Munich Re Posts Q1 2015 $896 Million Profit; Lower Operating Results

May 7, 2015

Munich Re announced that it realized a profit of €790 million [$896 million] for the first quarter of 2015, compared to €941 million [$1.067 billion] in Q1 2014. Despite the lower figure, Munich Re said it is “still aiming for a profit of €2.5–3 billion [$2.84 – $3.4 billion] for the year.

CFO Jörg Schneider said: “We have started off well, although investment has again been made more difficult by the expansive policies of the central banks. We are well on track to achieve our result target of €2.5–3bn for the year as a whole.”

He also noted that there was still a great demand for insurance cover in many regions across the world. Often, only a small part of the risk is insured. “As a result, the strongly increasing capacity supply in the primary insurance and reinsurance sectors at present is matched by a demand potential in many classes of business that is not yet exhausted,” said Schneider. “Working together with present and future clients and partners, we aim to tap this potential by focusing all of the Group’s extensive knowledge even more strongly on innovations.”

Munich Re listed the following highlights for the period:
– The operating result of €995 million [$1.13 billion] was below the figure for the same quarter last year (€1.327 billion [$1.505 billion]).
– The amount posted under “other non-operating result” showed an increase of €121 million [$137 million] to €6 million [$6.8 million] (–€115 million [$-$130 million] [), mainly due to foreign-exchange effects.
– Taxes on income totaled –€151 million [-$171 million] (–€215 million [-$244 million]).
– Despite share buy-backs amounting to €300 million [$340 million] in the first quarter of 2015, equity capital rose by 14.7 percent to €34.8 billion [$39.48 billion] compared with the year-end figure of €30.3 billion [$34.38 billion], mainly due to the quarterly profit, favorable foreign exchange effects, and the increase in on-balance-sheet net unrealized gains on investments triggered by low interest rates.
– The annualized return on risk-adjusted capital (RORAC) amounted to 11.7 percent.
– The return on the strongly increased overall equity (RoE) totaled 9.7 percent.
– Gross premiums written grew by 0.9 percent to €13.0 billion [$14.75 billion] (€12.9 billion [$14.64 billion]). If exchange rates had remained the same, premium volume would have fallen by 5.4 percent year on year.

In the reinsurance sector Munich Re reported an overall contribution of €668 million [$758 million], compared to €768 million [$871 million] in Q1 2014. The operating result fell by €258 million [$292 million] to €758 million [$860 million]. Gross premiums written rose by 2.2 percent to €7.0 billion [$7.94 billion] from €6.9 billion [$7.83 billion], mainly owing to the development of exchange rates.

Overall loss expenditure for major losses in the first quarter totaled €255 million [$283 million]
Natural catastrophe losses amounted to around €66 million [$75 million] and man-made major losses to €189 million [$214 million], representing 1.6 percent and 4.6 percent of net earned premiums respectively.

The combined ratio in the P&C reinsurance sector for the quarter was 92.3 compared to 86.9 in Q1 2014.

Torsten Jeworrek, Munich Re’s Reinsurance CEO, said with respect to the renewals at 1 April 2015: “Pressure on prices, terms and conditions remained high, so we are adhering strictly to our consistent cycle management. But as we were able to take advantage of selective opportunities in individual markets, our premium volume nevertheless increased slightly.”

Source: Munich Re

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