Munich Re shares rise 5% after maintaining FY profit target

By Rebecca Delaney

Feb 26 - (The Insurer) - Munich Re's share price rose more than 5% in Wednesday morning trading after the reinsurer maintained its full-year profit target.

Chief financial officer Christoph Jurecka said on a media call that the reinsurer expected a market loss of between $35 billion and $40 billion for the California wildfires, and that Munich Re itself anticipates a 1.2 billion euro hit.

He said the regional nature of the event meant basing individual company losses on an expected market share was challenging.

“You have to be mindful (that) this is a rather regional event. Taking average market numbers and applying them to such a small region … is not a particularly sensible comparison because it is so local. Sometimes it's just about which house was hit by the fire and which wasn't, as to whether you have higher claims or lower claims," he said.

Jurecka said he was comfortable with the decisions the company had made in recent years in underwriting California wildfire exposures, adding that Munich Re has both primary and reinsurance exposures in the region.

“I believe we have made good decisions consciously throughout the last few years in our underwriting business when it comes to California-based risk. We have definitely reduced risks compared to just five years ago,” he said.

He reiterated that it remained "very early says" in assessing the full claims impact from the event, and said wordings may differ across treaties in terms of whether the wildfires are defined as one or more events.

Earlier on Wednesday, Munich Re maintained its profit target of 6 billion euros for 2025 after outperforming its initial guidance of 5 billion euros by 700 million euros in 2024.

“The 6 billion euros is an increase of about 20%; it means we've got higher yield expectations on a normal basis,” Jurecka said.

“Every year we always expect that there will be major catastrophes. These are events of which we never know when and where they will happen. There's one event this year, it fits easily into our major loss portfolio and will be booked in the first quarter.”

The reinsurer's shares were trading at 553.00 euros at 12:00 GMT, up 5.01% from Tuesday's close.