31 March 2000 | Translation of the German ad-hoc announcement
Group profit holds up well at EUR 1.1bn despite high claims costs in reinsurance. Supervisory Board and Board of Management will propose a dividend of EUR 0.95, which would more than double the overall amount distributed. High allocation to reserves. Signs of a turnaround in reinsurance market. Continued growth and good results again in primary insurance.
After publishing figures on the basis of International Accounting Standards for the first time on 6th December 1999 (as calculated for the business year 1998), Munich Re is now announcing the key provisional figures for the business year 1999 on this basis, following today's Supervisory Board meeting.
The Group achieved very satisfactory growth in the business year
1999. Gross premium income rose by 7.5% to EUR 27.4bn. Owing to
exceptionally high claims costs in reinsurance, however, the Group
profit for the year was – at EUR 1.1bn
– somewhat down on the very good result of
the previous year (EUR 1.2bn). Earnings per share on the basis of
IAS amount to EUR 6.40, compared with EUR 7.11 in the previous
year; EUR 1.70 of this is due to the lowering of the German
corporation tax rate from 45% to 40%, which led to a marked
decrease in deferred tax liabilities.
The 1999 result before tax, amortization of goodwill and minority interests amounts to EUR 1.8bn (2.3bn).
Despite the difficult environment, the parent company more than doubled its profit for the year. It will therefore be able to strengthen its reserves with an allocation of EUR 160m. Supervisory Board and Board of Management will propose to the shareholders at the AGM that a dividend per share of EUR 0.95 (0.92) be paid. As a result of the last year's stock split, this will more than double the overall amount distributed.
The reinsurers in the Group had to deal with an exceptional
accumulation of small and medium-sized losses from natural
catastrophes in 1999. Besides the December winter storms Lothar and
Martin in Europe, these included the Sydney hailstorm, Typhoon Bart
in Japan, and the earthquakes in Turkey, Greece and Taiwan. Total
claims costs for natural catastrophes trebled compared with the
previous year. In addition, an extremely unsatisfactory market
situation had a significant impact on results. Thus American Re,
like its main competitors in the USA, had to record substantial
losses in 1999. Altogether, as far as the reinsurers in the Group
were concerned, 1999 was the worst year ever for Munich Re in terms
of claims costs. However, thanks especially to an outstanding
investment result, the reinsurers were still able to make a
contribution of EUR 1.2bn (1.5bn)* to the result before tax,
amortization of goodwill and minority interests.
The gross premiums written by the reinsurers in the Group, which contribute just under 51% of the Group's total premium income, increased altogether by 8.6% to EUR 15.4bn*, partly owing to changes in exchange rates; the biggest contributor to this growth was life reinsurance.
The development of the primary insurers' premium income and
results was again very satisfactory. Premiums rose by 6.5% to EUR
13.5bn in 1999. Especially the life insurers in the Group,
benefiting from tax plans of the German government that have since
been shelved, succeeded in writing an exceptionally large amount of
new business and achieved growth of 9.8%. In health insurance,
growth amounted to 3.1%. The property-casualty insurers increased
their premium income by 4.7%.
Altogether, the primary insurers contributed an excellent EUR 0.9bn (0.8bn)* to the result (before tax, amortization of goodwill and minority interests).
The Group's investments increased in 1999 by 11% to EUR 151bn.
The profit on investments, which is incorporated in the segment
results, increased by 12% to EUR 9.5bn; it includes realized
capital gains of EUR 1.7bn (1.6bn).
In accordance with IAS rules, a substantial portion of the investments are measured at fair value; there are nevertheless significant valuation reserves of around EUR 20bn.
Further significant progress was made in the development of the asset management company MEAG, which takes over management of a large portion of the Group's investments as at 1st April 2000. In addition, MEAG will gradually expand its asset management for third parties.
In the current year Munich Re expects results to be considerably
better. The positive effect of this should more than equal the
one-off effect of the reduction in the corporation tax rate, which
benefited the 1999 result, and yield a higher profit for the year.
Unless there are any unpleasant surprises, it should therefore be
possible to emulate the very good 1998 result.
* Before consolidation of business between primary insurers and reinsurers.
Munich Re, 31 March 2000