MUNICH RE EXPECTS LOWER PROFIT IN 2014 AS COMPETITION RISES

The boss of Munich Reinsurance Company told investors yesterday that the German insurer and reinsurer made a good start to 2014, following a very good 2013. However, he also warned of growing competitive pressures, adding that the group’s property casualty result is unlikely to be repeated again this year. At the group’s annual general meeting yesterday, Nikolaus von Bomhard, said that Munich Re had posted a target beating profit of €3.3bn in 2013, the third-highest result in the company’s history. In the absence of major losses, Munich Re reported a result for the first quarter of around €900m, he said. Munich Re has now set itself an “ambitious” target of €3bn for 2014, given the prospect of a lower return on investments and a higher tax bill, he said. Munich Re expects investment returns to fall again in 2014, and does not expect to repeat the €2.8bn reinsurance result of 2013. The group expects to produce a profit from reinsurance activities in 2014 of between €2.3bn to €2.5bn and €400m to €500m in primary insurance. Mr von Bomhard also commented on the soft market for reinsurance, brought about by fiercer competition and additional alternative capital. “It is a long time since we have seen such intense competition,” he said. “In the two rounds of renewals so far this year – most recently at the beginning of April – the effects of the keener competition were clearly apparent,” he added.