Insurance majors warn of tough times

London, Frankfurt: European insurers Munich Re and Royal & Sun Alliance warned that market conditions would be tough this year, due to rising competition and turbulent financial markets.

Munich Re, the world's second-largest reinsurer, said its net profit fell by nearly a fifth in the first quarter to 785 million euros ($1.20 billion, Dh4.04 billion), slightly better than expected, as investment gains and premiums fell. Analysts expected it to make 779 million euros.

Royal & Sun, the UK's second-largest commercial underwriter, shrugged off the gathering gloom, with a 15 per cent rise in first-quarter premiums, boosted by rapid growth in its international operations, helped by recent small acquisitions and currency effects.

South Africa's largest insurer Old Mutual saw first-quarter life sales rise less than was expected to £426 million, dragged down by disappointing sales in Europe.

Insurers are facing a tougher outlook, as competition in the non-life market intensifies while turbulent financial markets are hitting their investment income and sales of life products.