The reinsurer Munich Re earned well in 2021, even more than in 2019, the year before the pandemic. But Covid-19 will keep the insurance company busy for a long time. Many corona-related deaths lead to high burdens for life insurers, especially in the USA. As a reinsurer, Munich Re has to bear part of it. That was 785 million euros in 2021 alone, reported CFO Christoph Jurecka. “We expect another 300 million euros in 2022.”
Overall, the pandemic has cost the group 4.5 billion euros so far. Of this, EUR 1.8 billion was attributable to event cancellation insurance alone. Among other things, Munich Re was involved in insuring the Olympic Games in Tokyo that were canceled in 2020. In 2020 and 2021, the company spent a total of 1.2 billion euros on deaths and treatment costs, and one billion euros on property damage and business interruption.
For 2021, CEO Joachim Wenning was able to report a profit of 2.9 billion euros, after a low 1.2 billion euros in the previous year due to the pandemic. Sales rose from 54.9 billion euros to 59.6 billion euros.
Ergo was once the eternal construction site of the group
He was particularly pleased with the result of the Düsseldorf subsidiary Ergo, which insures end customers. Once Ergo was the group’s eternal construction site, now it has increased its profit from 517 million euros to 605 million euros – despite the burden of natural disasters such as the floods of summer 2021.
Wenning wants to put shareholders in a positive mood with a dividend increase of EUR 1.20 to EUR 11 and a share buyback program of EUR 1 billion.
Profit is expected to continue growing in 2022. “We expect a result of 3.3 billion euros,” said Wenning. He doesn’t expect the Ukraine crisis to have any direct impact on the result. The group is only very slightly represented in the Ukraine and in Russia with insurance business. “The direct impact is not an issue, there could be an indirect impact on the capital market turmoil.” You could also hit Munich Re. “But that would be speculative.”
The burden of natural disasters, on the other hand, is steadily increasing. In 2021, damage with a volume of more than ten million euros, this is how the Munich-based company defines major damage, totaled 4.3 billion euros, and in 2020 it was even more at 4.7 billion euros. The group has therefore increased the value of catastrophe burdens, which it classifies as normal. So far it was twelve percent of premium income, in future Munich Re calculates with 13 percent. In 2021, hurricane “Ida” was the most expensive, with damage of 1.2 billion euros. The low-pressure area “Bernd”, which led to the floods in the summer, cost Munich around 0.5 billion euros.
Munich Re, along with numerous other insurers, withdrew from insuring the controversial Nord Stream 2 pipeline in 2021, the company said.