Joachim Wenning, Chairman of the Board of Management at Munich Re commented, “In spite of the significant difficulties postured by COVID-19, Munich Re closed out 2020 with a clear profit– and our dividend stays reputable. In 2021, we anticipate to fulfill the earnings target that we envisaged prior to the pandemic. Our reinsurance organization is preferably positioned to resolutely exploit chances for rewarding development in the improved market environment. And ERGO is performing well following the effective conclusion of its Strategy Programme. We are refraining from releasing a brand-new share buy-back program at this time, since our shareholders will benefit more from investments in the appealing company opportunities now emerging.”
Worldwide reinsurance giant Munich Re is bullish about the upcoming April and mid-year renewal seasons in 2021, forecasting a positive market environment and growth chances as it reported its 2020 outcomes this morning.The reinsurance company has published EUR1.2 billion of profit for 2020 in spite of considerable losses suffered due to the COVID-19 pandemic and natural disaster events throughout the year.
The January 2021 reinsurance renewals saw a lucrative result for the firm, which feels well positioned entering into the year, having actually achieved 10.9% of premium development at 2.4% greater costs across its portfolio.
Munich Re kept in mind that cost rises were especially strong at the January renewals in the non-proportional sector of its service, so this would consist of the excess-of-loss treaty element.
Joachim Wenning, Chairman of the Board of Management at Munich Re commented, “In spite of the remarkable challenges posed by COVID-19, Munich Re closed out 2020 with a clear earnings– and our dividend stays reputable. In 2021, we expect to fulfill the profit target that we imagined prior to the pandemic. All the pieces are in location. Our reinsurance company is preferably positioned to resolutely exploit chances for lucrative growth in the improved market environment. And ERGO is carrying out well following the successful conclusion of its Strategy Programme. We are refraining from launching a brand-new share buy-back programme at this time, due to the fact that our shareholders will benefit more from investments in the attractive service opportunities now emerging.”
Munich Re suffered EUR3.4 bn of pandemic associated losses in its reinsurance department in 2020, EUR370m of which was attributable to its life and health reinsurance company and simply over EUR3bn to its property and casualty reinsurance service. Primary unit ERGO just saw a negative COVID-19 effect of EUR64m.
Missing those pandemic related losses, Munich Re said that its 2020 profit target of EUR2.8 bn would have been satisfied.
Munich Re has grown its underwriting service by 6.7%, in terms of gross premiums written, in 2020, underwriting over EUR54.89 bn of premiums, up from 2019s EUR51.457 bn.
The residential or commercial property and casualty reinsurance combined ratio was elevated on the back of the COVID losses, can be found in at 105.6% for the year.
Still the P&C reinsurance unit contributed EUR571m to the annual result for Munich Re, while premiums rose to EUR24.61 bn, up from EUR22.09 bn in the previous year.
As the COVID-19 coronavirus pandemic losses, Munich Re stated that Hurricane Laura was its most significant natural disaster loss of 2020 at EUR280m.
Natural catastrophe losses as a whole can be found in well-below the prior year, EUR906m (down from EUR2.053 bn), which Munich Re said was “far lower than expected typically– regardless of a record variety of occasions in some loss situations.”
A more average disaster loss year would have seen a significantly worse set of numbers reported today by Munich Re, and the company appears to have actually avoided the effects some other significant reinsurance firms saw during the year.
On the renewals seen in January 2021, Munich Re said that as well as the 2.4% of cost boost seen across its portfolio, conditions and terms improved too.
Rate increases varied around the globe and the non-proportional company saw the greatest rate enhancements.
Looking ahead to the rest of the 2021 reinsurance renewals, Munich Re is positive that market conditions will remain attractive.
The business stated that in April and July 2021, “Munich Re prepares for that the market environment will remain favorable and deal attractive growth chances.”
Munich Re tends to anticipate upcoming renewal conditions accurately, so as soon as again the remarks of a major reinsurance gamer read-across positively for the rest of the sector, along with for insurance-linked securities (ILS) funds and the disaster bond market.
Munich Re targets an earnings of EUR2.8 bn in 2021, saying that it, “expects the financial consequences from COVID-19 to be on a considerably smaller scale than in 2020.”
In P&C reinsurance the business predicts a 96% combined ratio, perhaps lower if COVID concerns dont become highly this year and revenue of EUR2.3 bn.
Munich Re had formerly forecast COVID-19 pandemic losses of around United States $720m for 2021, but that stays really unpredictable at this phase.
As ever though, natural disaster loss activity will be a key chauffeur for revenues of the major reinsurance firms like Munich Re in 2021.
As weve already seen in 2021 with the US winter season storm activity and the high predicted losses from that occasion, anticipating earnings at this early phase of the year can be challenging at best offered the vagaries of severe weather condition and natural disaster activity.