Munich Re's profits more than quadrupled in 2012

Munich Re expects a net profit of €3.2bn (£2.8bn) for 2012, compared with the €0.71bn that it reported a year earlier.

In its preliminary figures, Munich Re’s operating profit also more than quadrupled, soaring to €5.4bn in 2012 from €1.2bn in 2011. Gross written premium was up 5.1% at €52bn.

Munich Re chief financial officer Jorg Schneider said: “This very pleasing profit is founded on our rigorous risk management, disciplined underwriting policy and the realisation of profitable business opportunities.”

Munich Re’s fourth quarter profit came in at €476m, boosted by prior-year reserve releases. Following reserve releases of €300m in the third quarter, €600m was pumped in during the fourth quarter.

Releases came primarily from the years 2005 to 2009 in the property, marine and aviation business. The reinsurer expects to see between three and four point releases going forward largely because of conservative releases from its long-tail lines.

Meanwhile, Munich Re revealed that Superstorm Sandy, which battered the east coast of the US last year, cost it €800m in losses.

Despite the Sandy losses, the combined ratio for Munich Re’s reinsurance business for the year was a profitable 91% (2011: 113.8%), and for the fourth quarter alone it was 83.2% (Q4 2011: 101.8%).

The reinsurer’s primary insurance combined ratio was a profitable 98.7% for the year (2011: 99.1%), but a loss-making 104% for the fourth quarter (Q4 2011: 101.5%). The company said it suffered “a number of random major losses” in its German primary business.

Munich Re shrunk its renewable book in non-life by 1.5% at the 1 January 2013 renewals.