FRANKFURT - Reinsurer Munich Re said Tuesday its first-quarter net profit rose 25 per cent as the company saw modest outlays for natural disasters and raised its prices for catastrophe coverage.
Net profit was 979 million euros ($1.28 billion) in the first three months of the year, up from 782 million euros the same quarter a year ago. Gross premiums for all its insurance and reinsurance businesses rose 0.5 per cent to 13.28 billion euros.
The company said its payouts were low as it faced fewer claims for catastrophic events such as Hurricane Sandy, which hit the east coast of the U.S. in the fourth quarter.
Munich Re also said it had been able to raise prices for reinsurance coverage, which backstops primary insurers so the system can cover large losses from disasters.
Profits at its reinsurance business rose 30 per cent to 827 million euros. News of disasters such as Sandy often makes people buy insurance, and can enable companies to charge higher premiums.
"Premium income benefited particularly from price increases in the segments recently affected by major losses, including natural catastrophe covers and marine business," the company said in a statement. It reaffirmed its profit target for this year of close to 3 billion euros.
In contrast to the performance of the reinsurance division, the company's investment arm saw its earnings fall 10.6 per cent from the year-ago quarter to 2.01 billion euros, largely because of the current environment of very low interest rates. Munich Re puts much of its premium income in conservative investments such as bonds, which are earning very low yields.
Premium income and earnings also fell at its primary insurance business, partly due to the absence of the South Korean ERGO Daum Direct business which was sold last year.
The company's share price was barely changed at 147.85 euros following the results.