Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Munchener Ruckversicherungs-Gesellschaft AG (MURGF, Financial) achieved a net result of EUR930 million in Q3, despite above-average major losses from natural catastrophes.
- The company's group ROE stands at 20% after nine months, which is well above their target.
- The investment portfolio proved resilient, posting an ROI of 3.6% supported by positive fair value changes due to rising stock markets and lower bond yields.
- Life & Health reinsurance surpassed initial full-year guidance for the total technical result by almost EUR200 million, benefiting from strong new business growth.
- The group's economic position remains strong with a Solvency II ratio slightly increased to 292% in Q3, driven by good operating performance.
Negative Points
- The Q3 result in P&C reinsurance was lower due to above-average major claims, with a combined ratio of 90.5%.
- ERGO's net result of EUR164 million in Q3 was below the pro rata run rate, mainly due to elevated NatCat losses in the international segment.
- The German motor business faced high claims inflation, affecting the combined ratio in P&C Germany.
- International business was impacted by major losses related to Storm Boris, causing severe floods in Central and Eastern Europe.
- Currency losses of almost 0.7-percentage-points partly offset the good investment result in Q3.
Q & A Highlights
Q: Can you split the Q3 P&C Re losses by specialty and pure-play P&C Re? How are you balancing the reduction in frequency exposure in P&C Re with growing your specialty business?
A: Christoph Jurecka, CFO, explained that the large losses this quarter affected both GSI and reinsurance, particularly Hurricane Helene, which had a significant impact on GSI. The split for Helene was roughly 50-50 between GSI and P&C Re. Going forward, the approach to underwriting will differ between primary and reinsurance sides, with pricing and reinsurance protection being key on the primary side.
Q: The Life CSM new business was the lowest since IFRS 17 introduction. Is this usual volatility or a structural change?
A: Christoph Jurecka noted that the lower new business in Q3 was due to the absence of large transactions that benefited the first half of the year. Life Re new business is transaction-based, leading to quarterly volatility.
Q: What is your view on the casualty trends in the US, and how do you see the casualty reinsurance market in 2025?
A: Christoph Jurecka stated that casualty prices remain inadequate, and Munich Re continues to be cautious in underwriting. The market is increasingly focusing on younger years, and while some areas may require action, the overall reserve situation remains stable with a 5% positive reserve runoff expected.
Q: How do you view the investment results for 2025, and have you taken advantage of market volatility?
A: The running yield has increased significantly, and Munich Re is optimistic about future investment results. They have realized some losses on fixed income to strengthen future yields and may continue to do so if results remain strong.
Q: With the solvency ratio at record highs, will you address the stock of capital with buybacks by year-end?
A: Christoph Jurecka confirmed that capital management decisions will be made in Q1 2025. Munich Re is committed to capital repatriation, considering both stock and flow, and will carefully assess the split between dividends and buybacks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
