Munich Re posts Q3 profit of €527m

Munich Re has achieved a profit of €527m in Q3 2022, and a total of €1.9 billion for the first nine months.

The quarter was marked by above-average expenditure for natural catastrophes and the reinsurance giant projects losses of around €1.6 billion from Hurricane Ian. The operating result fell to –€346m, compared with €204m for the same quarter last year.

The reinsurance business contributed €81m (compared to €232m in the same quarter a year ago) to the consolidated result. The decline is mainly attributable to the expenditure for Hurricane Ian and the lower investment result.

“Hurricane Ian matches the pattern science would expect of a warming world. Therefore the rising probability of such extreme storms is part and parcel of our models and must be reflected in pricing,” said chief financial officer Christoph Jurecka.

“The sustainable and reliable offering our clients expect of us is based on realistic analyses, not only of natural catastrophe risks, but also of cyber and pandemic risks. And although Hurricane Ian and the macroeconomic environment are making it significantly more challenging for us, we are firmly adhering to our annual guidance of €3.3 billion. All fields of business are contributing to sustainably positive performance.”

Major losses drive up COR

Property-casualty reinsurance contributed a loss of €343m to the result in Q3 and the combined ratio totalled 108.2% (compared to 112.8% a year ago) of net earned premiums in Q3.

Life and health reinsurance business recorded a substantial increase in profit to €424m (€94m). Losses resulting from COVID-19 dropped appreciably to €35m during the quarter. 
 
Major property casualty losses of over €10m each were, by contrast, up in Q3 and totalled €2.3 billion (up from €2 billion a year ago). Man-made major losses rose to €489m (up from €245m). The costliest natural catastrophe for Munich Re in Q3 was Hurricane Ian.

In Q3, reserves of €344m (€265m) were released for basic losses from prior years.

Improving outlook

Given the very positive business performance in the first nine months of 2022, Munich Re has raised its guidance for gross premiums in the reinsurance field of business to €48 billion, up from €45 billion.

In life and health reinsurance, Munich Re now expects a significantly higher technical result, including the result from insurance contracts with non-significant risk transfer.

For property-casualty reinsurance, Munich Re projects a combined ratio of around 97% (previously: 94%) of net earned premium on account of the high natural catastrophe losses that occurred in Q3. 

All forecasts and targets face considerable uncertainty owing to fragile macroeconomic developments, volatile capital markets and the unclear future of the pandemic.

In particular, there continues to be considerable uncertainty regarding the financial impact of the Russian war of aggression in Ukraine.