Munich Re Earnings: Major Miss Due to Large Losses From Higher Natural Catastrophe Claims

Munich Re has missed company-compiled consensus expectations for the third quarter of the year, reporting a EUR 930 million net result versus consensus of EUR 1,419 million. The primary reason for the miss is because of EUR 1,609 million of major loss expenditure in the property and casualty reinsurance division. Munich Re’s property and casualty reinsurance annual major loss expenditure budget is 14% of net insurance revenue. However, this quarter that major loss expenditure has hit 23.1%, supporting a long-term trend of rising claims. The 90.5% combined ratio is much higher than consensus expectations of 82.5%. While the major loss of EUR 1,609 million is much higher than the prior year's third-quarter major loss expenditure of EUR 770 million. This should be put in the context of EUR 1.974 billion and EUR 2.316 billion reported in the third quarter of 2021 and 2022. They buck a longer-term trend of rising catastrophe losses due to rising temperatures and climate change.