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Wednesday, March 22, 2023

Insurance: Munich Re exceeds profit target

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Insurers also need insurance – that’s the business of reinsurers like Munich Re. The world market leader benefits from rising prices in times of crisis.

The world’s largest reinsurer, Munich Re, has exceeded its profit target despite the Ukraine war, catastrophes and capital market turbulence. Last year, the company made a net profit of a good 3.4 billion euros, as the Dax group announced. That was almost 17 percent more than in the previous year and 100 million more than targeted.

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Reinsurers are the companies with which primary insurers such as Allianz, Axa or Generali insure themselves. Munich Re performed better in 2022 than analysts expected on average, although investment income fell from 7.1 to 4.9 billion euros as a result of the turbulence on the financial markets.

The “major man-made losses” were also expensive, rising from almost 1.2 to 1.7 billion euros compared to the previous year, largely due to the financial consequences of the Ukraine war. “Major damage” includes insurance claims that cost more than 10 million euros.

Group benefits from price increases

On the other hand, Munich Re benefited from price increases, a trend that began even before the start of the Ukraine war. High inflation has raised concerns in insurance industry boardrooms that claims payments to customers are skyrocketing as the cost of repairs and restoration of all kinds is skyrocketing too. But the prices had developed “positively overall” and more than compensated for the sometimes significantly increased damage estimates, the statement said.

Target profit of four billion euros

The costs caused by natural disasters were also comparatively low at 2.4 billion euros in 2022; in the previous year, storms, floods, etc. had cost Munich Re 700 million euros more. The most expensive natural disaster of the past year was hurricane “Ian” in the USA, which cost 1.6 billion euros.

Munich Re is not only active in reinsurance, with Düsseldorfer Ergo a primary insurer also belongs to the group. This was considered a problem until a few years ago, but it is now delivering good results. Last year, Ergo increased its profit by more than a third to 826 million euros.

For this year, Munich Re and its CEO Joachim Wenning are aiming for a profit of four billion euros.

Source: Stern

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