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Munich Re to cut 900 jobs, nudges up profit forecast

Munich Re to cut 900 jobs, nudges up profit forecast

(Reuters) — Munich Reinsurance Co., the world’s largest reinsurer, announced plans on Thursday to cut 900 jobs, generating savings that also helped it to nudge up profit targets for this year and beyond.

Chief Executive Officer Joachim Wenning, who had flagged job losses in February without giving details, said half of the cuts would be in Munich, Germany, and half in the United States.

The cuts at the company, which employs 42,000 people, would trim costs by €200 million ($247 million), he added.

Munich Re, hit by a spate of natural catastrophes in North America in 2017, also lifted its guidance for profit in 2018.

Last year’s deadly hurricanes Harvey, Irma and Maria in the United States and Caribbean, wildfires in California and earthquakes in Mexico destroyed infrastructure and homes, leading to record claims for the industry.

However, there are signs the run of catastrophes have allowed reinsurers to push up premiums.

“Munich Re is again poised for growth,” Mr. Wenning said.

For 2018, Munich Re is aiming for net profit of €2.1 billion to €2.5 billion ($2.6 billion to $3.1 billion).

That is up slightly from the guidance of €2.0 billion to €2.4 billion issued alongside annual results last month, and far above its 2017 profit of €375 million.

In addition, Munich Re said it expected to grow profit to around €2.8 billion by 2020, thanks to improved earnings of about €500 million in its reinsurance business and its primary insurance unit Ergo.

Shares in Munich Re were up 1.4% at 1105 GMT, putting them near the top of Germany’s blue-chip DAX index.

Munich Re also said it planned another €1 billion share buyback before its 2019 annual general meeting.

Torsten Jeworrek, member of Munich Re’s board of management, said reinsurance prices had increased in the January round of contract renewals, “particularly in the markets affected by natural catastrophes.”

“We expect this trend to continue in the renewal rounds yet to come,” he said.

Mr. Wenning confirmed that Munich Re was looking to unite staff scattered around London in a building it would own but refrained from specifics. On Wednesday, Bloomberg News reported Munich Re was in talks to buy a piece of land that has been approved as a site for one of London’s tallest buildings.




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