UPDATE 2-Munich Re ups Chile quake claims forecast to $1 bln

* Ups expected hit from $700 mln

* Sees insured market loss for quake at $8 bln

* Says 2010 profit goal getting harder to reach

* Hannover Re keeps Chile loss estimate at 185 mln eur

* Munich Re share down 1 pct vs STOXX Europe 600 -2.3 pct

(Adds detail, Hannover Re, analyst comment, shares)

By Jonathan Gould

FRANKFURT, June 8 (BestGrowthStock) – Munich Re (MUVGn.DE: ) faces
even more of a stretch to reach its 2010 profit target after
raising its expected payout on February’s earthquake in Chile to
$1 billion.

The world’s biggest reinsurer said on Tuesday it had not
abandoned its goal of earning a net profit of at least 2 billion
euros ($2.4 billion) this year, despite a 40 percent increase in
its expected loss claims from the Chile quake.

“We have recently said that it would be difficult to reach
the target. That is now even more the case,” a Munich Re
spokesman said. It originally expected claims of $700 million.

Munich Re also raised its estimate for total insured losses
from the magnitude 8.8 quake to around $8 billion, from a
previous estimate of $4 billion to $7 billion, a move which
analysts said had negative implications for peers such as
Hannover Re (HNRGn.DE: ) and Swiss Re (RUKN.VX: ).

Hannover Re said it had left the estimate for its share of
the Chile quake loss at 185 million euros and said it could pass
on damage claims to other reinsurers if the loss was somewhat
higher than 200 million. [ID:nFAB015659]

“On the subject of Chile, I am quite relaxed,” Hannover Re
Chief Executive Ulrich Wallin told a news conference.

Swiss Re, the world’s No. 2 reinsurer, has estimated its
quake loss at $500 million.


The earthquake that wrenched Chile on Feb. 27 killed nearly
350 people and was the fifth strongest to have occurred since
worldwide records began in 1900. [ID:nN06123980]

Munich Re said the relatively low level of insurance claims
retained by primary insurers, the high number of individual and
business claims and ongoing losses from business interruption
underpinned its increased damage assessment.

“The fact that the early loss estimate for the Chile
earthquake has turned out to be too optimistic is somewhat
embarrassing for Munich Re,” said DZ Bank analyst Thorsten
Wenzel in a note to clients.

“The aim for 2010 to achieve an annual profit in excess of 2
billion euros looks even more ambitious than was the case as per
end of March,” Wenzel said, adding that higher-than-expected
investment returns might explain Munich Re’s unwillingness to
abandon the goal.

Analysts on average expect Munich Re to deliver 2.14 billion
euros in net profit this year, according to Thomson Reuters
I/B/E/S, down 16 percent from 2009 when the company enjoyed
unusually low disaster claims as well as rising financial

Loss claims such as those from the Chile quake, European
wind storm Xynthia and flooding in eastern Europe in the first
half of the year are already running above the long-term
average, pressuring profits at a range of insurance companies.

But Munich Re said big losses like earthquakes and
hurricanes raise awareness of the need for reinsurance among its
insurance company clients, boosting demand for its services.

It said it expected price increases in loss-affected regions
and business segments in contract renewals with insurance
companies scheduled for July 1.

Munich Re shares fell 1 percent to 99.84 euros, while
Hannover Re fell 2.5 percent to 33.73 euros by 1508 GMT. The
STOXX Europe 600 insurance index (.SXIP: ) fell 2.3 percent.

Stock Market Analysis

(Additional reporting by Christian Kraemer in Munich and Arno
Schuetze in Hanover; Editing by Michael Shields and David
($1=.8375 Euro)

UPDATE 2-Munich Re ups Chile quake claims forecast to $1 bln