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(Reuters) — German reinsurance group Munich Re said on Monday it was scrapping a planned share buyback as it reported second-quarter earnings that were depressed by payouts on major events that were canceled due to the coronavirus pandemic.
Munich Re reported a net profit of about €600 million ($685 million), a decline from the year-earlier consolidated result of €993 million but above the consensus expectation of €405 million among 20 analysts in a poll shared by the company.
Losses resulting from the coronavirus outbreak totaled €700 million, with the largest share related to claims on canceled events. A lower impact was reported in Munich Re's life and health business, as well as in property-casualty insurance, the company said.
Munich Re announced in February that it would repurchase shares worth a maximum €1 billion but discontinued the program at the end of March until further notice. The buyback plan will now definitely not be implemented.
“Munich Re perceives considerable ongoing uncertainty with respect to the macroeconomic development and the financial impact of COVID-19 and does not expect that uncertainty will subside between now and early 2021,” the company said.
“In addition, Munich Re has recently identified truly favorable conditions for growing its reinsurance business and therefore the active use of its capital.”
Munich Re said it would continue to pursue a shareholder-friendly dividend policy and will revisit the idea of share buybacks in early 2021. The company's shares traded 0.5% up in late Frankfurt trading.
More insurance and risk management news on the coronavirus crisis here.