Munich Re withdraws €2.8bn profit guidance and discontinues share buy-back

Written by Adam Cadle

01/04/2020

Munich Re has withdrawn its previous 2020 profit guidance of €2.8bn and discontinued its previously announced share buy-back of up to €1bn until further notice.

The reinsurer said the decision comes “as a result of the uncertainty around the macro economic and financial impact of coronavirus”. In addition, it said it only anticipates profits in the low three-digit million euro range for the first three months of 2020 (Q1 2019: €633m).

Despite this, the firm said “even after the impacts of capital-market and loss developments, Munich Re’s solvency ratio is still comfortably within the communicated optimal range of 175-220% of the requirement”.

“The proposal to the annual general meeting on 29 April remains unchanged: that the dividend be increased to €9.80 per share.”

In its latest report on the reinsurance industry Moody’s said reinsurers in general “entered 2020 with healthy capital after reporting strong earnings in 2019, however a protracted economic downturn coupled with severe catastrophes or sizeable adverse reserve development could shift the industry outlook to negative”.

During 2019, Moody’s rated reinsurers reported strong earnings with aggregate net income available to common shareholders of $26.5bn, up 44% from 2018. The increase was driven by lower natural catastrophes and solid investment income (boosted by appreciated of common stock investments) offset by lower reserve releases and an uptick in attritional losses.

Strong profitability and high unrealised gains in 2019 helped boost firms’ capital.

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