Munich Re’s Jurecka ‘satisfied’ as 2018 results show rising profits

Munich Re’s CFO said 2018 had been positive for the company’s life and health reinsurance and for ERGO, which both beat their profit guidance for the year, as the firm published its year end results.

Gross premiums written (GPW) by the whole group in 2018 were €49 billion, slightly down from €49.1 billion in 2017. The company attributed the decline in premium income to the expiry or restructuring of large-volume capital-relief treaties. But it said this drop was “largely compensated for by partly robust growth in property-casualty reinsurance.”

GPW for the reinsurance part of the business were also down slightly year on year to €31.2 billion in 2018 from €31.5 billion.

Net profits for Munich Re’s ERGO group of insurance companies rose considerably to €412m in 2018 up from €273m the year before, representing a large increase on the guidance predictions of €250–€300m.

ERGO’s combined ratio was separate for Germany and international business. For Germany it had improved slightly to 96 percent from 97.5 percent the year before. For international it had also improved to 94.6 percent in 2018 from 95.3 percent the year previously.

The results showed the combined ratio for reinsurance had improved to 99.4 percent down from 114.1 percent in 2017. However, the same measure for reinsurance in Q4 told a different story. It had worsened to 105.1 percent in the three months to the end of 2018, compared to 103.9 percent in the same three months a year before. Munich Re said the Q4 result was caused by “especially high major losses from natural catastrophes” .

In 2018, major catastrophes such as Typhoon Jebi and the two wildfires in California in November cost the company expenditure of around €440m and losses of around €430m respectively.

Christoph Jurecka, Munich Re CFO, said: “We are very satisfied with the overall result for 2018. We increased our profit and achieved our result target – despite the volatile capital markets and high losses from natural catastrophes in the fourth quarter. The year was especially positive for life and health reinsurance and for ERGO, both of which surpassed their profit guidance for the year. Munich Re shares remain a reliable, high-return investment, which is again reflected in the significant increase in the dividend.”

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