Munich Re forges ahead on back of strong renewals

Munich Re increased business written by 11.1% during the April renewals and reported an overall risk-adjusted rate increase of 4.7%. As it reported solid first quarter results, including a net profit of €1.27bn, down from €1.48bn for the same period last year, the reinsurer said the pricing outlook remains positive for carriers and expects another healthy renewals round in July. Munich Re said it was able to increase the volume of business written to €2.9bn (+11.1%) in the reinsurance renewals as at 1 April 2023. “It was possible to leverage growth opportunities, especially in Asia – particularly in Japan and India – as well as in Latin America. Non-proportional natural catastrophe business was expanded, in particular, in view of attractive rate levels. By contrast, Munich Re once again selectively discontinued business that no longer met risk/return expectations,” explained the reinsurer. Munich Re said prices developed “positively” overall and for the most part more than compensated for the significantly higher loss estimates in some areas, which it said were caused primarily by inflation or other loss trends. “To varying degrees, price increases were evident around the world. All in all, prices for the Munich Re portfolio increased by 4.7%. This figure is, as always, risk adjusted. In other words, price increases are offset if they are associated with increased risk and, consequently, elevated loss expectations,” said the reinsurer. “Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming July renewal rounds,” added Munich Re. The reinsurer’s combined ratio in property/casualty reinsurance closed the quarter at 86.5%, only slightly higher than the expected 86%, despite above-average losses attributable to natural catastrophes, not least the earthquake in Turkey. Christoph Jurecka, CFO at Munich Re, said: “The earthquake that hit Turkey on the border with Syria in February 2023 was one of the most catastrophic we have seen in recent history. Around 60,000 people lost their lives. The insured losses amount to some €4bn-5bn, of which Munich Re is shouldering €0.6bn – one of the reasons why major losses from natural catastrophes in Q1 2023 were higher than expected. “Owing to otherwise pleasing operational performance and a strong investment result, however, Munich Re generated a net result of almost €1.3bn. In addition, the April renewals saw Munich Re continue its trend of profitable growth. Accordingly, we are confident that we can reach our 2023 net result guidance of €4bn; the chances for us to surpass this target have increased.” Munich Re’s primary German insurance operation ERGO posted a net result of €219m in Q1 this year, up from €156m in Q1 last year. Insurance revenue from insurance contracts issued increased to €5bn up from €4.6bn, driven by all segments. ERGO’s property/casualty Germany business made a strong contribution to the net result of €166m, up from a loss of €64m in the first quarter of last year. The reinsurer said this was underpinned by low major losses, strong operational performance, a good investment result and seasonally low expenses in acquisition cash flows. Last year, the first quarter was hit by high major losses, impacting ERGO’s net result.

Munich Re forges ahead on back of strong renewals

Outlook positive for next round of renewals in July

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