Munich Re’s technical performance boosts market position

The reinsurer reported a strong net income of $2.3b in Q1.

Munich Re has shown significant improvement in profitability and earnings diversification over the past few years. The group's switch to International Financial Reporting Standard 17 (IFRS 17) in 2023 has been beneficial, assessed S&P Global Ratings. 

Munich Re is expected to maintain its competitive position and conservative capital management over the next two years, supported by its strong and diversified earnings profile.

In the recent reporting, Munich Re posted a net income of $4.87b (€4.6b) and a return on equity (ROE) of 16.1%. The combined ratio stood at 86.3%, reflecting robust performance across its key divisions.

For the first quarter of 2024, Munich Re reported net income of $2.27b (€2.1b), continuing its strong performance.

Munich Re's earnings come from four major divisions: P/C reinsurance, life reinsurance, global specialty insurance, and retail primary insurance (through Ergo). 

The group's ability to achieve sound technical performance in these areas, particularly in life reinsurance and primary insurance, has contributed to its stability and resilience against cyclical fluctuations and catastrophes.

Munich Re’s capital management remains conservative. As of 2023, its capital adequacy was above the 99.99% confidence level, and the group is expected to maintain very strong capital and earnings through 2024-2025. 

The Solvency II ratio was high at 273% after Q1 2024, indicating strong capital adequacy compared to peers.

The group's conservative balance sheet, strong risk controls, and cautious reserving practices position it well to handle challenges such as social inflation and capital market volatility. 

Despite potential capital and earnings volatility from large tail risks, Munich Re’s diversified portfolio and risk management strategies provide significant mitigation.

($1.00 = €1.08)