Hurricanes Harvey, Irma and Maria will cost Munich Re €2.7bn

Hurricanes Harvey, Irma and Maria will cost Munich Re €2.7bn

The FINANCIAL -- Munich Re is expecting a third-quarter loss of €1.4bn owing to exceptional major-loss expenditure. The Group now projects a small profit for the full year 2017.

Jörg Schneider, Chief Financial Officer of Munich Re: “High losses from severe natural catastrophes are part and parcel of our business; that is why we are here. Our capital base remains very strong. We will continue to offer our clients full reinsurance capacity. Moreover, Munich Re has enough capital to take advantage of the opportunities this exceptional situation provides in terms of profitable growth.”

According to current estimates – which are still fraught with considerable uncertainty – Munich Re anticipates losses of €2.7bn after retrocession from these three hurricane events. Including the expenditure for other natural catastrophes – in particular the earthquakes in Mexico – and man-made losses, overall major-loss expenditure will amount to €3.2bn in the third quarter.

Munich Re will post a loss of €1.4bn for the period from July to September 2017. In addition to the aforementioned major losses, the quarterly result will also be impacted by adverse IFRS effects from the recapture of a life reinsurance treaty and – as expected – a low positive contribution to the quarterly result from ERGO. Detailed information on the quarterly figures will be provided on 9 November.

Munich Re is now proceeding on the assumption of generating a small profit for the year – on the proviso that business performs in line with expectations in the last quarter.

The ongoing share buy-back programme will continue as planned until it expires at the 2018 Annual General Meeting; up to 24 October 2017, 2.7 million Munich Re shares were repurchased for a total of €485m, according to Munich Re.

On 15 March, Munich Re had announced that its profit guidance for 2017 would be in the range of €2.0–2.4bn. On 13 September, Munich Re reported that the severe losses to be expected from Hurricanes Harvey and Irma were likely to result in a loss for the third quarter, and might jeopardise its profit target for 2017. Since then, Hurricane Maria has also caused significant damage in the Caribbean.