Frankfurt am Main (AFP)
German reinsurer Munich Re said Wednesday it was "realistic" that its profits would stop sliding in 2017, as its new chief executive aims to get the bottom line growing again in the coming years.
Munich Re booked net profit of 729 million euros ($856 million) in the second quarter, 25 percent lower than a year earlier, but better than analysts' predictions of around 685 million euros.
Strong income from its investments and a smaller bill for natural disasters around the world flowed into the financial result.
In a telephone conference, recently-installed chief executive Joachim Wenning reiterated the group's objective for an annual net profit of between 2.0 and 2.4 billion euros this year.
Until 2015, Munich Re had for years reported profits of at least 3.0 billion euros, before factors such as low interest rates and stagnant prices of reinsurance premiums undermined them last year.
"These factors influencing the result are outside the control of any business strategy," Wenning told journalists.
Nevertheless, "we think it's realistic that the result will stabilise around 2017's level, and we aim for a step-by-step improvement in the coming years," he added, without giving any precise figures.
Wenning is continuing to restructure Munich Re's retail insurance subsidiary Ergo, hoping to increase profits by between 100 and 150 million euros each year.
And with a "soft" market in reinsurance, Munich Re -- historically reputed as risk averse -- must seize opportunities with a more favourable relationship between risk and profit, he said.
Looking in more detail at the second quarter, losses from natural disasters amounted to just 66 million euros, compared with some 335 million between April and June 2016.
A severe storm in the United States in early May alone accounted for some 25 million euros in damages.
But low payouts for disasters were countered by unfavourable exchange rates as the euro gained in value against other currencies over the quarter, the group said.
As for the rest of the year, "the forecast looks conservative to us given profits in the first half of 1.3 billion euros," DZ Bank analyst Thorsten Wenzel said.
Business could be less lucrative for Munich Re in the second half of the year, finance director Joerg Schneider cautioned, as those months often see more frequent natural disasters.
Shares in Munich Re were among the worst performers in the DAX index of German blue-chip shares on Wednesday morning, losing 2.44 percent to trade at 181.55 euros ($213.14) around 1140 GMT, against a market down 1.26 percent.
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