Munich Re said its reinsurance business will face € 3.4 billion ($ 4.10 billion) in COVID-19 losses this year, an increase from € 2.3 billion ($ 2.77 billion) during the the first nine months, and has revised its forecast for the Group's earnings for 2020 to EUR 1.2 billion, a decrease from EUR 2.7 billion last year.
The majority of Munich Re's reinsurance losses COVID-19 this year, more than EUR 3 billion, were booked in Munich Re's real estate account. It is expected to have a combined share of 106% for 2020.
Munich Re said that emergency preparedness was the main driver of COVID-19 receivables at a cost of € 1.7 billion, with an additional € 965 million from business interruptions, € 200 million from remuneration from board members and executives / workers, EUR 1
Munich Re expects an additional EUR 500 million of COVID-19 losses booked for its reinsurance business in 2021, while the negative impact on premiums will hit the technical result by an additional EUR 50 million.
Real estate / accident reinsurance will account for EUR 300 million of the additional loss of COVID-19 2021, with contingencies costing EUR 200 million, business interruptions of EUR 50 million and credit insurance of EUR 50 million.
Munich Re's primary insurer Ergo Group AG has lost EUR 100 million to its net profit in 2021 after damages and the effect on premiums. Munich Re said the insurer will add € 500 million to the group's earnings for 2020 and only € 30 million is shy of its original target. It is expected to match this result in 2021
Munich Re withdrew its initial profit development of 2.8 billion euros for 2020 in March, when COVID-19 began to drive upward receivables.
This week, Chief Financial Officer Christoph Jurecka said the group would have achieved its original target but for € 3.4 billion of COVID-19 losses in its reinsurance book. He added that Munich Re will instead reach the target of 2.8 billion euros by 2021.
The reinsurance business will add 700 million euros to the group's forecast profit of 1.2 billion euros for 2020, said Munich Re. It is expected to increase the Group's earnings in 2021 to a target of EUR 2.3 billion.
“We expect to generate a profit of well over 1 billion euros this year. The pandemic has, of course, had a significant impact on our results. But the burdens of COVID-19 are financially manageable for Munich Re, "said Jurecka.
" Thanks to our strong balance sheet, we are in a very good position to take advantage of current market opportunities. In the coming year, we plan – despite expected further COVID-19 losses – to reach the profit target of 2.8 billion euros as planned before the pandemic, "he added.
Munich Re said that record group premiums of EUR 54 billion are forecast for the full year 2020. This is expected to break quickly in 2021, with premiums expected to rise to EUR 55 billion.
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