NU Online News Service, April 16, 2004, 5:58 p.m. EDT – The weak U.S. dollar is a problem, but life and health reinsurance markets are starting to look stronger.[@@]
Executives at Munich Re Group, Munich, gave that assessment Thursday at a press conference held to discuss the company’s 2003 performance.
The company is reporting a 400 million euro loss for 2003 on 40.4 billion euros in premium revenue, compared with a 300 million euro loss on 40 billion euros in revenue for 2002, in part because of a drop in the euro value of the company’s U.S. earnings.
The value of the dollar fell to $1=1.2552 euros Dec. 31, 2003, from $1=1.0481 euros a year earlier, according to OANDA Corp., New York.
Because the value of the dollar has fallen so much, the dollar value of Munich Re’s revenue has increased to $51 billion, from $42 billion.
Life reinsurance premiums are up about 10% before currency translation adjustments, and, in the United States and the United Kingdom, “for the first time over a long period, there is a trend towards price increases,” Munich Re reports in a discussion of its earnings.
But Nikolaus von Bomhard, Munich Re’s chairman, says the company will be tougher on units that have low profits and high expense levels.
“All Munich Re units must be profitable,” Bomhard says in a statement. “That means implementing our strategy more rigorously.”
Munich Re also announced that it has cut the percentage of stock in its investment portfolio to 15.1%, from 17.4%, even as the stock market rebound has increased the value of the stocks that it has kept.
“Munich Re is not planning to reduce the overall proportion of equities further but does intend to diversify its securities portfolio more broadly,” the company says.