Munich Re plans to raise its 2005 dividend by more than half and is set to reach its earnings target despite larger-than-expected damage from US hurricanes, which was offset by one-time gains from asset sales.
The German reinsurer said on Thursday that gains from selling assets -- including 1.15 billion euros ($1.37 billion) from the exchange of HVB shares into UniCredito stock and a 552 million euro gain from selling a stake in insurer Allianz -- will help it to reach its goal of a 12 percent return on equity this year. The company plans to raise its 2005 dividend to 3.10 euros a share from 2 euros last year.
Munich Re shares were up 0.6 percent at 116.55 euros by 1000 GMT, outperforming a 0.3 percent rise in the blue chip DAX index as investors were encouraged by the higher dividend.
While one-off gains have helped Munich Re to offset big payouts for hurricane damages this year, rivals such as Swiss Re and Hannover Re have been forced to lower their sights because of heavy claims.
"The real good news is about the dividend, which is higher than what we had expected," said an analyst in Paris. "The cost of the damage was not a surprise because we were expecting a higher estimate."
Munich Re said the total burden from major US hurricanes on its 2005 results before tax, and after transferring assumed reinsurance to other reinsurers, would be nearly 2.3 billion euros.
It added that it expected a negative impact on net profit of 1.5 billion euros from the storms, which helped to make 2005 the worst US hurricane season on record.
US hurricanes Dennis, Emily, Katrina, Rita and Wilma hit the company harder than previously thought, Munich Re said. Since November 7, the date of its most recent estimate, there had been a constant flow of further claims and notifications from loss adjusters.
Munich Re said overall economic losses from natural disasters shot to a record high this year of $200 billion, up from $145 billion in 2004. In addition, insured losses reached more than $75 billion, almost doubling from the previous year.