* Munich Re beats forecasts with Q1 net profit
* Hannover Re also ahead of forecast average
* Q1 damage claims lower than low year-earlier quarter
* Munich Re shares indicated up 0.5 pct
* Hannover Re shares indicated up 1.3 pct
By Jonathan Gould
FRANKFURT, May 7 Low damage claims and rising
premiums helped shield earnings at German reinsurers Munich Re
and Hannover Re in the first quarter, as
the sector battles to shore up income against a backdrop of
record low interest rates.
Munich Re, the world's biggest reinsurer, reported net
profit of 972 million euros ($1.3 billion), up a fourth from the
previous year's quarter and above the average forecast of 931
million euros in a Reuters poll of analysts.
"There happened to be lower claims burdens from major
losses, but the group's operating earnings also proved to be
robust," Chief Financial Officer Joerg Schneider said on
"After this good start, we are optimistic about achieving
our profit target for the year of close to 3 billion euros," he
However, Munich Re said investment income fell 11 percent
from the prior year quarter, due to declining interest income
and slower growth in investments for unit-linked insurance.
The insurance sector is facing an increasingly tough battle
to make up for falling income from its vast holdings of
relatively safe government bonds, where yields have slumped
because of rock-bottom central bank interest rates.
The European Central Bank (ECB) cut borrowing costs to a
record low last week and held out the possibility of further
easing to support the recession-hit euro zone economy.
World No. 3 player Hannover Re said its net profit fell by
less than expected in the first three months of the year, with
payouts for damage claims tumbling to 13 million euros from 61
million in the year-earlier quarter.
"Investments developed satisfactorily despite the protracted
period of low interest rates," it said.
Hannover's quarterly net profit fell to 221 million euros
from 261 million in the year-earlier quarter, but was above the
211 million euro average forecast in a Reuters poll.
Hannover Re Chief Financial Officer Roland Vogel told a
conference call with journalists that the quarterly result
formed a good basis for reaching the reinsurer's full-year
target of net profit in the order of 800 million euros.
The reinsurer had seen no large damage claims so far in the
second quarter, he added.
Also on Tuesday, Europe's biggest insurer Allianz
posted a 20 percent rise in first-quarter operating profit to
2.8 billion euros and said it was on track to meet its full-year
($1 = 0.7659 euros)
(Editing by Mark Potter)