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Munich Re targets growth as profits rise

Munich Re has reported third-quarter profits of €738 million ($1.07 billion), up from €630 million ($914 million) in the corresponding period last year.

Profits for the first nine months grew 14% to €2.4 billion ($3.5 billion) and the company predicts it will exceed expectations of €3 billion ($4.4 billion) for the full year.

CFO Jorg Schneider says the German group’s strong performance comes despite a “difficult environment” for reinsurers. Intense competition and increasing capacity has led to extreme pricing pressure, but Munich Re sees potential for growth through innovative solutions.

“A great number of risks are still underinsured or not insured at all,” Mr Schneider said.

There are opportunities in regions with high-tech centres such as Asia, and liability risks lack sufficient coverage. Weather coverage is in the single-digit billions, but global economic weather risks are “many times higher than that”.

Munich Re’s primary insurer Ergo has developed a new product line offering flood cover to previously uninsurable properties in Germany.

Total group gross written premium (GWP) for the third quarter fell 3.6% to €12.05 billion ($17.5 billion), while natural catastrophe expenditure was well below expectations at €100 million ($145 million).

Reinsurance GWP fell 2.3% to €6.7 billion ($9.7 billion), while primary insurance GWP increased 0.6% to €4.02 billion ($5.8 billion).

The combined operating ratio for property and casualty reinsurance improved to 91.3% from 94.3%, and for primary insurance it moved to 95.8% from 99.2%.