Munich Re, the world’s second-biggest reinsurer, expects profit to decline this year as falling prices for its products and low interest rates weigh on investment earnings.

The company plans to repurchase $1.1 billion of stock before its 2017 shareholder meeting, Munich Re said in a statement Wednesday. That follows a repurchase of the same size that ends in April. Net income for this year is expected to decline to between $2.6 billion and $3.2 billion, compared with $3.4 billion reported for 2015, the Munich-based company said.

“On account of continuing low interest rates and intensive competition in reinsurance, this is an ambitious target,” Chief Executive Officer Nikolaus von Bomhard said. “Especially because we cannot expect to see a repeat of the below-average expenditure for natural catastrophe claims that we had in 2015.”

Reinsurers help primary insurers shoulder disaster claims. Average prices for coverage have declined in eight of the last 10 years, according to the Guy Carpenter World Property Catastrophe Rate on Line Index. While losses from natural catastrophes were the lowest since 2009 last year, earnings are also being squeezed as record-low interest rates hurt investment income.

Restructuring Costs

Munich Re targets $2.1 billion to $2.7 billion of reinsurance profit this year and $55.5 million to $111 million at the Munich Health division. At the Ergo primary insurance unit, profit is expected to be between $277.6 million and $388.6 million, excluding costs for a restructuring program that Ergo chief Markus Riess plans to present in the second quarter.

“The net profit guidance for 2016 is likely to be the main disappointment,” William Hawkins and Rufus Hone, analysts at Keefe, Bruyette & Woods, said in a note to clients. Shareholders may also be disappointed about payouts as Munich Re “still sees no reason/capacity to go further in spite of a 302 percent Solvency II ratio.”

Munich Re’s Solvency II ratio, a measure of an insurer’s ability to absorb losses under rules introduced in Europe this year, rose from 277 percent a year earlier, the insurer said.

The company’s primary insurance unit reported a $252 million loss for last year following a write-down on the German life insurance division and a loss from the sale of its Italian unit. Ergo, which gets the majority of its business from selling life and health insurance in Germany, virtually stopped providing new life insurance policies with traditional guarantees because low interest rates made them unprofitable.

The company on Tuesday named management board member Joachim Wenning, 51, to succeed von Bomhard, 59, as CEO in April 2017. Munich Re reported preliminary figures for last year on Feb. 4, including a plan to pay out 8.25 euros per share as a dividend for 2015, up from 7.75 euros a year earlier.