The German reinsurance group Munich Re raised its full year net profit target slightly on Monday, targeest reinsurance company worldwide, said net profit in 2007 "could slightly surpass" its previous estimation of between 3.5 and 3.8 billion euros (5.1-5.5 billion dollars).
"This would be again a record result," a company statement quoted financial director Joerg Schneider as saying. But the group acknowledged it had suffered following the collapse of the US market for high-risk mortgages, also known as the subprime market, saying it had lost around 150 million euros in transactions affected by the debacle.
In morning Frankfurt trades, Munich Re shares fell by 0.77 percent to 120.63 euros, while the DAX index of leading shares was 0.52 percent lower overall. In the third quarter however, the group recorded net profit of 1.196 billion euros, a jump of 69.2 percent from the same period a year earlier, and much better than expected by analysts.
The result was boosted by the result of a German business tax reform that added 400 million euros, a company statement said. Operating profit came to 1.132 billion euros, a drop of 13.4 percent and below analysts forecasts. Munich Re said that was because "in 2006 there had also been an extraordinarily low claims burden from natural catastrophes."
In 2007, "losses from natural catastrophes in the year to date have, as a whole, remained within the range of our expectations, being above budget in Europe and Asia and below budget in the hurricane-exposed regions of the USA."
The group indicated pre-tax costs of 60 million euros as a result of Hurricane Dean, which slammed Mexico in August, and payments linked to British flooding in June and July.