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FRANKFURT, Germany (Reuters)—German group Munich Reinsurance Co. missed expectations for quarterly profit, as Europe's debt market storm, including more writedowns on Greek bonds, buffeted investment income.
The world's biggest reinsurer said on Tuesday it still expected to post a full-year profit and aimed to keep its dividend at €6.25 ($8.62).
"Our result was certainly affected by the capital-market and currency turbulence," CFO Joerg Schneider said.
Third-quarter net profit fell 63% to €286 million ($394.5 million) after minorities, compared with a forecast for €525 million ($724 million) forecast in a Reuters poll.
"The relatively weak net profit is due to several negative one-off effects (such) as negative currency effects, impairments on equities and impairments on Greek government bonds," DZ analyst Thorsten Wenzel said in a note.
Investment income fell nearly 40% in the third quarter. Negative currency effects hit net profit by €342 million ($471.7 million), while a further writedown on Greek sovereign bond holdings dented net profit by €45 million ($62.1 million), the company said.
Munich Re said it has been cutting exposure to bonds from European periphery states and increasing its holdings of bonds from financially strong countries and corporates, as well as those of dynamically developing states.
Mr. Schneider said he would not give a concrete profit outlook for the full year because the final result could be influenced until the final day of the year by major losses or capital market and exchange rate volatility.
The company had abandoned its €2.4 billion ($3.3 billion) net profit target in March following devastating earthquakes in Japan and New Zealand and flooding in Australia earlier this year.
Quarterly operating profit fell 27% to €839 million ($1.16 billion), a steeper decline than analysts had expected.
Munich Re shares were flat at 0843 GMT. They are down 19% this year, underperforming the DAX , which has lost 14%.
Data from StarMine, which weights analyst forecasts according to their track record, showed Munich Re trading at 7.2 times 12-month forward earnings, a discount to rival Swiss Reinsurance Co. at a multiple of 8.4 but a slight premium to Hannover Re Group, which trades at a multiple of 7.0.
Munich Reinsurance Co. ranks No. 1 in the Business Insurance 2011 ranking of the 10 world’s largest reinsurers published Monday.