German global reinsurance giant Munich Re is anticipating reporting above average major losses from February’s US winter storms and freezing Texas weather, as well as from additional pandemic related impacts, but still expects a bumper profit for the first-quarter of 2021.
Munich Re expects to report a preliminary net profit of around €600 million for the first-quarter of 2021, which is significantly above analyst consensus, cited as €466m, and well above Q1 2020’s €221m.
This is despite what analysts have been expecting to be a relatively significant burden for reinsurance firms such as Munich Re and Swiss Re from the US winter storms and freezing weather in Q1.
Munich Re doesn’t reveal the size of its losses from that event, just saying that, “In the first quarter of 2021, Munich Re’s major-loss expenditure in property-casualty reinsurance was higher than average, primarily owing to an unusually severe cold spell in the USA, in particular in the state of Texas.”
Which suggests a relatively meaningful hit, perhaps large enough to see some of the firms retrocession quota share and sidecar partners taking a portion of the claims.
On top of this, Munich Re said that both its P&C and life reinsurance units have taken additional COVID-19 pandemic related losses in the first-quarter of this year.
However, the reinsurer notes that the additional pandemic hit was in-line with its expectations.
Despite this, shareholders will likely be delighted with the profits set to be reported, as Munich Re expects to reort the €600 million of net profit thanks to “good operational development overall, an investment result that was within expectations, and ERGO’s very good performance.”