Munich said it expects to pay an increased dividend distributing a total of EUR1.1 billion ($1.6 billion) to shareholders.

The 2007 results of primary insurance in the Munich Re Group amounted to EUR1.3 billion ($1.9 billion). Primary insurance contributed EUR1 billion ($1.47 billion) to results, exceeding August's increased profit target of EUR900 million ($1.325 billion), Munich said.

In the U.S. subprime market, Munich said it was only marginally exposed with EUR340 million ($500 million), representing less than 0.2 percent of total investments. Revaluation of such financial instruments led to write-downs and losses on disposal totaling EUR166 million ($244 million) in the past year.

The group's portfolio of fixed-interest investments, amounting to around EUR135 billion ($198 billion), also reflects its conservative investment policy. It mainly comprises government bonds and other investments with good security (details were published Jan. 30, 2008).

The combined ratio in property-casualty and legal expenses insurance came up to 93.4.

In property-casualty reinsurance, Munich Re recorded large losses from natural catastrophes, such as Winter Storm Kyrill, EUR390 million ($574 million); the Queen's Birthday Storm in Australia, EUR60 million ($88 million); and the floods in the United Kingdom, totaling about EUR60 million. However, at 5 percentage points of net earned premiums, the overall cost burden from natural catastrophes was at the level budgeted for.

The Munich Re Group's investments totaled EUR176.2 billion ($259.5 billion) at the end of 2007. The investment result rose to EUR9.3 billion ($13.7 billion). At 5.2 percent, the return on investment exceeded the 4.5 percent return expected on average.

As in the previous year, the balance of EUR1.8 billion ($2.65 billion) from gains and losses on disposals and from write-ups and write-downs contributed one percentage point to the good result.

The Munich Re Group achieved profits of EUR3.9 billion ($5.7 billion) in financial-year 2007, surpassing its increased profit target of EUR3.5-to-EUR3.8 billion ($5.1-to-$5.6 billion) announced in August. With a return of 20.2 percent on risk-adjusted capital, the company said it also markedly exceeded its long-term target of 15 percent.

The group said its equities portfolio and real estate portfolio were further reduced and diversified. The sale of a large parcel of German real estate alone produced EUR630 million ($927 million) in gains on disposals, with a positive impact of around EUR180 million ($265 million) on the result (after policyholder participation and tax).

The proportion of investments in equities, including hedging instruments, fell to 10.8 percent of the group's total investments at market values.