Munich Re To Buyback $1.35B Shares

The world’s biggest re-insurer, Munich Re, has revealed plans to buy back 1 billion euros ($1.35 billion) of shares after the company’s third quarter profit fell 44%. The re-insurer told that the buyback will be concluded by next year’s annual shareholders meeting, which is scheduled for 30th April, 2014.

Buyback since 2003

Earlier in 2011, Munich re had plans to buy back shares, which was later scrapped owing to the earthquake and tsunami in Japan resulting in its first quarterly loss since 2003. Munich Re has continued its buyback since November 2003, and has repurchased around 6 billion Euros, till now.

The re-insurer has increased the dividend payout for the last year to 7 euros a share from 6.25 euros in 2011. According to Bloomberg, the company may retain the same level of dividend for the current year also.

Raised full year outlook

The Munich based company said in a statement that its net income fell from 1.13 billion euros from last year to 637 million euros, although they beat the analyst’s estimate of 587.3 million euro.  Munich Re has increased the yearly earnings target to 3 billion euros from the earlier target of getting close to that amount.

Chief Financial Officer Joerg Schneider said in a statement “Although we are not home and dry yet, we are very confident of achieving a profit of 3 billion euros” in 2013.

For the third quarter, profit from reinsurance segment was down 51% to 510 million owing to rise in claims from major losses, from 337 million euros to 595 million euros. For the nine months, the company’s posted a profit of 2.16 billion euros compared to 2.7 billion euros a year earlier.

Hannover Re also posted a decline

Earlier this week, Hannover Re, the world’s third largest re-insurer, reported a fall of 23% in the third quarter profit owing to lower investment income. The Germany based company reiterated its yearly target of around 800 million euros, and expects to earn 850 million euros in 2014.  The company said that due to floods and hailstorm in Germany the insurance industry may suffer a loss to the tune of 5 billion euros in the current year.

Munich Re has gained a market value of 27.7 billion euros with a 14% rise in share value this year, which is below the Bloomberg Europe 500 Insurance Index’s 23% gain.