Munich Re reported spending on claims and costs at its property and casualty unit grew last year on higher payments for natural disasters.
The so-called combined ratio increased to 96.4 % last year from 92.6 % in 2006. Munich Re is targeting a combined ratio of about 98 % this year, 6.5 percentages of which account for natural catastrophes.
The world's second- biggest reinsurer estimated that worldwide insured losses caused by natural disasters doubled last year. Natural catastrophes consequently made up 5 percentage points of last year's combined ratio, compared with 1.3 percentage points in 2006, according to a presentation to investors filed on the company's Web site.
The company has "less pronounced growth expectations until 2010'' in the property and casualty reinsurance segment and thus plans to "focus on profitability,'' management board member Torsten Jeworrek said on a conference call today.
Munich Re expects a combined ratio of 97 percent "over the cycle,'' it said. A combined ratio below 100 percent means an insurer's premium income exceeds claims and costs, giving it a profit from underwriting.
The reinsurer fell 68 cents, or 0.6 %, to 114.25 EUR as of 10:58 a.m. in Germany . That compares with the 2.4 % decline in Swiss Reinsurance Co., the world's biggest reinsurer.
Claims from natural disasters doubled to about $30 billion in 2007 according to Munich Re estimates. They rose to a record $99 billion in 2005, when hurricanes including Katrina, Rita and Wilma hit the U.S. coast. The reinsurer forecasts that losses from natural catastrophes will rise because of climate change.
The reinsurer on Jan. 30 reported an 11 % rise in 2007 net income before minority interests to a record of 3.9 billion EUR ($5.7 billion). It intends to announce final fourth- quarter figures on Feb. 25.
Münchener Rück AG is the world's second largest reinsurance company with over 5,000 customers in 160 countries and has its headquarters in Munich, Germany .
Munich Re was founded in 1880 by Carl Thieme, who also founded the Allianz insurance company, Germany's largest insurance company. Munich Re is the name as used by the company, short for the legal name Munich Reinsurance Company, or in German Münchener Rückversicherungs-Gesellschaft.