Munich Re raises dividend on stable profits

The world's biggest reinsurer city Re (MUVGn.DE) raised its dividend by quite expected, returning money to shareholders that it cannot productively invest in its business.

The German reinsurer on Thursday same it might pay a dividend of eight.25 euros per share for 2015 compared with seven.75 euros a year earlier, matching the very best forecast in a very poll of analysts. it's creating the payout on the rear of stable profits in a very tough insurance market.

"The any sturdy increase within the dividend demonstrates our trust within the sustained earnings power of city Re," same Chief money handler Joerg Schneider.

Munich Re shares rose quite four.6 p.c to the highest of Germany's blue chip DAX index .GDAXI, that was zero.25 p.c higher.

Munich Re and rivals like Swiss Re (SRENH.VX) and Hanover Re (HNRGn.DE) face a slump in insurance costs and the bottom capital market interest rates that have weighed on revenue.

They have focussed on maintaining profitable underwriting, preferring to lose market share instead of undercutting competitors on value. Surplus capital is being came back to shareholders although higher dividends or share buybacks.

Munich Re expects to try and do any share purchase programmes with volumes of around one billion euros, CFO Schneider told a phone call with journalists, a move welcome by Bernstein analysts in a very analysis note.

"We expect these buybacks can still attract financial gain familiarised investors and can be able to go away the weaker earnings prospects of the cluster," the analysts same.

LOWER EARNINGS

Preliminary profits for 2015 was around three.1 billion euros ($3.4 billion), down slightly from three.2 billion the previous year however in line with the typical expectation in a very Reuters poll.

Munich Re doesn't see profit falling below a pair of.5 billion euros this year, Schneider same.

"It may even be abundant higher," he said, adding that analysts' forecasts for profits of around a pair of.75 billion euros this year were "not implausible".

Prices within the insurance market are driven down by a scarcity of demand from insurance corporations still as oversupply fuelled by new entrants to the market Associate in Nursingd an accumulation of surplus capital due to unco low injury claims from natural catastrophes.

There were signs that the multi-year slide in insurance costs was coming back to Associate in Nursing finish, Schneider same, adding that he now not expected broad-based value erosion.

Munich Re's premium volume rose by zero.7 p.c once it revived nine.2 billion euros of property-casualty insurance contracts with nondepository financial institution purchasers on Gregorian calendar month. 1. costs fell by concerning one p.c within the renewals, the corporate same.

Munich Re's earnings have benefited from the absence of major claims from hurricanes or earthquakes in recent years however that would simply amendment.