“Munich Re absorbed the crises of 2022 well,” Chief Executive Joachim Wenning said
It reduced the share of proportional business and, owing to the attractive price level, grew in the area of non-proportional natural catastrophe covers in particular.
Despite increasing market pressure, Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming April and July renewal rounds, said Munich Re.
FRANKFURT:
German reinsurer Munich Re beat its full-year earnings target with a 16.7% gain despite Ukraine-related claims and after fourth-quarter net profit jumped by a better than expected 74% on equity disposals and lower tax payments.
Fourth-quarter net profit of the largest reinsurer rose to 1.516 billion euros ($1.61 billion), beating analyst expectations of 1.399 billion euros.
Gross premiums written by the reinsurer rose by 12.7% to €67,133m year on year.
For the full year, its 3.419 billion euro profit beat both analyst and company expectations of about 3.3 billion euros. Munich Re had announced on Wednesday that it would raise its dividend and buy back more shares.
“Munich Re absorbed the crises of 2022 well,” Chief Executive Joachim Wenning said.
Munich Re absorbed the crises of 2022 well and continues to grow profitably. We are robust, both financially and in terms of capital. Our broadly diversified business portfolio not only makes us more resilient, but also opens up new earnings prospects. In times of great uncertainty due to war and volatile capital markets, our clients value reliability,”he said.
“Munich Re also takes its social responsibilities very seriously. That is why I am pleased about the progress we have made in the areas of decarbonisation and diversity. With regard to climate change and digital transformation, we are still fully committed, offering new solutions to cover insurance needs. In addition, all fields of business are focusing on achieving the goals of our Ambition 2025. In the current year, we intend to generate a consolidated profit of €4.0bn,” . he added.
Jefferies analysts described the results as a “remarkable achievement” given a challenging year featuring claims from Hurricane Ian in Florida, continued pandemic losses and high inflation.he company’s shares fell 3.7% in early trade, which JPMorgan and Deutsche Bank analysts attributed to profit-taking.
Hurricane Ian and floods in Australia helped to make 2022 one of the costliest years on record for natural disasters, Munich Re said last month, warning that climate change was making storms more intense and frequent.
In the reinsurance renewals as at 1 January 2023, Munich Re was able to increase written business volume to €15.3bn (+1.3%).
Munich Re reduced the share of proportional business and, owing to the attractive price level, grew in the area of non-proportional natural catastrophe covers in particular.
Due to improved contractual terms and conditions, the quality of the portfolio improved further. Despite times of high uncertainty and inflation, as well as a reduction in the capacities offered by reinsurers and capital market players in certain markets, explained the company.
Munich Re continued to position itself as a high-quality and reliable partner for the long term. This was also evidenced by an active optimisation of the portfolio and the realisation of growth opportunities from business development across almost all regions. said the company.
The main driver was the expansion of existing business and the acquisition of new business with selected clients, particularly in Europe, Asia and Australia, informed the reinsurer.
Around two thirds of non-life reinsurance treaty business was renewed, with a focus on Europe, the USA and global business, said the company.
Prices developed positively overall and more than compensated for the significantly higher loss estimates in some areas, which were caused primarily by inflation or other loss trends. To varying degrees, price increases were evident around the world. All in all, prices for the Munich Re portfolio increased by 2.3%. This figure is, as always, risk-adjusted. In other words, price increases are offset if they are associated with increased risk and, consequently, elevated loss expectations.
Despite increasing market pressure, Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming April and July renewal rounds, said Munich Re.
The group’s insurance revenue, which will supersede “premium income” in future, is expected to reach around €58bn in 2023. It is anticipated that the return on investment will amount to at least 2.2%.
In the reinsurance field of business, Munich Re anticipates insurance revenue of about €39bn and a profit of around €3.3bn in 2023. The combined ratio in property-casualty reinsurance will likely decrea
se significantly to around 86% – chiefly due to the disclosure method used under IFRS 17. In life and health reinsurance, Munich Re is aiming for a total technical result of around €1.0bn. In future, this will include the result from reinsurance contracts with non-significant risk transfer.