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Munchener Ruckversicherungs-Gesellschaft AG MUV2

Morningstar Rating
€419.30 +6.20 (1.50%)
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Company Report

Munich Has Developed a Unique Approach to Carving Out a Competitive Position in Certain Lines

Munich Re is the largest reinsurance company in the world, yet that size has its drawbacks. We think the company has some really nice and moaty business lines, that seem almost unrivaled, yet the impact that those lines can have on the overall business is not enough to sway it into moaty territory. Munich has a strategy to drive growth in its Global Specialty Insurance and cyber lines. In the context of the property and casualty reinsurance division, gross premiums written in these two lines are growing faster than the underlying traditional reinsurance. Munich’s expansion of an inspection-based model combined with insurance yields superior underwriting results, in our opinion. And we believe its traditional area of expertise in providing these inspection-based services utilizing historical records and specialized industrial engineers is probably the most moaty way the business has been able to develop good underwriting earnings. There are likely underwriting benefits to be had in developing that model into the Internet of Things. We think Munich is one of the few reinsurers developing specialist insurance and reinsurance with this combination. However, when we think more broadly about the competitive dynamics of that approach versus an engineer-based model, we think the new IoT model holds lower barriers to entry and is more replicable. While Munich may be able to gain insights from these peripheral technologies and may have a first-mover advantage in rollout and integration, we see little reason another reinsurer could not replicate this. We think a purer focus on research and development of proprietary technology would be a more durable way to develop an underwriting-based competitive advantage.

Price vs Fair Value

MUV2 is trading at a 18% premium.
Price
€413.10
Fair Value
€692.00
Uncertainty
Medium
1-Star Price
€325.80
5-Star Price
€468.00
Economic Moat
Rcxk
Capital Allocation
Zmvptxhcs

Bulls Say, Bears Say

Bulls

Munich has a unique Global Specialty Insurance division that has foundations in combining industrial machinery inspection services with insurance. This has created unique underwriting benefits.

Bears

Despite the successful turnaround of Munich’s primary insurance division, Ergo, this is quite a capital-intensive division because of its exposure to market risk and that has pulled down Munich’s overall returns.

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News

Trading Information

Previous Close Price
€413.10
Day Range
€414.60420.20
52-Week Range
€292.40420.20
Bid/Ask
€0.00 / €419.50
Market Cap
€57.08 Bil
Volume/Avg
258,366 / 258,043

Key Statistics

Price/Earnings (Normalized)
11.41
Price/Sales
0.88
Dividend Yield (Trailing)
2.81%
Dividend Yield (Forward)
2.81%
Total Yield
3.57%

Company Profile

Munich Re was founded in 1880 by Carl Thieme amid a flurry of other reinsurance companies set up independent of primaries. In those early days, most reinsurers typically focussed on a few customers with strong reputations. Thieme focussed on a broader set of cedents in order to drive stronger growth in premiums. This coincided with a strategy of risk diversification and a preference to partner rather than take on a one-sided transfer of risk. In the 1890s, Munich introduced the first machinery insurance. After Thieme and Fink founded Allianz, this was the main channel to sell insurance on machinery. We think the approach of partnering with insurers and preferring to avoid one-sided risk, in conjunction with combining inspection and insurance services, remains at the heart of the firm.
Sector
Financial Services
Industry
Insurance - Reinsurance
Stock Style Box
Large Core
Total Number of Employees
42,562

Competitors

Valuation

Metric
MUV2
SREN
HNR1
Price/Earnings (Normalized)
11.416.4114.43
Price/Book Value
2.032.602.91
Price/Sales
0.880.691.07
Price/Cash Flow
31.9719.7514.86
Price/Earnings
MUV2
SREN
HNR1

Financial Strength

Metric
MUV2
SREN
HNR1
Quick Ratio
Current Ratio
Interest Coverage
14.384.8815.78
Quick Ratio
No chart available

Profitability

Metric
MUV2
SREN
HNR1
Return on Assets (Normalized)
1.03%1.01%2.24%
Return on Equity (Normalized)
11.44%13.21%18.60%
Return on Invested Capital (Normalized)
10.00%6.47%13.71%
Return on Assets
MUV2
SREN
HNR1
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Insurance - Reinsurance Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
MURGF
Munchener Ruckversicherungs-Gesellschaft AGBlvq$60.8 Bil
MURGY
Munchener Ruckversicherungs-Gesellschaft AG ADRFwvjf$60.8 Bil
SSREF
Swiss Re AGCbbdy$33.4 Bil
SSREY
Swiss Re AG ADRXnpr$33.4 Bil
HVRRF
Hannover Rueck SECts$30.2 Bil
HVRRY
Hannover Rueck SE ADRZfcb$30.2 Bil
EG
Everest Group LtdJwmb$15.7 Bil
RNR
RenaissanceRe Holdings LtdWkmd$11.7 Bil
RGA
Reinsurance Group of America IncLxxl$11.1 Bil
SCRYY
SCOR SE ADRPplg$5.1 Bil

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