Munich Re has forecast another fall in net profit this year.

The company reported net profit of €3.17 billion ($4.39 billion) for last year, down from €3.33 billion ($4.62 billion) in 2013.

CEO Nikolaus von Bomhard told shareholders at last week’s AGM the company expects a further drop to €2.5-€3 billion ($3.5-$4.2 billion) this year.

However, he remains upbeat about the company’s performance, telling shareholders that in an “insecure political and economic environment” last year Munich Re “not only hit our targets, we beat them”.

Dr von Bomhard warns of “very intensive competition in the reinsurance markets” this year.

“Primary insurers have more capital available, thus reducing their demand for reinsurance cover. The reinsurers are also well capitalised and some are reducing their prices.

“Other investors, such as hedge funds and corporate pension schemes, are muscling in to the reinsurance market in their search for investment opportunities.

“The result is that we have a strong supply of reinsurance cover while demand is falling… [which] puts margins in reinsurance under pressure.”

Against this backdrop, Dr von Bomhard says “a fall in income is unavoidable”. He considers the projected target of €2.5-€3 billion “ambitious but realistic”.

There remain “good opportunities for profitable growth” for Munich Re.

“Globally speaking, the world is clearly underinsured. The spectrum of underinsurance ranges from insufficiently covered liability risks in industry to uninsured natural catastrophe losses in emerging markets.”

Asia has been targeted for expansion. The region’s economies and insurance markets are experiencing strong growth, with premium in Asia expected to rise 10% annually by 2020.

“We want a part of this growth,” Dr von Bomhard said.

Munich Re has been increasing its presence in the region’s primary insurance market. It has been offering life insurance in China through a joint venture since 2013, and last year it acquired a property and casualty insurer in Singapore.

Munich Re also has a presence in health and property and casualty insurance markets in India.

The company will release its first-quarter results on May 7.