Munich Re's capitalisation exceeds strongest requirements

Munich Re reported a net profit of $5.02b in 2023.

Munich Reinsurance’s balance sheet strength remains solid, whilst its operating performance is deemed with a favourable business profile, AM Best assessed. 

The insurer also appeared to have very strong enterprise risk management. Munich Re’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), exceeds the requirements for the strongest assessment. 

Despite potential large losses and substantial dividend payments, AM Best expects Munich Re’s capitalisation to remain at this highest level, supported by its excellent financial flexibility and low financial leverage. 

The group’s operating performance is strong, with a 10-year weighted average return-on-equity (ROE) of 8.8% from 2013-2022.

In 2023, Munich Re reported a net profit of $5.02b (€4.6b), down from $5.78b (€5.3b) in 2022, and an ROE of 16.1%. 

The property/casualty reinsurance division earned $2.62b (€2.4b) in net profit, with natural and man-made losses slightly below budget at $3.60b (€3.3b). 

The life & health reinsurance division and ERGO reported net profits of $1.53b (€1.4b) and $785m (€721m), respectively, highlighting strong earnings diversification and improved investment results. 

Munich Re’s global presence and diversified business model position it well to benefit from favourable reinsurance market conditions.