Munich Re posts 17% jump in 2022 profit as ERGO preforms well

Munich Re reported a 17% increase in profit to €3.4bn last year as it beat guidance and was boosted by a 74% jump in Q4 earnings to €1.5bn. Munich Re’s primary business ERGO booked 37% growth in profit to €825m for 2022. The group’s reinsurance profit for full-year 2022 was up 11%, and above guidance to €2.59bn. Full-year contribution from P&C reinsurance was down 7% to €1.86bn after losses from Hurricane Ian but the business booked a 77% increase in profit contribution during Q4 to €1.15bn. Munich Re’s life and health reinsurance recorded 127% growth in 2022 to €737m, again buoyed by Q4 performance. Munich Re said its reinsurance business was hit by a 56% dent to its investment result, which saw the unit end 2022 with a 5% fall in operating result to €2.57bn. The group’s investment result across all business lines was down 30% for 2022 to €4.9bn from €7.2bn in 2021, primarily due to impairment losses on equities and on fixed-interest securities totalling €850m from the war in Ukraine. Major losses from natural catastrophes cost Munich Re €2.43bn last year, down from €3.14bn in 2021. Hurricane Ian was the costliest disaster at €1.6bn. Man-made major losses were running 50% higher in 2022 to total €1.74bn after losses from the war in Ukraine amounted to €475m. Reinsurance renewals at 1 January 2023 saw Munich Re increase premium volumes by 1% to €15.3bn after it reduced proportional business in favour of non-proportional natural catastrophe cover because of attractive rate increases. Munich Re said price increases across the board “more than compensated” for higher loss estimates in some lines driven by inflation. “Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming April and July renewal rounds,” the company said. ERGO exceeded full-year profit guidance of €800m but recorded a dip of 9% in Q4 to €124m. ERGO’s full-year result was driven by its life and health Germany unit, where profits almost tripled to €485m. Profit from ERGO’s P&C Germany business was down 21% to €185m, while ERGO’s international profit was down 25% to €155m. Both units were impacted by lower investment and currency results. ERGO recorded growth across all three operating units and premium income increased 5% to €20bn. ERGO’s P&C Germany business improved its year-end combined ratio to 90.6% from 92.4% but ERGO’s international unit saw its combined ratio deteriorate to 94.3% from 92.9%. Munich Re’s reinsurance business recorded an improved combined ratio of 96.2% from 99.6% despite high nat cat losses. Munich Re’s total gross premiums for 2022 were up 13% to €67.13bn, driven by 16% growth in reinsurance to €48.08bn. Munich Re said it expects 18% growth this year to reach profits of €4bn in 2023, although EGRO’s contribution is expected to come in lower than 2022 at €700m. Announcing a €1bn share buy-back programme, Joachim Wenning, chair of Munich Re’s board of management, said: “Munich Re absorbed the crises of 2022 well and continues to grow profitably. We are robust, both financially and in terms of capital. Our broadly diversified business portfolio not only makes us more resilient but also opens up new earnings prospects.”

Munich Re posts 17% jump in 2022 profit as ERGO preforms well

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