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Munich Re says on target for 2016 after mild profit fall

German reinsurer Munich Re said it was on track for its full-year earnings goal after net profit fell by less than expected in the second quarter as realized gains on investments helped offset higher claims from natural disasters.

"We are well on track to reach our annual target of 2.3 billion euros ($2.5 billion)," Munich Re Chief Executive Nikolaus von Bomhard said in a statement on Tuesday, referring to net profit.

The world's largest reinsurer said it had cut its exposure to equities and derivatives ahead of the UK's referendum on leaving the EU.

Nikolaus von Bomhard, CEO of German reinsurance giant Munich Re, is pictured during the company's annual general meeting in Munich
Christpf Stache | AFP |Getty Images
Nikolaus von Bomhard, CEO of German reinsurance giant Munich Re, is pictured during the company's annual general meeting in Munich

Quarterly earnings also benefited from the release of reserves built up to cover past losses and no longer seen as needed, which totaled 230 million euros.

Like other reinsurers, Munich Re saw a jump in claims for natural catastrophes such as wildfires in Canada and earthquakes in Japan. Major loss claims more than doubled to 542 million euros in the second quarter.

Results at peer Swiss Re were also hit by the rise in damage claims, low interest rates and falling industry prices, earnings data from the Swiss reinsurer late last month showed.

Munich Re reported quarterly net profit of 974 million euros, down 9 percent from a year earlier but above the highest forecast of 590 million in a Reuters poll of banks and brokerages. The average forecast in the poll was 484 million.

Operating profit fell 20 percent but was also above the highest forecast in the poll.