7 May 2015 Insurance

Munich Re profits drop in Q1

Munich Re posted a drop in profits for the first quarter of 2015 as its reinsurance and primary insurance arms dragged down results.

Its profits fell to €790 million in the first quarter of 2015 compared with €941 million in the first quarter of 2014.

Munich Re’s gross written premiums (GWP) increased minimally to €13 billion in the quarter, compared with €12.9 billion in the same period of the prior year. If exchange rates had remained the same, premium volume would have fallen by 5.4 percent year on year.

Its reinsurance segment contributed €668 million to the reinsurer’s profits, down from €768 million in the first quarter of 2014. However, its GWP increased by 2.2 percent to €7 billion, compared with €6.9 billion, driven by the development of exchange rates.

Within the segment, property/casualty reinsurance accounted for €597 million in the first quarter of 2015, compared with €646 million in the first quarter of 2014, while the combined ratio deteriorated to 92.3 percent in the quarter, compared with 86.9 percent in the first quarter of 2014.

Its primary insurance arm, Ergo, generated profits of €99 million in the first quarter of 2015, compared with €153 million in the first quarter of 2014. Its GWP increased 0.4 percent to €4.6 billion in the first quarter of 2015.

The combined ratio in its property/casualty Germany segment deteriorated to 98.1 percent in the quarter, compared with 95.4 percent in the first quarter of 2014, driven by Windstorm Niklas. The combined ratio in the Ergo international segment for the same period was 98.7 percent, compared with 94.9 percent in the prior year period.

Regarding the April 1 renewals, Torsten Jeworrek, Munich Re’s reinsurance chief executive officer, said: “Pressure on prices, terms and conditions remained high, so we are adhering strictly to our consistent cycle management. But as we were able to take advantage of selective opportunities in individual markets, our premium volume nevertheless increased slightly."

Jörg Schneider, chief financial officer of Munich Re, said: "We have started off well, although investment has again been made more difficult by the expansive policies of the central banks. We are well on track to achieve our result target of €2.5–3 billion for the year as a whole.

“The strongly increasing capacity supply in the primary insurance and reinsurance sectors at present is matched by a demand potential in many classes of business that is not yet exhausted. Working together with present and future clients and partners, we aim to tap this potential by focusing all of the group's extensive knowledge even more strongly on innovations."

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