* Q2 net profit 529 mln euros vs poll avg 542 mln euros
* Q2 major claims 605 mln euros, of which floods 230 mln
* Munich Re "well on track" for FY 2013 net profit goal
* Shares down 3.6 pct vs flat blue chips
By Alexander Hübner
MUNICH, Aug 6 The world's biggest reinsurer,
Munich Re, on Tuesday reported a 35 percent fall in
second-quarter net profit due to more than 600 million euros
($794 million) in damage claims that included the heavy floods
in central Europe in June.
This contrasted with the relatively low claims for Munich Re
and the European reinsurance sector as a whole in the first
"Unlike the first quarter of 2013, the second quarter was
significantly affected by major losses," Chief Executive
Nikolaus von Bomhard said in a statement. He said this showed
the need to be careful in basing long-term result estimates on
the basis of just one quarter.
The business environment was also tough because of low
interest rates, which crimp income from Munich Re's investments,
The group's quarterly net profit came in at 529 million
euros after minorities, compared with the average forecast of
542 million euros in a Reuters poll and the 808 million euros in
the year-earlier quarter.
The reinsurer's shares fell 4.4 percent in early trading,
before paring losses to trade down 3.6 percent at 147.20 euros
by 0708 GMT. The DAX index of German blue chip
companies was flat.
Despite missing second-quarter expectations, Munich Re said
it was well on track to reach its full year goal of net profit
close to 3 billion euros.
Analysts expect the reinsurer to produce just over 3 billion
euros in net profit this year, according to the poll.
Damage claims from flooding in central Europe cost 230
million euros, but the quarter was also marked by major man-made
losses, Munich Re said.
The company had estimated in July that Europe's insurance
industry would face around 3 billion euros in damage claims from
the floods in May and June, which hit Germany and neighbouring
Munich Re's business is to help insurers cope with big
damage claims in return for part of the premium they receive.
In contract talks with insurance company clients to renew
reinsurance cover from July 1, the volume of premiums remained
stable but prices fell by around 0.9 percent, Munich Re said.
The reinsurer also noted substantial competitive pressures
in the market for natural catastrophe risk cover.
DZ Bank analyst Thorsten Wenzel downplayed the significance
of the price drop.
"Given the high capacity in the reinsurance market we
believe the reported price decline in July renewals is
moderate," Wenzel said in a note to clients.
The July contract renewals mainly affect business in the
United States, Australia, New Zealand and Latin America, and
represent about 13 percent of Munich Re's property and casualty
Munich Re shares have risen by about 8 percent since the
start of the year, compared with a 12 percent gain at rival
Swiss Re and lagging the 16 percent rise in the STOXX
Europe 600 insurance index.
Data from StarMine, which weights analyst forecasts
according to their track record, showed Munich Re trading at
nearly 9 times 12-month forward earnings, in line with Swiss Re
but at a premium to rival Hannover Re, which trades
at a multiple of 8.2.
Hannover Re reports second quarter results on Wednesday and
Swiss Re on Thursday.