German reinsurance giant Munich Re said its net profit rose to €557m in the first quarter of this year, which it said kept it on track to meet its profit target for the full year.
Ergo, Munich Re's troubled primary insurance division, contributed €91m in profit, up from a slight loss a year ago.
Munich Re said the result was in line with expectations, but the unit's recuperation could help ease the concerns of disgruntled shareholders who worry that Ergo is a drag on the core reinsurance business.
For the full year, Munich Re expects a profit between €2-2.4 billion, it affirmed today. That would mark a fifth consecutive year of declining profit.
Low interest rates and sliding reinsurance prices have eroded profits in recent years.
But Munich Re suggested today that light was at the end of the tunnel.
"We welcome the turnaround in interest rates in the USA, and hope that the ECB will also return to sustainable monetary policy," its chief financial officer Joerg Schneider said in a statement.
"Pressure on prices in reinsurance has eased off considerably," he added.
Munich Re hopes that its digital initiatives, such as insurance against cyber risks, will help its bottom line in the coming years. Investors have complained innovation is not yet paying off.
The 28% rise in first-quarter profit, up from €436m the same quarter a year earlier, was slightly below expectations.
Banks and brokerages on average had expected Munich Re to post a slightly higher net profit of €584m, according to a Reuters poll.
"We are very pleased with the profit for the quarter of €557m, and are on track to meet our profit target for the full year," Schneider said.
