Munich Re profit drops in second quarter

Munich Reinsurance Co. reported a lower profit for the second quarter of 2017 but said it was on pace to meet its full-year target.

The world’s largest reinsurer reported a €733 million ($860.6 million) profit for the 2017 second quarter, down 24.8% compared with the same period last year.

Gross written premium for the group was €11.80 billion for the 2017 quarter, down 1.1% from the 2016 period, and gross written premium for its principal reinsurance business fell 2.1% to €7.66 billion.

“In property/casualty reinsurance, premium income benefited from currency translation effects. However, the reduction in treaty shares and the targeted withdrawal from unprofitable business led to an erosion of gross premiums written,” the reinsurer said in its results presentation.

Munich Re’s combined ratio for its property/casualty reinsurance business improved to 93.9% in the second quarter compared with 99.8% in the 2016 period.

For the first half of the 2017, Munich Re reported a profit of €1.29 billion, down 8.6% compared with the 2016 first half, and gross premium written of €24.7 billion, up 1.2%.

Reinsurance prices fell about 0.5% at Jan. 1 and April 1 renewals, Munich Re said.

Natural catastrophe losses were lower in the 2017 periods, the reinsurer said — €221 million for the first half of the year compared with €325 million in the 2016 period, and €66 million for the second quarter compared with €335 million last year.

“The largest single loss in the second quarter was a severe thunderstorm in the USA in early May, for which we anticipate expenditure of around €25 million,” Munich Re said.

“Both the quarterly result and the half-year result are very pleasing overall. Munich Re is well on track to reach its 2017 profit guidance of €2.0–2.4 billion,” Joachim Wenning, chairman of Munich Re’s board of management, said in a statement.