German reinsurer Munich Re has reported a net result of €4.7 billion for the first nine months of 2024, despite losses from natural catastrophes in the third quarter rising significantly to €1.4 billion, of which roughly €500 million relates to hurricane Helene.
For 9M 2024, the net result increased by 31% on the prior year period’s €3.6 billion, although for the third quarter of this year declined 21% to €930 million from €1.2 billion in Q3 2023.
The reinsurer attributes the decline in the quarter’s net result to above-average major losses from natural catastrophes, which rose to €1.4 billion from €535 million last year.
Hurricane Helene’s impacts in Florida and other parts of the U.S. was the largest single claims event for Munich Re in the quarter, while three loss events in Canada together resulted in similar claims expenditure. The firm also highlights significant damage in central and eastern Europe due to Storm Boris and consequent flooding, as well as in the U.S. and the Caribbean due to hurricane Beryl.
Man-made major losses came down slightly from €235 million in Q3 2023 to €225 million in Q3 2024, as total major-loss expenditure increased significantly compared to the prior-year quarter, to €1.6 billion from €770 million. The reinsurer reveals that major-loss expenditure reached 23.1% of net insurance revenue, exceeding the expected figure of 14% in both Q3 and 9M 2024.
As well as these losses, Munich Re reversed provisions of €351 million for basic claims from prior years in the quarter, which corresponds to 5% of net insurance revenue.
Group-wide, insurance revenue from insurance contracts issued, so underwriting profit, benefited from organic growth in all segments and rose to €15.5 billion from €14.5 billion in Q3 2024, and from €42.9 billion to €45.5 billion in 9M 2024.
Looking at the reinsurance division, the contribution to the net result decreased to €766 million from €995 million in the quarter, but rose to €4 billion from €3 billion in 9M 2024. For the quarter, insurance revenue from insurance contracts issued hit €10.2 billion, up from last year’s €9.5 billion. The segment’s technical result decreased to €1.1 billion and the unit’s operating result fell to €956 million.
The majority of the year-on-year dip in the reinsurance segment result, although it’s clearly still very strong, is driven by the above-average level of losses in the property / casualty (P&C) reinsurance business, which generated a result of €375 million in Q3 2024, down from €644 million last year. The P&C reinsurance underwriting result did increase to €7.3 billion compared with €6.9 billion, as the combined ratio, net of insurance revenue, moved from 82% to 90.5%, with a normalised combined ratio of 81.3%. For 9M 2024, the P&C combined ratio fell slightly to 82%.
In its life and health (L&H) reinsurance arm, the technical result decreased to €428 million from €440 million in the third quarter of 2024, as the net result rose to €391 million from €351 million, and insurance revenue from insurance contracts issued spiked to €2.9 billion from €2.6 billion.
At ERGO, the company’s primary insurance arm, the company has reported a result of €164 million for the quarter and €699 million for 9M 2024, compared with €173 million and €643 million, respectively, in 2023. The underwriting performance increased to €5.3 billion from €5 billion in the quarter, and from €14.9 billion to €15.6 billion in 9M 2024.
Turning to investments, and the reinsurer’s result rose to €2.1 billion from €760 million in the quarter, as regular income from investments increased to €2 billion from €1.8 billion, which was due primarily to ongoing reinvestments with high interest rates.
“In the third quarter, our Group once again proved its resilience. The hurricane season in the North Atlantic was relatively severe, causing above-average major losses and a year-on-year decline in the quarterly result. However, on the back of €4.7bn in net profit in the first nine months of the year, the overall result for 2024 remains extremely healthy. Munich Re is growing profitably across all segments. We therefore expect to outperform our 2024 result target of €5bn, despite the expected claims expenditure from Hurricane Milton in the fourth quarter,” said Christoph Jurecka, Chief Financial Officer (CFO).
As noted by the CFO, Munich Re is well placed to beat its annual target for the year, and in reinsurance specifically, its expecting to produce a net profit of over €4.2 billion this year, and insurance revenue of €40 billion. L&H reinsurance is expected to produce a technical result of €2 billion, while the P&C reinsurance combined ratio is anticipated to hit 83% in 2024. At ERGO, Munich Re is projecting insurance revenue of around €21 billion.
All in all, the reinsurer expected group insurance revenue will total around €61 billion in 2024, which is up from the previous expectation of €59 billion.
