Munich Re has revealed its Q1 2022 trading statement for the period ended March 31, 2022, a period which saw the reinsurance giant generate a profit of €608 million (approx. CA$836.10 million) in Q1 2022, up from €589 million in Q1 2021.
The group saw an operating result of €780 million, down from €798 million last year, while its other non-operating result amounted to a loss of €14 million, compared to a loss of €12 million in the same period last year. Supported by strong organic growth across all segments, particularly in Munich Re’s property-casualty reinsurance division, its GWP rose a significant 15.7% year on year to €16,833 million (compared to €4,551 million in Q1 2021).
Munich Re’s solvency ratio was approx. 231% (227% as at 31 December 2021), which is above its optimum range (175–220%), and includes the deduction of €1 billion share buy-back. Its annualized return on equity (RoE) for Q1 2022 was 9.8% (compared to 10.4% in Q1 2021).
The group’s reinsurance arm contributed €511 million (up from €410 million in Q1 2021) to the consolidated result for the period while its operating results rose to €654 million, up from €558 million in the same period last year. Its GWP for the unit increased to €11,307 million compared to €9,389 million in Q1 2021.
Life and health reinsurance business generated a loss of €78 million, compared to a profit of €52 million in Q1 2021, which was largely attributed to COVID-19-related losses of €150 million. Meanwhile, premium income rose to €3,369 million from €3,058 million last year.
Property-casualty reinsurance contributed €589 million (up from €358 million in Q1 2021) to the result in Q1. Premium volume increased substantially to €7,938 million (compared to last year’s €6,330 million). Its combined ratio was 91.3% (98.9%) of net earned premium. In Q1, Munich Re posted expenditure related to the war in Ukraine of slightly over €100 million in some specialty lines.
In the reinsurance renewals as of April 01 2022, Munich Re was able to increase the volume of business written to €2.7 billion ( up +7.6%). It tapped into new growth opportunities, especially in Asia – particularly in Japan and India – as well as in Latin America. By contrast, the reinsurer noted that it once again selectively discontinued business that no longer met risk/return expectations.
Prices rose in the sectional markets, Munich Re said, and prices for reinsurance cover rose considerably in some markets, including the USA. The reinsurance giant anticipates that the market environment will remain stable in the next renewal round in July, offering attractive growth opportunities.
Despite volatile capital markets and major losses, ERGO posted a profit of €96 million (down from Q1 2021’s €178 million) for Munich Re in Q1. ERGO saw substantial growth in Q1 and overall premium income rose to €5,803 million (up from last year’s €5,362 million) - supported by all segments, while GWP rose to €5,526 million (up from last year’s €5,163 million).
Munich Re saw an investment result of €987 million in Q1 2022, a decrease from Q1 2021’s result of €1,691 million.
Outlook for 2022
The reinsurer’s annual target is unchanged at €3.3 billion and the group expects to see “advantageous business prospects in reinsurance in 2022” with the projected gross premium of this field adjusted upwards from €42.5 billion to €45 billion which, in turn, has raised the forecast for the Munich Re Group as a whole to €64 billion.
Commenting on the results, CFO Christoph Jurecka, said: “Munich Re is helping to provide humanitarian aid for the people of Ukraine and fully supports the sanctions against Russia. The financial consequences of the war and the sanctions severely impacted our result in the first quarter:
“We made write-downs for impairment losses on Russian and Ukrainian bonds alike and recorded the first claims. Despite the uncertainties of a challenging environment, Munich Re maintains its annual guidance of €3.3 billion based on a quarterly profit of more than €600 million.”