Background of the Losses
The latest quarterly figures from Munich Re have led to significant losses in the stock of the world’s largest insurer. This development is of great importance to private investors, as it can influence both short-term and long-term investment strategies.
Profit Decline
Munich Re recorded a substantial profit decline in the first quarter of 2025. Net profit fell by 48 percent to 1.09 billion euros, which was in line with analyst expectations. This decline is primarily attributed to damages from wildfires in California, which the company estimated to have cost 1.1 billion euros.
Price Decline in Renewal Round
In the renewal round on April 1, 2025, Munich Re had to accept a price decline. The price level for the portfolio adjusted for risk decreased by 2.5 percent. Despite this decline, the signed business volume increased by 6.1 percent to 2.8 billion euros.
Impact on the Stock
The stock of Munich Re has suffered significant losses following the release of the quarterly figures. On Tuesday, the price fell temporarily by nearly five percent to 553.40 euros via XETRA. Later in the morning, the loss amounted to 3.7 percent at a price of 559.60 euros, marking the lowest level in four weeks.
The 21-day line, which signals the short-term trend, was breached, while the 90-day line, which represents the medium-term trend, prevented further price declines.
Outlook and Forecasts
Despite the current profit decline, Munich Re expects a profit increase for the current year to 6 billion euros, representing an increase from the previous year of 5.67 billion euros. Insurance revenue is expected to rise to 64 billion euros, with a capital investment return forecasted at 3.0 percent.
For the next renewal round in July, Munich Re anticipates a continued positive market environment despite increasing market pressure.
Significance for Private Investors
The mixed quarterly figures and the associated price losses may prompt private investors to reconsider their investment strategies. However, Munich Re’s long-term forecasts could provide hope that the situation may improve. Private investors should carefully weigh the current market conditions and future expectations to make informed decisions.