Drop in profits
US forest fires cost German reinsurers billions
In January, parts of the Californian metropolis of Los Angeles went up in smoke and flames. This is major damage to the German reinsurers.
The devastating forest fires of the past winter in California are expensive for the large German reinsurers. The industry leader Munich Re put its expected total costs at 1.1 billion euros, the Hanover returned to 765 million.
The Munich re recorded a drop in profits by almost half, the net win in the first quarter decreased by a good 48 percent in the previous year, as the DAX group announced. The main cause was the natural disaster in Los Angeles. Regardless of this, the Munich-Re board of directors holds this year’s profit target of six billion euros.
Competitor Hannover Rück came with a comparatively small decline in profits. The bottom line was that the company earned a good 480 million euros and thus around 14 percent less than a year earlier. For 2025, the new CEO Clemens Jungsthöfel continues to expect a profit increase to EUR 2.4 billion.
High natural disaster risk in North America
Reinsurance are the insurance of the insurers: First insurers – like the Allianz – themselves conclude insurance contracts in order to be protected in particular against the immense costs of natural disasters. Munich Re, the Swiss Swiss Re and the Hanover Rück are the top 3 in the industry.
North America is both the continent with the world’s highest natural disaster damage and a large market for German companies – hence the very high burden. 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.
Munich Re: Normal fluctuations
With Munich Re, the result was exceptionally good in the first quarter of 2024 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 outlook of both corporations remains optimistic. As always, the goals are subject to reservation. The USA also plays an important role in this: the results of the two companies depend, among other things, on the course of the summer hurricane season in the North Atlantic.
dpa
Source: Stern
