Munich Re’s FY’24 result exceeds target at €5.7bn as LA wildfire loss reported at €1.2bn

Reinsurance giant Munich Re has reported a net result of €5.671 billion for the 2024 financial year, driven by the strong performance of its reinsurance and ERGO businesses and a solid investment result.

The reinsurer’s net result increased 23% year-on-year and is almost €700 million above the original profit target of €5 billion. It’s actually the fourth year in a row the firm’s annual profit has exceeded expectations. In Q4’24, the net result came down slightly from €1 billion to €979 million.

Across the group, insurance revenue from insurance contracts issued rose as a result of organic growth across all segments to €60.830 billion compared with €57.884 billion in the prior year.

The firm’s return on equity increased to 18.2% in 2024 from 15.8% in 2023. The technical result jumped to €8.918 billion in 2024 from €7.545 billion, and the operating result increased from €5.702 billion in 2023 to €7.969 billion in 2024.

In the reinsurance division, Munich Re has reported a contribution of €4.88 billion to the net result for 2024, up from €3.876 billion in 2023, and above the full year target of €4.2 billion. €887 million of the full year 2024 result was in Q4 2024.

Further, insurance revenue from insurance contracts issued rose to €40.034 billion from €37.786 billion, as the technical result increased to €6.933 billion from €5.402 billion, and the operating result moved higher to €6.955 billion from €4.738 billion in 2023.

In P&C reinsurance, the result increased from €2.448 billion to €3.199 billion, as insurance revenue from insurance contracts issued rose to €28.267 billion from €27.061 billion. The P&C combined ratio strengthened to 82.4% in 2024 from 85.2% in 2023.

Claims expenditure from major losses totalled €3.885 billion in 2024 compared with €3.278 billion in 2023, of which €670 million was in Q4’24. Losses from natural catastrophe increased to €2.644 billion for the year, with Hurricane Helene the most expensive single loss event for the firm at a cost of €500 million. Losses of €400 million made Hurricane Milton the most expensive Q4 event for Munich Re. Nat cat losses also came from numerous flood, thunderstorm and storm events, particularly in North America, the Caribbean, and Europe. Man-made major losses amounted to €1.241 billion for the year.

Today, Munich has also provided an estimate of €1.2 billion of losses related to the Los Angeles, California wildfires, within its P&C reinsurance and Global Specialty insurance businesses.

“At this early stage, this estimate is subject to a high degree of uncertainty owing to the complexity of the losses incurred,” says Munich Re.

Staying with P&C reinsurance, the firm has also provided an update on the outcome of its January 1st, 2025, reinsurance renewals, reporting that the volume of business written declined slightly by 2.4% to €15.6 billion.

“We consistently discontinued business that did not meet our expectations with regard to prices or terms and conditions. Thanks to our close relationships with clients and our sought-after expertise, we tapped into attractive business opportunities – including the expansion of existing client relationships and new business. It was possible to maintain the high quality of our portfolio thanks to stable or improved contractual terms and conditions,” explains the firm.

Around two-thirds of the company’s non-life reinsurance treaty business was renewed at 1.1 2025, with a focus on Europe, the US, and global business. Overall, Munich Re notes that price development was stable, and for the most part compensated for the higher loss estimates in some areas, which were caused primarily by inflation and other loss trends. The reinsurer explains that primary insurance prices also increased in many markets. Overall, the good price level of the reinsurer’s portfolio was maintained, with a slight decrease of 0.6%.

“Despite market pressure increasing slightly in the most recent renewal round, Munich Re expects the environment to remain positive in the upcoming April and July renewal rounds – with the attractive price levels and improved terms and conditions largely being upheld. It is worth emphasising that recent claims attributable to natural disasters are clearly impeding a softening of prices,” adds Munich Re.

Back to the full year 2024 performance, life and health reinsurance also produced a strong result of €2.014 billion, up from €1.433 billion in 2023, thus coming in above the target of €1.45 billion for the period. The net result in life and health reinsurance increased to €1.681 billion from €1.428 billion, and insurance revenue from insurance contracts issued improved to €11.767 billion in 2024 from €10.725 billion in 2023.

Turning to ERGO, the company’s primary insurance business, and profit increased to €791 million for 2024 from €721 million, of which €92 million was in Q4’24. This is in line with the profit target of €92 million. At the same time, insurance revenue from insurance contracts issued rose to €20.796 billion from €20.098 billion, while the technical result came down to €1.985 billion from €2.144 billion.

On the asset side of the balance sheet, Munich Re’s investment result increased substantially to €7.191 billion in 2024 compared with €5.374 billion in 2023, as regular income from investments increased to €8.137 billion, primarily attributable to continual reinvestments with higher interest rates.

Overall, the 2024 investment result represents a return of 3.1% on the average market value of the portfolio.

“With a net result of €5.7bn, we’ve increased our annual profit by more than €1bn year on year. Munich Re’s profit growth has been truly substantial and sustained in the context of our five-year Ambition 2025 strategy programme, which we’ll conclude at the end of the year. This year’s record dividend of €20 embodies our success. Our shareholders will also benefit from a new share buy-back with a volume of €2bn, an increase of €500m. What’s more, we’ll remain ambitious as we seek to boost our annual profit to €6bn this year. Our confidence here reflects our successful renewals as at 1 January 2025, among other factors,” said Joachim Wenning, Munich Re’s CEO.

Given the strong performance and still favourable market conditions, Munich Re is targeting net profit of €6 billion in 2025, and expects that Group insurance revenue will presumably total €64 billion and the return on investment is expected to surpass 3%.

In reinsurance, the company anticipates that insurance revenue will rise to €42 billion in 2025, with a higher net profit of €5.1 billion. The P&C reinsurance combined ratio is expected to remain at an attractive profitability level of 79%, and 90% in Global Specialty Insurance. In life and health reinsurance, Munich Re projects a total technical result of €1.7 billion in 2025.

At ERGO, Munich Re expects a profit of €22 billion in 2025, with a profit contribution of around €900 million.

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