European reinsurer Munich Re has lifted its annual guidance for its net result to €4.5 billion after reporting a solid set of third quarter and nine month 2023 results, as the firm closed a third consecutive quarter with a net result above pro-rate guidance.
For Q3 and 9M 2023, Munich Re has posted a net result of €1.2 billion and €3.6 billion, respectively, compared with €1.1 billion and €4.2 billion, respectively, a year earlier.
Group-wide, insurance revenue fell by less than 1% to €14.5 billion in the quarter, but rose 3% to €42.9 billion in 9M 2023.
Within reinsurance, the segment contributed €995 million to the Group net result in the quarter, up from €851 million in Q3 2022, while the 9M 2023 result fell from €3.6 billion to €2.95 billion. Insurance revenue fell 6% year-on-year to €9.5 billion in the quarter, while the technical result increased to €1.6 billion.
The firm’s property and casualty reinsurance business produced a net result of €664 million in Q3 2023 compared with €309 million a year earlier, although as a result of a one-off effect in the quarter, insurance revenue decreased 5% to €6.9 billion. The P&C reinsurance combined ratio strengthened 6.9 percentage points to 82% in the quarter, but increased 3.1 percentage points to 83% for the nine month period.
When compared with last year, major loss expenditure fell by a significant 64% to €770 million, which includes gains and losses from the run-off of major losses from pervious years. Natural catastrophe losses fell from €1.7 billion to €535 million, as man-made major losses fell from €460 million to €235 million. Munich Re says that the Hawaii wildfires were its costliest event during the quarter at around €200 million.
Also in Q3 2023, Munich Re notes that it released €333 million of reserves for basic losses from prior years.
Within its life and health reinsurance segment in Q3 2023, Munich Re has today reported a total technical result of €440 million, compared with €393 million in the prior year period. The firm reports that strong growth in new business more than offset the level released. However, the net result fell from €542 million to €351 million this quarter, with the Q3 2022 result having been driven by substantial currency gains. Insurance revenue within L&H reinsurance fell 7% to €2.6 billion.
At its ERGO business, profit shrank slightly to €173 million in the quarter but rose to €643 million for the nine month period. Insurance revenue increased to more than €5 billion in Q3 2023 and to €14.9 billion in 9M 2023.
On the asset side of the balance sheet, Munich Re has reported an improved investment result of €760 million in the third quarter, as regular income from investments rose by more than €200 million to €1.8 billion, primarily driven by the rise in interest rates.
Looking forward, the reinsurer says that it is well positioned to surpass the previous annual target of €4 billion, so has raised this by €500 million to €4.5 billion for full-year 2023.
The firm expects to produce a reinsurance profit of €3.8 billion, which is up on the previous estimate of €3.3 billion, although now anticipates insurance revenue of roughly €1 billion less for the year, of €38 billion, due to currency effects.
In L&H reinsurance, Munich Re now expects to produce a technical result of around €1.4 billion for 2023, compared with the previous estimate of €1 billion. The reinsurer also expects a stronger combined ratio of 85% (86% previously) in P&C reinsurance. And at ERGO, the firm expects to see insurance revenue of around €20 billion for the year, up from the previous €19 billion.
“Munich Re’s outstanding business performance continued seamlessly in the third quarter. Unlike last year, we benefited from a comparatively mild hurricane season in the North Atlantic. Accordingly, major-loss expenditure in property-casualty reinsurance was lower than expected, despite various other natural catastrophes. Strong performance in our other operating segments rounded out the positive results,” said Christoph Jurecka, Chief Financial Officer (CFO).
“Ultimately, we can report a net result of nearly €1.2bn for the third quarter and €3.6bn for the first nine months of the year. We are confident that we will surpass our previous annual target of €4.0bn and have raised the guidance to €4.5bn,” he added.
