Munich Re reports P&C loss on EUR1.5bn nat cat & COVID impact

Munich Re has reported more than EUR 1.5 billion of major losses to its reinsurance business, largely driven by the continuing significant impacts of the COVID-19 pandemic and a range of natural catastrophe losses.

Reporting its nine-month results this morning, Munich Re said that it has made around a EUR 1 billion profit for the year so far, despite the impacts of coronavirus driven losses.

In Q3 specifically, profit was just EUR 199 million, as continued COVID-19 losses and major natural catastrophe events dented the reinsurance firms results.

At the same time, Munich Re cites a “substantial increase in premium income” as growth continues in the more attactively priced underwriting environment.

“In reinsurance, the third quarter is often characterised by aboveaverage losses – and that was again the case this year. On top of manmade major losses and natural catastrophes in the USA, ongoing high COVID-19 claims affected the result. A gratifying aspect is that ERGO once again delivered a strong quarter. Given Munich Re’s dynamic growth and the recent considerable price increases for reinsurance cover, we can look to the future with confidence,” explained Christoph Jurecka, CFO of Munich Re.

Gross premiums written were up 3% in Q3 for Munich Re, not stunning growth compared to some of its peers but still very solid. Premiums increased by 6% over the first nine-months of the year.

The heavy losses suffered by Munich Re drove its property and casualty reinsurance unit to a loss for the quarter, with a combined ratio of 112.2% and a -EUR 23 million result.

Driving this was some EUR 1.518 billion of major losses, including adjustments for prior year loss events.

Major losses came out at more than double the long-term average, Munich Re explained, and were primarily attributable to the COVID-19 pandemic at around EUR 700 million, with impacts seen from event cancellation business and other lines of property & casualty reinsurance, such as business interruption.

On top of this the Beirut, Lebanon port explosion is cited as another major man-made loss, but no specific figure has been given.

While natural catastrophes reached EUR 474 million, down on the prior year, with hurricanes and wildfire losses in the USA the main driver.

Munich Re released EUR 226 million of reserves from prior years this quarter, without which the result would have been significant worse for the P&C reinsurance business at the firm.

Signalling a quieter few months in Germany and surrounds, in terms of weather, Munich Re’s primary arm ERGO reported lower catastrophe losses for the period and the P&C arm generated a profit of EUR 48 million.

Munich Re said that it still won’t issue any profit guidance for 2020, given the high levels of uncertainty that remain, largely due to the pandemic and its impacts in terms of losses and continued financial market effects.