Christoph Jurecka, CFO of Munich Re, anticipates that the hard market cycle will persist into 2024, unless 2023 proves to be a very benign year for natural catastrophes.
Jurecka recently spoke with analysts at Goldman Sachs, and noted that there is still a considerable supply-demand imbalance with capital not yet ready to come into the sector, with some players moving out of the property market altogether.
Analysts explained that there’s also a possibility that primary insurers may get uncomfortable with the volatility of cat losses and seek reinsurance, which will serve to strengthen the market further.
Thus, Jurecka expects the market to remain hard in 2024, unless this year turns out to be a very benign nat cat year.
Jurecka said that Munich Re is running ahead of its 2025 ambition, though he did add that these ambitions were set in a different part of the cycle.
Nonetheless, the business strategy remains the same, i.e. that it will grow the non-cyclical lines, which include Global Specialty and ERGO.
Munich Re states it will also use this opportunity to make a higher margin in the P&C Re business given that it will have to pull back in the softer part of the cycle, and it is at that time the benefit of having a more stable business will be visible.
In Q1, the reinsurer reported a net result of approximately €1.3 billion, down on the previous year (€1.5bn) as natural catastrophe events resulted in above-average losses for the firm, driven by the Turkey and Syria earthquake.
However, Group-wide, insurance revenue from insurance contracts issued increased to €14.3 billion in Q1 2023 from €13.3 billion a year earlier.
Within its reinsurance business, which contributed €1.05 billion to the Group’s net result in the quarter, insurance revenue from insurance contracts issued hit €9.2 billion compared with €8.7 billion last year.
At the time, the firm said, “Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming July renewal rounds.” These latest comments from the CFO appear to support that statement.
Christoph Jurecka has been a member of the Board of Management and Chief Financial Officer of Munich Reinsurance Company since January 2019.
He is currently responsible for Financial and Regulatory Reporting, Corporate Finance and Performance, Integrated Risk Management, Group Taxation, and Investor and Rating Agency Relations.
