Munich Re reveals significant fall in profit
Munich Re has become the latest (re)insurance giant to reveal the impact of COVID-19 on its full-year 2020 results and while the company has posted a profit of €1.2 billion (around $1.47 billion), this is substantially down from the €2.7 billion (around $3.3 billion) figure for 2019. The reinsurer noted that the 2020 financial year was marked by high losses in connection with the COVID-19 pandemic, and that, in reinsurance, pandemic losses totalled €3.4 billion, with over €3 billion of this attributable to property-casualty reinsurance.
Adjusted for the impact of COVID, however, the group noted it would have met its originally envisaged 2020 profit target of €2.8 billion, which it retracted in March 2020. Q4 2020 showed an improved trend with a profit of €212 million, down only slightly from €217 million for the previous year.
Munich Re’s operating result fell year on year to €1.98 billion from €3.43 billion in 2019, while the other non-operating result amounted to a loss of €83 million, a slight improvement on its loss of €91 million for the previous year. In some good news, gross premiums written increased by 6.7% year on year to €54.89 billion from €51.46 billion in 2019. The reinsurer also noted that January 2021 has shown continued premium growth of 10.9% and rising prices of 2.4%.
In the 2020 financial year, return on equity (RoE) amounted to 5.3% and, subject to the approval of the Supervisory Board and of the AGM, a stable dividend of €9.80 per share is to be paid.
Chairman of the board of management of Munich Re, Joachim Wenning noted that, in spite of COVID and all its challenges, the reinsurer closed out 2020 with a clear profit and its dividend remains dependable. In 2021, he said, the business expects to meet the profit target that it envisaged prior to the pandemic and all the pieces are in place for this to happen.
“Our reinsurance business is ideally positioned to resolutely exploit opportunities for profitable growth in the improved market environment,” he said. “…We are refraining from launching a new share buy-back programme at this time, because our shareholders will benefit more from investments in the attractive business opportunities now emerging.”