Munich Re’s profits plummeted last year because of the eurozone debt crisis and a string of natural disasters, the reinsurer reported today.
In 2010 the company saw profits reach €2.43 billion (£2.2b), but last year this figure was around €71 million (£59m), a drop of 71 percent.
The company acknowledged that despite the massive drop compared to 2010, €71 million was a good result and demonstrated the companies resiliance in a tough operating climate.
“The year 2011 was marked by a series of severe earthquakes and many weather-related catastrophes,” the company said in a statement. “Thus Munich Re estimates its claims costs from the earthquakes in Japan and New Zealand at around €1.5bn for each event.
“In addition, there was the worsening of the sovereign debt crisis in the eurozone”
Munich Re CEO, Jörg Schneide, added his own comments, saying “we have never experienced a year like 2011 before – extreme burdens from natural catastrophes combined with the financial crisis, which flared up again after the slight recovery in 2009 and 2010.
“Given the huge strains these placed on results, it is a notable achievement that we still posted a profit of €0.71bn,” Schneide said.
Analysts had predicted worse results from the reinsurance giant, and if it weren’t for a strong frouth quarter their predictions may have come true.
The company made almost 90 per cent of their yearly profit in the final quarter of the year, reporting gains of €63 million (£53m) for the term.
While gross premiums for the year rose by 8.9 percent to 49.6 billion euros, investment earnings dropped 21.8 percent to 6.8 billion euros, not least as a result of 1.2 billion euros in writedowns on the group’s holdings of Greek government securities.
The company said that losses from natural catastrophes amounted to 4.5 billion euros for the entire year, with the deadly earthquake and ensuing tsunami in Japan costing it 1.5 billion euros.
Yet despite despite economists predicting the eurozone will remain shaky throughout 2012, the company said they expect 2012 profits to be back around what they experienced in 2010.
“Assuming average loss experience, Munich Re expects a significantly improved technical result for 2012,” the company said. This will be “subject to actual claims experience with regard to major losses and the impact of possible severe currency or capital market developments”
