Drop in profits
California forest fires cost Munich Re a billion
In January, parts of the Californian metropolis of Los Angeles went up in smoke and flames. For the Munich Dax Group Munich Re, this is a major damage.
The devastating forest fires of the past winter in California are almost half of the world’s largest reinsurer Munich Re. The net profit in the first quarter has dropped by a good 48 percent in the previous year to just under 1.1 billion euros, as the DAX group announced. The main cause was the natural disaster in Los Angeles, for which the company also expects costs of 1.1 billion euros. Regardless of this, the Munich-Re board of directors holds this year’s profit target of six billion euros.
High natural disaster risk in North America
Reinsurance are the insurance of insurers: First insurers such as Allianz themselves conclude insurance contracts in order to be protected against the immense costs of natural disasters. North America is both the continent with the world’s highest natural disaster damage and the most important foreign market for Munich Re – hence the very high load. Apart from that, the West of the United States is also one of the world regions in which climate researchers and meteorologists see increasing risk of long dryness periods – and thus also increased risk of forest fires.
CFO: normal fluctuations
In the first quarter of 2024, the result was exceptionally good due to very low damage; This time there was a great burden, said CFO Christoph Jurecka. “These fluctuations are normal and usually compensate for the quarters.”
However, the fire in California was not the only burden: the investment result of Munich Re fell from almost 2.2 to 1.3 billion euros in the annual comparison, due to value losses of fixed -income securities. The weak dollar also contributed to the drop in profits: the currency result was still positive in early 2024 with 277 million euros and negative in the first quarter of this year with minus 506 million euros. The fact that in the end there was still a quarter of a good billion, Jurecka regarded the company’s resistance.
However, the outlook remains optimistic: the Munich Re continues to expect positive business opportunities in the coming months, the goals for 2025 are still valid. As always, the goal is subject to reservation. The USA also plays an important role in this: the result of the Munich Re depends, among other things, on the course of the summer hurricane season in the North Atlantic.
dpa
Source: Stern
