Munich:
German reinsurer Munich Re’s gross premiums, written in the second quarter of 2019, improved year on year by 5.5% to €11,799m (11,188m). If exchange rates had remained unchanged, the increase would have been 3.5%, said the company on Wednesday.
The group generated a profit of €993m (728m), a of 36 per cent during Q2 2019, helped by low claims from major losses.
In the renewals at 1 July 2019, the recently observed market recovery continued. In particular, there was a marked improvement in prices for reinsurance cover in the markets affected by natural catastrophes.However, there were also increases in loss expectations and stable renewals in unaffected regions and markets.
In Q2, property-casualty reinsurance business contributed €704m (335m) to the result. Premium volume rose to €4,842m (4,623m), due in particular to the positive impact of currency effects. The combined ratio was low at 87.7% (102.0%) of net earned premium. In the first half-year, it was 92.8% (95.5%), which is on track to achieve the Munich Re target level of around 98% for the full year.
Last month, the company had already said that it expected to post a net profit of about 1 billion euros.Profit was also helped by the release of reserves for losses from previous years.
The company maintained its full-year profit target of around 2.5 billion euros in 2019 and 2.8 billion euros in 2020.
Munich Re and the insurance industry have been trying to bounce back from large natural catastrophes in 2017 and 2018. Reinsurers have been under pressure in recent years from falling prices amid intense competition.
The group's total expenditure for major losses in excess of €10m amounted to €202m (605m) for Q2, and €680m (667m) for the first six months of the year. These figures include run-off profits and losses for major claims from previous years, including additional expenditure of around €80m for losses from Typhoon Jebi. Major-loss expenditure was equivalent to 4.1% (13.3%) of net earned premium for Q2, and was thus considerably below the long-term average value of 12%.
In the first half-year, major-loss expenditure was 6.9% (7.5%) of net earned premium. Man-made major losses amounted to €47m (501m) in Q2. Major-loss expenditure from natural catastrophes amounted to €155m (104m).
Higher earnings volatility is expected in the upcoming quarters. Munich Re is currently working together with its clients to rehabilitate the existing portfolio.