleasing.'' Munich Re posted net income of 965 million euros ($1.54 billion) in the first quarter of 2007.
Von Bomhard had said two months ago that insurance and capital markets hurt by the U.S. subprime collapse will remain “tough” this year, adding that he plans to increase per-share earnings an average of 10 percent until 2010, helped by share buybacks.
Munich Re expects to post between 3 billion euros and 3.4 billion euros in net income this year following a record profit of 3.85 billion euros in 2007. Last year's earnings were boosted by a 400 million-euro tax gain. Munich Re is scheduled to report first-quarter results May 8.
The biggest first-quarter claims were not as costly as the year-ago quarter's worst disasters, which included winter storm Kyrill, according to the Munich, German-based reinsurer. Still, Munich Re “saw a higher number of claims in total” which resulted in higher costs, von Bomhard said. Extraordinary year-earlier gains such as a property sale were not repeated, he said. Writedowns on equity investments have been compensated by gains from hedging instruments, he said.
Munich Re, which repurchased 1 billion euros of its shares in February 2007 in its first-ever buyback, reiterated plans for an additional 5 billion euros in repurchases by 2010. It has bought back almost 2 billion euros under that program and plans at least another 1 billion euros in repurchases by the next annual shareholders meeting in 2009.