Munich Re estimates LA wildfire loss of €1.2bn, reports slight pull-back at Jan renewals

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Global reinsurance giant Munich Re has estimated that the January 2025 wildfires in Los Angeles, California could cost the company around €1.2 billion in losses, while also reporting today that it pulled-back slightly at the January renewals and discontinued business that did not meet its targets.

Munich Re today reported another stellar set of results, surpassing its profit target for the fourth year in a row, while delivering a net result of €5.7 billion that outperformed its initial guidance by €700 million.

Joachim Wenning, CEO and Chair of the Board of Management, said, “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.”

The reinsurance company delivered a return-on-equity of 18.2% for 2024 and a €5.671 billion net result, although the fourth-quarter saw a net result of €979 million which was slightly down on the previous year.

Property and casualty reinsurance delivered a net result of €3.199 billion, well up on 2023’s €2.448 billion, with a normalised combined ratio of 82%.

That’s despite higher claims expenditure from major losses in 2024, which reached €3.885 billion for the year.

Both man-made and natural catastrophe losses rose year-on-year for Munich Re, at €1.241 billion and €2.644 billion respectively.

Hurricane Helene was the largest loss event of the year for Munich Re at €500 million, while hurricane Milton was a little smaller at €400 million.

Munich Re also reported this morning that the devastating wildfires in Los Angeles in January 2025 are expected to deliver around a €1.2 billion loss across its property casualty reinsurance and specialty insurance divisions, but the company noted “this estimate is subject to a high degree of uncertainty owing to the complexity of the losses incurred.”

Finally, of note, Munich Re also revealed that it trimmed its appetite a little at the January 2025 reinsurance renewals, resulting in a pull-back of sorts.

Munich Re underwrote around 2.4% less business at the key January renewal season, at €15.6 billion in volume terms.

“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,” the reinsurance company explained.

Across Munich Re’s portfolio, prices decreased by about 0.6%, with the company saying “price development was stable overall, and for the most part compensated for the higher loss estimates in some areas, which were caused primarily by inflation and other loss trends.”

Munich Re added, “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.”

Despite concerns over potential softening at renewals this year, Munich Re is targeting another uplift in profit target as the higher rates continue to earn through.

For 2025, Munich Re is targeting net profit of €6 billion for the year, up on the initial net profit of €5 billion it targeted and then beat for 2024.

Expecting “an ongoing favourable market environment” Munich Re said it will leverage its market position to continue building the business and delivering more profits, with a combined ratio of 79% in property-casualty reinsurance forecast even after the early wildfires this year.

Munich Re estimates LA wildfire loss of €1.2bn, reports slight pull-back at Jan renewals was published by: www.Artemis.bm
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