Munich Re posts €1.4bn loss for Q3

Munich Re incurred a net loss of €1.4 billion in the third quarter of 2017 due to the impact of natural catastrophes in North America but expects “significant” market recovery.

The reinsurance operations registered an operating loss of €2.03 billion in the third quarter compared to an operating profit of €889 million in the same period a year ago. It contributed with a net loss of €1.47 billion to the consolidated third quarter results.

The losses in the third quarter were mainly driven by natural catastrophes that hit North America in the third quarter, namely Hurricanes Harvey, Irma and Maria, which together accounted for losses totalling €2.7 billion in the third quarter.

Munich Re expects that together the three hurricanes will have caused insured market-wide losses totalling approximately $100 billion.

Overall, major losses (after retrocession and before taxes) impacted Munich Re with €3.17 billion in the third quarter, a major increase compared to the €277 million recorded in the third quarter of 2016.

“The major losses from natural catastrophes in the third quarter have had a substantial impact on our result,” said chief financial officer Jörg Schneider.

“Despite business being otherwise good, this means that we can only post a small profit in 2017. But our capitalisation is strong, and we are able to take full advantage of opportunities arising from the likely market recovery. We expect prices to rise again in the forthcoming negotiations – particularly in the markets that have been hardest hit by recent natural catastrophes,” Schneider noted.

The combined ratio in property/casualty totalled 160.9 percent of net earned premiums in the third quarter compared to 92.5 percent in the same period a year ago.

Munich Re was able to release reserves totalling around €250 million in the third quarter, which was equivalent to 6.0 percentage points of net earned premiums in the third quarter.

Gross premiums written in reinsurance decreased by 1.4 percent year on year in the period from July to September.

Overall, the group’s gross premiums written remained roughly stable year on year at €12.28 billion in the third quarter compared to €12,34 billion in the same period a year ago.

Munich Re is pressing ahead with its initiatives for profitable growth – especially in connection with digitalisation, Schneider noted.

The company is improving its existing range of products and services with digital solutions, and is also developing new digital business models, according to the press release. With “nexible”, its primary insurance unit ERGO has launched a purely online insurer.

ERGO posted a net profit of €29 million in the third quarter compared to a net loss of €19 million in the same period a year ago.

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