Global reinsurer Munich Re has announced it generated profit of €728 million (about NZD$1.3 billion) in the second quarter (Q2) of 2018, taking its half-year (H1) profit to €1.6 billion (about NZD$2.8 billion).
The Group’s Q2 net result has stayed pretty much level with the same period in 2017 (€733 million) despite significant man-made major losses. In fact, overall profit for the first half of this year is up by 20.5% compared to H1 of 2017.
The reinsurer’s board of management is pleased with the firm’s performance. Chair of the board, Joachim Wenning, commented: “With a half-year profit of €1.6 billion, we are most certainly on track to reach our profit target of €2.1-2.5 billion for the year as a whole. We also made progress with the implementation of our strategy: Munich Re is becoming more profitable, more digital and leaner.”
Munich Re’s reinsurance field of business contributed €620 million to the consolidated result in Q2. Gross written premiums reduced by 9.5% to €6.9 billion, down from €7.6 billion the previous year. This was largely driven by a significant decrease in premium volume in life and health reinsurance owing to terminations and the restructuring of large volume treaties.
Property and casualty reinsurance generated €335 million in Q2, a significant decrease from €517 million in the same period of 2017, which the reinsurer attributes to an increase in man-made major losses and higher basic losses. The combined ratio was 102% of net earned premiums in Q2, but remained at 95.5% by the end of H1, which is “right on track to reach the envisaged figure of 97% for the year,” according to a company release.
The treaty renewals at July 01 once again brought a slight increase in prices of 0.9% and a significant business expansion of around €3.3 billion. The strong 42% increase was due to an attractive large-volume treaty in Australia, and profitable growth of reinsurance quota share business in the US.
Munich Re’s ERGO field of business performed well. It contributed €108 million to the Q2 result and €135 million to the half-year result, at a combined ratio of 96% - better than the forecasted 97%. Total premium income across all lines of business rose by 32% to €4.5 billion in Q2 and GWP was up by 2.8% to €4.3 billion.
Given its strong performance in the first half of the year, Munich Re has lowered ifs projection for ERGO International’s combined ratio for the full year by one percentage point to 96%.
The company release concludes: “Expectations for 2018 have not changed in comparison with the figures given in the Quarterly Statement for Q1 2018 that was published in May. Munich Re is still expecting to post gross premiums written of €46-49 billion for 2018, and is not changing its forecast consolidated result in the range of €2.1-2.5 billion.”