Munich Re insurance giant raises profit forecast

Munich Re, the world's largest reinsurer, said Tuesday it was raising its profit forecast for 2012 after a better-than-expected second quarter. "We are well on track to slightly surpass the originally envisaged profit for the year of around 2.5 billion euros ($3.1 billion)," chief executive Nikolaus von Bomhard said in a statement. "We are optimistic for 2012, despite the difficult business environment." Full-year gross premium income was projected to reach "a range between 50-52 billion euros," compared with 50 billion euros in 2011, the group said. On the Frankfurt stock exchange, Munich Re shares were showing a gain of 0.47 percent -- in line with the overall market -- at 118.15 euros. In the second quarter alone, Munich Re said it booked a 9.8-percent rise in net profit to 808 million euros on a 5.5-percent gain in gross premiums to 12.63 billion euros. That meant first-half profit amounted to 1.59 billion euros on gross premiums of 25.897 billion euros. "With a profit of 1.6 billion euros for the first half-year, we have achieved well over half of our target of around 2.5 billion euros," von Bomhard said. The group said that its claims exposure was lower than in the same period last year "with its exceptional burden from natural catastrophes" such as earthquakes. Total major-loss expenditure fell to 716 million euros for the first six months from 3.64 billion euros a year earlier. For the current year, Munich Re said it anticipated a net burden of around 160 million euros from crop failure due to the persistent drought in large agricultural areas in the United States. Overall, the company said it believed that "the challenge of the still very low interest rate levels to be far greater than that of the volatility of the financial markets or the (weaker) global economy."