Global reinsurance player Munich Re expects to shed roughly 900 personnel over the coming months, as the company seeks to save EUR 200 million, with the majority of the staff to be lost from the reinsurance business.
Speaking this morning during the reinsurers press briefing in Munich, CEO Joachim Wenning said that around one-third of its forecasted reinsurance profit growth by 2020 will be achieved through the shedding of personnel.
The other two-thirds of the expected stronger earning contribution from its reinsurance business by 2020 is expected to be secured through growth initiatives.
Munich Re believes it can grow its reinsurance book and at the same time make it more profitable, partly through an expectation that rate increases will persist.
Munich Re targets lowering its expenses by around EUR 200 million due to downsizing its global workforce and the majority (90%) of this will be achieved through job cuts.
Job cuts had been rumoured at the reinsurance firm earlier this year and this morning Wenning gave some additional information on the scale and location of job cuts.
Wenning said that the job cuts program will run for six months and so far is just three weeks in.
Wenning explained, “We’re talking here about 900 jobs worldwide, of which half will be affected in the international organisations and the other half will be in the headquarters in Munich, one-quarter of which will be achieved by natural fluctuations and the use of part-time retirement schemes.
“The remaining will be from a voluntary personnel reduction program, which has been running for three weeks and will run for another six months.”
The efficiency and job cut program is well underway at Munich Re, as the reinsurer looks to improve and enhance its profitability through efficiency drives, at the same time as the company seeks underwriting growth as well.
Wenning said that the company would not be losing staff from areas it is investing in, or where the digitalisation process is ongoing.
It’s important to note that Munich Re has roughly 42,000 employees around the world, so this downsizing is not significant and is designed to support ongoing increases in efficiency, not purely save costs in the short-term.