Munich Re increases profits significantly. But there are several drawbacks in the balance sheet.
Munich (dpa) - The reinsurer Munich Re increased its profit significantly in 2019 despite significantly increased large claims. Thanks to lucrative financial transactions and currency gains, the surplus climbed 18 percent to EUR 2.7 billion.
The company exceeded its original profit target of 2.5 billion euros, but missed the even more optimistic expectations of analysts. CEO Joachim Wenning was confident in Munich that Munich Re could increase its profit in 2020 to 2.8 billion euros as planned.
Shareholders are to receive a dividend increased from 9.25 to 9.80 euros for the past year. In addition, as already known, Munich Re plans to buy back its own shares from the market for one billion euros.
However, the group had to spend 3.1 billion euros in major reinsurance business in 2019, around one billion more than in the previous year. The typhoons "Hagibis" and "Faxai", which had raged in Japan, were particularly expensive. Munich Re recorded losses of around 1.3 billion euros for both.
In property and casualty reinsurance, premiums were therefore insufficient to cover claims, administration and sales expenses. The combined combined ratio decreased from 99.4 to 101.0 percent in 2018. However, in 2017 - the most difficult natural catastrophe year for the insurance industry to date - the ratio was still significantly in the red.
In the life / health segment, burdens in Australia were exhausted and the expectation of higher damage in the disability business to profit. The fact that profit overall nevertheless rose was due to good business in investing. Across the Group, investment income rose by almost 19 percent to EUR 7.7 billion, which corresponds to a return of 3.2 percent. The board expects 3 percent for 2020.
Management also explained that Munich Re is expecting a further rise in profits in 2020 due to rising prices in its business with primary insurers such as Allianz and Axa. The group achieved an average of 1.2 percent higher prices for contract renewals in property and casualty reinsurance at the turn of the year and expanded its business volume by 4.4 percent. Management expects that the price level will continue to rise during the further renewal rounds in April and June. Because then contracts from regions such as Japan are pending, in which high damage had recently occurred.
The Düsseldorf subsidiary Ergo, which had long been considered a problem child of Munich Re, is expected to provide further momentum. The primary insurer is on the right track to achieve the goals set in the course of its strategy program. The premium income in the property and casualty business of Ergo remained significantly more in 2019 than in the previous year. Overall, the primary insurer increased its profit by seven percent to 440 million euros. In the new year it should be around 530 million.
