* 2017 net profit seen 2-2.4 bln euros vs 2.6 bln 2016
* Announces share buyback of up to 1 bln euros
* Shares 2nd-worst performer on blue-chip DAX index
(Recasts with CEO comment, adds analyst, share price,
By Carolyn Cohn and Alexander Hübner
LONDON/MUNICH, March 15 German reinsurer Munich
Re expects a lower profit in 2017 than last year as
prices remain weak and it invests in technology, it said on
Wednesday, sending its shares towards the bottom of the
blue-chip DAX index.
The world's largest reinsurer said it expects net income
between 2 billion and 2.4 billion euros ($2.1-$2.5 billion) this
year, compared with 2.6 billion in 2016.
Reinsurance prices have been falling for several years due
to increasing competition in the sector and a lack of natural
catastrophes in developed markets, which typically push up
"We haven't seen the bottom (of the market) yet," Chief
Executive Nikolaus von Bomhard told a news conference. "We
believe that we will have reached the bottom soon."
Insurers and reinsurers, which help insurers shoulder the
burden of large losses in return for part of the premium, have
also been looking at ways to streamline their business in areas
such as automation of claims processing.
They fear disruption in the industry from a new breed of
"insurtech" companies or from technology and social media giants
such as Amazon or Facebook.
Munich Re and others such as AXA and Aviva
are investing in start-up insurtech companies.
Changes in technology will require Munich Re to "set up
partnerships that would previously not have been considered",
the reinsurer said in a statement on Wednesday, explaining the
lower profit guidance.
RBC analysts described the profit guidance as "highly
conservative", reiterating their "buy" rating on the stock.
The company also said it would buy back up to 1 billion
euros of its own shares by April 2018, following similar buyback
arrangements in 2015 and 2016.
The buyback of up to 11 million shares would be equivalent
to 3.5 percent of its share capital based on the current price,
Munich Re said.
Reinsurers have focused on share buybacks as they struggle
to put money to work against the backdrop of declining prices.
Rival Swiss Re last month announced a new share
buyback programme of up to 1 billion Swiss francs ($991.4
Von Bomhard, who will be replaced as CEO next month by board
member Joachim Wenning, told the news conference that he wanted
to remain "flexible" over future buybacks, however, leaving open
room for investment in growth or acquisitions.
Munich Re released preliminary results for 2016 on Feb. 7,
including a proposed dividend of 8.60 euros per share, up 4
percent from a year earlier.
Munich Re's shares were trading at 176.5 euros at 1034 GMT,
down 1.6 percent and the second-worst performer on Germany's DAX
($1 = 0.9413 euros)
($1 = 1.0087 Swiss francs)
(Editing by Victoria Bryan)