Global reinsurer Munich Re has announced COVID-19 related losses of roughly €700 million in its reinsurance operations in the second-quarter of 2020, as the firm cites “truly favourable conditions” for growing its reinsurance business.
The reinsurance giant states that the large majority of its €700 million of registered COVID-19 losses is attributable to cover for major events, with less of an impact felt in life and health as well as other property / casualty lines, including business interruption.
In Q1 2020, Munich Re reported COVID-19 related losses across its operations of €800 million, which resulted in the company’s net profit falling year-on-year by 65% to €221 million.
Today, the reinsurer has announced that despite the COVID-19 hit in its reinsurance business, it posted a “satisfactory” net result of around €600 million in Q2 2020. While this is up significantly on Q1 2020, it’s a decline from the €993 million result reported in Q2 2019.
Excluding COVID-19, and Munich Re actually reports lower-than-average major losses in the second-quarter of the year, and also a good performance at ERGO, both of which served to bolster its net result for the period.
Looking forward, and the firm notes considerable ongoing uncertainty with respect to both the macro-economical development and the financial impact of the pandemic, adding that it does not expect this to subside between now and early next year.
“In addition, Munich Re has recently identified truly favourable conditions for growing its reinsurance business and therefore the active use of its capital,” explains the reinsurer.
As a result, Munich Re has revealed that it will definitely not implement its discontinued 2020/2021 share buy-back program.
Combined with Q1’s total, Munich Re has now reported COVID-19 related losses of approximately €1.5 billion in the first-half of 2020.