CORRECTED – UPDATE 2-Munich Re to raise dividend after solid 2009

(Removing extraneous number from share price bullet line,
correcting Reuters Instrument Code in first paragraph)

* Q4 net profit 780 million euros, above expected

* Proposes raising dividend to 5.75 eur/share from 5.50 eur

* January renewals volume down nearly 7 pct, prices stable

* Prices generally show slight downtrend due slow economy

* Share rise 1 pct

(Adds analyst comment, further detail, background)

HANOVER, Germany, Feb 2 (BestGrowthStock) – Munich Re (MUVGn.DE: )
said on Tuesday it would raise its dividend after low storm
damage claims and reviving financial markets helped it beat its
2009 profit goal.

The world’s biggest reinsurer, in which U.S. investor Warren
Buffett has built up a stake of more than 5 percent including
options, posted preliminary net profit of 2.56 billion euros in
2009, above its 2.2 billion to 2.5 billion target range and up
from 1.58 billion euros in 2008.

“The reinsurance business profited from exceptionally low
claims costs for natural catastrophes,” Munich Re said in a
statement.

The group’s investment result rose by a third as financial
markets recovered, slashing the need for writedowns.

The combination of low damage payouts, rising investment
income and a 10 percent increase in premiums helped the full
year result exceed the average expectation of 2.39 billion euros
in a Reuters poll of analysts.

SATISFIED ON RENEWALS

Munich Re said it was satisfied with the results of
negotiations to renew around 8 billion euros worth of
property-casualty risk cover contracts with insurance companies
at the start of the year.

“The market environment for the turn-of-the-year renewals was
more difficult than in the previous year,” Munich Re said.

“Generally, prices showed a slight downward trend,” it said,
adding that this was an effect of stagnant demand for insurance
due to the sluggish economy.

At the start of the year, the volume of the business it
renewed fell by nearly 7 percent but prices fell by only 0.3
percent, reflecting the company’s focus on maintaining
underwriting profitability, Munich Re said.

“At first glance, the outcome on January 1st renewals, the
preliminary key figures and the dividend increase are positive
surprises,” said DZ Bank analyst Torsten Wenzel in a note to
clients.

“On top of that we believe the stock should have some
tailwind from its new famous investor,” he added.

Munich Re shares were up 1.01 percent at 110.45 euros at
0815 GMT, compared with a 0.53 percent rise in the DJ Stoxx
index of European insurance shares (.SXIP: ).

Munich Re has been seen as a defensive stock in the
financial crisis. Its share is up by more than 2 percent over
the last 18 months, compared with a 36 percent decline in the
sector index and a 25 percent drop in rival Swiss Re (RUKN.VX: ).

Quarterly net profit rose seven-fold to 780 million euros.

The company gave no outlook in its statement. It is due to
report final 2009 results on March 10.
($1=.7188 Euro)

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(Editing by Hans Peters)

CORRECTED – UPDATE 2-Munich Re to raise dividend after solid 2009