Munich (dpa) – The collapse of the financial markets has caused a sharp drop in the profits of the reinsurer Munich Re. In the first half of the year, net profit fell by almost 19 percent year-on-year to just under 1.4 billion euros. , although the insurance business was doing well. The main reason was the turbulence in the financial markets caused by the war in Ukraine, the energy crisis and inflation. CEO Joachim Wenning is sticking to this year’s profit target of 3.3 billion euros, the manager told a news conference.
However, Wenning and CFO Christoph Jurecka stressed that this forecast is subject to further reservations in view of the multiple current crises. In the first half of the year, Munich Re earmarked around 200 million euros for losses stemming from the Ukraine war. Had it not been for falling prices in financial markets, the first half of the year would have been very rewarding for Wenning and his board colleagues: premium income in reinsurance and primary insurance rose 12 percent to 32, 6 billion.
Since the damage was low at the same time, the result of the insurance business soared by more than 60 percent to 2.5 billion euros. Wenning called it “very solid”. But when it came to investments, things went exactly the other way around: the investment result fell by 46 percent to just under €2 billion. The Frankfurt Stock Exchange responded with satisfaction and Munich Re shares rose sharply.
Munich Re is one of the largest reinsurers in the world: these are the companies that primary insurers like Allianz or Generali insure themselves with. This market was difficult for years because reinsurers were unable to drive direct insurers’ price increases.
But the series of severe natural disasters in recent years and inflation are causing prices to rise, known in the industry as “tightening.” “We continue to harvest hard market margins and profitably grow our business,” Wenning said. To the average Joe, a “tough market” means many insurance policies are getting more expensive.
Munich Re operates in the direct insurance business with its Düsseldorf subsidiary, Ergo. Rising 5.6 percent, its premium income surpassed the €10 billion limit, although Ergo posted poorer results in its individual divisions.
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