Munich Re expects to report Q2 2020 profit of around €600m compared to €728m it made in the same quarter the year before
Main building of Munich Re in Munich, Germany. (Credit: Munich Re / Marcus Buck, München)
Munich Re revealed that it has been hit with approximately €700m in Covid-19 related losses in its reinsurance business in the second quarter of 2020.
The German reinsurance company expects to report Q2 2020 profit of around €600m compared to €728m it made in the same quarter the year before.
In the first quarter of this year, Munich Re made a profit of €221m, which was a decrease of 65.1% compared to Q1 2019, owing to nearly €800m of losses related due to the Covid-19 pandemic.
For Q2 2020, the German reinsurer said that the largest share of the Covid-19 related losses is due to cover for major events, with a lesser impact in its life and health business and other lines of property and casualty insurance, including business interruption.
The company said that its Q2 2020 result is driven by lower-than-average major losses, with the exclusion of Covid-19, and good performance at ERGO.
Munich Re is set to release its second quarter results during the first week of next month.
Munich Re will not implement share buy-back programme
The German reinsurance company also announced that it will not be implementing its discontinued 2020/2021 share buy-back programme.
The company stated: “At this time, Munich Re perceives considerable ongoing uncertainty with respect to the macroeconomic development and the financial impact of COVID-19, and does not expect that uncertainty will subside between now and early 2021. In addition, Munich Re has recently identified truly favourable conditions for growing its reinsurance business and therefore the active use of its capital.”
In late February, the company said that it will repurchase shares with a maximum total value of €1bn between its 2020 and 2021 annual general meetings. However, due to the Covid-19 crisis, the reinsurer in the following month decided to stop implementation of the share buy-back programme until further notice and till there was better clarity on the actual burdens resulting from the pandemic and on capital requirements for capturing potential organic or inorganic business opportunities.