Munich Re targets ambitious profits of US$4 bln for 2014

Munich Re, the world’ biggest reinsurer, is aiming for a profit of EUR3 billion (US$4.1 billion) for 2014, or around 10 percent lower than for 2013 when it reported a profit of EUR3.3 billion, the third-best result in the company’s history.Munich Re CEO Nikolaus von Bomhard indicated that EUR3 billion is an ambitious objective, given the parameters. Munich Re is reckoning in particular with a continuation of the low interest-rate levels in 2014 and hence with somewhat lower regular income from investments. In addition, a normal tax burden is expected again for 2014, after Munich Re posted a very low effective tax rate in 2013 due to the recalculation of tax for prior years and the utilisation of loss carry-forwards.Nonetheless, he is optimistic about the further development of the Group’s business in 2014. “The quality of our core business allows us to formulate this ambitious result target”, he said.The forecast is subject to claims experience with regard to major losses being within normal bounds and to its income statement not being impacted by severe currency or capital market developments, significant changes in fiscal parameters, or other exceptional factors.Assuming exchange rates remain stable, the Group anticipates that for the financial year 2014, its gross premiums written will be around EUR50 billion, slightly lower than the EUR51.1 billion collected in 2013. It expects gross premium income of some EUR28 billion in the reinsurance segment, and a figure of slightly above over EUR16.5 billion for primary insurance. Total premium income in primary insurance (including the savings premiums of unit-linked life insurance and capitalisation products) should be slightly above EUR18 billion. Gross premiums written of slightly above EUR5.5 billion are projected for Munich Health.Commenting on the 2013 financial year, von Bomhard said: “The result for 2013 is an indication of how we have positioned ourselves competitively – we have strategically prepared Munich Re for foreseeable challenges which we can now tackle from a position of strength.” These challenges included the lingering low-interest-rate environment, increasing competition in reinsurance, and changes in demand from clients in primary insurance.“We have done our homework in recent years. Our capital base is more than solid, in reinsurance we are committed to solution-finding competence, and in primary insurance we are bringing a visionary concept to the German market with our new generation of life insurance products”, he emphasised.