Munich Re profit drops 56% in fourth quarter

(Reuters) — Munich Reinsurance Co. on Wednesday reported a 56% decline in fourth-quarter net income after a spate of natural catastrophes but proposed raising its dividend for 2018.

Profit fell to €238 million ($271.13 million) from €538 million a year earlier but met expectations.

It proposed a dividend of €9.25 per share, up from €8.60 for 2017 and higher than analysts had expected, a Reuters poll showed.

For the full year, the German reinsurer posted a jump in profit to €2.275 billion, in line with its target, from €392 million in 2017, the costliest year ever for the industry after a slew of natural disasters.

Munich Re had aimed to post a 2018 full-year profit of €2.1 billion to €2.5 billion.

“We are very satisfied with the overall result for 2018,” Chief Financial Officer Christoph Jurecka said.

The drop in net income in the fourth quarter followed two wildfires in California, with losses of around €430 million.

Munich Re’s combined ratio, a measure of profitability, was 105.1% in the fourth quarter for its reinsurance business, worse than 103.9% a year ago.

Munich Re and the insurance industry are bouncing back from a series of major hurricanes, fires and earthquakes in North America in 2017. Reinsurers have been under pressure in recent years from falling prices amid intense competition.

Munich Re said that prices of contract renewals in January were “stable” but that the market environment was expected to improve during the next round in April.