FRANKFURT: German reinsurance giant Munich Re said Tuesday it had met profit targets for 2016 and would increase its dividend, although it booked a lower result than the previous year.

Munich Re, whose main business is insuring other insurance companies against their risks, saw profits fall around 16 per cent to 2.6 billion euros (Dh10.24 billion, $2.7 billion), from 3.1 billion in 2015, the firm said in a statement.

Executives had set a target of profits “significantly higher” than 2.3 billion euros for the year after a 30-percent jump in the third quarter.

The group was unable to match that result in the fourth quarter of 2016, reporting net profits of 500 million euros, down 28 per cent from the same period in 2015.

Munich Re said it had been hit by high costs from natural disasters in the final three months, pointing to claims for some 232 million euros ($248 million) relating to Hurricane Matthew, which struck the Caribbean and United States in October, and 251 million euros for an earthquake in New Zealand.

Over the whole year, underlying, or operating profit fell from 4.8 billion to 4.0 billion euros.

In a statement, chief financial officer Joerg Schneider said the group was “largely able to counter the effects of low interest rates and intense competition”, adding that executives were “satisfied” with the result.

Like other financial industry firms, Munich Re is battling extremely low interest rates, which make it more difficult for the firm to earn money on the premiums paid by its clients.

Gross premiums written — the equivalent of revenues for an insurance company — shrank almost 3.0 per cent to 48.9 billion euros, compared with 50.4 billion in 2015.

The group said much of the fall was down to its sale of direct insurance subsidiary Ergo Italia.

Munich Re said some 9.0 billion euros’ worth of its reinsurance contracts expired on January 1 and 14 per cent — or around 1.3 billion euros — were not renewed, but the group was able to add some 1.1 billion euros of new business.

The group also slowed a fall in its prices, to around 0.5 per cent in 2016 compared with 1.0 per cent in the previous year.

While profits were lower in 2016, Munich Re said it would increase its dividend to 8.60 euros per share, up from 8.25 euros for 2015.

“We are sure that we will be able to maintain this level of dividend and continue the trend of raising it in the future,” CFO Schneider said.