FRANKFURT: Munich Re, the world's biggest reinsurer, expects to beat its 2012 net profit target of 2.5 billion euros ($3.1bn) after rising premiums and improved underwriting performance boosted the German group's quarterly earnings.
"We are well on track to slightly surpass the originally envisaged profit for the year," chief executive Nikolaus von Bomhard said, adding the group would benefit in the second half from funds no longer needed to cover past damage claims.
Munich Re cited the potential for big damage claims from hurricanes in the second half and expected triple-digit million euro restructuring costs at insurance unit Ergo as reasons for not raising its 2012 target more significantly.
It had been expected to post a net profit of 2.6bn euros this year, according to a poll.
Its second quarter saw payouts for big damage claims fall nearly a third to 452m euros. Munich Re expected claims for crop failure after a drought in the US to cost around 160m euros.
A quarterly net profit of 808m euros topped the highest forecast for 801m in the poll and compared with an average forecast for 696m.
In contract renewals with insurance company clients in Australia, Latin America and the US in July, Munich Re managed to boost premium volumes by 18.5pc while also raising prices about 2pc.
Munich Re said low yields on its 190bn euro portfolio of fixed-income securities remained a major threat for which it was trying to compensate through price increases and greater underwriting discipline.