Munich Re Chief Executive Officer (CEO), Joachim Wenning, recently explained how the reinsurer’s strategy remains unchanged with a push for growth sending the wrong signals that would ultimately result in the wrong results, with continuity seemingly being the firm’s focus in the current market environment, reports Deutsche Bank analysts.
Deutsche Bank recently met with Munich Re’s executives as part of the global reinsurer’s “Meet the Management” event, which included interviews with new CEO, Joachim Wenning.
Despite a new CEO leading the reinsurer through the ongoing soft market landscape, Deutsche Bank feels that nothing has really changed, with the firm still committed to its strategy and the continuation of its capital management program.
Wenning, according to Deutsche Bank, acknowledged that the company’s no growth strategy of recent years might lead to some questions being asked, but stressed that “growing now would be the wrong signal, leading to the wrong results,” says Deutsche Bank.
Adding; “The focus is clearly on continuity than on potential increases. The EUR2bn lower end of the target profit range is a level the company wants to defend. Improving ERGO results is seen as the key factor in a sustained low yield/ low price environment.”
Munich Re announced in early 2017 that it would merge its health and life reinsurance units, while announcing that its primary health insurance business would be transferred to Ergo, its primary insurer.
Some investors had expressed concern with the performance of Ergo, and Wenning sought to reassure earlier in the year by noting that the unit was on track to return to profitability in 2017. Furthermore, after launching a restructuring project in 2016 Ergo sees greater annual profit contributions to Munich Re, driven by modernisation and slimming down.
Munich Re also suggested that a bottoming at current pricing levels could persist for a number of years, and the reinsurer plans to maintain its conservative approach to reserving. Munich Re expects to stabilise the combined ratio at around 100%, says Deutsche Bank, and one-year on from the start of its restructuring programme, remains confident of reaching its 2020/2021 net profit target of €600 million (US$684 million).