Combined ratio down 5.9 points, P&C reinsurance premiums down 8% for Munich Re

Munich Re reported Wednesday a combined ratio of 93.9% in reinsurance in the three months ending June 30, down 5.9 points from 99.8% in the same period in 2016, when the German reinsurer had natural catastrophe claims costs of €335 million.

In May, 2016, wildfires in Alberta resulted in the evacuation of Fort McMurray and the most expensive natural disaster in Canadian history. The wildfires cost Munich Re €404 million in 2016, the firm reported in its 2016 annual report.

By contrast, the largest single natural catastrophe loss in the latest quarter was a severe thunderstorm in early May in the United States, for which the reinsurer anticipates an expenditure of about €25 million, Munich Re said Aug. 9.

For the first half of 2017, Munich Re reported an overall major-loss expenditure of €656 million, of which €253m was attributable to the second quarter. In the second quarter of 2016, Munich Re’s major loss expenditure was €542 million. Those figures are after retrocessions and before tax.

Munich Re reported gross premiums written, in property & casualty reinsurance, of €4.223 billion in the most recent quarter, down 8% from €4.589 billion in Q2 2016.

“The reduction in treaty shares and the targeted withdrawal from unprofitable business led to an erosion of gross premiums written” Munich Re said in its report for the first six months of 2017. “If exchange rates had remained unchanged, premium income would have seen a year-on-year decline of 5.4% for the first six months and 9.8% for the second quarter.”

The euro closed Wednesday at $1.49.

Munich Re reported the euro was trading at US$1.13 and Cdn$1.46 in Q2 2016, compared to US$1.10 and Cdn$1.48 in the latest quarter.

Claims costs from natural catastrophes were €66 million in the latest quarter, compared to €335 million in Q2 2016.

For the first six months of the year, claims costs from natural catastrophes were €221 million, compared to €325 million for the first half of 2016.

Man-made losses in the latest quarter were €187 million (down from €207 million in Q2 2016), which includes an expenditure for Grenfell Tower fire in London, England. At least 80 were killed in that tragedy June 14, the Associated Press reported earlier.

Group-wide, Munich Re reported gross written premiums of €11.8 billion in the latest quarter, down 1.1% from €11.9 billion in Q2 2016.

In addition to P&C reinsurance, that figure includes global life and health reinsurance ERGO Life and Health Germany, ERGO Property-casualty Germany and ERGO International, which writes primary insurance outside of Germany.

The “consolidated result” for the latest quarter was €733 million, down 24.8% from €974 million in Q2 2016. Munich Re said its total investment result, group-wide, dropped 31.35%, from €2.75 billion in  Q2 2016 to €1.89 billion in the latest quarter.

For the first six months of the year, Munich Re reported gross premiums written of 24.7 billion this year, up 1.2% from 24.4 billion during the same period in 2016.