Munich Re suffers P&C Re margin slide in '23 on ‘claims uncertainty’

Munich Re suffered a moderate slide in P&C reinsurance margins in 2023, citing “claims uncertainty” sufficient to offset lower than planned nat cat and other drivers. 

The P&C reinsurance combined ratio rose 2.0 percentage points to 85.2%, but management assured it could push the figure back down towards the 82% mark for 2024. 

Major losses proved “slightly better than expected,” but the impact, together with a positive boost from IFRS17 discounted was "more than offset by “prudent reflection of claims uncertainty in basic losses,” management said. 

Major-loss expenditure of €3.3 billion, including a burst in Q4, accounted for 12.6 combined ratio points, below the 14 points budgeted and down from 15.4 points in 2022 which had been boosted by Hurricane Ian. 

P&C reinsurance revenues grew nearly 7% to nearly €27.1 billion, with management citing “significant growth in nat cat and global specialty insurance, taking advantage of attractive market conditions.”

Life and health reinsurance compensated with a 38% increase in its FY total technical result to €1.43 billion to beat an adjusted target of €1.4 billion. Segment insurance revenues declined on currency translation effects.

Munich Re’s primary insurance group ERGO increased its net contribution 26%, including a major recovery in Q4. 

Despite an 80% increase in investment results and the profit gains in life reinsurance and Ergo primary, Munich Re couldn’t scrounge enough to offset the reduced take in P&C reinsurance. A full-year net profit of €4.6 billion was down 13% year on year to fractionally beat forecasts which had been revised up by the group in October. 

Munich Re is aiming to generate a net result of €5 billion in 2024 on a reduced top-line gain in re/insurance revenue to €59 billion. 

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