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Falling profits in all of the reinsurance business of Munich Re

by

Frédérique De Simone

May 16, 2019 09:30

The reinsurer Munich Re has posted a profit of 633 million euros (M€) during the first quarter of 2019, a decline of just under€ 200 Million compared to net income of 827 Million euros recorded in the corresponding quarter of the previous year.

The reinsurer argued that the loss of basic and higher expenditures for claims were prevented, however, to reproduce the results of the first quarter of 2018, which were practically immune from major losses.

Organic growth

“Munich Re has started 2019 with a good first quarter,” says Christoph Jurecka, chief financial officer. Munich Re continues to grow organically in its main activity of reinsurance damage. The renewal period of April constitute the sixth series of renewals of consecutive, during which we are able to expand our business vigorously in some areas. The price of the reinsurance cover continued to increase, following large losses in previous years. “

Compared to the same quarter of last year, the gross premiums written for the group rose 1.9 %, bringing the brand to a 13.4 G€, while it was 13.1 G€ in 2018.

The damage will cost them dear

Natural disasters and human activity has heavily affected the reinsurer for the quarter ending march 31, 2019, leading to increases of 1.4% of the price on the markets during the round of election of the 1st of April.

The major losses which crossed the bar of 10 M€ made a dramatic leap to reach 479 Million€, whereas they were 62 M€ the last year. The losses related to natural disasters have reached the 195 M€, while the reinsurer has reported a profit of 49 M€ in 2018. As to the losses related to human activity, the amount rises to€ 283 Million for 2019, more than double the mark of 112 M€ in 2018.

In the first quarter, the volume of premiums reached 5.5 billion€, compared with 5.3 G€ at the same date last year. The combined ratio stood at 97.9%, i.e. almost equal with the level targeted by Munich Re, which is about 98 % for the year as a whole. In the first quarter of 2018, this brand was 88.6 percent.

All in all, the activities of casualty reinsurance contributed 420 Million euros to the consolidated result, while they accounted for 591 M€ the previous year.

A price stabilization with a slight tendency to increase was also observed on the market of civil liability.

Lower earnings in life reinsurance

In the first quarter, the reinsurance business, life and health have generated a profit lower than that of 2018. The life reinsurance has reported 128 M€ in 2019, even though it reported 159 M€ the previous year. However, the turnover has increased from 2 865 million euros in 2018 to 2 896 M€ in 2019.

The duration of the investment to Canada and to the lower interest rates in Australia resulted in a decrease in the technical result, including the result of the activities with risk transfer is not significant. The brand is therefore of 105 M€ this year, when she was of 155 M€ in the first quarter of 2018. Overall, the number of claims was in line with expectations, but Munich Re said that he hoped that its technical results reach€500 Million.

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