Munich Re's results for the first half of 2005 have been hit by the need to continue strengthening the reserves of its subsidiary, American Re.
The company reported a drop in its profit for the first half of the year at €870m, compared with the €1192m it made over the same period of 2004. It said that this included the reserve strengthening of American Re, which came in at €388m before tax and €750m after tax.
Despite this Munich Re said that its subsidiary had had an excellent second quarter, with a profit of €82m. The company's combined ratio for the half year came to 95.5%, although Munich Re added that 5.3% of that figure was due to the reserve strengthening at American Re.
Chairman of the board of management, Nikolaus von Bomhard said: "The Munich Re Group's good overall half-year profit fulfils expectations, even though it was burdened by American Re's reserve strengthening. This underlines how strong our earnings power has...become.
"We therefore see our return target of 12% for the whole year within reach."
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