MUNICH:
Munich Re, the world’s largest reinsurer, is bullish on the Indian market despite being hit hard by larger than expected Covid- 19 claims from the country.
“We are keen on India and China among Asian markets. We have increased our exposure for Indian market in Apr 1 renewals,” said Christoph Jurecka, chief financial officer, Munich Re, to Asia Insurance Post in a conference call while addressing media after announcing the reinsurer’s half yearly result on Tuesday.
Munich Re, which has been underwriting India business over decades, set up a brach in 2017 and has underwritten business worth of over Rs 4,500 crore till March, 2021.
Without providing any specific figures on what kind of claims, Munich Re has been saddled with due to Covid-19 mortality from the Indian market, Jurecka said Munich Re doubled its life and health reinsurance COVID-19 loss estimate for the year to €400 million (US$470.03 million) as the Delta variant sweeps through emerging markets.
“In life and health reinsurance business, the claims clearly exceeded the our expectation of €140 million of virus-related losses in the second quarter, mainly due to the high mortality rate in India and South Africa,” he said.
.Munich Re’s profit, globally, still nearly doubled in the second quarter to €1.1 billion from €579 million, helped by fewer major losses than on average. Life and health reinsurance business accounted for €93 million of the profit while premiums declined to €3.14 billion from €3.32 billion, which the company attributed to negative currency translation effects.
In the second quarter of 2021, Munich Re’s major-loss expenditure in property-casualty reinsurance business was below average, mainly as a result of comparatively low losses from natural catastrophes. COVID-19 related losses in the field of property-casualty reinsurance were in line with expectations.Property/casualty reinsurance COVID-19 related losses totaled €101 million, leading the company to maintain its annual €300 million COVID loss estimate for the segment.
The property/casualty reinsurance combined ratio improved 9.8 points to 90.1 as gross premiums written rose to €10.29 billion from €8.86 billion in the first of the year.Munich Re is on track for a combined ratio of 85 to 90 in the line, he said, anticipating demand to outpace available capacity. That would increase transparency by clients and improve conditions for carriers.
The company writes nearly $1 billion of cyber business and holds nearly 10% of the market yet highly-publicized cyberattacks occurring since the pandemic started have had very limited impact on its book, said Wenning.
The company is deepening its investment in cyber expertise, technology, services and partnerships, he said, buoyed by double-digit rate increases and rates “good enough at least to cover higher losses.”
“The cyber market started as an immature market in many senses,” he explained with little demand or data and uncertainty over the ability of historic data to predict future risks.
Munich Re’s cyber coverage now considers diversity across regions and types of business while monitoring accumulation of risk and client risk mitigation efforts, Wenning said.
Munich Re is creating new business opportunities, he added, often based on digital models
Ergo added €155 million to second-quarter profits as German property/casualty business rose while international business declined. Major property/casualty losses in the Baltic states, natural catastrophes in Austria and COVID-19-related losses in India that are projected to be material for the year were partially offset by strong development in Poland and Spain, the company said.
Natural catastrophe losses were down in the first quarter.Munich Re anticipates a “mid-three-digit-million euro loss” from flooding in Germany, Belgium, France, The Netherlands and Austria, said Wenning.
Extreme rainfall over large parts of Europe in July caused extensive flooding. the greatest destruction hit Germany.
In the reinsurance renewals as at 1 July 2021, Munich Re exploited growth opportunities successfully and increased the volume of business written to €3.9bn (+11.1%). The primary focus of the renewals was business in North America, South America, Australia, and with global clients.
Prices continued to increase overall. The trend toward higher reinsurance prices persists, owing to claims in various markets and lines of business, including COVID-19-related claims. Primary insurance prices are also increasing in many markets.
Overall, prices across Munich Re’s portfolio renewed as at 1 July 2021 were up by 2 per cent. .
Munich Re anticipates that the market environment will continue to improve year on year in the next major renewal round in January – also in view of the current claims burden, e.g. from extreme weather events in America or Europe in Q3.
The outlook for revenues is brighter, with 2021 gross premiums now forecast at € 58 billion [$68.2 billion], up by more than 1 billion euros [$1.2 billion] from previous expectations.It aims for profit of € 2.8 billion euros [$3.3 billion] this year, said te company.