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Munich Re on Wednesday stood by its profit target for 2025 and raised its dividend by a third, despite announcing it expected to take a €1.2bn hit from claims from the California wildfires.
The company, one of the world’s biggest reinsurers by premiums written, acknowledged that insured losses from the fires that devastated Los Angeles in January were “clearly the most substantial wildfire losses in the history of the insurance industry”.
But chief financial officer Christoph Jurecka said Munich Re had planned for substantial losses from natural disasters and claims would fit “easily” into the reinsurer’s budget.
The company also downplayed the effect of US President Donald Trump’s new administration on its business, while signalling that it anticipated some reduction in its future emphasis on climate targets.
Munich Re said it planned to return a higher than anticipated €4.6bn to shareholders, including through a €2bn buyback. It added that it intended to increase its dividend for 2024 to €20, from €15 the previous year. Net profit for 2024 rose 23 per cent to €5.67bn, in line with analysts’ expectations.
The company stood by its target for 2025 net profits, set in December, of €6bn.
The shares briefly hit an all-time high of €556.20 on Wednesday morning. At lunchtime, they were up 4.9 per cent at €552.40.
Rising expenses for major damages last year were more than offset by the effects of rising prices for insurance and the reinsurer’s setting of more restrictive terms that limited payouts. The returns from the company’s asset management activities rose 34 per cent to €7.2bn, mostly driven by higher interest rates.
Munich Re has targeted a further profit increase for 2025 despite forecasts from some analysts that there will be a squeeze on reinsurance prices. Capital has flowed into the sector after years of record profits and strong demand for reinsurance products, which insurers buy to offload some of their risks.
Asked about the influence of Trump’s policies on Munich Re, chief executive Joachim Wenning told journalists on Wednesday that the US president did not influence the insurance business.
“We’re not on their radar,” he said of the new US administration.
However, Jurecka told the Financial Times that, in light of efforts by the EU to lighten the burden of regulation on the bloc’s economies, the net zero discussion had “moved on a bit”. Net zero targets have been among the Trump administration’s targets in a deregulation drive spearheaded by Elon Musk’s so-called Department of Government Efficiency.
Jurecka said Munich Re would announce changes to its environmental, social and governance strategy at an overall strategy update this year.
The “status of the conversation” was now different from when the company last defined its “climate ambition”, he said.
“The change in temperature is a bit different than expected a couple of years back,” he added, but declined to say how temperatures had diverged from expectations.
Europe’s Copernicus observation agency has said that 2024 was the hottest year on record. Insured losses from natural disasters rose to $140bn last year, according to Munich Re estimates, making it the third most expensive year for such losses on record.
https://www.ft.com/content/452c13bd-618d-48fe-99f1-52cc2eecb02c
