Munich Re ups dividend despite rise in claims as natural disasters take a toll

EARTHQUAKES, storms and floods sent claims soaring and dented profits at Munich Re last year but the world’s biggest reinsurer said it could manage to maintain earnings at a high level, boosting its share price.

In a sign it was expecting less earnings volatility ahead, Munich Re said yesterday it would bump up its dividend and buy back more of its shares, adding that net profit this year should match the €2.4bn (£2.03bn) it made in 2010. The hit from catastrophe claims last year jumped to €1.6bn from just €200m a year earlier. Flooding in Australia cost the company €270m in the fourth quarter, and Munich Re said it expected a hit of similar size from those floods in the first quarter as well. Munich Re said it would raise its dividend for 2010 by 50 cents to €6.25 per share, while also buying back €500m worth of its own shares by April, 2012. In renewing reinsurance contracts as of 1 January, Munich Re said it managed to raise premium volumes by 4.1 per cent to €8.2bn and prices by 0.1 per cent compared with the previous year. For the full-year 2010, Munich Re posted net profit of €2.43bn, slightly short of the €2.47bn average expectation.