Munich Re chairman Wenning ‘delighted’ by ‘highest’ Q2 result in four years

Munich Re described its consolidated results for the first half-year of 2019 as “gratifying” and pointed to “a very good underwriting result in property-casualty reinsurance in the second quarter” as part of the reason.

For the group, gross premiums written (GPW) improved for the second quarter year on year by 5.5 percent to €11.79 billion in 2019 from €11.18 billion in 2018. The reinsurer said if exchange rates had remained unchanged, the increase would still have been 3.5 percent.

The group reported a net profit of €993 million in the second quarter up from €728 million for the same period a year earlier.

The reinsurance part of the group contributed a net profit of €858 million to the consolidated result in Q2 2019, up from €620 million in Q2 2018. Its GPW grew by 9.4 percent to €7.58 billion up from €6.93 billion in the same quarter a year before.

Within this part of the business, property-casualty (P&C) contributed €704 million in Q2 2019 up from €335 million in the same period for 2018. P&C’s combined ratio greatly improved to 87.7 percent, down from 102 percent of net earned premium in Q2 2018.

Total expenditure for major losses in excess of €10 million amounted to €202 million, down from €605 million in the same three months in 2018. The half year results for the same measure showed a rise to €680 million in H1 2019 from €667 million in H1 2018. The reinsurer said these figures “include run-off profits and losses for major claims from previous years, including additional expenditure of around €80 million for losses from Typhoon Jebi”.

The life and health part of the reinsurance business generated a net profit of €154 million in Q2 2019 a drop from €285 million in Q2 2018.

ERGO, Munich Re’s Primary Insurance group, generated a net profit of €135 million in Q2 2019 up from €108 million for the same quarter in 2018. This figure was €220 million for the first six months of 2019 up from €185 million in H1 2018.

The Q2 result was supported by a 534.7 percent increase in net profit in ERGO Life and Health Germany, which rose to €72 million in Q2 2019 up from a loss of €15 million in the same quarter a year earlier.

The ERGO P&C Germany segment generated a profit of €55 million in Q2 2019 down from €57 million in Q2 the year before. The reinsurer said “despite Storm Jörn, major-loss expenditure was lower than expected”.

However, the ERGO International segment was “strongly hit” by disposal losses in connection with the sale of businesses outside Germany, and profits in Q2 2019 fell to €8 million from €66 million for the same three months in 2018.

But the company was pleased with the development of the combined ratio for the P&C Germany segment, which improved to 86.2 percent from 90.3 percent in Q2, and for the half year to 91.9 percent in 2019 from 95.6 percent in 2018.

The ERGO International segment also saw its combined ratio reduced to 95 percent in Q2 2019 from 95.6 percent in Q2 2018, and to 95.2 percent from 95.4 percent for the first half-year.

Joachim Wenning, chairman of the board of management, said: “We are delighted to have generated our highest quarterly result in four years. And we are confident that we will reach our profit guidance of €2.5 billion for 2019 and €2.8 billion for 2020 as set out in our multi-year ambition for 2018–2020. At the halfway stage of this programme, Munich Re is both strategically and financially on track.”

In its results report, the reinsurer said: “Munich Re posted a gratifying consolidated result for the first half-year of 2019, chiefly due to a very good underwriting result in property-casualty reinsurance in the second quarter, supported by below-average major- loss expenditure and high reserve releases for basic losses.” It said that the remeasurement of balance-sheet items in foreign currencies at period-end exchange rates led to a positive currency result of €85 million for the first half-year from a loss of €28 million in H1 2018.

“In addition, the tax burden in the first half of the year was somewhat below the expected rate due to various one-off effects, with an effective tax rate of 22.3 percent.

“Our premium income increased year on year due to currency translation effects and new treaties in reinsurance business.”

In the first half-year 2019, Munich Re repurchased a total of 1.9 million shares worth €0.4 billion as part of its share buy-back programme.

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