Munich Re surpasses profit target four years in a row

Munich - For the year 2024, Munich Re has posted a net result of €5,671m (4,597m) – higher than the original profit target of €5.0bn. 2024 was the fourth consecutive year in which the annual profit outperformed expectations. The net result in Q4 2024 amounted to €979m (1,004m). Insurance revenue from insurance contracts issued rose thanks to organic growth across all segments to €60,830m (57,884m). 

In the 2024 financial year, Munich Re’s return on equity (RoE) amounted to 18.2% (15.8%). Earnings per share totalled €42.78 (33.88). The Board of Management proposes to pay shareholders a dividend of €20 per share for the 2024 financial year. This would constitute a year-on-year increase of 33%. Munich Re’s solvency ratio* increased to 287% (31 December 2023: 267%), thus remaining above the optimal range of 175–220%.

The total technical result for the 2024 financial year rose to €8,918m (7,545m) and the investment result increased substantially to €7,191m (5,374m). The currency result improved to €175m (–292m). The operating result rose to €7,969m (5,702m); the effective tax rate was 26.9% (16.9%). Equity was higher at the reporting date 
(€32,746m) than at the start of the year (€29,772m).

Munich Re’s financial strength can largely be traced to the diversification of its business portfolios. The profitability of all segments and prudent reserving protect against natural fluctuations in profit due to, for instance, major claims or the emergence of capital market risks. 

Joachim Wenning, Chair of the Board of Management says: "With a net result of €5.7bn, we’ve increased our annual profit by more than €1bn year on year. Munich Re’s profit growth has been truly substantial and sustained in the context of our five-year Ambition 2025 strategy programme, which we’ll conclude at the end of the year.

"This year’s record dividend of €20 embodies our success. Our shareholders will also benefit from a new share buy-back with a volume of €2bn, an increase of €500m. What’s more, we’ll remain ambitious as we seek to boost our annual profit to €6bn this year. Our confidence here reflects our successful renewals as at 1 January 2025, among other factors.”

Reinsurance: Result of €4,880m 

The reinsurance field of business contributed €4,880m (3,876m) to the net result in the 2024 financial year, of which €887m (926m) was in Q4. The original full-year target of €4.2bn was thus surpassed. Insurance revenue from insurance contracts issued rose to €40,034m (37,786m). The total technical result increased to €6,933m (5,402m) and the operating result climbed to €6,955m (4,738m).

Life and health reinsurance generated a total technical result of €2,104m (1,433m) in 2024, thus substantially outperforming its target of €1.45bn. The net result in life and health reinsurance increased to €1,681m (1,428m). Insurance revenue from insurance contracts issued improved to €11,767m (10,725m). 

The result in the property-casualty reinsurance segment went up to €3,199m (2,448m) and insurance revenue from insurance contracts issued rose to €28,267m (27,061m). The combined ratio improved to 82.4% (85.2%) of net insurance revenue; the normalised combined ratio was 82.0%.

Overall claims expenditure resulting from major losses totalled €3,885m (3,278m) in the reporting year, of which €670m (873m) was in Q4. These figures include gains and losses from the run-off of major losses from previous years. Major-loss expenditure corresponded to 14.3% (12.6%) of net insurance revenue in the financial year – which was slightly higher than the expected value of 14%, though the Q4 figure of 9.7% (13.0%) was lower. Man-made major losses amounted to €1,241m (943m). Major-loss expenditure for natural catastrophes rose to €2,644m (2,335m). The major-loss figures above take account of the effects from discounting and risk adjustment. Hurricane Helene, which caused severe damage in the southeastern United States and approximately €0.5bn in losses, amounted to Munich Re’s most expensive single claims event in 2024; expenditure of €0.4bn made Hurricane Milton the costliest Q4 claims event. In addition, there were numerous flood, thunderstorm and storm events, particularly in North America, the Caribbean and Europe.

Events after the balance sheet date

Although it is not yet possible to accurately estimate the losses caused by the devastating wildfires in Los Angeles in January 2025, they were clearly the most substantial wildfire losses in the history of the insurance industry. Munich Re anticipates claims expenditure here to total about €1.2bn for property-casualty reinsurance and Global Specialty Insurance. At this early stage, this estimate is subject to a high degree of uncertainty owing to the complexity of the losses incurred.

Renewals as at 1 January 2025

In the reinsurance renewals as at 1 January 2025, Munich Re’s volume of business written declined slightly by 2.4% to €15.6bn. We consistently discontinued business that did not meet our expectations with regard to prices or terms and conditions. Thanks to our close relationships with clients and our sought-after expertise, we tapped into attractive business opportunities – including the expansion of existing client relationships and new business. It was possible to maintain the high quality of our portfolio thanks to stable or improved contractual terms and conditions.

Around two-thirds of non-life reinsurance treaty business was renewed – with a focus on Europe, the United States and global business.

Price development was stable overall, and for the most part compensated for the higher loss estimates in some areas, which were caused primarily by inflation and other loss trends. Primary insurance prices also increased in many markets, with Munich Re benefiting as regards proportional reinsurance contracts. Overall, the good price level of Munich Re’s portfolio was maintained, with a slight decrease of 0.6%. This figure is, as always, fully risk-adjusted. In other words, price increases are offset if they are associated with increased risk and, consequently, elevated loss expectations.

Despite market pressure increasing slightly in the most recent renewal round, Munich Re expects the environment to remain positive in the upcoming April and July renewal rounds – with the attractive price levels and improved terms and conditions largely being upheld. It is worth emphasising that recent claims attributable to natural disasters are clearly impeding a softening of prices.