Munich Re has revealed that it will be facing a drop in profits this year, as Covid-19 has caused the reinsurer losses of over €3 billion in its property and casualty (P&C) account.
Having made €2.7 billion for its group profit in 2019, Munich Re is now facing a forecasted 2020 profit of €1.2 billion.
“We expect to generate a profit of clearly above €1 billion this year,” said Chief Financial Officer Christoph Jurecka. “The pandemic has naturally had a considerable impact on our result. But the burdens arising from Covid-19 are financially manageable for Munich Re.”
Contingency business a major driver of Covid claims
Contingency business was the major driver of Covid-19 claims at a cost of €1.7 billion, Munich Re said. A further €965 million came from business interruption; €200 million from directors and officers/workers compensation; €170 million from credit insurance; and €25 million from marine/aerospace.
Elsewhere, Munich Re expects a further €500 million of Covid-19 losses to impact its reinsurance business in 2021; and the negative impact on premiums will likely hit the technical result by an additional €50 million.
More hope for 2021
Jurecka did note that while the group was on track to meet its original target, the €3.4 billion of Covid losses on its reinsurance book set it back. Instead, Jurecka says, Munch Re plans to meet the €2.8 billion target in 2021.
“Thanks to our strong balance sheet, we are in a very good position to exploit current market opportunities. In the coming year, we plan – despite anticipated further Covid-19 losses – to meet the profit target of €2.8 billion as envisaged prior to the pandemic,” he said.