Munich Re unveils plans for fresh share buyback

Munich Re unveiled today a fresh plan to buy back its own shares, returning unneeded capital to shareholders even as low interest rates and tough reinsurance price competition crimp earnings prospects this year.

The world’s largest reinsurer said it would buy back up to €1 billion of its own shares by its April 23rd, 2015 shareholder meeting. It has yet to conclude its current share buyback programme which also targets up to €1 billion by this year’s shareholder meeting on April 30th.

Analysts had expected Munich Re to launch a fresh buyback programme, but thought the announcement was more likely to come around November, when possible damage claims from the Atlantic hurricane season would become clear.

“With this share buyback, we are again paying out currently unneeded capital to shareholders,” Munich Re chief executive Nikolaus von Bomhard said in a statement, adding that the plan was contingent on there being no unusually large upsets from capital markets or damage claims.

Munich Re and peer Swiss Re have been returning more cash to shareholders in the form of higher dividends or share buybacks as prospects have narrowed for profitably plowing the money into the reinsurance market, where prices are falling.

Munich Re also said it expected a net profit of €3 billionthis year, down from €3.3 billion in 2013 - its third best year on record - but said the goal was ambitious given rock-bottom interest rates and an expected higher tax rate. (Reuters)