MUNICH Re expects hurricane losses to prevent it reach the 2017 profit target
After Hurricane Harvey caused significant damage in Texas and adjacent states at the end of August, there has now been another devastating storm in the form of Hurricane Irma. It caused extensive damage on islands in the Caribbean, and also in Florida. These two events are expected to result in high insured losses, which the market and MUNICH Re are unable to quantify at the moment.
Despite good business performance in 2017 to date, says the company's press release, the losses from Harvey and Irma could mean that MUNICH Re might miss its profit guidance of EUR 2.0-2.4 billion for the year - depending on how the business performs until the end of 2017. The figures for the third quarter of 2017 will probably show a loss. The business and risk strategy of MUNICH Re ensures that even after such severe natural catastrophes the Group has a sufficiently solid capital base to still be able to offer full reinsurance capacity to its clients.
In the financial year 2016, the Group - which combines primary insurance and reinsurance under one roof - achieved a profit of EUR 2.6 billion. It operates in all lines of insurance, with over 43,000 employees throughout the world. With premium income of around EUR 28 billion from reinsurance alone, it is one of the world's leading reinsurers.
According different assessments consolidated losses of Harvey and Irma may amount to USD 79 - 85 billion (~ EUR 59 - 72 billion), not only challenging the sector's profitability for the current year, but also leading to a long awaited stabilization of the reinsurance prices.