Munich Re 2020 profit dips as pandemic boosts claims to €4.7bn

Photo: AP

The German reinsurance group Munich Re announced prospects for a rebound in business later in 2021 as pandemic last year supported a surge in claims leading to a sharp fall of profits, Reuters reported.

Total losses, caused by Covid-19 in addition to natural disasters in 2020 accounted for 4.689 billion euros. This is the highest level for more than 10 years. The previous time Munich Re fell that much was linked to covering outstanding damages caused by a tsunami in Japan, an earthquake in New Zealand and the explosion of the Deepwater Horizon oil rig. All three within one year period. “In spite of the tremendous challenges posed by COVID-19, Munich Re closed out 2020 with a clear profit,” Chief Executive Joachim Wenning said.

Net profit of 1.211 billion euros compares with 2.707 billion euros a year earlier, and is slightly below a consensus forecast of 1.261 billion euros. Munich Re said it expects profit to rebound to 2.8 billion euros in 2021.

The insurance industry has faced large claims from the pandemic, such as those for cancelled events and postponed events including the Olympics, as well as losses from hurricanes and wildfires in the United States. The virus uncertainty prompted the company to refrain from providing a full-year profit target and it will no longer insure against events cancelled due to pandemics.

Munich Re’s results, while weaker in the aftermath of the virus, contrast favourably with those of competitor Swiss Re, which posted a full-year loss of $878 million, its first loss since the financial crisis in 2008.

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