Global reinsurer Munich Re has announced a bold new strategy called ‘Ambition 2025’. The group strategy - which spans across reinsurance, primary insurance and asset management - sets new growth and result targets which follow the three guiding principles of scale, shape, and succeed.
Scale, the first pillar in the triad, represents growth in the Munich Re’s core business. When revealing Ambition 2025, the group said there are opportunities for organic growth in reinsurance, in particular, due to recent, significant improvements in market conditions. The firm also expects to grow profitably over the next five years in its Risk Solutions operating field, including in MR Specialty Insurance, HSB, and Munich Re Facultative & Corporate. In life and health, Munich Re plans to expand both its traditional business, as well as its offering for financial markets and longevity business.
The second pillar of the triad – shape – reflects Munich Re’s mission to develop new business models that span the entire value chain. The group is evolving to meet the demands of the digital environment and says it will continually scrutinize insurance innovations and their scalability.
Succeed symbolizes the value that Munich Re generates for all its stakeholders. By 2025, Munich Re aims to boost return on equity (RoI) by 12-14% - up from a return of 9.2% in 2019. The group says it will do this by achieving higher profitability, growth, and an RoI performance that will counteract the erosion of regular investment income caused by low interest rates. The group also hopes to increase earnings per share and dividend per share by more than 5% annually.
Internally, succeed is about creating appealing long-term employment and good career prospects. When announcing Ambition 2025, Munich Re shared its ambition that 40% of managers below the Board of Management are to be women by 2025.
Finally, the group also announced an extensive decarbonization strategy, shifting away from coal, oil and natural gas. Specifically, Munich Re aims to reduce net greenhouse gas emissions in its investment portfolio by 25–29% between now and 2025, before achieving net-zero emissions by 2050. The firm has already ceased to invest in companies that generate more than 30% of their earnings from coal or by extracting oil from oil sands.
Regarding the exploration and production of oil and natural gas (direct and facultative business), Munich Re will reducing its climate-related industry exposure in order to reach no attributable net CO2 emissions by 2050. In an initial phase, Munich Re aims to reduce greenhouse gas emissions by 5% between now and 2025. At the same time, the group will reduce its coal-related exposure in its direct and facultative insurance business by 35% worldwide, before eliminating this exposure altogether by 2040.
Joachim Wenning, chairman of Munich Re’s Board of Management, commented on the bold new strategy: “With our Munich Re Group Ambition 2025, we’ve created a strategy that is uniform across the Group – spanning reinsurance, primary insurance and asset management. We have committed ourselves to ambitious financial targets, and we will continue adding value for our shareholders, clients, staff and communities. The Munich Re Group Ambition 2025 will help us to elevate Munich Re to a new level of success.”