Munich Re ‘happy to write’ any well-priced cat at mid-year renewals

Munich Re will walk into the mid-year renewals ready to expand or restrict its cat exposure as pricing dictates, CFO Christof Jurecka (pictured) has indicated.

“As long as business is exceeding our profitability threshold, fully reflecting cost of risk, cost of capital and the like, as long as business is above that, we are happy to write,” Jurecka said of philosophy ahead of the mid-years.

But  Munich Re’s profitability thresholds will be up-to-date and unbending, “fully incorporating our most current assumptions on inflation and model changes where we include whatever we learned from most recent cat season.”

“Long-term it is one of the most profitable businesses, so we are not afraid to write.”

Munich Re held its cat exposure stable at the April renewals, but was perfectly happy erasing some treaties from its books while growing into others. “We did not renew all our treaties,” Jurecka said.

“At 1.4 it was stable … we wrote more in some areas and less in others,” Jurecka said. “We are not writing cat wherever it comes along, but when it meets the criteria.”

In the April reinsurance renewals,  Munich Re managed to increase the volume of business written by 7.6% to €2.7 billion on “growth opportunities” in Japan and India as well as Latin America.

Inflation assumptions are delivering the biggest jolt to  Munich Re’s pricing demands.

“We always try to be cautious in our assumptions, but it is fair to say that this time we particularly focused on the inflation topic,” Jurecka said of 1.4. “We focused a lot on the inflation assumptions and had discussions with clients that were not always consensual.”

Munich Re fell well inside its cat budget on a Q1 large loss tally of €667 million, just 9.2% of net earned premium versus a long-term expected budget of 13%. That left  Munich Re with €3.3 billion in unutilised cat budget for the remainder of 2022, a factor in the group’s reiteration of its 2022 net profit forecast.

Jurecka attributed the subdued Q1 large loss tally to European windstorm losses at levels that may have proven below expectation plus some adjustments on prior-year loss settlements.

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