Munich Re cuts staff in earnings boost initiative

Munich Re will cut costs in the reinsurance operations and in the group functions through staff reduction to improve profitability.

The reinsurer is targeting earnings of around €2.8 billion in 2020, an increase from around €2.3 billion expected for 2018. The reinsurance division is planned to contribute about €250 million to this earnings improvement while its primary insurance operations Ergo is set to contribute another €250 million, according to the firm’s 2018 balance sheet presentation.

“We will cut somewhere in the region of €200 million in gross expenses,” CEO Joachim Wenning said during the March 15 press conference. “90 percent of these savings will be attributed to the reinsurance division,” he added.

“If by 2020 we will have a stronger reinsurance earnings contribution, then one third of that will be due to a lower uptake of resources and two thirds will be due to growth initiatives,” Wenning explained.

The overall cost savings will involve 900 jobs worldwide, half of which will take place in the international operations while the other half will happen in the headquarters in Munich, Wenning noted.

Munich Re has already reduced the employee numbers by around 1,000 between 2016 and 2017. However, the majority of these staff reductions were linked to restructuring initiatives taking place at Munich Re’s primary insurance unit Ergo, which will not be affected by the new cost cutting initiatives.

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