Frankfurt - German reinsurance giant Munich Re unveiled Thursday a huge share buy-back programme as it projected a decline in profits this year due to the current environment of low interest rates.
Munich Re said in a statement it plans to buy back up to €1.0bn worth of shares by 2015.
"In the period commencing after the 2014 annual general meeting and extending up to the 2015 annual general meeting, Munich Re intends to buy back up to 13 million shares for a maximum purchase price of €1.0bn," the group said in a statement.
"On the basis of the current share price this would amount to around 3.7% of the share capital," the statement said.
On Wednesday, Munich Re shares had closed at a price of €150.50 on the Frankfurt stock exchange.
A share buyback is an operation by which a company can increase its share price, because it reduces the number of shares outstanding.
"The buy-back is conditional on no major upheavals occurring on the capital markets or in the underwriting business," Munich Re said.
"With this share buy-back, we are again paying out currently unneeded earned capital to shareholders," said chief executive Nikolaus von Bomhard.
At the same time, Munich Re said it expected net profit this year to fall to €3.0bn from €3.3bn in 2013.
"This is an ambitious objective, given the parameters: Munich Re is reckoning in particular with a continuation of the low interest-rate levels in 2014 and hence with somewhat lower regular income from investments," von Bomhard said.
In 2013, Munich Re's net profit rose by 3.9% to €3.313bn, but underlying or operating profit fell by 17.6% to €4.409bn on a 1.7% decline in gross premium income to €51.06bn.