* Analysts expected Q1 net profit of 993 mln eur -I/B/E/S
* Competition intense, Munich Re faring better than market
* Share down 2.2 pct, biggest decliner among flat blue chips
(Adds shares, analyst comment, detail)
By Jörn Poltz
MUNICH, April 30 Munich Re's net
profit fell in the first quarter, its chief executive on
Wednesday, hit by low capital market interest rates that
continue to weigh on investment income at the world's largest
The company does not officially release quarterly results
until May 8 - however CEO Nikolaus von Bomhard told its annual
shareholder meeting: "Net profit is likely to come in at around
900 million euros ($1.24 billion) in the first quarter."
That would represent a drop of about 7 percent compared with
the same period last year, when it posted net profit of 970
The CEO's comments weighed on Munich Re's shares, which fell
2.2 percent to 166.25 euros by 1145 GMT, the biggest decliner in
the DAX index of German blue chip shares, which was
flat. The STOXX Europe 600 insurance index fell 0.5
Analysts had expected quarterly net profit of 993 million
euros, according to Thomson Reuters I/B/E/S.
"It would be nice to have a beat and this isn't one," said
one insurance analyst, who declined to be named because of his
Morgan Stanley cut its recommendation on the share to "equal
weight" from "overweight" on Wednesday, he pointed out.
Von Bomhard reiterated Munich Re's goal of earning 3 billion
euros in net profit this year and repeated that the target was
"ambitious" in the face of sinking yields on the reinsurer's
stock of fixed-income investments.
The company posted net profit of 3.3 billion euros in 2013.
It felt increasing downward price pressure when annual
reinsurance contracts with insurance firm clients were renewed
in April, as pension funds and other specialised investors pour
money into the reinsurance business, competing directly with
traditional resinsurers like Munich and Swiss Re.
"It has been a long time since we've seen such intense
competition," von Bomhard said.
"However, we've also seen that Munich Re has been less
affected by these cyclical market movements than the overall
market has," he said, citing the reinsurer's close relationship
with its insurance company customers and its ability to deliver
tailor-made reinsurance solutions as important strengths.
($1 = 0.7237 euros)
(Additional reporting by Jonathan Gould in Frankfurt; Editing
by Thomas Atkins and Pravin Char)