Germany's Munich Re Expects Lower After-Tax Profit in 2016 -- Update

By Ulrike Dauer

Germany's Munich Re AG (MUV2.XE) on Wednesday set a target of between 2.3 billion euros ($2.55 billion) and EUR2.8 billion for after-tax profit this year.

The world's biggest reinsurer, which uses after-tax profit including minorities as its main earnings yardstick, had already cautioned in February that its guidance would be well below last year's figure of EUR3.1 billion.

Reinsurers like Munich Re and Hannover Re (HNR1.XE) usually set cautious targets at the beginning of the year, which are often revised up or down in the course of the year, depending on hurricane activity in the Atlantic and other major disasters that can't be forecast.

The sector continues to suffer from low reinsurance rates the companies can demand for insuring risks of their customers. Investment returns will remain depressed this year, and last year's extremely low bill for disaster damage is unlikely to be repeated in 2016.

Munich Re also said it would buy back further shares. Between the 2016 and 2017 annual general meetings, it plans to buy back up to 11 million of its own shares for up to EUR1 billion, equivalent to around 3.2% of the share capital at current share prices. So far, it has bought back around 5.2 million shares for around EUR890 million under a previous plan.

Munich Re already released preliminary fourth-quarter and 2015 earnings last month, when it also announced plans to raise its 2015 dividend to EUR8.25 a share from EUR7.75 it paid for 2014.

On Tuesday, Munich Re paved the way for a change at the helm after the 2017 annual shareholders' meeting, when Chief Executive Nikolaus von Bomhard will hand over control to Joachim Wenning. Mr. Wenning, 51, currently heads the group's international life reinsurance business and its human resources department.

-Write to Ulrike Dauer at [e-mail]

(END) Dow Jones Newswires

March 16, 2016 03:44 ET (07:44 GMT)

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