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Investing.com -- Munich Re (ETR:MUVGn) on Tuesday reported a net profit of €1.1 billion in the first quarter of 2025, down from €2.1 billion a year earlier, as claims from the Los Angeles wildfires pressured earnings in its reinsurance segments.
While the result was broadly in line with consensus estimates, it masked sharply divergent performances across business lines, according to analysts at Jefferies.
Insurance revenue rose to €15.8 billion from €15.1 billion, and the total technical result fell to €2.05 billion from €2.65 billion.
Operating profit declined to €1.47 billion from €2.89 billion, missing consensus by 4.9%.
The annualized return on equity fell to 13.3%, 0.7 percentage points below expectations. Munich Re’s solvency ratio stood at 285%, 7 percentage points above consensus.
The group’s earnings were supported by a strong showing in life and health reinsurance, which outperformed expectations by nearly 30%.
The segment posted a total technical result of €608 million and a net profit of €501 million, up slightly from the previous year.
Analysts pointed to €143 million in positive US experience variances as a key driver of the outperformance.
In contrast, property and casualty reinsurance underperformed with a 20% earnings miss.
Despite a combined ratio of 83.9%, which was 5.6 percentage points better than expected due to lower-than-anticipated catastrophe losses, earnings were hit by the impact of the Los Angeles wildfires.
The segment posted a net result of €343 million, down from €1.24 billion, with major-loss expenditures totaling €1.01 billion.
Global Specialty Insurance, which is now reported separately, posted a steep 94% miss relative to consensus.
The combined ratio rose to 95.5%, 3.1 points above expectations, also due to catastrophe losses tied to the wildfires, which amounted to €200 million.
The primary insurance business under ERGO contributed €241 million to the group’s bottom line, broadly in line with forecasts.
Within ERGO, the Germany segment missed by 3.6%, while ERGO International beat expectations by 14.7%, led by property and health businesses in Poland, Greece, and Spain.
Munich Re’s investment result fell short by nearly 30%, totaling €1.32 billion, down from €2.16 billion a year earlier.
This was mainly due to a fair-value loss of €527 million on fixed-interest securities, which depreciated amid higher European interest rates.
The group also reported a negative currency result of –€506 million, primarily related to US dollar exposures.
In its April 2025 renewals, Munich Re grew premiums by 6.1% to €2.8 billion, leveraging its position in markets such as India, Latin America, and Europe.
Prices fell by 2.5%, reflecting what analysts called the early signs of a softening market, though rate levels remained elevated on a risk-adjusted basis.
Munich Re maintained its full-year net profit guidance of €6 billion. The company cited strong operating profitability and continued favorable business opportunities.