Chairman, of the Board of Management of Munich Re, Joachim Wenning summed up an impressive financial year for the leading multinational reinsurer with his statement.
“With a net result of €5.7bn, we’ve increased our annual profit by more than €1bn year-on-year. Munich Re’s profit growth has been substantial and sustained in the context of our five-year Ambition 2025 strategy programme, which we’ll conclude at the end of the year. This year’s record dividend of €20 embodies our success. Our shareholders will also benefit from a new share buy-back with a volume of €2bn, an increase of €500m. What’s more, we’ll remain ambitious as we seek to boost our annual profit to €6bn this year. Our confidence here reflects our successful renewals as of January 1, 2025, among other factors.
The 2024 financial year presented another opportunity for Munich Re to surpass its set in line with the strategic five-year growth forecasts ending this year. The year was the fourth consecutive year in which the annual profit outperformed expectations with a net result of €5,671m (4,597m) – higher than the original profit target of €5.0bn.
According to the report, insurance revenue from insurance contracts rose to €60,830m (57,884m) indicating organic growth across all business segments.
“In the 2024 financial year, Munich Re’s return on equity (RoE) amounted to 18.2% (15.8%). Earnings per share totaled €42.78 (33.88). The Board of Management proposes to pay shareholders a dividend of €20 per share for the 2024 financial year. This would constitute a year-on-year increase of 33%. Munich Re’s solvency ratio1 increased to 287% (31 December 2023: 267%), thus remaining above the optimal range of 175–220%,” the report noted.
The total underwriting result for the 2024 financial year rose to €8,918m (7,545m) and the investment result increased substantially to €7,191m (5,374m). The currency result improved to €175m (–292m). The operating result rose to €7,969m (5,702m); the effective tax rate was 26.9% (16.9%). Equity was higher at the reporting date (€32,746m) than at the start of the year (€29,772m).
Reinsurance: Result of €4,880m
In the current completed results, the core reinsurance business contributed €4,880m (3,876m) to the net result in the 2024 financial year, of which €887m (926m) was in Q4. The original full-year target of €4.2bn was thus surpassed. Insurance revenue from insurance contracts issued rose to €40,034m (37,786m). The total technical result increased to €6,933m (5,402m) and the operating result climbed to €6,955m (4,738m).
Life and health reinsurance generated a total technical result of €2,104m (1,433m) in 2024, thus substantially outperforming its target of €1.45bn. The net result in life and health reinsurance increased to €1,681m (1,428m). Insurance revenue from insurance contracts issued improved to €11,767m (10,725m).
The result in the property-casualty reinsurance segment went up to €3,199m (2,448m) and insurance revenue from insurance contracts issued rose to €28,267m (27,061m). The combined ratio improved to 82.4% (85.2%) of net insurance revenue; the normalized combined ratio was 82.0%.
Overall claims expenditure resulting from major losses totaled €3,885m (3,278m) in the reporting year, of which €670m (873m) was in Q4. These figures include gains and losses from the run-off of major losses from previous years. Major-loss expenditure corresponded to 14.3% (12.6%) of net insurance revenue in the financial year – which was slightly higher than the expected value of 14%, though the Q4 figure of 9.7% (13.0%) was lower. Man-made major losses amounted to €1,241m (943m). Major loss expenditure for natural catastrophes rose to €2,644m (2,335m). The major loss figures above take into account the effects of discounting and risk adjustment. Hurricane Helene, which caused severe damage in the southeastern United States and approximately €0.5bn in losses, amounted to Munich Re’s most expensive single claims event in 2024; expenditure of €0.4bn made Hurricane Milton the costliest Q4 claims event. In addition, there were numerous floods, thunderstorms, and storm events, particularly in North America, the Caribbean, and Europe.
Post-balance sheet estimates
With expected substantial losses from wildfires in Los Angeles in January 2025, which is projected to be the highest wildfire event in the insurance industry, Munich Re states that it “anticipates claims expenditure here to total about €1.2bn for property-casualty reinsurance and Global Specialty Insurance”, though cautiously indicating that due to complexities of the losses, the loss exposure may be subject to “a high degree of uncertainty”.
Outlook 2025: New profit target higher than 2024 target
Munich Re aims to generate a net profit of €6bn in 2025. The Group’s insurance revenue will presumably total €64bn and the return on investment is expected to surpass 3.0%.
In its reinsurance field of business, Munich Re anticipates that insurance revenue will rise to €42bn in 2025, with a higher net profit of €5.1bn. Munich Re will continue to leverage its strong position in an ongoing favourable market environment. The combined ratio is expected to remain at an attractive profitability level – with a combined ratio of 79% in property-casualty reinsurance and 90% in Global Specialty Insurance (GSI), with the latter becoming a separate IFRS reporting segment from 2025. As per segmentation before 2025, the combined ratio would amount to 83% for property-casualty reinsurance due to expected strong business growth in GSI and a lower discounting effect compared to 2024. In life and health reinsurance, Munich Re projects a total technical result of €1.7bn in 2025.
The ERGO field of business is expected to generate insurance revenue of €22bn in 2025, continuing its strong development in recent years with a profit contribution of about €0.9bn. A combined ratio of 89% is envisaged at ERGO Germany, and 90% at ERGO International.
