Rising interest rates have caused Munich Re's profit to fall in the past year.

The bottom line for 2023 was 4.6 billion euros, around 700 million euros lower than in the previous year, as the world's largest reinsurer announced on Tuesday. The company itself had targeted 4.5 billion euros, while analysts had expected just under 4.6 billion euros. Exchange rate effects also had a negative impact on Munich Re. CEO Joachim Wenning nevertheless expressed his satisfaction. It was the third time in a row that the profit target had been exceeded. "Apart from systemic risks - such as cyber and the pandemic - our appetite for covering existential risks for people and companies is far from exhausted."

The decline in profits is primarily due to the changes in accounting rules for the insurance industry introduced last year. According to these rules, provisions for future claims must now be discounted. As a result of the sharp rise in interest rates, profit in 2022 was significantly higher than under the old accounting rules.

Shareholders are to receive a dividend of 15 euros per share for the past financial year, compared to 11.60 euros a year ago. In addition, there will be a share buy-back with a volume of up to 1.5 billion euros. In total, Munich Re will thus be distributing up to EUR 3.5 billion to its shareholders. The buy-back is scheduled to begin on April 26.

The DAX-listed company confirmed its profit target of five billion euros for the current year. In a persistently favorable market environment, Munich Re will use its strong position to generate even more profitable growth. In the treaty negotiations with primary insurers at the turn of the year, Munich Re had concluded 3.5% more business, amounting to EUR 15.7bn.

Prices had remained stable overall, while market pressure had increased somewhat. Overall, they were increased by 0.3 percent on a risk-adjusted basis in the January round. The reinsurer also anticipates a positive market environment for the upcoming renewal rounds in April and July.

At the same time, Munich Re called for government assistance in protecting against extreme weather and cybercrime. The company explained that major cyber risks in particular, such as the failure of critical infrastructure or cyber warfare, could not be borne by the private sector. A state "backstop" has the potential to be a solution to this complex problem. "This is why it should also be discussed politically in Germany and Europe." This dialog has already begun in the USA.

(Report by Christina Amann, edited by Ralf Banser. If you have any questions, please contact our editorial team at Berlin.Newsroom@thomsonreuters.com (for politics and the economy) or Frankfurt.Newsroom@thomsonreuters.com (for companies and markets)