MUNICH Re's outlook for 2017: business environment remains challenging
Looking at the current challenges, von BOMHARD stated: "Digitalisation is changing client demand, allows for the development of innovative business models, and requires us to set up partnerships that would previously not have been considered. More than ever, MUNICH Re is a company embracing change - as demonstrated by our innovation schemes, the ERGO Strategy Programme, and the recent decision to adopt a new set-up in the global health markets. My successor as Chairman of the Board of Management, Joachim WENNING, will continue to drive this change forward."
MUNICH Re is aiming for a consolidated result of EUR 2.0-2.4 billion in 2017, subject to major losses being within normal bounds, and to its income statement not being impacted by severe currency or capital market developments, significant changes in tax parameters, or other exceptional factors.
The consolidated result in reinsurance is projected to be in the range of EUR 1.8-2.2 billion. In life and health reinsurance, the technical result - including the result from reinsurance treaties recognised in the non-technical result owing to insufficient risk transfer - should be at least EUR 450 million. In property-casualty reinsurance, MUNICH Re is aiming for a combined ratio of around 97% of net earned premiums in 2017, taking into account the relatively low incidence of major losses until the end of February. At the beginning of the year, MUNICH Re projects major losses in the order of around EUR 2 billion for 2017, corresponding to an unchanged 12% of net earned premiums.
MUNICH Re expects the ERGO field of business to contribute EUR 150-200 million to the consolidated result. The combined ratio for the ERGO Property-casualty Germany segment should be around 99% in 2017, provided that major losses remain within normal bounds. A combined ratio of around 98% is expected for the ERGO International segment if major losses are at a normal level.
On 1 February 2017, the MUNICH Health field of business was integrated into the two larger fields of business, reinsurance and ERGO. Thus the profit contribution of health reinsurance has been included in the profit target for reinsurance. Profits from international health primary insurance will be recognised under ERGO International.
MUNICH Re anticipates that interest rates will also remain very low overall in 2017, with correspondingly lower regular income from fixed-interest investments. Overall, MUNICH Re expects an investment result of around EUR 7 billion, representing a return on investments of about 3%.
Assuming exchange rates remain stable, the Group anticipates that its gross premiums written for the financial year 2017 will be in the range of EUR 48-50 billion. Gross premium should be in the range of EUR 31-33 billion for the reinsurance field of business, and EUR 17-17.5 billion for the ERGO field of business. Total premium income in the ERGO field of business (including the savings premiums of unit-linked life insurance and capitalisation products) should amount to EUR 18-19 billion in 2017.