Munich Re says Ian’s just another Hurricane; no impact on cat appetite

Munich Re is not thrown off guard by Hurricane Ian, whose occurrence fit inside the reinsurer’s set of business scenarios and left nat cat appetite largely unchanged vis-à-vis prior tastes, a key official has indicated.

“Does it concern us?  No, not at all,” CFO Christoph Jurecka told his company’s Q3 investor call. Property cat remains “one of the most profitable lines of business and that has not changed.”

Ian constitutes “one big single event” whose occurrence pushed Munich Re over its large-loss budget in Q3, but would have left the group well below budget on a different roll of the dice, Jurecka said. “You roll the dice and we talk stochastically.”

But Ian did make Q3 “a heavy nat cat quarter” and “left its mark” on Munich Re Q3 results after a EUR 1.6 billion hit.

Munich Re’s full-year large loss budget is “largely exhausted” after the first nine months. Munich Re nonetheless pencilled in an extraordinary $1 billion in large loss budget for the fourth quarter when deciding to reaffirm its full-year financial guidance.

Jurecka called the decision to reiterated guidance “a strong commitment, given the challenging macroeconomic environment and another year of high nat cat losses.”

Munich Re’s 8.5% nat cat load stands for now. “If the number needs to be adjusted in an upward direction, then of course we are going to do that next year.”

Much of the financial guidance confirmation came from outperformance and one-off gains in life & health; the FY2022 target for combined ratio in P&C reinsurance had to be hiked 3 percentage points to 97% following Ian.

Or, as Jurecka put it, Q3 earnings proved tht Munich RE has the earnings diversification to handle nat cat bumps. “We are also affected by cat events when they occur; we are able to mitigate quite nicely with our diversified business model.”

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