Munich Re cut its July renewal volume by 9.1% and walked away from business that did not meet its pricing requirements. The reinsurer reported a risk-adjusted price decrease of 5.5%, with business written concentrated primarily in North America, South America, Australia, and with global clients.
Terms and conditions remained largely stable across the round. Higher loss cost estimates in some areas, primarily attributable to inflation and other loss trends, were mostly offset by price adjustments. Munich Re said the risk-adjusted price level for its portfolio remains good despite the decline.
Munich Re expects favourable price levels at January 2027. Improved terms and conditions are expected to be largely upheld despite high competition. The group drew on its positioning across less cyclical and less volatile business segments built up over recent years.
The 5.5% price decrease sits within a broader market context. The Guy Carpenter global property catastrophe rate-on-line index fell 16% across 2026, the steepest annual fall since the late 1990s.
Munich Re's property-casualty reinsurance unit posted a combined ratio of 68.9% for Q2 2026, against 61.0% for the same quarter in 2025. The comparison requires context: Q2 2025 benefited from an exceptional release of claims reserves from prior years to an even greater extent than Q2 2026.
Major-loss expenditure in Q2 amounted to €191 million after retrocession and before tax, equivalent to 4.9% of net insurance revenue against an expected value of 18%. Natural catastrophe losses were €54 million and man-made major losses stood at €137 million. Both figures include run-off profits and losses from prior-year claims.
The benign loss environment extends a run of five consecutive below-average quarters, according to Gallagher Re figures. H1 2026 global insured catastrophe losses came to approximately US$46 billion against a 10-year average of US$64 billion. (AC)
Munich Re's P&C reinsurance segment generated a net result of €1.25 billion in Q2, up from €1.19 billion a year earlier. Insurance revenue from insurance contracts issued fell to €4.04 billion from €4.51 billion, owing to the volume reduction at renewals.
The July pullback continues a pattern of deliberate portfolio management. Munich Re also cut retrocession cover from US$1.55 billion to US$600 million and wound down two sidecar structures earlier in 2026.
Munich Re chair Christoph Jurecka said the group's financial position gives it the flexibility to manage the pricing cycle on its own terms. "Thanks to our strong balance sheet, higher investment income and rising profit contributions from our less volatile business segments, we are able to manage the market cycle in property-casualty reinsurance from a position of strength," Jurecka said. He added that the group deliberately opts not to take on business where prices would not be risk-commensurate.
The life and health reinsurance segment posted a total technical result of €528 million in Q2, up from €305 million a year earlier. Net result rose to €489 million from €344 million, while insurance revenue grew to €3.37 billion from €3.09 billion, driven by major transaction business involving in-force life portfolios.
The H1 period included the largest single longevity transaction in Munich Re's history. Pension liabilities of €4 billion were transferred in the deal, which completed in the first half of 2026. The transaction points to growing demand from pension funds seeking to remove long-duration liabilities from their balance sheets.
At the group level, Munich Re reported a half-year net result of €3.92 billion, up from €3.18 billion in H1 2025. The full-year guidance of €6.3 billion is unchanged. Insurance revenue for the reinsurance segment is now expected at €38 billion, revised from €40 billion, with group insurance revenue expected at €62 billion, revised from €64 billion.
The global specialty insurance segment posted a combined ratio of 88.9% in Q2, against 77.9% a year earlier when major-loss expenditure was unusually low. Insurance revenue rose to €2.05 billion from €2.02 billion. Munich Re identified growth opportunities in US real estate and professional liability, European surety, and AI liability.
Munich Re's investment result for Q2 was €3.16 billlion, up from €2.19 billion in Q2 2025, representing a return of 5.5% on average market value. The running yield was 4.0% and the reinvestment yield was 4.3%. Fair value increases in the equity portfolio drove the improvement, partly offset by hedging derivative costs.
The solvency ratio stood at 304% as at July 1, up from 298% at year-end 2025, against a Solvency II minimum of 200%.
