* Sees net profit of 3 bln euros in 2014 vs 3.3 bln in 2013
* To buy back up to 1 bln euros own shares by April 23, 2015
* Munich Re shares rise 2 pct, outperforming market
(Adds Munich Re board member comment, context, shares)
By Jonathan Gould
MUNICH, March 20 Munich Re has
unveiled new plans to buy back up to 1 billion euros of its
shares, providing more evidence that reinsurance companies are
reluctant to pour money into the reinsurance market where prices
The world's largest reinsurer Munich Re and peer Swiss Re
have been returning cash to shareholders in the form
of higher dividends or share buy-backs as prospects have
narrowed for profitably investing the cash into the reinsurance
Reinsurers, which help insurers spread risk in exchange for
part of the profit, are facing pressure on prices partly from
the absence of big natural disasters such as hurricanes in the
last two years, which has pushed customers to demand lower
premiums. The price pressure has been compounded by competition
in reinsurance from pension funds looking for higher returns.
Munich Re said it would buy back up to 1 billion euros ($1.4
billion) of its own shares by its April 23, 2015 shareholder
meeting. It has yet to conclude a current share buyback
programme which also targets up to 1 billion euros by this
year's shareholder meeting on April 30.
"With this share buy-back, we are again paying out currently
unneeded capital to shareholders," Munich Re Chief Executive
Nikolaus von Bomhard said in a statement. He said the plan was
contingent on there being no unusually large upsets from capital
markets or damage claims.
Analysts had expected Munich Re to launch a new buy-back
programme, but thought the announcement was more likely to come
around November, when possible damage claims from the Atlantic
hurricane season would become clear.
Munich Re shares were up 2 percent in early trading, among
the top gainers in a 0.5 percent weaker German blue chip index
Munich Re also said it expected a net profit of 3 billion
euros this year, down from 3.3 billion in 2013 - its third best
year on record - but said the goal was ambitious given
rock-bottom interest rates and an expected higher tax rate.
Analysts expect net profit of 2.9 billion euros this year on
average, according to Thomson Reuters I/B/E/S.
The company had already announced a dividend hike to 7.25
euros per share for 2013 from 7.00 euros, after below average
damage claims from disasters like hurricanes and earthquakes
helped bolster earnings.
Munich Re said it saw no let-up in the price pressure when
reinsurers renew contracts with insurance companies in the
United States, Australia and Latin America in April and July.
"Given our strong position on the market, we expect to be
able to limit the effects on our own portfolio," Munich Re board
member Torsten Jeworrek said.
($1 = 0.7189 Euros)
(Editing by David Holmes and Jane Merriman)