Munich Re reports profit of €1.9 bn and premiums of €18.2 bn for 9M 2022

Munich Re has reported profit of €527 million and €1.9 billion for the third quarter and first nine months of 2022, respectively, despite a rise in major losses within property and casualty (P&C) reinsurance on the back of Hurricane Ian losses of around €1.6 billion.

Profit for the quarter increased year-on-year, although declined slightly for 9M 2022 as the reinsurer notes above-average expenditure for natural catastrophes.

Major losses of more than €10 million each reached over €2.6 billion in Q3 2022, corresponding to 26.9% of net earned premiums, and higher than the long-term average expected value of 13% for both Q3 and 9M 2022.

The costliest nat cat event for the reinsurer was Hurricane Ian at €1.6 billion. All in all, nat cats cost the reinsurer €1.8 billion in Q3 2022, compared with €1.7 billion in Q3 2021.

Munich Re booked man-made losses of €489 million in the period, compared with €245 million a year earlier.

Further, the company released reserves of €344 million for basic losses from prior years, corresponding to 4% of net earned premiums.

The P&C reinsurance business contributed a negative €343 million to the overall result in Q3, with a combined ratio of 108.2% for the quarter, and 96.9% for 9M 2022.

However, premiums grew strongly in this operating segment, from almost €8 billion last year to €10.2 billion in Q3 2022.

In life and health (L&H) reinsurance, Munich Re has announced a substantial rise in profit to €424 million for the quarter, compared with €94 million a year earlier, while premium income spiked to €3.5 billion. Within L&H reinsurance, the technical result improved from just €9 million last year to €293 million in Q3 2022.

Losses related to the COVID-19 pandemic fell appreciably to €35 million for Q3 2022 and to €323 million for 9M 2022.

The reinsurance unit performance contributed €81 million to the overall result for the third quarter, and €1.2 billion for the first nine months of the year. Munich Re attributes the quarter-over-quarter decline to the cost of Hurricane Ian and also a lower investment result.

Within reinsurance, the operating result came in negative for the quarter at -€687 million, while gross written premiums jumped significantly, year-on-year, to €13.7 billion.

Turning to the ERGO business, and profit reached €446 million for the quarter and €702 million for 9M 2022, which is up significantly for both periods, driven by a one-off effect in the ERGO Life and Health Germany segment. In the third quarter, all segments continued to see premium growth, with total premium income rising to €4.7 billion in Q3, and gross written premiums rising to €4.5 billion.

Munich Re has announced an operating loss of €346 million for the third quarter, compared with a gain of €204 million a year earlier. The other non-operating result was also negative at -€5 million, while the currency result increased significantly to €846 million, in part as a result of exchange gains on account of the US dollar.

Across the group, gross written premiums increased substantially to more than €18.2 billion for the third quarter, and jumped by 14% to more than €50.9 billion in 9M 2022

On the asset side of the balance sheet, Munich Re has reported that its investment result dropped from more than €2 billion in Q3 2021 to €904 million in Q3 2022. Overall, the third quarter investment result represented a return of 1.6% on the average market value of portfolio.

Munich Re is still targeting a consolidated result of €3.3 billion for the 2022 full year, but warns that this will be a lot harder to achieve given the claims experience and business environment. The firm anticipates a consolidated result of €2.5 billion in reinsurance for the year, which is down on the previous target of €2.7 billion. However, at ERGO, the company expects a consolidated result of €800 million for the year, which is up on the previous €600 million target.

In P&C reinsurance, Munich Re now expects to produce a combined ratio of roughly 97% of net earned premiums for the full-year, compared with a previous target of 94%.

In L&H reinsurance, the firm says that it now anticipates a much higher technical result of €800 million for 2022.