Profits at Munich Re’s P&C reinsurance unit halved in Q2 as the carrier took EUR799mn ($947mn) of major losses, largely due to Covid-19 contingency claims.
But the reinsurer said the July renewals showed premium growth of 8.3% and that its premium base was expected to reach a record level in 2020.
Catastrophe losses: Major losses from natural catastrophes came to EUR167mn, largely driven by US thunderstorms. This was up 7.5% compared with the prior-year quarter, which had been impacted by Jebi loss creep.
But Covid-19 losses were the major driver of the quarter, leading man-made losses to EUR632mn, more than 13 times that of the prior-year period. Contingency losses accounted for the bulk of claims, as Munich Re said most of its BI policies were not affected due to having physical damage triggers.
Major losses accounted for 14.8 points on the loss ratio, up 10.7 points year on year.
P&C reinsurance underwriting result: The P&C Re segment’s combined ratio for Q2 deteriorated by 13.0 points to 99.9%, as the loss ratio shot up 14.8 points to 68.9%. The expense ratio improved by 1.7 points to 31.0%.
P&C reinsurance top line: P&C Re gross written premiums increased by 14.1% during Q2 to EUR5.52bn, as the carrier grew reinsurance premiums at the July renewal by EUR3.8bn, or 8.3%.
Munich Re said during the July renewals it tapped into growth opportunities in North America, South America and Australia in particular. The carrier said prices rose 2.8% on a risk-adjusted basis overall and in high single-digit percentages in North America and the Caribbean.
Commentary: Joachim Wenning, chairman of the board of management, said: “Munich Re will emerge from this crisis economically stronger. We are growing profitably, while taking steps to benefit from the significantly improved market conditions for reinsurers.”
“Prices have risen in nine consecutive renewal rounds, and premium income has grown correspondingly. With our high-quality portfolio, we expect to post a premium volume of EUR54bn in 2020, which would set a new record in the 140-year history of Munich Re.”