Munich Re's Q1 net loss narrower than expected

FRANKFURT (Reuters) - Munich Re posted a smaller-than-expected net loss in the first quarter as its tax bill fell in the wake of devastating earthquakes in Japan and New Zealand.

The world's biggest reinsurer had already primed the market to expect a "clearly negative" quarterly result, after penciling in 2.7 billion euros ($3.9 billion) for natural catastrophe insurance claims from disasters including the two earthquakes as well as flooding and a cyclone in Australia.

"Despite these devastating natural catastrophes, we can still achieve a profit for the year as a whole," Chief Financial Officer Joerg Schneider said in a statement on Monday, reiterating its latest outlook.

Munich Re had ditched its full-year target of earning about 2.4 billion euros in net profit in the wake of the disasters.

"Thanks to our broad spectrum of activities, with life reinsurance, primary insurance and Munich Health, we will be able to partly counterbalance the catastrophic losses in property-casualty reinsurance," Schneider said.

The quarterly net loss reached 947 million euros ($1.4 billion), after minorities, which was smaller than the 1.06 billion euro average of 10 estimates in a Reuters poll of banks and brokerages.

The result was favored by a tax gain of 612 million euros in the quarter resulting from the quarterly loss. Group gross premiums also rose 11.3 percent to nearly 13 billion euros.

Munich Re shares fell 1 percent to 110.95 euros by 0720 GMT, lagging a 0.7 percent drop in the STOXX Europe 600 insurance index <.SXIP>.

PAINFUL QUARTER

The freak quarter of natural disasters this year has slammed reinsurers in their bread-and-butter business of providing a financial backstop to insurance companies facing huge claims.

Munich Re's operating loss of 1.35 billion euros, its first operating loss since the fourth quarter of 2002 when the company was battered by the bursting of the stock market technology bubble, was wider than the average loss of 1.2 billion in the poll.

"Given a below consensus forecast operating result we believe that the figures will not cause a lot of applause in the market," said Silvia Quandt Research analyst Christian Muschick.

Global No. 2 player Swiss Re last week reported a $665 million quarterly loss, which was less than analysts had expected.

Hannover Re , the world's third-biggest reinsurer, managed to turn a surprise profit in the first quarter after it got a boost from investment income, a tax rebate and the freeing up of reserves accrued to cover past claims.

The Japan, New Zealand and Australia claims also dented profits at Warren Buffett's conglomerate Berkshire Hathaway Inc, which is also a major reinsurance player.

Munich Re shares have fallen by more than 9 percent since February 21, the day before a 6.3 magnitude earthquake struck Christchurch, New Zealand, and have fallen by 4.8 percent since the magnitude 9.0 earthquake and tsunami in Japan.

Data from StarMine, which weights analysts' forecasts according to their track record, show Munich Re trading at 12.8 times 12-month forward earnings, a discount to rival Swiss Re at a multiple of 14.8 but a premium to Hannover Re , which trades at a multiple of 8.4.

(Editing by David Holmes)

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