FRANKFURT_German reinsurer Munich Re AG said Tuesday its second-quarter net profit rose nearly 14 percent on solid growth in premiums, better investment returns and a one-off gain from the sale of a stake in British insurer Admiral Group PLC.

The Munich-based reinsurer earned ?llion ($1 billion) in the April-June period compared with ?llion a year earlier.

The increase was due, in part, to the company's sale of a stake in Admiral that contributed ?llion to its net income, though the underlying business appeared to be in good shape as well.

Gross written premiums, a key measure of revenue, were 14.6 percent higher at ?illion in the quarter compared with ?ion in the second quarter of 2008. Premiums were lifted by Munich Re's acquisition late last year of the U.S.-based Hartford Steam Boiler Group.

Investment returns also prospered, rising nearly 38 percent to nearly ?llion compared with nearly ?llion last year.

Investors cheered the company's performance. In early trading in Frankfurt, the company's share price was up 1.5 percent at ?, making it the best performer on the DAX.


Munich Re is the world's biggest reinsurance company by gross written premiums. Reinsurers sell back up coverage to primary insurers to absorb shocks in case of large losses or catastrophes. The company also sells primary insurance.

"We were able to benefit further from our capital strength and exploit our scope for profitable growth," Nikolaus von Bomhard, the company's chief executive said in the report. "We regard the effects of the economic crisis as limited in extent for the Munich Re Group."

Bomhard said the company was well prepared to cope with the aftermath of the financial crisis even though considerable uncertainties remained.

Still, the company revised its outlook for gross premiums upward and said it now expects gross written premiums in the primary insurance and reinsurance business to range between ?lion and ?lion for the year from the previous forecast range of ?lion to ?lion.

Munich Re said the new forecast was a result of "large volume quota" business in the life and health reinsurance segment.

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