Competitor Hannover Re mounts pressure on Munich Re, shaking up the reinsurance industry
Despite a challenging market with higher burdens, capital income losses, and modest price declines, Hannover Re and Munich Re have reported their financial results for the first half of 2022.
Hannover Re's operating profit rose by 6.3% to EUR 1.8 billion, but the company faced a setback with a net loss of EUR 976.1 million due to major losses, particularly from the devastating wildfires in California. This loss was higher than the budgeted expected value of EUR 935 million. In comparison, losses in the same period of the previous year were EUR 566.5 million for Hannover Re.
On the other hand, Munich Re reported a net consolidated profit that climbed by 13.2% to EUR 1.3 billion for the first half of 2022. The overall volume of contract renewals decreased by 2.1% for Hannover Re, due to a large contract reduction, while Munich Re's gross written premiums increased by 3.3% to EUR 13.3 billion.
Earnings per share improved for both companies, with Hannover Re reporting EUR 10.90 for the first half of 2022, up from EUR 9.63 previously. Munich Re, however, remains the top choice within the industry for investors, given its superior underwriting metrics and stronger life and health profitability.
The inflation- and risk-adjusted price change for contract renewals was minus 2.9% for both companies. However, Munich Re appears to maintain slightly better pricing and underwriting discipline overall.
In terms of conflict of interest, shares of Munich Re are held in a real-time portfolio of Boersenmedien AG, creating another conflict of interest. The management and majority shareholder of the publisher, Mr. Bernd Foerst, has direct and indirect positions in the financial instruments of both Hannover Re and Munich Re.
Looking ahead, Hannover Re has confirmed its forecast of a net consolidated profit of around EUR 2.4 billion for the full year 2022. Any outperformance by Hannover Re would likely depend on overcoming capital income volatility and improving life and health results.
In summary, while Hannover Re remains a strong reinsurer with solid operational foundations and growth in some segments, Munich Re’s superior underwriting metrics, stronger life and health profitability, and market position make it more likely to continue outperforming Hannover Re on the stock market under current conditions.
Read also:
- A Business Model Explained: Its Purpose and Benefits for Your Venture
- Deep-rooted reinforcement of Walkerhughes' acquisitions through strategic appointment of Alison Heitzman
- Unchecked Management of HP Dams Leads to Environmental Disaster: RTI Reveals
- Impact of Trump's Enforced Russia Sanctions Could Compel Putin's Decision-Making
