Natural disasters weigh on Munich Re's profits in first half

Aug 4, 2011, 8:27 GMT

Munich - A string of natural disasters in the first quarter of 2011 weighed on profits at Munich Re, the world's largest reinsurer, the company said Thursday, even as second quarter profits indicated hopes the company could end 2011 in the black.

Overall, the company reported a 210-million-euro (299-million-dollar) loss for the January-June period, compared to a 1.2-billion-euro profit for the same period in 2010.

That figure represented a series of losses the reinsurer took due to a variety of natural disasters, ranging from earthquakes in New Zealand, the tsunami in Japan and a series of tornadoes in the United States.

'It was an exceptional accumulation of major losses, but that is precisely what reinsurance is for,' said Nikolaus von Bomhard, chairman of the board.

'After all, a well-developed and functioning insurance and reinsurance system helps to overcome disasters on this scale.'

But Mother Nature's quieter second quarter yielded a second-quarter profit of 738 million euros, versus 709-million-euros profit in the second quarter of 2010.

The company also noted that its insurance portfolio had taken some hits due to holdings of Greek government securities, which have lost value in recent months, as concerns grow about the Greek government's ability to honour its debts.

The mishaps of Munich Re subsidiary, Ergo, were also highlighted. The company has come under criticism in Germany for mishandling some pension forms and - more sordidly - for revelations of a sex party hosted in Hungary in 2007 for top agents.

But officials insisted that reforms had put Ergo on the right path.