In times of general turmoil in the German economy, the comparatively positive mood of the insurance industry is an exception. Munich Re could even exceed its annual target.
Despite high natural catastrophe losses and a weak economy, the world’s largest reinsurer, Munich Re, continues to do good business. In the first six months, the Munich-based DAX group has already achieved three quarters of its profit target for this year: the target is five billion, of which Munich Re has already earned almost 3.8 billion euros in the first half of the year. CEO Joachim Wenning and CFO Christoph Jurecka, however, want to stick with the now cautious-looking forecast. And in view of the increasing damage caused by cyber attacks from year to year, the group is also becoming even more cautious in its business with cyber policies.
Wenning, however, made more or less subtle hints that the profit at the end of the year could be more than the hoped-for five billion euros: “It has now become somewhat more likely that we may even exceed this target at the end of the year.” However, this is assuming that no major natural disaster causes major damage.
Main risk: hurricane
Munich Re’s main business is to insure primary insurers such as Allianz. The traditional risk is natural disasters, with hurricanes on the US east coast being the most expensive because of the very high values insured there. However, the annual hurricane season does not end until autumn, so good figures for the first half of the year at Munich Re are no guarantee of a good year overall.
The first six months of this year, with natural catastrophe losses of just under 1.1 billion euros, were somewhat less expensive for the group in this respect than the first half of 2023. However, the medium-term trend is increasing. “Annual losses of over 100 billion US dollars are now the order of the day,” said Wenning of the estimated total economic costs around the globe. At the moment, however, this is having a rather positive effect on the Munich-based company’s business, as the reinsurance industry as a whole has been able to push through price increases.
Be careful with cyber insurance
Munich Re is becoming increasingly cautious in view of the rampant hacker crime in cyber insurance, although demand is rising sharply. According to Wenning, Munich Re was very cautious in concluding contracts this year and did not renew some contracts. “We want to rule out the possibility of being drawn into a segment in which the systemic cyber risks could materialize as losses for us, because that is simply not sustainable,” said the CEO. Wenning put Munich Re’s global market share in the cyber business at ten percent. “We don’t want it to be 20 or 30 percent either.”
Source: Stern
