For the fourth quarter of this year, Munich Re anticipates a further €1.1bn in losses arising from the Covid-19 pandemic, totalling €3.4bn for the year

Munich Re

Munich Re chief financial officer Christoph Jurecka. (Credit: Munich Re.)

German reinsurance firm Munich Re has announced that it anticipates €3.4bn in reinsurance losses for this year arising from Covid-19, which include €360m related to life and health reinsurance business and more than €3bn in property and casualty reinsurance.

The company also announced a profit target of €2.8bn for next year, as it expects a significant reduction in Covid-19-related claims next year, compared to this year.

Munich Re announced €800m in losses from the pandemic for this year’s third quarter, making a total of €2.3bn, followed by €700m in the second quarter and €800m in the first quarter. It is now expecting further €1.1bn in losses related to the pandemic in the fourth quarter of this year.

Munich Re further stated that the largest percentage of Covid-19 claims in property-casualty reinsurance was due to contingency, at €1.66bn. It also anticipated further Covid-19 claims under property/business interruptions at €965m, D&O/workers compensation at €200m, credit at €170m and marine/aerospace at €25m.

Thus, the reinsurance company’s combined ratio in property-casualty reinsurance is expected to be 106% with a normalised combined ratio of 97%. The estimates also assume a further €225m in losses not related to the pandemic for the year.

The company’s group premium income could reach up to €55bn next year along with return on investment to be above 2.5%.

In reinsurance, Munich Re expects a premium income of about €37bn, with nearly €2.3bn in profit. Expenditure on Covid-19 claims is expected to be about €300m for next year.

The combined ratio in property-casualty reinsurance is estimated to be 96%. Without the expenditure owing to the pandemic, the combined ratio could be 95%. In life and health insurance, Munich Re expects €200m in Covid-19 losses.

Munich Re chief financial officer Christoph Jurecka said: “We expect to generate a profit of clearly above 1bn € this year. The pandemic has naturally had a considerable impact on our result.

“But the burdens arising from COVID-19 are financially manageable for Munich Re. By covering insured losses totalling billions, we are playing a substantial role in helping the economy and society cope with the pandemic.

“Our business is clearly on track. In the absence of COVID-19, we would have been able to achieve our original result target for 2020.

“Thanks to our strong balance sheet, we are in a very good position to exploit current market opportunities. In the coming year, we plan – despite anticipated further COVID‑19 losses – to meet the profit target of €2.8bn as envisaged prior to the pandemic.”