Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (ETR:MUV2) reported a third-quarter net result of €1.7 billion and said it was on track to exceed its annual profit target after raising its full-year guidance to €6.6 billion.
The company, known as Munich Re, earned €5.7 billion in the first nine months of 2026. Chief Financial Officer Andrew Buchanan said the increase in full-year guidance came from the reinsurance business and that exceeding the annual target would mark the sixth consecutive year the company has done so.
Reinsurance Results and Reserve Review
Life and health reinsurance produced a third-quarter total technical result of €493 million. Buchanan said favorable mortality experience supported the result, partly offset by updated assumptions following adverse experience in certain disability portfolios. Munich Re remains on track for its full-year technical result guidance of €1.9 billion, he said.
Buchanan said the disability-related adjustments involved specific portfolios or contracts in Canada, the U.S. and Germany. They were not related to the large life reinsurance deals Munich Re has written recently, he said.
Property and casualty reinsurance recorded a third-quarter combined ratio of 80%, with major losses somewhat below expectations. A lower combined ratio indicates greater underwriting profitability. The division’s actual combined ratio was 72.2% for the first nine months, and Buchanan said Munich Re expected to beat its full-year guidance for the business.
The normalized P&C reinsurance combined ratio rose to 82.4% in the quarter as recent renewals and changes in the business mix earned through. Buchanan said it could rise further in the fourth quarter, partly because of a large structured transaction and seasonal effects.
Munich Re released 2% for basic losses from prior years, rather than its usual 6%, as a precaution ahead of its annual reserve review. Buchanan described the reduction as preliminary and said he had no concerns about major reserve problems or serious reserve strengthening in the near future. The company will assess potential vulnerabilities in the fourth quarter, potentially at the cost of a higher normalized combined ratio.
Higher interest rates lifted the discounting benefit on newly incurred claims to 11.5 combined-ratio points in the quarter. Buchanan cautioned that the figure was not a new normal, citing the mix of losses, including an approximately €300 million outlier loss from an earthquake in Colombia. He added that the impact of outlier losses and their associated discounting is replaced in the normalized ratio by the company’s outlier assumption.
Investment Returns and ERGO
Rising bond yields affected Munich Re’s businesses differently. Reinsurance generated a 4.7% return on investment, helped by interest-rate derivatives and commodities. At ERGO, declines in the fair value of fixed-income investments contributed to a 2.1% return, although Buchanan said policyholder participation limited the impact on profit and loss.
The group’s return on investment was 3.2% for the quarter and 3.9% for the first nine months. Its reinvestment yield rose 40 basis points to 4.7% during the quarter. Munich Re realized some fixed-income losses in reinsurance to reposition its portfolio for higher future income, and Buchanan said it could realize further disposal losses in the fourth quarter.
ERGO posted a quarterly net result of €263 million, including €118 million in Germany and €145 million internationally. The international result benefited from the first full consolidation of ERGO China Life Insurance, partly offset by smaller negative one-time effects. Global Specialty Insurance posted an 83.9% combined ratio, aided by benign major losses.
Renewals and Capital Deployment
Looking toward January 2027 reinsurance renewals, Buchanan said it was too early to predict price or volume changes. He nevertheless anticipated continued downward price pressure, citing strong capitalization across the industry and a relatively benign North Atlantic hurricane season. Clients were also discussing coverage terms, he said, including aggregate covers and reinstatements.
Munich Re’s Solvency II ratio fell to 301%, largely because profitable business growth increased capital requirements, particularly in life and health reinsurance. Buchanan said the company intends to deploy capital through profitable growth and selective acquisitions while providing shareholders with capital returns. An update on returns is planned for the analyst conference in late February, after full-year figures are finalized.
The company expects to disclose its 2027 financial outlook on December 10. Buchanan also said Munich Re hopes to complete its announced acquisition of cyber insurer At-Bay in the first quarter of 2027.
About Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (ETR:MUV2)
Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München engages in the insurance and reinsurance businesses worldwide. It also offers life and health reinsurance solutions, such as digital underwriting and advanced analytics solutions, health insurance management system, financial market risks, financing, portfolio risk management, digitalized investment-linked solution, MIRA digital suite, MIRA POS, MIRApply insured and physician, claims risk adjustment, CLARA plus, data analytics, underwriting and claims, medical research, capital management, and health market.
