Investments rescue Munich Re’s quarterly earnings

German insurance group Munich Re posted a better-than-expected second quarter net profit on Wednesday owing to earnings from investments, and raised slightly a full-year sales target despite losses from events such as the BP oil catastrophe.

Investments rescue Munich Re's quarterly earnings
An archive picture of the BP oil spill. Photo: DPA

Gross premiums, the equivalent of sales in the insurance industry, are now expected to reach between €44 billion and €46 billion ($58 billion – $61 billion) this year, a statement said. Munich Re had previously estimated premiums of between €43 billion and €45 billion.

Overall group profit should climb to more than €2 billion, meanwhile, even though the first half was marked by “exceptionally heavy burdens from major losses,” chief executive Nikolaus von Bomhard said in a statement. They included the Gulf of Mexico oil disaster, an earthquake in Chile and a major winter storm in Europe.

But owing to a “very pleasing profit from investments,” the full-year profit target “remains ambitious, but it is achievable,” von Bomhard stressed. In the three-month period from April to June, the insurer’s operating profit rose to €1.45 billion, and its combined ratio – which measures insurance payments against premiums taken in – declined to 94.5 percent.

That was considered “good” by the reinsurance giant, and compared favourably with the first quarter figure of 109.2 percent, when storm Xynthia in Europe and the Chilean earthquake resulted in major costs to the company.

In April, Munich Re’s re-insurance operation was hit by the BP oil spill, an event that could cost it more than €100 million and for which it has already “made adequate provision.” Some of the costs were booked in the second quarter, it said.

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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.