UPDATE 1-Munich Re raises 2018 profit forecast, plans share buyback

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MUNICH (Reuters) – Munich Re (MUVGn.DE), the world’s largest reinsurer, said on Thursday it was aiming for net profit in 2018 of 2.1 to 2.5 billion euros ($2.60-3.09 billion) and plans to buy back 1 billion euros in shares.

The company logo of German reinsurer Munich Re is seen before the company’s annual news conference in Munich, Germany, March 16, 2016. REUTERS/Michaela Rehle/File Photo

The profit forecast is up slightly from the reinsurer’s initial guidance of 2.0 to 2.4 billion euros, issued when it published annual results last month. It is also above its 2017 profit of 375 million euros, which was hit by a spate of natural catastrophes in North America.

“Munich Re is again poised for growth,” Chief Executive Officer Joachim Wenning said.

In addition to the unexpected profit revision, Munich Re said in a presentation that it was expecting to grow profit to around 2.8 billion euros by 2020. Munich Re also said that it planned the 1 billion euro share buyback before its 2019 annual general meeting.

Gross written premiums will meanwhile ease to between 46 and 49 billion euros this year from 49.1 billion last year.

Shares in Munich Re rose 2.4 percent to the top of the blue-chip DAX index .GDAXI in pre-market trade at brokerage Lang & Schwarz on the news.

Last year’s deadly hurricanes Harvey, Irma and Maria in the United States and Caribbean, wildfires in California and earthquakes in Mexico destroyed infrastructure and homes, leading to record claims for the industry. The sector was already struggling with thin margins, stiff competition and falling prices.

A big question has been whether the run of catastrophes would allow the industry to push up premiums.

Torsten Jeworrek, member of Munich Re’s board of management, said reinsurance prices had increased at the January renewals, “particularly in the markets affected by natural catastrophes”.

“We expect this trend to continue in the renewal rounds yet to come,” he said.

Reporting by Tom Sims; Editing by Maria Sheahan and Jane Merriman

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