MUNICH Re's representative office in Russia closed

14 July 2015 — Oleg DORONCEANU
One of the leading international reinsurers - MUNICH Re - has closed recently its representative office in Russia and will continue to serve local customers directly from Germany, according to Russian newspaper VEDOMOSTI.

The publication reported that MUNICH Re has taken this decision aiming to improve the efficiency of its Russian business, which will ensure its future profitability. Also, the exit comes as a result of a combination of factors - relatively narrow market of the Russian Federation with a poor economy, low quality risks and no prospects to improve performance.

Overall, in the last ten years the situation in the Russian industrial sector has deteriorated significantly, which influenced reinsurer's operations on the local market, considering the fact that MUNICH Re often undertook major risks from this sector (for example, according to company's report for 2014 - there were extensive losses resulted from an explosion at a Russian refinery of EUR 150 million in 2014 only).

According to sources cited by the newspaper VEDOMOSTI, the company's decision is a negative event, as it reduces competition on the reinsurance market, but will not have a major influence on the market's development.