Munich Re expects €1bn profit in second quarter 2019 due to lower expenditure and high reserve releases

Germany-based global reinsurer Munich Re expects to report a consolidated result of approximately €1 billion for the second quarter of 2019.

The company stated that this estimate is mainly attributable to low major-loss expenditure and high reserve releases for basic losses in reinsurance from prior years.

However, due to the uncertainty concerning developments in major losses and the capital markets during the rest of the year, the target for the 2019 consolidated result remains unchanged at €2.5 billion.

In its  2019 outlook unveiled in March, the reinsurer said that it is “on track” to achieve this target by increasing profits in the reinsurance segment and ERGO business, while reducing complexity in its internal processes and resolutely driving forward digital transformation.

In the second quarter of last year, Munich Re's profit in property/casualty (P&C) reinsurance declined due to a significant increase in man-made major losses and higher basic losses. Premium income in life and health (L&H) operations also dropped owing to terminations and the restructuring of large-volume treaties. Overall the expenditure for major losses of over €10 million increased to €605 million in the second quarter of 2018. However, the group’s net profit remained broadly stable at €728 million in Q2 2018, compared with €733 million in Q2 2017.

Munich Re's 2019 half-year financial report is still ongoing, and is expected to be announced in the coming month.

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