Fitch Ratings has described the first half 2003 results for Munich Re as mixed, revealing improved underlying profitability but poor bottom line results. The negative outlook attached to Munich Re's 'AA+' insurer financial strength rating reflects the agency's concerns over the group's earnings.
Munich Re's after tax loss of €603m for the first half, said the agency, revealed the impact of a one off tax charge of €1.418bn. The operating result before amortisation of €939m was markedly up from the €1.0bn loss in the first half 2002, excluding the restructuring charges taken in that period, said Fitch.
The group's combined ratio for reinsurance business improved to 95.9% for first half, while primary insurance business recorded a combined ratio of 96%. Fitch said these improvements were consistent with the experience of most major companies operating in the global reinsurance market.
Fitch said it expected the combined ratio for the full 2003 calendar year to stay well below 100%, and that it believed Munich Re's near and long-term underwriting profitability, as measured by the combined ratio, would be better than the reinsurance industry's average.
Fitch said it continued to monitor the group's capital position and expected to make further comment following a meeting with Munich Re's management in the coming weeks.
