Munich Re reports €608m Q1 profit

Munich Re generated a profit of €608m (€589m) in Q1 2022 and an operating result totalled €780m (€798m).

The reinsurer credited strong organic growth across all segments, especially in property-casualty reinsurance, where gross premiums written increased by 15.7% year-on-year to €16.8 billion.

In Q1, loss reserves of €291m (230m) were released for basic losses from prior years, which corresponds to 4% of net earned premiums. The normalised combined ratio was 94.8%.

“Munich Re is helping to provide humanitarian aid for the people of Ukraine and fully supports the sanctions against Russia,” said Christoph Jurecka, Munich Re CFO. “The financial consequences of the war and the sanctions severely impacted our result in the first quarter:

”We made write-downs for impairment losses on Russian and Ukrainian bonds alike and recorded the first claims. 

”Despite the uncertainties of a challenging environment, Munich Re maintains its annual guidance of €3.3bn based on a quarterly profit of more than €600m.”

Bullish renewals 

Property-casualty reinsurance contributed €589m to the result in Q1. Premium volume increased substantially to €7.9 billion (up from €6.3 billion in Q1 2021). The combined ratio was 91.3% (down from 98.9% a year ago) of net earned premium.

In Q1, Munich Re posted expenditure related to the war in Ukraine of slightly over €100m in some specialty lines.

Major losses from natural catastrophes came to €481m (down from €646m a year ago) in Q1. Major natural catastrophe events included heavy rainfall in eastern Australia, resulting in losses of around €440m, and the winter storms in Europe, which produced losses of slightly below €120m for Munich Re.  

Major losses of over €10m each totalled €667m (892m). This figure includes gains from the settlement of major losses from previous years of around €100m.

In the reinsurance renewals as at 1 April 2022, Munich Re was able to increase the volume of business written to €2.7 billion (+7.6%). 

The reinsurer tapped “growth opportunities, especially in Asia – particularly in Japan and India – as well as in Latin America”.

Drop in investments

Munich Re’s investment result decreased to €987m (down from €1.7 billion in the prior year quarter). 

The net balance of write-ups and write-downs declined substantially to –€1 billion, mainly due to gross write-downs of almost €700m (net: €370m) on Russian and Ukrainian bonds, which impacted the investment results of both reinsurance and ERGO.

Nevertheless, the reinsurer’s outlook for the rest of the year remains unchanged and it expects to see advantageous business prospects in reinsurance in 2022.

It notes that, “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 is considerable uncertainty regarding the financial impact of the Russian war of aggression in Ukraine.”