Low major losses boost Munich Re Q1 results
Munich Re has benefitted from low major losses in the first quarter of 2018, lifting its net profit to €827 million from €557 million in the first quarter of 2017.
Munich Re now expects a combined ratio of 97 percent in property/casualty reinsurance for the full year while the profit guidance remains unchanged at €2.1–2.5 billion.
“The first quarter was mainly influenced by low major losses in property-casualty reinsurance,” said chief financial officer Jörg Schneider. “We also achieved a good quarterly result in life and health reinsurance and at ERGO. We can be very satisfied with the start to the year.”
Property/casualty reinsurance contributed €591 million to the consolidated result for the first quarter compared to €340 million in the first quarter of 2017. Premium volume rose to €5.32 billion from €4.56 billion over the period, benefiting from organic growth. The combined ratio improved to 88.6 percent from 97.1 percent of net earned premium.
The expenditure from major losses of over €10 million each fell to €62 million in the first quarter of 2018 from €403 million a year ago. At 1.4 percent of net earned premium, major losses were significantly below Munich Re’s major-loss projection of 12 percent. In the first quarter of the year, major-loss expenditure from natural catastrophes was overcompensated by reserve releases for prior-year major losses, resulting in a positive balance of €49 million compared to a negative €156 million.
Munich Re released reserves (adjusted for commissions) in the amount of around €180 million in the first quarter, corresponding to 4.1 percentage points of the combined ratio.
Overall, gross premiums written increased by 1.6 percent to €13.13 billion in the first quarter of 2018 from €12.93 billion a year ago. If exchange rates had remained the same, premium volume would have risen by 7.8 percent year on year.
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