UPDATE 2-Munich Re lifts 2012 net profit aim to 3 bln eur

Wed Nov 7, 2012 11:58am EST

Related Topics

* New FY 2012 target 3 bln eur vs poll 2.8 bln

* May raise dividend to above 6.25 eur/shr -CFO

* Sees hit from Sandy in mid-triple digit mln eur range

* Shares up 0.2 percent vs sector down 1.4 percent (Adds CFO, analyst comment)

By Jonathan Gould

FRANKFURT, Nov 7 (Reuters) - Munich Re raised its full-year net profit target after surging investment income and moderate damage claims helped it beat even the most optimistic estimates for third- quarter profit.

The world's biggest reinsurer raised its guidance to around 3 billion euros ($3.8 billion), even though it is still unclear what costs it faces from superstorm Sandy, which pummelled the northeastern United States last week, causing up to $20 billion in insured losses.

Like other reinsurers, Munich Re has benefited this year from lower-than-usual damage claims from big natural disasters, but it has also been working to ratchet up profitability in its bread-and-butter underwriting business.

It previously expected to earn slightly more than 2.5 billion euros in 2012. The new target compares with average analyst projections of 2.83 billion.

Next year, net profit will likely be "somewhere in between" 2.5 billion and 3 billion euros, Chief Financial Officer Joerg Schneider said in a conference call.

"We'd be very happy with something that was comfortably over the 2.5 billion (for 2013)," Schneider said. Analysts have pencilled in 2.76 billion for 2013 net profit, according to the Reuters poll.

Munich Re shares rose by as much as 3.4 percent before paring gains to trade up 0.2 percent by 1523 GMT, while the STOXX Europe 600 insurance index traded down 1.4 percent.

GROWTH OPPORTUNITIES

Munich Re said it expected a hit in the medium hundreds of millions of euros from Sandy, adding that it currently did not look like so-called contingent business interruption policies, for companies not directly hit by the storm, would play a big role.

Despite uncertainty over the final cost of Sandy, Munich Re said it expected to raise its dividend for 2012 to above the 6.25 euros per share it paid for 2011, adding that its balance sheet would remain strong enough to take advantage of "profitable growth opportunities".

JP Morgan analyst Michael Huttner said he expected Munich Re to pay a dividend of 7.00 euros per share for 2012, bolstered by stronger internal solvency and what he saw as a sharp improvement in underlying profitability.

CFO Schneider said share buybacks were not on the agenda, in light of the European debt crisis, new insurance capital rules due to come into force and the competitive business advantage Munich Re could enjoy as a reinsurer with a strong capital base.

Helped by a 65 percent rise in investment income, quarterly net profit came in at 1.13 billion euros, above the highest forecast of 823 million in a Reuters poll of banks and brokerages and well above the poll average of 739 million.

Munich Re's share has risen by more than a third since the start of the year, outpacing a 25 percent rise in the European sector.

Data from StarMine, which weights analyst forecasts according to their track record, showed Munich Re trading at 8.2 times 12-month forward earnings, a discount to Hannover Re , which trades at a multiple of 8.8, and Swiss Re at 9.0. ($1=0.7812 euros) (Editing by David Holmes)

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