Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München Q2 Earnings Call Highlights

Key Points

• Munich Re remains on track for its 2026 profit target: First-half net profit reached €3.9 billion, more than 60% of its €6.3 billion full-year guidance, while return on equity was 23%, above its target of more than 18%.
• The reinsurance revenue outlook was lowered, but earnings guidance was maintained: Munich Re cut its reinsurance revenue target to €38 billion from €40 billion as it declined lower-margin business and reduced July renewal volumes by about 9%.
• Strong investment returns and diversified operations supported results: Low major losses helped drive a 68.9% P&C reinsurance combined ratio in Q2, while investment returns, Life and Health Reinsurance, Global Specialty Insurance and ERGO strengthened overall performance; the Solvency II ratio rose to 304%.

Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München ETR: MUV2 said it remained on track to meet its 2026 profit target after reporting a net result of €3.9 billion for the first half, more than 60% of its full-year guidance of €6.3 billion.

Chief Executive Officer Christoph Jurecka said the group benefited from low major-loss claims and strong equity-market performance, while underlying results were supported by contributions across its business segments. Munich Re reported a return on equity of 23% in the first half, above its Ambition 2030 target of more than 18%.

Second-quarter net profit totaled €2.2 billion, as pre-announced two weeks before the conference call. Chief Financial Officer Andrew Buchanan said a strong investment result complemented technical performance across reinsurance, Global Specialty Insurance and ERGO.

Revenue outlook lowered as underwriting discipline tightens

Munich Re reduced its insurance revenue guidance for the reinsurance business to €38 billion from €40 billion. The change was largely attributable to property-and-casualty reinsurance, where first-half revenue declined by €1.4 billion from the prior-year period. About one-third of that decline was related to currency movements, according to Buchanan.

Management said the reduced revenue target does not change its full-year earnings outlook. Buchanan said some of the forgone business carried thin margins, particularly proportional business, and therefore had a limited effect on the company’s bottom line.

“In many cases, foregoing business is preferable to writing business at inadequate terms,” Jurecka said, adding that the company’s revenue outlook should be considered a directional ambition rather than a hard target.

At the July renewals, Munich Re’s volume declined by about 9%, largely reflecting an overall price decrease of 5.5% and a further reduction in U.S. casualty exposure. The reported price movement included a negative business-mix effect of around one percentage point because proportional business accounted for a larger share of the portfolio.

Jurecka said Munich Re withdrew from business with inadequate profitability, particularly in excess-of-loss coverage, while finding selected opportunities in proportional and non-proportional business. He said there had been no acceleration in rate softening compared with the April renewals, while structures and contract wordings largely held firm.

The company remains concerned that loss-cost trends in casualty insurance could exceed rate increases in primary markets. Still, Jurecka described the market environment as attractive and said it continued to offer healthy margins for risks Munich Re chooses to assume.

Low major losses support P&C reinsurance result

Munich Re’s P&C reinsurance segment reported a second-quarter combined ratio of 68.9%, aided by very low major losses. Reserve releases contributed the expected six percentage points to the ratio.

Buchanan said the normalized combined ratio rose to around 82% in the second quarter, reflecting the gradual earning-in of recent renewals and a large new structured transaction. He said the ratio was expected to continue trending upward through the remainder of the year.

The first-half P&C reinsurance combined ratio was just below 68%, leaving the group “with tailwind into the hurricane season,” Buchanan said. Management said full-year performance will still depend in part on a normal hurricane season.

Asked about recent wildfires in France and Spain, Buchanan said the events were still developing and it was too early to provide a loss range. He said there was no current indication that the fires would become a particularly large loss event for Munich Re, while cautioning that loss estimation remained at an early stage.

Jurecka said climate change, heatwaves, wildfires, localized storms and hail were increasing the importance of what the industry had historically classified as secondary perils. He said Munich Re has expanded its modeling capabilities, including wildfire models, and continues to adapt its risk assessment as conditions evolve.

Diversified businesses and investments add to earnings

Munich Re highlighted the increasing contribution from businesses less exposed to the P&C reinsurance cycle. Global Specialty Insurance, or GSI, Life and Health Reinsurance, and ERGO more than offset the currency-adjusted revenue decline in P&C reinsurance, Jurecka said.

GSI’s reported revenue declined about 3% in the first half from the same period of 2025. However, Buchanan said organic growth was positive after adjusting for currency and accounting effects, nearing the lower end of the group’s Ambition 2030 annual growth range of 5% to 9%. The segment’s first-half combined ratio was 86.3%, while its second-quarter combined ratio was 88.9%.

Munich Re identified specialty expansion opportunities including U.S. real estate and professional liability, as well as surety business in Europe. Jurecka said GSI is also exploring geographic expansion beyond its core U.S. and U.K. markets, including Europe and Australia.

Life and Health Reinsurance delivered a total technical result of more than €1 billion in the first half. The second-quarter result was €528 million, above the pro rata annual ambition. Munich Re’s life contractual service margin stock rose to €16 billion, supported by new business and positive currency effects.

The company completed a longevity transaction covering €4 billion of pension liabilities in the first half and said two large structured U.S. transactions completed more recently will be reflected in results later this year.

ERGO recorded a second-quarter net result of €321 million, including €235 million from ERGO Germany and €86 million from ERGO International. Buchanan said ERGO Germany’s P&C operations achieved good technical profitability and took a prudent approach to reserving, while its private-equity investments also performed strongly.

Investment returns and capital position strengthen

Munich Re reported a second-quarter return on investment of 5.5% and a first-half return of 4.2%, above its full-year guidance of more than 3.5%. The running yield was 4%, supported by higher interest rates, dividend seasonality and inflation-linked bond effects. The reinvestment yield remained 4.3%.

Buchanan said public and private equity investments made significant contributions to the quarterly investment result. He described public-equity gains as broad-based and said the private-equity portfolio benefited from several positions increasing in value.

The group’s Solvency II ratio increased to 304% in the second quarter, supported by operating performance. Jurecka said Munich Re remains committed to returning excess capital through growing dividends and share buybacks, and reiterated its Ambition 2030 targets of return on equity above 18% and average annual earnings-per-share growth above 8%.

About Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (ETR:MUV2)

Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München engages in the insurance and reinsurance businesses worldwide. It also offers life and health reinsurance solutions, such as digital underwriting and advanced analytics solutions, health insurance management system, financial market risks, financing, portfolio risk management, digitalized investment-linked solution, MIRA digital suite, MIRA POS, MIRApply insured and physician, claims risk adjustment, CLARA plus, data analytics, underwriting and claims, medical research, capital management, and health market.

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