The world’s largest reinsurer will probably be able to meet its profit forecast for 2021 of 2.8 billion euros.
(Photo: dpa)
Munich The high damage caused by storm Bernd is putting a strain on Munich Re’s balance sheet. The world’s largest reinsurer is assuming payments of around 600 million euros, which relate to the property and casualty area of reinsurance and the primary insurance business of the subsidiary Ergo. In addition, there is damage from Hurricane Ida in the USA amounting to 1.2 billion euros. In the third quarter, the group expects only a preliminary result of 400 million euros. Munich Re announced this on Tuesday afternoon.
At the presentation of the figures for the first half of the year at the beginning of August, CEO Joachim Wenning said that Munich Re was expecting burdens from the flood disaster in Germany with an amount in the mid three-digit million range. Precise statements were not possible at this point in time, when the clean-up work was still in progress in many places.
However, it is now becoming apparent that the estimates will have to be revised upwards two months ago. Michael Pickel, head of competitor E + S Rück, only said on Monday that the total losses for German insurers are likely to be at the upper end of the range of eight to ten billion euros. It was already clear beforehand that the devastating flash flood of July, which hit regions in Rhineland-Palatinate and North Rhine-Westphalia in particular, would be the most damaging natural disaster of all time in Germany.
Analysts’ expectations exceeded
Despite the high burdens, Munich Re’s management continues to assume that the targeted net result of 2.8 billion euros for this year can be achieved. After six months there were already 1.7 billion euros at this point, with the 400 million euros from the third quarter it is now 2.1 billion euros.
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The fact that, despite the high burdens, a result of 400 million euros was still achieved in the months from July to September is mainly due to the positive development in the other areas, a strong investment result and currency gains. 15 financial analysts had expected an average of a slight loss of ten million euros in the third quarter.
In general, the months of July to September are among the most damaging for the industry. The hurricane season will then peak in the United States and the Gulf of Mexico. In recent years, there have also been severe typhoons in Asia, which have led to high claims payments.
But the severe damage in Germany from violent storms is not unusual either. Similar weather phenomena already existed in 2002. The total insured damage was around 4.5 billion euros, the June flood of 2013 cost the industry 2.1 billion euros.
In addition to the high storm damage, the corona pandemic also had an impact on Munich Re’s balance sheet in the third quarter. In the life / health reinsurance segment, the targeted underwriting result of EUR 400 million will not be achieved. CFO Christoph Jurecka had already indicated possible burdens when presenting the Q2 figures.
With a plus of more than three percent, the Munich Re share was the biggest winner in the Dax on Tuesday afternoon. The stockbrokers praised the adherence to the annual forecast despite the high damage. The group plans to present its final figures on November 9th.
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