Munich Re to post €1.4bn Q3 loss, with hurricanes to cost €2.7bn
Munich Re expects to post a third-quarter loss of €1.4bn and estimates that Hurricanes Harvey, Irma and Maria will cost the firm €2.7bn.
The reinsurer projects that the Q3 loss, driven by “exceptional major-loss expenditure” from recent nat cats, will see it make just a small profit in 2017. In March, Munich Re’s profit guidance for the year was in the €2bn to €2.4bn range.
The firm said its €2.7bn loss estimate after retrocession from the three major hurricanes is still “fraught” with considerable uncertainty. In addition to these losses, other natural catastrophes – in particular the Mexican earthquake – and man-made losses will see Munich Re post overall major losses of €3.2bn in the third quarter.
Munich Re’s quarterly results will also be impacted by adverse International Financial Reporting Standards effects caused by a life reinsurance treaty and a low positive contribution from its primary insurer ERGO, the company said.
Jörg Schneider, chief financial officer at Munich Re, said: “High losses from severe natural catastrophes are part and parcel of our business; that is why we are here. Our capital base remains very strong. We will continue to offer our clients full reinsurance capacity.”
“Moreover, Munich Re has enough capital to take advantage of the opportunities this exceptional situation provides in terms of profitable growth,” he added, hinting at likely rate rises.
