Reports suggest that Munich Re is expecting to incur a large financial hit in Q4 from Typhoon Hagibis and other catastrophe events, but has nevertheless grown more confident that it will meet its targets for the year, as well as in 2020.
Destroyed by Typhoon Hagibis Tuesday, Oct. 15, 2019, in Nagano, Japan. AP Photo/Jae C. Hong)
Speaking at a press event in Munich on Monday, Chief Financial Officer (CFO) Christoph Jurecka said that Hagibis will constitute a “very expensive” event for the company.
In addition, Munich Re is anticipating further losses on tornadoes and forest fires in the US, as well as bushfires in Australia.
As such, the reinsurer has “started the fourth quarter with a bit of a backlog,” Dow Jones quoted Jurecka as saying.
On top of these catastrophe losses, Munich Re is examining whether it will have to increase reserves for its Australian business, both on the life and non-life side.
Jurecka acknowledged that “it is entirely possible that we will have to do something in Australia,” according to Reuters, but did not go into specifics.
But management still seems to be optimistic about the Munich Re’s financial targets, with Chief Executive Officer (CEO) Joachim Wenning maintaining that “the group’s strategic focus is good.”
Munich Re reported in its third quarter resulted that it is set to exceed its initial profit forecast of €2.5 billion for 2019, with profits at €865 million in the third quarter alone.
This target remains unchanged in light of the Q4 catastrophe losses, as does the higher target of €2.8 billion for 2020.
In fact, Jurecka told attendees at Monday’s event that the company had even grown “more confident” in its ability to hit medium term profit goals.
All segments contributed to Munich Re’s positive result in Q3, which the CFO noted “was achieved despite considerable losses in the third quarter,” Dow Jones reported.
Results this year show that Munich Re is continuing to grow its business on the reinsurance side, while also benefitting from a turn-around in the results of its primary insurance arm, ERGO.
Executives added that group’s performance had also been lifted by “very, very positive” developments in the capital markets.
During the same press event, Wenning revealed that Munich Re is currently more interested in looking at acquisitions of primary insurers, rather than reinsurers.
