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Munich Re eyes profit over 2 bln eur in 2010-paper

Published 09/16/2009, 04:10 AM
Updated 09/16/2009, 04:15 AM
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FRANKFURT, Sept 16 (Reuters) - Munich Re is on track to achieve net profit of 2.5 billion euros ($3.67 billion) this year and well above 2 billion euros in 2010, its chief financial officer said in a newspaper interview.

Joerg Schneider told financial daily Boersen-Zeitung that he sees no repeat in the near term of 2007's record net profit of 3.9 billion euros, which was helped by asset sales, a one-off tax boost and low payouts for damage claims.

"Therefore I don't see 3.9 billion euros either in 2009 or 2010, but I do see attractive earnings significantly above 2 billion euros," he said.

Munich Re officially targets a return of 15 percent on its risk-adjusted capital after tax over the cycle, a goal it says is ambitious but does not lead it to take irrational risks.

The world's biggest reinsurer was well on course to achieve that target this year, Schneider told the paper.

Schneider last month said the target equated to about 2.5 billion euros in net profit.

He also repeated Munich Re's position that the more the financial markets stabilised, the more likely the company would resume its programme of buying back its own shares.

Munich Re had planned to buy back up to 1 billion euros in shares ahead of its annual shareholder meeting in April 2010, but suspended the plan earlier this year due to the financial crisis.

A decision had yet to be taken on resuming the buyback, Schneider said, adding, however, that the company planned to stick to its dividend of 5.50 euros per share.

The company also had no big acquisitions in the pipeline, Schneider said, echoing the words of his boss, Chief Executive Nikolaus von Bomhard, earlier this week.

The financial crisis is boosting insolvencies and would create "considerable losses" in Munich Re's credit and surety business this year and next, Schneider said, adding that the company had pencilled in damage claims in the triple-digit million euro range for both years.

Munich Re's stock has fallen nearly 6 percent so far this year, lagging a rise of more than 10 percent in the DJ Stoxx index of European insurance shares.

The share was up 0.7 percent at 104.33 euros by 0731 GMT, lagging a 1.2 percent rise in the DJ Stoxx insurance index.

World No. 2 reinsurer Swiss Re's share has fallen by nearly 7 percent, while No. 4 player Hannover Re is up by more than a third since the start of the year. (Editing by Rupert Winchester)

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