Munich Re enjoying attractive market environment, says CEO. But cycle management evident

Munich Re, the global reinsurance company, is continuing to enjoy an attractive market environment, its CEO Joachim Wenning explained this morning. But the reinsurer is focusing on profitability and portfolio optimisation with some reductions, while pricing is seen as still largely compensation for higher loss estimates.

In reporting its results for the second-quarter and first-half this morning, Munich Re adopts a similar stance to most other large reinsurance underwriters, that market conditions remain largely attractive even after the softening of rates seen this year.

As you’d expect, terms, conditions and attachment points are a critical area, with Munich Re seeing these as largely stable across the opportunities it chose to underwrite.

It wasn’t all stable though, as Munich Re explained that at the July renewals, it “selectively opted to not renew or write business that did not meet expectations with respect to prices, terms and conditions.”

On the results side of the announcement, Munich Re generated record profits in the second-quarter, with a net result of €2.1 billion and a half-year result of €3.2 billion, leading the company to maintain its €6 billion target for the full-year.

Low combined rations in property and casualty reinsurance and specialty insurance, of 61% and 78% respectively, helped to deliver the record quarter for the reinsurer.

Reinsurance delivered €1.834 billion of the profit for Q2 2025, well up on last year’s €1.339 billion. H1 is still down after the more loss impactful first quarter of the year.

Low major losses and some reserve releases kept loss impacts to just €87 million in P&C reinsurance for Munich Re, resulting in a net result of €1.193 billion and insurance revenues from contracts of €4.513 billion.

Perhaps notably and indicative of a company beginning to manage the cycle somewhat, that insurance revenue figure for Q2 is down year-on-year (although there are also currency effects to consider).

Joachim Wenning, CEO and Chair of the Board of Management of Munich Re commented, “In the second quarter, Munich Re posted a record-breaking profit of €2.1bn. With a half-year net result of €3.2bn, we are well on track to reach our annual target of €6bn. All lines of business contributed to the quarterly result – with excellent combined ratios in property-casualty reinsurance and GSI, and pleasing developments in life and health reinsurance, at ERGO and in our investment business. This also allowed us to mitigate the impact of foreign exchange losses due to the faltering US dollar.

“As the outcomes of the July renewals show, we continue to enjoy an attractive market environment. Our task now is to continue capitalising on it through stringent discipline.”

While the renewals are seen as still profitable, there is evidence emerging of Munich Re beginning to manage the cycle a bit more robustly, as we said.

Munich Re reduced the volume of business written by 3.2% to €3.2 billion at the July reinsurance renewals, as it selectively opted not to write certain business that did not meet its profit and portfolio optimisation targets.

Maintaining stable terms and attachments was a focus for Munich Re at the mid-year renewal season, and the company concluded that “prices largely compensated for the higher loss estimates in some areas, which were primarily attributable to inflation or other loss trends.”

However, overall price was down 2.5% at the renewals for Munich Re, but the company said that “the good price level of Munich Re’s portfolio was maintained overall.”

In fact, across the three main renewals in 2025 so far, Munich Re said price across its portfolio is only down 1.2%.

Property excess of loss reinsurance is one area called out by Munich Re as where it reduced volumes and declined business, due to it not meeting its hurdles.

In fact, disclosures show Munich Re reducing property XL business by around 5%, while pricing fell by around 4% for this class of reinsurance at the renewals.

But still, while there is evident that Munich Re has begun managing the cycle a bit more proactively than normal, the business is seen as still remaining attractive by the company.

Munich Re called July 1 a, “Good renewal in an attractive market environment – portfolio quality largely unchanged by maintaining improved terms and conditions (including higher attachment points).”

Looking ahead to the January 2026 reinsurance renewals, Munich Re said it, “expects to see a market environment that continues to offer attractive business opportunities.”

Clearly if that does not manifest, the reinsurer is ready to manage the cycle more aggressively and give up business it does not see as meeting its return hurdles, so we could see this trend from the mid-year of a more active approach persisting for Munich Re.