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Insurer Munich Re hesitant to douse coal business

© AFP/File | Environmentalists demonstrated at the Hambach open pit lignite coal mine near Elsdorf in western Germany last year to protest the continued use of fossil fuels and its contribution to global warming

FRANKFURT AM MAIN (AFP) - 

German reinsurance giant Munich Re said Tuesday it was unsure whether to follow Allianz by ending all activities linked to coal in the name of fighting climate change.

"Before taking any decisions, we want to think very carefully about how (an exit from coal) should be planned, so as to avoid sending any negative signals overall," chief financial officer Joerg Schneider said in a telephone conference.

"There's no doubt that burning coal makes a signficant contribution to climate change," he added, "but our role as a business is harder to define."

Allianz's Friday announcement that it would stop insuring coal power plants and mines and gradually end investments in coal businesses by 2040 is part of a trend that has picked up in the wake of the 2015 Paris climate agreement.

Insurers are some of the companies most gravely affected by climate change, with financial damage from catastrophes like hurricanes and flooding doubling to 330 billion euros ($392 billion) worldwide last year, Munich Re estimated in January.

"Even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in the future," board member Torsten Jeworrek said at the time.

- Tougher measures? -

The group already has a rule that it does not invest in firms that generate more than 50 percent of revenue from production or burning of coal.

"Of course we're also considering whether we ought to get tougher here," finance chief Schneider said.

Looking to the nearer term, a lower number of disasters in the first quarter spared Munich Re the massive losses seen last year, putting in on track to hit its targets for the year.

In the first three months, the group paid out just 62 million euros for major losses costing more than 10 million euros per incident, far short of the 403-million-euro blow inflicted by man-made and natural disasters in the same period last year.

Net profit attributable to shareholders at the group reached 826 million euros between January and March, up 49.2 percent year-on-year.

Operating, or underlying profit grew more slowly, adding 34.8 percent to reach almost 1.3 billion euros, while gross premiums written -- the equivalent of revenue at an insurance company -- increased 1.6 percent to 13.1 billion.

Munich Re stuck to its expectations of annual net profit between 2.1 and 2.5 billion euros in 2018.

The firm's ambitions are roughly in line with its original guidance for 2017 before a series of catastrophes ground net profit down to 375 million euros.

© 2018 AFP