Reinsurer Munich Re AG reported Wednesday a euro100 million ($129 million) profit for the fourth quarter, just a sixth of its earnings a year earlier, but enough to post a full-year profit the company described as "satisfactory" in view of the financial crisis.
Munich Re said the profit for the October-December period fell from euro600 million a year earlier.
For the full year 2008, profit was euro1.5 billion ($1.9 billion), down sharply from euro3.9 billion in the previous year, although the 2007 figure was boosted by one-time tax gains.
Gross premiums written by Munich Re rose by 1.5 percent to euro38 billion. The company said it plans to pay an unchanged dividend of euro5.50 per share.
"In view of the financial crisis, the result for 2008 is satisfactory," Chief Financial Officer Joerg Schneider said in a statement. "Thanks to our pronounced risk management and a diversified investment portfolio, we have come through the crisis relatively well so far."
Reinsurers sell backup coverage to other insurers, spreading risk so the system can handle large or widespread losses.
The company said income from life insurance showed a marked decrease due to the financial market crisis.
It also pointed to claims burdens last year both from natural catastrophes and from man-made losses. The company's reinsurance combined ratio, a key measure of profitability, worsened to 99.5 percent from 96.4 percent in 2007; a lower number is healthier.
Munich Re said it saw stable or increased prices for coverage.
The company said it booked "large losses" last year on investments in light of the financial market crisis, and that it continued to write down the value of equity portfolios in the fourth quarter "owing to the continuing market turbulence."
Those were cushioned by write-ups of derivatives, it said.
"We have reduced our equity exposure further and have invested strongly in secure government bonds, but have increasingly also taken selective advantage of good return opportunities especially from corporate bonds," Schneider said.
Shares of Munich Re were down 3 percent at euro104.42 in Frankfurt trading.
Collins Stewart analyst Ben Cohen still has a "buy" rating on the stock, with a target price of euro135.
"We think these results will look increasingly credible as its peers report, and, notwithstanding the strong relative performance, see the stock likely to continue to outperform," said Cohen in a research note.
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