BERLIN (AP) - Reinsurer Munich Re AG's fourth-quarter profit declined 38 percent to 480 million ($663 million) due to "weighty major losses" such as the devastating flooding in Australia, the company said Thursday.
The earnings for the October-December period compared with net profit of 780 million a year earlier. Full-year earnings in 2010 slipped to 2.43 billion from 2.56 billion amid higher costs resulting from natural disasters.
But the company still plans to raise its dividend to 6.25 per share from the previous year's 5.75, and to buy back shares for up to 500 million before next year's annual meeting. Since the buyback program's launch in May, Munich Re bought back shares worth some 750 billion.
Chief Financial Officer Joerg Schneider said that "despite weighty major losses, which also affected us at the end of the year, we are presenting a good result."
Schneider gave a cautious outlook for 2011, expecting "a somewhat better technical result than in 2010 and a consolidated result of around the same level."
Munich Re's reinsurance business in 2010 was marked by high claims costs for major losses, but its premium income grew by over 8 percent from 21.8 billion to 23.6 billion.
Full-year costs from natural catastrophes in 2010 for Munich Re were sharply up from 200 million to 1.56 billion. The most costly single event was February's earthquake in Chile, at $1 billion.
For September's earthquake in New Zealand, Munich Re is expecting claims of 340 million.
The largest individual loss in the fourth quarter stemmed from the flooding in Queensland, northeastern Australia, with claims totaling 270 million, Munich Re said.
With the floods continuing into the first weeks of January, and Brisbane seeing its worst floods for more than three decades, the company expects about the same costs for the first quarter of 2011.
The Munich-based company's primary insurance business, ERGO Insurance Group, saw its 2010 gross premium grow by 5 percent to 17.5 billion. It more than doubled its profit from 173 million to 355 million.
Munich Re's shares were up 0.3 percent to 117.65 in Frankfurt midday trading.