Joachim Wenning, Chief Executive Officer (CEO) of reinsurance giant Munich Re, has said that the company is currently more interested in looking at acquisitions of primary insurers, according to reports from German newspaper Welt.
Speaking at an event on Monday evening in Munich, Wenning said that acquisitions of reinsurance firms seemed unlikely at the moment, but that Munich Re was open to opportunities on the primary side.
“When it comes to primary insurance interests worldwide – which have risks in their portfolios that are compatible with our risk appetite – then we are open to it,” Welt quoted Wenning as saying.
The CEO added that Munich Re is particularly interested in markets where its primary insurance subsidiary Ergo is already active.
Potential acquisitions are also likely to be in areas where the reinsurer has a “relevant market position,” Wenning said, rather than in areas that might expand its global reach.
Investors had for some time considered Munich Re’s primary operations to be a drag on the group’s overall result, but Ergo has seen something of a turn-around in profits following a restructuring of the subsidiary three years ago.
These efforts have been continued throughout 2019, as ERGO has shed many of its less profitable European units over a series of M&A deals.
Munich Re’s third quarter results showed that ERGO generated a profit of €119 million during the period, although this was down on €173 million in Q3 2018.
This performance, in combination with Wenning’s recent comments, indicate that Munich Re may now be ready to expand on Ergo’s activities.
Q3 results also showed that Munich Re is set to exceed its initial profit forecast of €2.5 billion for 2019, with profits at €865 million in the third quarter alone.
For 2020, the company has raised its goal to €2.8 billion, and Welt reports that Chief Financial Officer Christoph Jurecka is confident of being able to achieve this figure, based on his comments at the same event.