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Reinsurers decline despite profits

Reinsurers decline despite profits

ENTERTAINMENT Gaming Inc saw its share price rise last week despite posting its 10th straight quarterly loss.

Supplying gaming machines to Phnom Penh’s NagaWorld, Entertainment Gaming – formerly named Elixir Gaming– had previously announced plans to open the Dreamland Casino and Resort in Takeo province, near the Vietnam border.

Entertainment Gaming’s share price climbed 2.1 percent last week, closing Friday at US$0.243 on the American Stock Exchange, despite posting a $1.5 million quarterly net loss Thursday.

Its second-quarter loss showed a marginal improvement on a $1.7 million deficit during the first quarter, but represents a larger decline than last year’s second quarter, when the firm lost $133,000.

The decline so far this year had been caused “primarily due to a substantial decline in table game products revenue ... and non-recurring items”, whereas 2009’s bottom line benefited from discontinued operations and a favourable lawsuit settlement, it said.

Meanwhile, the world’s two largest reinsurers, Munich Re and Swiss Re, which both reinsure domestic firm Infinity Insurance, saw their share prices drop last week despite the strong profits they had recorded for the latest quarter.

Munich Re rose 1 percent on the Frankfurt Stock Exchange after issuing its quarterly earnings Wednesday to close the day at €109.80 ($145.80), but ultimately ended the week at €107.05 – a 1.25 percent fall from Monday’s €108.40 opening.

The firm’s net profit increased to €709 million (US$941.5m) for the quarter ending in June, up from €697 million for the same quarter last year.

Its profit was driven largely by a 20 percent increase in investment income, it said, but its portfolio was still under pressure from the Chile earthquake – the third-largest loss in the reinsurer’s history.

Munich Re’s shares have returned to January prices, unlike counterpart Swiss Re which has seen an 8 percent slide in its value during 2010.

Zurich-listed Swiss Re fell 2.9 percent to 47.53 Swiss francs (US$45.79) on Thursday after publishing results, before continuing to fall on Friday to close the week at 43.90 francs – 4.88 percent lower than its Monday opening.

It posted a net profit of $812 million in the three months to June 30, after a $342 million loss a year earlier, according to Thursday’s results.

The reinsurer also claimed increased benefit from its investments as its asset management income grew 160 percent.

However, the firm said that its strong performance would not be repeated next quarter.

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