Munich Re, 1Q2019: First quarter profit dropped by EUR 194 million

In the first quarter of 2019, Munich Re generated a profit of EUR 633 million. Higher basic losses and greater expenditure for claims from previous years prevented a repeat of the extraordinary result in the same quarter last year, which was practically free of major losses.


Key figures highlights

  • Consolidated result: EUR 633 million (-23.5%, compared to 1Q2018)
  • Gross premiums written (GWP): EUR 13,375 million (+1.9%), of which:
    • Reinsurance GWP: EUR 8,380 million (+2.4%)
    • ERGO GWP: EUR 4,995 million (+1.1%)
  • Investments: EUR 224 billion (+3.3%)
  • Net technical provisions: EUR 215 billion (+3.0%)
  • Equity: EUR 28 billion (+9.4%)
  • RORAC: 9.9% (-3.3 pp.)
  • ROl: 2.9% (-0.2 pp.)
  • ROE: 9.1% (-2.8pp.)
  • Combined ratio:
    • Reinsurance P&C: 97.9% (+9.3 pp.)
    • ERGO Germany: 98.1% (-3.7 pp.)
    • ERGO International: 95.4% (+0.1 pp.)
  • Solvency ratio: 250%


1. Overview

The first-quarter operating result fell year on year to EUR 875 million. The other non-operating result remained nearly constant at -EUR 122 million; the currency translation result amounted to EUR 58 million. Taxes on income totaled EUR 122 million. Compared with the same quarter last year, gross premiums written rose by 1.9% to EUR 13,375 million.

The annualised return on risk-adjusted capital (RORAC) in Q1 amounted to 9.9%, and the overall return on equity (RoE) totalled 9.1%. Moreover, the solvency ratio rose from 245% at the beginning of the year to about 250% at the end of Q1. Thus far in 2019, Munich Re has repurchased shares worth EUR 303 million as part of its active capital management.


2. Reinsurance

The reinsurance field of business contributed EUR 548 million to the consolidated result in Q1. The quarterly operating result amounted to EUR 633 million. Compared with the same quarter last year, gross premiums written rose by 2.4% to EUR 8,380 million.

In Q1, total expenditure for major losses in excess of EUR 10 million each amounted to EUR 479 million. These figures include run-off profits and losses for major claims from previous years, including additional expenditure of EUR 267 million for losses from Typhoon Jebi. Major-loss expenditure is equivalent to 9.7% (1.4% in Q1 2018) of net earned premium for Q1. Major-loss expenditure from natural catastrophes amounted to EUR 195 million in Q1. Man-made major losses amounted to EUR 283 million.

Given that claims expenditure for basic losses in previous years remained appreciably below the expected level, it was possible to release reserves - adjusted for commissions - of about EUR 200 million.


3. ERGO

In the ERGO field of business, Munich Re generated a profit of EUR 85 million in Q1. Of this amount, EUR 63 million was contributed by the ERGO Life and Health Germany segment. The main reasons for this segment's good result were the realization of investments for financing the additional interest reserve and a good technical result in health insurance.

The combined ratios developed favorably. In the Property-casualty Germany segment, the combined ratio improved to 98.1% (from 101.7% in Q1 2018) despite the losses from Winter Storm Eberhard. The combined ratio in the International segment amounted to 95.4% (slight increase from 95.3% in Q1 2018).

Overall premium income across all lines of business was largely unchanged at EUR 5,165 million in Q1. Gross premiums written rose slightly by 1.1% to EUR 4,995 million.


4. Investments

The Group's investment result (excluding insurance-related investments) dropped slightly to EUR 1,741 million in Q1. Regular income from investments increased to EUR 1,611 million. Total investments (excluding insurance-related investments) as at 31 March 2019 were up on the year-end 2018 figure, with the carrying amount rising to EUR 223,927 million and the market value to EUR 240,484 million.



Christoph JURECKA, Munich Re CFO, said:

"Munich Re has begun 2019 with a good first quarter. Munich Re continues to grow organically in its core business of property-casualty reinsurance. The April renewals were the sixth consecutive round of renewals in which we are able to expand our business robustly in some areas. Prices for reinsurance coverage have continued to rise following the high losses in previous years. In primary insurance, the implementation of the ERGO Strategy Programme is making good progress."


More details about Munich Re Q1 2019 results can be found on munichre.com or at the following links:


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