Munich Re says hard market to earn through in 2024, with higher premiums / profit

Reinsurance firms are expecting the hard market environment to earn through in 2024 in much higher profits, with Munich Re the latest to forecast a significant increase for 2024.

Munich Re said today it will target €5 billion of group net profit in 2024, which is significantly up from the initial target for €4 billion of 2023.

Munich Re had updated its 2023 profit target to €4.5 billion in November, given the way reinsurance business had been earning through.

For next year, the earn through is expected to continue and drive group insurance revenue to €59 billion for the company.

The reinsurance arm is expected to deliver insurance revenue to €39 billion and a net profit of €4.2 billion in 2024.

“In an ongoing favourable market environment, Munich Re will continue to leverage its strong position to spur profitable growth,” the reinsurance giant said.

Adding that, “In property-casualty reinsurance, the combined ratio is likely to improve to 82%, reflecting operating improvements from the earn-through of the 2023 renewals and from the expected outcome of the 2024 renewals.”

Interestingly, Munich Re also noted that it doesn’t feel the need to increase its reserves, saying, “On the basis of Munich Re’s very strong reserving position, it is not planned to build up reserve prudency any further by offsetting part of the discounting impact, as was the case in 2023.”

It’s another clear signal that reinsurance is going to remain an extremely attractive investment sector in 2024, both in equity and in insurance-linked securities (ILS) terms, loss activity permitting these results to be achieved.

The underlying profitability of reinsurance portfolios underwritten in 2023 is seen as high and expected to keep earning through into next year, as Hannover Re also recently said.