Munich Re profits slump

LARGE catastrophe losses and the collapse in the value of Greek sovereign debt slashed profits at Munich Re this year, it said yesterday.

The world’s biggest reinsurance group made just €80m (£68.7m) net profit in the nine months to September, down from almost €2bn in the same period in 2010, despite its revenues from premiums rising more than nine per cent to €34.2bn.

Third quarter profits were higher at €290m, though still down 63 per cent compared with a year earlier.

“Our result was certainly affected by the capital-market and currency turbulence,” chief financial officer Joerg Schneider said.

Munich Re took a €1.5bn pre-tax loss from natural disasters earlier in the year and another €195m loss from Hurricane Irene in the third quarter.

Munich Re had to write off €933m of the value of its Greek bonds, and cut the value of its Italian bond holdings by €1.4bn.

It instead ploughed capital into AAA-rated bonds issued by Germany, France and the Netherlands as well as strong states outside the Eurozone.