Munich Re Shares Fall After Combined Ratio Drag

By Ed Frankl

Munich Re AG shares fell on Thursday after it missed on its loss ratio and investment result in the fourth quarter, despite beating net-profit expectations.

Shares at 0850 GMT were down 5.6% at EUR306.20.

The German reinsurer missed expectations on its reinsurance combined ratio--a key measurement for insurers that divides incurred losses by premiums earned--at 94.4% in 4Q versus the 92.2% expected, according to company-compiled consensus. The closer the number is to 100%, the nearer the reinsurance business is to making an underwriting loss.

Munich Re also missed on its investment result, reporting 2.04 billion euros ($2.16 billion) in the quarter, below consensus of EUR2.09 billion.

And while the company surpassed expectations on its net profit, of EUR1.53 billion, the quality of the beat was low coming from its life reinsurance segment and Germany-focussed arm ERGO, Citi analysts said in a note.

The Bavarian reinsurer also reported 1.3% risk-adjusted rate increases on its renewed portfolio, against 8% for Hannover Rueck SE, 9% for Scor SE and 5% for Swiss Re AG, with prices up 2.3%, below expectations, according to the Citi analysts.

However, they are more optimistic on the outlook, with Munich Re expecting its P&C combined ratio in reinsurance to drop significantly to around 86% and to get a small boost from January renewals alone.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

February 23, 2023 04:18 ET (09:18 GMT)

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