Global reinsurance giant Munich Re has announced 2018 profit of €2.275 billion, helped by an improved result in its property and casualty (P&C) reinsurance segment.
The €2.275 billion is a substantial jump from the €392 million recorded a year earlier. Munich Re’s operating profit for 2018 reached €3.725 billion, as gross written premiums (GWP) remained flat year-on-year, at roughly €49 billion.
The reinsurer states that reinsurance business contributed €1.86 billion to its 2018 consolidated result, with growth in both its P&C segment and its Life and Health (L&H) business.
L&H profit increased to €729 million with a technical result of €584 million, meaning the firm exceeded its target of at least €475 million for the full-year.
In its P&C segment, profit increased to €1.135 billion as the combined ratio improved significantly to 99.4%, compared with 114.1% a year earlier. Major losses declined from €4.3 billion to €2.15 billion, which is equivalent to 11.6% of earned premiums.
Overall, reinsurance GWP declined very slightly in 2018 to €31.2 billion, as growth in the P&C sector offset a decline in premiums in the L&H space.
“2018 was a successful year for Munich Re, and the good result is a clear endorsement of our long-term and ambitious goals. Following the significant increase in profit last year, we anticipate that profits for 2019 and 2020 will continue to rise, reaching our medium-term profit guidance of €2.8bn in 2020.
“In reinsurance, we are pursuing our ambitious growth targets, and the successes of ERGO’s Strategy Programme are becoming clearly evident. At the same time, we are reducing complexity in our internal processes and resolutely driving forward digital transformation. Munich Re is on track,” said Joachim Wenning, Chairman of the Board of Management.
Looking forward, Munich Re has raised its profit guidance for 2019 by €200 million to €2.5 billion, with roughly €2.1 billion attributable to reinsurance, and the remaining €400 million to its ERGO unit.
The reinsurer states that its solid result in 2018 combined with improved earnings power in 2019, enables it to increase the dividend to €9.25 and also to launch a further share buy-back programme with a volume of €1bn.
Munich Re is targeting an improved combined ratio of 98% in its P&C segment in 2019, while it expects its L&H unit to record an improved technical result.
