Munich Re aims for higher profit after strong renewals

Munich Re is projecting higher earnings for this year, encouraged partly by the performance of its property and casualty (P&C) business and strong renewals in January.

The reinsurer announced last week its overall consolidated profit rose 16.6% to €3.4 billion ($5.3 billion) in 2022 from a year earlier while gross premiums written improved 12.7% to €67.1 billion ($105 billion)

For this year the reinsurer is aiming for a consolidated profit of €4 billion ($6.3 billion).

“Munich Re absorbed the crises of 2022 well and continues to grow profitably,” Chair of the Board of Management Joachim Wenning said.

“Our broadly diversified business portfolio not only makes us more resilient, but also opens up new earnings prospects.”

Munich Re predicts its group insurance revenue, which will supersede “premium income” in future, is expected to reach around €58 billion ($90 billion) this year.

In the reinsurance field of business, Munich Re anticipates insurance revenue of about €39 billion ($61 billion) and a profit of around €3.3 billion ($5.2 billion) this year. The P&C reinsurance combined ratio will likely decrease significantly to around 86%, mainly due to the disclosure method used under IFRS 17.

Last year the P&C reinsurance arm’s profit fell 7.3% to €1.86 billion ($2.9 billion) but Munich Re says the division’s combined ratio improved to 96.2% from of net earned premiums from 99.6% despite high natural catastrophe losses in the market.

Major-loss expenditure corresponded to 12.8% of net earned premiums, down from 16.5% and is slightly below the long-term average expected value of 13%.

Hurricane Ian was the costliest natural catastrophe for Munich Re, with losses of around €1.6 billion ($2.5 billion).

At the January renewals Munich Re increased written business volume by 1.3% to €15.3 billion ($24 billion) and further improved the quality of the portfolio due to improved contractual terms and conditions.

“The main driver was the expansion of existing business and the acquisition of new business with selected clients, particularly in Europe, Asia and Australia,” it says.