Munich Re reports net income of 2.6 billion euros in 2016
In 2017, Munich Re is aiming for a profit in the range of 2.0–2.4 billion euros.
The Group achieved an operating result of 4,025 million euros in 2016, down from 4,819 million euros in 2015.
The lower technical result and the costs of the ERGO Strategy Programme were only partly offset by improved investment and currency translation results. Foreign exchange effects had a positive impact of 485 million euros on the other non-operating result in 2016.
Equity increased by 819 million euros in 2016 to 31,785 million euros from 30,966 million euros in 2015. The return on risk-adjusted capital (RORAC) – which serves as the key performance indicator for profitability in terms of risk capital requirements – was 10.9%, while the return on equity (RoE) amounted to 8.1%. In the 2016 financial year, the Group’s gross premiums written declined to 48,851 million euros down from 50,374 million euros in 2015, mainly because of reduced shares in large-volume treaties, the sale of ERGO Italia, and negative currency translation effects.
For Property and Casualty reinsurance, the firm reported net income of 2,025 million euros in 2016, down from 2,915 million euros in 2015.
The solvency ratio calculated on the basis of Solvency II was 267% as at 31 December 2016.
Chairman of the Board of Management, Nikolaus von Bomhard, said: “With a profit of 2.6 billion euros for 2016, we have clearly met our most recent forecast of ‘well over 2.3 billion’. On the basis of this result, we are able to propose that this year’s Annual General Meeting raise the dividend to 8.60 euros. Our dividend policy thus remains shareholder-friendly.” Munich Re also announced another share buy-back programme: it will repurchase up to 1 billion euros in shares by the Annual General Meeting on 25 April 2018.
“For the financial year 2017, Munich Re is aiming for a profit in the range of 2.0–2.4 billion euros in what is set to be a challenging environment,” von Bomhard said.
Looking at the current challenges, von Bomhard stated: “Digitalisation is changing client demand, allows for the development of innovative business models, and requires us to set up partnerships that would previously not have been considered. More than ever, Munich Re is a company embracing change – as demonstrated by our innovation schemes, the ERGO Strategy Programme, and the recent decision to adopt a new set-up in the global health markets. My successor as Chairman of the Board of Management, Joachim Wenning, will continue to drive this change forward.”
The Supervisory Board approved the Board of Management’s recommendation to the Annual General Meeting with respect to the proposed dividend.