Munich Re faced losses of about €500 mn ($540.8 mn) from Hurricane Helene, impacting third-quarter profits due to above-average natural catastrophe expenses.
CFO Christoph Jurecka highlighted the high demand for reinsurance, as the sector sees over $100 bn in annual natural catastrophe losses. Insurers are seeking more protection against volatility.
Net profit for the third quarter dropped to €930 mn, down from €1.17 bn the previous year. However, insurance revenue increased to €15.50 bn from €14.46 bn. Over the first nine months, the net result climbed to €4.69 bn from €3.59 bn.
Jurecka noted that strong performance in life/ & health reinsurance and solid investment income helped offset property/casualty losses. The P&C combined ratio worsened to 90.5, compared to 82 in the prior year.
Major loss expenses in the third quarter surged to €1.61 bn from €770 mn, with natural catastrophe-related losses rising to €1.38 bn from €535 mn. Hurricane Helene was the most costly event, causing losses of approximately €500 mn.
Munich Re also cited three events in Canada with significant impact and damage from Storm Boris and flooding across central and eastern Europe, as well as Hurricane Beryl in the U.S. and Caribbean. The company expects notable claims from Hurricane Milton in the fourth quarter but remains on track to achieve its full-year profit target of €5 bn.
Man-made losses declined to €225 mn from €235 mn. The Ergo primary insurance unit reported €164 mn in profit, a slight drop from €173 mn, primarily due to international segment losses from natural catastrophes.
Despite inflation and high claims in the German motor sector, Ergo P&C Germany posted profit gains. However, international operations, particularly in Poland and Austria, were negatively impacted by Storm Boris, resulting in a €52 mn loss.
Health insurance in Spain also experienced unfavorable trends, though life/health insurance showed stable performance, supported by positive results in Belgian health insurance.
The life and health insurance segment’s net profit increased to €391 mn from €351 mn, driven by robust new business growth and consistent performance across all lines.
Jurecka expressed confidence in meeting and possibly exceeding the €5 bn profit target for 2024. Munich Re expects revenue growth of €1 bn each in P&C reinsurance and Ergo segments, with gains from international business driving Ergo’s success.
However, Munich Re no longer anticipates meeting its combined ratio target, citing inflation and higher motor claims in Germany, along with substantial losses from Storm Boris. Despite these challenges, Ergo is still projected to achieve €800 mn in profit for the year.
