Munich Re’s Q2 profits stable but warns of perils of growth in soft market

Tough market conditions meant Munich Re shrank its reinsurance book slightly in the second quarter of 2016 as its head of reinsurance warned of the perils of growth in a soft market.

In the second quarter of 2016, Munich Re posted a consolidated profit of €974 million compared to €1.08 billion in the same period in 2015.

Gross premiums written in the reinsurance business field from April to June fell by 2.1 percent year on year to €6.96 billion.

“Past experience shows that one shouldn’t be among those who grow in a soft market and as a result is among the first to burn capital,” Torsten Jeworrek, head of reinsurance, said.

“We will introduce product innovations for which clients are prepared to pay for which can be related to reinsurance but not necessarily, and we might also shrink the business, that’s OK,” he noted.

In its life reinsurance segment, its gross premiums written decreased by 12.3 percent year on year to €2.3 billion in the second quarter, chiefly because a large treaty was renewed at a reduced volume with effect from 2016.

Premiums in property/casualty reinsurance, however, showed a total increase of 4.2 percent year-over-year to €4.59 billion in the second quarter. Even if exchange rates had remained the same, premium volume in this reinsurance segment would have increased, the company said.