German reinsurance firm Munich Re has recorded a 45% increase in third-quarter profit, having suffered with Hurricane Katrina-related damage claims last year.
In the first nine months of 2006, the reinsurance group recorded a profit of E2,861 million in comparison to E1,390 million the previous year as well as witnessing a 60.4% growth in the operating result to E4,638 million.
Munich Re also indicated that it would easily surpass its on year target of 15% return on risk adjusted capital (RORAC), after results suggested a 16.5% RORAC after the first three quarters.
Much of the profit has been assigned to the lack of natural catastrophes in this current year in contrast to the natural disasters that occurred in the corresponding period the previous year – namely Hurricane Katrina. With the cyclone season coming to an end Munich Re is set to achieve its target.
Subsequently, the firm has made a decision to redistribute profits to shareholders through a buy-back. According to the Financial Times, this is the company’s first share buy-back since it first listed in the stock exchange 118 years ago.
Munich Re will acquire nearly eight million shares based on the current price level at a purchase price of up to E1 billion by the end of April 2007.