Munich Re Q2 Net Profit Slides Amid Steep Investment Losses

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Munich Re Q2 Net Profit Slides Amid Steep Investment Losses
Credit: © Reuters.

By Scott Kanowsky -- Muench. Rueckvers. VNA O.N. (ETR: MUVGn ) has posted a more than 30% decline in second quarter net profit, as recent market volatility led to a slide in the German reinsurer's investments.

The company reported a consolidated result for the three months to June 30 of €768M, down by 30.5% from the same period last year. Impairment losses on equities, war-linked write-downs of Russian and Ukrainian bonds, as well as hedges taken out against rising interest rates all, caused Munich Re's quarterly investment income to nearly halve.

But earnings were still above analyst estimates of €719M, thanks in part to an 8% rise in gross premiums written stemming from positive currency effects and strength in Munich Re's property-casualty reinsurance unit. The company's solvency ratio, a measure of its capital level in relation to its required amount, also jumped to 252% from 227%.

Munich Re subsequently backed its 2022 guidance for gross premiums of €64B and a consolidated result of €3.3B.

"Given that major losses in the first half-year were lower than expected, a larger major-loss budget is available for the rest of the year and will support the achievement of our result target," the group said in a statement.

However, it lowered its return on investment target to over 2.0% from over 2.5%.

Shares in the company rose by more than 1.70% in afternoon European trading on Tuesday.

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