Munich Re

Showing posts with label Munich Re. Show all posts
Showing posts with label Munich Re. Show all posts

Thursday, 9 January 2020

Munich Re:Tropical cyclones causing billions in losses dominate nat cat picture of 2019

  • Severe typhoons in Japan cause the year’s biggest losses
  • Hurricane Dorian, the strongest hurricane of the year, devastates the Bahamas – US mainland largely spared
  • Natural catastrophes cause overall losses of US$ 150bn, with insured losses of about US$ 52bn – In line with long-term average
  • Humanitarian tragedy caused by cyclones in Mozambique – Over 1,000 deaths – Better protection is urgently needed
  • The 2019 natural catastrophe year at a glance

    820 natural catastrophes caused overall losses of US$ 150bn, which is broadly in line with the inflation-adjusted average of the past 30 years. A smaller portion of losses was insured compared with 2018: about US$ 52bn. This was due, among other things, to the high share of flood losses, which are often not insured to the same extent as wind damage in most industrial countries.
    The insured portion of overall losses, slightly above 35%, matches the average of the past ten years. This is evidence that large sections of the market remain uninsured, especially in emerging and developing countries.
    Globally, in 2019, about 9,000 people lost their lives in natural catastrophes compared with 15,000 in 2018. This confirms the overall trend towards lower numbers of victims thanks to better prevention measures. On average over the past 30 years, about 52,000 people per year have lost their lives in natural catastrophes.
  • " The severe cyclones in 2019 have highlighted the importance of knowledge about changes in risk. Natural climate variations influence weather catastrophes from year to year. Longer-term climate change effects can already be felt and seen. Buildings and infrastructure must be made more resistant in order to reverse the increasing trend in losses. This will enable insurance to be more effective and support the remaining financial losses. 
    Torsten Jeworrek
    Member of the Board of Management

Friday, 18 October 2019

Munich Re achieves a strong result in Q3 and will likely surpass the 2019 forecast

Munich Re achieves a strong result in Q3 and will likely surpass the 2019 forecast
Munich Re generated a consolidated result of approximately €850m in the third quarter, despite high major-loss expenditure. The Q3 result is due to good operational performance, strong currency gains, and a very good investment result.

Munich Re expects to beat its target for the consolidated result of €2.5bn for 2019, despite typically considerable uncertainties about developments in major losses and the capital markets during the rest of the year.

As always, the figures are subject to the outcome of the ongoing quarterly closing, and will be published by Munich Re as planned on 7 November 2019.

Friday, 10 May 2019

2019 starts well for Munich Re – Quarterly profit of €633m

  • April renewals once again result in growth (10.3%) and rising prices (1.4%)
  • Greater expenditure for claims from previous years and medium-sized events
  • Profit guidance for 2019 remains unchanged at around €2.5bn

“Munich Re has begun 2019 with a good first quarter. Munich Re continues to grow organically in its core business of property-casualty reinsurance. The April renewals were the sixth consecutive round of renewals in which we are able to expand our business robustly in some areas. Prices for reinsurance coverage have continued to rise following the high losses in previous years. In primary insurance, the implementation of the ERGO Strategy Programme is making good progress.”
Christoph Jurecka, Chief Financial Officer

Summary of the Q1 figures
In the first quarter of 2019, Munich Re generated a profit of €633m (827m). Higher basic losses and greater expenditure for claims from previous years prevented a repeat of the extraordinary result in the same quarter last year, which was practically free of major losses. The first-quarter operating result fell year on year to €875m (1,283m). The other non-operating result remained nearly constant at –€122m (–125m); the currency translation result amounted to €58m (–68m). Taxes on income totalled €122m (212m). At €28,990m, equity was up on the start of the year (€26,500m) – primarily due to value increases in the share portfolio and fixed-interest securities. Compared with the same quarter last year, gross premiums written rose by 1.9% to €13,375m (13,126m).

The annualised return on risk-adjusted capital (RORAC) in Q1 amounted to 9.9%, and the overall return on equity (RoE) totalled 9.1%.

Moreover, the solvency ratio rose from 245% at the beginning of the year to about 250% at the end of Q1.

Thus far in 2019, Munich Re has repurchased shares worth €303m as part of its active capital management.

Reinsurance: Result of €548m
The reinsurance field of business contributed €548m (750m) to the consolidated result in Q1. The quarterly operating result amounted to €633m (1,059m). Compared with the same quarter last year, gross premiums written rose by 2.4% to €8,380m (8,183m).

Life and health reinsurance business generated €128m (159m) in profit; premium income rose slightly to €2,896m (2,865m). The technical result, including the result from business with non-significant risk transfer, totalled €105m (155m) in Q1. This figure was impacted by reserving effects owing to a reduction in the durations of investments in Canada and the fall in interest rates in Australia. Overall, claims experience was in line with expectations. For the year 2019, Munich Re still projects that the technical result, including the result from business with non-significant risk transfer, will come to approximately €500m.

In Q1, property-casualty reinsurance business contributed €420m (591m) to the consolidated result. Premium volume rose to €5,484m (5,317m). The combined ratio was 97.9% (88.6%) of net earned premium, which is on track to achieve the Munich Re target level of around 98% for the full year.

In Q1, total expenditure for major losses in excess of €10m each amounted to €479m (62m). These figures include run-off profits and losses for major claims from previous years, including additional expenditure of €267m for losses from Typhoon Jebi. Major-loss expenditure is equivalent to 9.7% (1.4%) of net earned premium for Q1. Major-loss expenditure from natural catastrophes amounted to €195m (–49m) in Q1. Man-made major losses amounted to €283m (112m).

Given that claims expenditure for basic losses in previous years remained appreciably below the expected level, it was possible to release reserves – adjusted for commissions – of about €200m. This equates to 4.0% of net earned premium. Munich Re also still seeks to set the amount of provisions for newly emerging claims at the very top end of the estimation range, so that profits from the release of a portion of these reserves are possible at a later stage.

The renewals at 1 April 2019 saw price increases in the markets and risks affected by natural catastrophes. Price stabilisation with a slightly upward trend was also observed in the third-party liability markets. With regard to all April renewals, prices rose by 1.4%. Munich Re was able to grow organically once again. Premium volume rose by 10.3% to some €1.8bn (1.7bn). It was possible to selectively tap growth opportunities in certain markets, especially in India and Japan. These two markets account for a third of the business renewed in April.

ERGO: Result of €85m
In the ERGO field of business, Munich Re generated a profit of €85m (77m) in Q1. Of this amount, €63m (36m) was contributed by the ERGO Life and Health Germany segment. The main reasons for this segment’s good result were the realisation of investments for financing the additional interest reserve and a good technical result in health insurance. The ERGO Property-casualty Germany segment boosted its profit to €14m (0m) thanks to its sound underwriting – despite losses caused by Winter Storm Eberhard in Germany. The ERGO International segment generated a quarterly profit of €8m (41m). This drop in profit was due largely to the sale of relatively small subsidiaries outside Germany. ERGO’s operating result rose to €241m (224m).

The combined ratios developed favourably. In the Property-casualty Germany segment, the combined ratio improved to 98.1% (101.7%) despite the losses from Winter Storm Eberhard. The combined ratio in the International segment amounted to 95.4% (95.3%).

Overall premium income across all lines of business was largely unchanged at €5,165m (5,156m) in Q1. Gross premiums written rose slightly by 1.1% to €4,995m (4,943m).  

Investments: Investment result of €1,741m
The Group’s investment result (excluding insurance-related investments) dropped slightly to €1,741m (1,796m) in Q1. Regular income from investments increased to €1,611m (1,493m).

The investment result in Q1 represents an overall return of 2.9% on the average market value of the portfolio. The running yield was 2.7%, and the yield on reinvestment 2.1%. The equity-backing ratio, including equity-based derivatives, rose to 6.0% as at 31 March 2019 (31 December 2018: 5.2%).

Total investments (excluding insurance-related investments) as at 31 March 2019 were up on the year-end 2018 figure, with the carrying amount rising to €223,927m (216,852m) and the market value to €240,484m (231,876m).

Outlook: 2019 profit target remains unchanged at around €2.5bn
All expectations for 2019 remain unchanged compared with the figures presented in the 2018 Annual Report published in March. For the 2019 financial year, Munich Re still forecasts a consolidated result of approximately €2.5bn