Munich Re exceeds 2022 profit guidance

Munich Re has posted a profit of €3.42 billion (up from €2.93 billion a year ago) in its 2022 financial results, exceeding its profit guidance of €3.3 billion. The Group’s profit in Q4 2022 amounted to €1.5 billion. Gross premiums written rose by 12.7% to €67 billion (€60 billion) year on year.

“Munich Re absorbed the crises of 2022 well and continues to grow profitably,” commented Joachim Wenning, chair of the board of management. ”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.

”In times of great uncertainty due to war and volatile capital markets, our clients value reliability. Our shareholders will benefit from both an increased dividend and a new round of share buy-backs.

”Munich Re also takes its social responsibilities very seriously. That is why I am pleased about the progress we have made in the areas of decarbonisation and diversity. With regard to climate change and digital transformation, we are still fully committed, offering new solutions to cover insurance needs.

”In addition, all fields of business are focusing on achieving the goals of our Ambition 2025. In the current year, we intend to generate a consolidated profit of €4 billion.”

Reinsurance business absorbs Ian loss

The reinsurance field of business contributed €2.59 billion to the consolidated result in 2022. The business was able to absorb the expenditure for Hurricane Ian in Q3 and the lower investment result, and – with further increased profitability of the business – slightly surpassed its adjusted profit guidance of €2.5 billion.

Major losses of over €10m each totalled €4.2 billion for the full year. These figures include gains and losses from the settlement of major losses from previous years.

Man-made major losses amounted to €1.7 billion. The increase was due in part to expenditure related to the war of aggression in Ukraine totalling €475m.

Major-loss expenditure from natural catastrophes amounted to €2.4 billion. The costliest natural catastrophe for Munich Re in 2022 was Hurricane Ian, with losses of around €1.6 billion.

Strong renewals performance; deploys more cat capacity

In the reinsurance renewals as at 1 January 2023, Munich Re was able to increase written business volume to €15.3 billion (+1.3%). Munich Re reduced the share of proportional business and, owing to the attractive price level, grew in the area of non-proportional natural catastrophe covers in particular.

Due to improved contractual terms and conditions, the quality of the portfolio improved further. Despite times of high uncertainty and inflation, as well as a reduction in the capacities offered by reinsurers and capital market players in certain markets, Munich Re continued to position itself as a high-quality and reliable partner for the long term.

This was also evidenced by an active optimisation of the portfolio and the realisation of growth opportunities from business development across almost all regions. The main driver was the expansion of existing business and the acquisition of new business with selected clients, particularly in Europe, Asia and Australia.

Around two thirds of non-life reinsurance treaty business was renewed, with a focus on Europe, the USA and global business.

Prices developed positively overall and more than compensated for the significantly higher loss estimates in some areas, which 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 2.3%.

Despite increasing market pressure, Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming April and July renewal rounds.

Bullish outlook for 2023

Munich Re is aiming for a profit in 2023 of €4 billion. The Group’s insurance revenue, which will supersede “premium income” in future, is expected to reach around €58 billion in 2023. It is anticipated that the return on investment will amount to at least 2.2%. 

In the reinsurance field of business, Munich Re anticipates insurance revenue of about €39 billion and a profit of around €3.3 billion in 2023. The combined ratio in property-casualty reinsurance is expected to decrease significantly to around 86% – chiefly due to the disclosure method used under IFRS 17.

All forecasts and targets face considerable uncertainty owing to fragile macroeconomic developments and volatile capital markets. In particular, there continues to be considerable uncertainty regarding the financial impact of the Russian war of aggression in Ukraine.