Munich Re is driving digital transformation and reducing complexity as part of a strategy to meet its new medium-term profit target of €2.8 billion for 2020, according to its Chief Executive Officer (CEO), Joachim Wenning.
“Munich Re is becoming more digital, leaner, and more profitable,” Wenning said in a letter to shareholders as part of the reinsurer’s annual results report for 2018.
Now the company plans to increase its consolidated result by a further €500 million to €2.8 billion over the next two years by targeting digital and operational efficiencies, Joachim explained.
“We have geared our strategy to this target,” he told shareholders. “We are driving digital transformation forward, reducing complexity and working towards our medium-term profit guidance on the basis of ambitious growth initiatives in reinsurance and primary insurance. In 2018, we made good progress in all three areas of our strategy.”
In terms of digital initiatives, Wenning pointed to Munich Re’s growing cyber coverage, as well as opportunities related to the Internet of Things and the manufacturing industry.
Munich Re also invested $250 million in the acquisition of Relayr in September, a technology company that allows SMEs to improve productivity by evaluating data from equipment and software in real time.
“The number of digital undertakings we have become involved in has allowed us to secure a leading position in the markets, and it has reinforced not only our existing business but also provides us with new sources of income,” Wenning said.
However, Munich Re is also getting leaner, he added, stating: “Last year, we systematically reduced costs in reinsurance and the Group as a whole.
“Since then, we have been managing a growing business with fewer resources, which in return is creating further scope for investment in digitalisation through cost savings. This has made us more competitive.”
In terms of Munich Re’s 2018 reinsurance business, Wenning noted that the life and health segment generated a technical result that significantly surpassed its expectation, in part due to very favourable claims development in the U.S.
It also posted a profit in its property-casualty reinsurance segment despite high natural catastrophe losses in the fourth quarter, including Typhoon Jebi and the wildfires in California.
“Compared with 2017, reinsurance prices remained stable for treaties renegotiated at the turn of the year,” Wenning said.
“We are confident that the market environment will see an improvement in the course of this year. Nevertheless, we will continue to actively seek and seize opportunities to grow profitably.”
