Munich Re has abandoned its 2008 profits target after third quarter takings fell 99% on the same period last year.
The world’s largest reinsurer recorded profits of €12m in the three months to July, a huge fall from the €1.2bn posted in Q3 2007.
It means the firm is likely to miss its forecasted 2008 profits of €2bn and its aim of achieving earnings per share of €10.
Chief financial officer Joerg Schneider blames the drop on the “ongoing volatility” of the markets, adding it has led to an unreliable profits forecast for the year as a whole.
“The 2008 financial year is proving difficult on account of the financial crisis,” he says. “But the Munich Re Group is acquitting itself well compared with its competitors thanks to its well-balanced investment portfolio.”
Munich Re's market capitalisation fell from €29bn at the end of Q£ 2007 €21.9bn in the same period this year, more than a 24% drop.
The firm says, however, its capital base “remains solid” at €21.5bn. For the first nine months of 2008, the Munich Re Group recorded an operating result of €2.4bn, a decrease of 38.8%.
The marked price losses on the stock markets impacted the investment result, it says, which fell by 48.4% to €3.9bn. In addition, equity decreased to €21.5bn since the beginning of the year but, compared with the figure at the end of June, there was only a very slight reduction of €8m.
Schneider adds the company still sees “good opportunities for profitable business” in the current environment.
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