Meeting in Monaco between Munich Re & Co: Dwindling earnings, yet a hint of optimism persists
In the dynamic world of reinsurance, Munich Re, a long-standing industry favourite, is navigating through a period of change.
Recent developments have seen rating agencies adjust their outlooks for the company. Moody's has downgraded its outlook to "stable," while Fitch Ratings has changed the outlook assessment for Munich Re to "deteriorating." These shifts reflect the current market conditions.
The market is also witnessing price reductions. Reinsurers, including Munich Re, have had to accept price reductions of approximately 1-2% in April and July, adjusted for inflation and risk changes. This trend is expected to continue, with Standard & Poor's (S&P) projecting the return on equity to further decrease to 11-13% in 2026.
However, it's not all doom and gloom. A.M. Best maintains its positive assessment of the industry, as prices remain significantly higher than the 2017 level despite the recent decline. This indicates a resilient market, despite the challenges.
Natural catastrophe losses have been a significant factor in these changes. Since 2020, they have exceeded $100 billion annually, reaching $80 billion in the first half of 2025 - the second-highest value since 1980.
Amidst these challenges, Munich Re is engaging in negotiations with primary insurers like Allianz, Axa, and Generali over renewal terms at the end of the year. Stefan Golling, a board member at Munich Re, stated that the demand for coverage will remain high.
The company is also emphasising the importance of fair prices and conditions for renewals. This approach underscores Munich Re's commitment to maintaining its quality status, despite foreseeable price weaknesses.
Swiss Re has surpassed Munich Re to become the world's largest reinsurer, according to recent data from rating agencies. A new accounting standard has contributed to Swiss Re's leadership position. Meanwhile, Hannover Re now holds the third position among the world's largest reinsurers.
Despite these changes in the rankings, Munich Re remains a stable stock with strong earnings power. The stock price of Munich Re has recently fallen below the stop-loss level set by AKTIONAER and was sold with a profit of over 140% since the recommendation.
It's important to note that the management and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has direct and indirect positions in the financial instruments mentioned in the publication or related derivatives, which could benefit from the potential price development resulting from the publication. (Conflict of Interest Disclosure)
In conclusion, the reinsurance market is experiencing shifts, with Munich Re navigating through a period of change. Despite the challenges, the company remains committed to maintaining its quality status and ensuring fair prices and conditions for renewals.
