February 27, 2023 by Alyssa DiSabatino
Munich Re is aiming for a profit of 4 billion euros (Cdn$5.8 billion) in 2023.
The global reinsurer posted a profit of 3.4 billion euros (approximately Cdn$4.9 billion) in 2022. Its gross premiums written amount to 67 million euros (Cdn$96.5 million) — an increase 12.7% year over year (up from 59 billion euros in 2021).
Munich Re’s reinsurance business contributed 2.59 million euros (Cdn$3.7 million) to 2022’s consolidated results, up from 2.32 million euros (Cdn$3.3 million) from the previous year. Of 2022’s total annual amount, 1.39 million euros (Cdn$2 million) of the 2022 results were from Q4 alone.
Property-casualty reinsurance contributed 1.85 million euros (Cdn$2.7 million) to the 2022 result, down from 2 million (Cdn$2.9 million) in the previous year.
However, P&C premium volume grew “robustly” to 34.4 million euros (Cdn$49.5 million) , up from 28.7 million (Cdn$41.3 million) in the year previous. And, despite high natural catastrophe losses in the market, the combined ratio decreased to 96.2% (from 99.6%) of net earned premiums.
Major losses totalled 4.17 billion euros (Cdn$6 billion) for the full year, and 615 million (Cdn$885.6 million) for Q4, both down from last year.
Jan 1 reinsurance renewals saw Munich Re able to increase its written business volume to 15.3 billion euros (or Cdn$22 billion), a 1.3% increase.
“Despite times of high uncertainty and inflation, as well as a reduction in the capacities offered by reinsurers and capital market players in certain markets, Munich Re continued to position itself as a high-quality and reliable partner for the long term,” the reinsurer wrote in a report.
The company’s insurance revenue is expected to reach around 58 billion euros (Cdn$83.5 billion) in 2023. Munich Re anticipates that its return on investment will amount to at least 2.2%.
In its reinsurance business, Munich Re anticipates insurance revenue of about 39 billion euros (Cdn$56.2 billion) and a profit of around 3.3 billion (Cdn$4.8 billion) in 2023 — a slight decrease from 2022’s 3.4-billion-euro (Cdn$4.9 billion) profit.
The company expects its combined ratio in property-casualty reinsurance to decrease significantly to around 86%, credited largely to the disclosure method used under IFRS 17.
But the company acknowledges its outlook depends on how macroeconomic developments and volatile capital markets play out in the coming year. In particular, the uncertainty of the Russia-Ukraine war may impact its finances.
“As always, the projections are subject to major losses remaining within normal bounds, and to the income statement not being impacted by severe fluctuations in the currency or capital markets, significant changes in the tax environment, or other one-off effects,” the company writes.
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