Munich Re sails through crisis posting profits for 2008

Munich Re, the world's second biggest re-insurance group, on Wednesday posted a net profit of €1.5 billion for 2008, with a slight gain of around €100 million in the last quarter.

Munich Re sails through crisis posting profits for 2008
A statue in front of the company's offices in Munich. Photo: DPA

“Notwithstanding the most severe financial crisis for generations, Munich Re recorded a clear profit for the financial year 2008,” a statement said.

In November, Munich Re was forced to abandon its initial 2008 profit target of more than €2 billion, and the result announced on Wednesday was less than an average forecast of €1.63 billion compiled by Dow Jones Newswire.

Shares in the re-insurance giant dropped by 2.56 percent to €104.73 in opening Frankfurt trade, while the DAX index of leading shares was 0.23 percent higher overall.

Gross premiums, a Munich Re yardstick, rose last year by 1.5 percent to €37.8 billion, and the company said it would propose an unchanged dividend of €5.50 per share.

Munich Re said it had significantly reduced its equity exposure in the fourth quarter, though it was also forced to reevaluate its stock portfolios, which had a negative impact on income.

It put the full-year cost at around €200 million, although the sale of holdings helped compensate in part, adding €700 million to the fourth quarter results.

“Naturally, as an investor of about €175 billion, we too had to absorb large losses on our risk-oriented investments,” chief financial officer Jörg Schneider said in a statement.

But the group’s asset manager system managed nonetheless “to steer our portfolio successfully through the crisis,” he added. “We have reduced our equity exposure further and have invested strongly in secure government bonds, but have increasingly also taken selective advantage of good return opportunities especially from corporate bonds.”

Board member Torsten Jeworrek said that the market for re-insurance would strengthen this year, citing as an example the offshore energy sector, where prices have improved following hurricane-related losses last year.

“Re-insurance is currently one of the few remaining possibilities for primary insurers to swiftly obtain the capital they need,” Jeworrek noted.

On Tuesday, German rival Hannover Re said it had also managed to raise its prices when contracts came up for renewal.

The group’s president Wilhelm Zeller declared: “For us, the financial market crisis is finished.”


Four injured as WWII bomb explodes near Munich train station

Four people were injured, one of them seriously, when a World War II bomb exploded at a building site near Munich's main train station on Wednesday, emergency services said.

Smoke rises after the WWII bomb exploded on a building site in Munich.
Smoke rises after the WWII bomb exploded on a building site in Munich. Photo: picture alliance/dpa | Privat

Construction workers had been drilling into the ground when the bomb exploded, a spokesman for the fire department said in a statement.

The blast was heard several kilometres away and scattered debris hundreds of metres, according to local media reports.

Images showed a plume of smoke rising directly next to the train tracks.

Bavaria interior minister Joachim Herrmann told Bild that the whole area was being searched.

Deutsche Bahn suspended its services on the affected lines in the afternoon.

Although trains started up again from 3pm, the rail operator said there would still be delays and cancellations to long-distance and local travel in the Munich area until evening. 

According to the fire service, the explosion happened near a bridge that must be passed by all trains travelling to or from the station.

The exact cause of the explosion is unclear, police said. So far, there are no indications of a criminal act.

WWII bombs are common in Germany

Some 75 years after the war, Germany remains littered with unexploded ordnance, often uncovered during construction work.

READ ALSO: What you need to know about WWII bomb disposals in Germany

However, most bombs are defused by experts before they explode.

Last year, seven World War II bombs were found on the future location of Tesla’s first European factory, just outside Berlin.

Sizeable bombs were also defused in Cologne and Dortmund last year.

In 2017, the discovery of a 1.4-tonne bomb in Frankfurt prompted the evacuation of 65,000 people — the largest such operation since the end of the war in Europe in 1945.