Munich Re's Record Earnings Fail to Halt Slide as Pricing Pressure Takes Centre Stage at Zurich Conference
Published on 06/01/2026 at 20:12 | Redaktion boerse-global.de
The arithmetic looks simple on paper: a first-quarter profit of €1.71bn, a solvency ratio of 292 percent and a €2.25bn buyback programme. Yet Munich Re's shares have been in freefall, touching a 52-week low of €446.20 and losing 26 percent from their peak of €605. That disconnect between operational muscle and market mood could hardly be more acute as chief financial officer Andrew Buchanan prepares to speak at the Goldman Sachs European Financials Conference in Zurich.
Investors have been selling first and asking questions later. The stock shed 14.4 percent in May alone, making it the worst performer in the DAX. Year-to-date the decline stands at 18.67 percent, while the 12-month loss is 23.07 percent. The sell-off has persisted despite a Q1 net profit that jumped more than 56 percent year-on-year to €1.714bn — just a whisker below the €1.729bn that analysts had pencilled in. The combined ratio in property-casualty reinsurance came in at 66.8 percent, underscoring the group's underwriting strength.
Pricing discipline meets a sceptical market
The elephant in the room — and almost certainly the main topic in Zurich — is the pricing environment. At the April renewal round Munich Re deliberately walked away from business that did not meet its internal return hurdles. The result: gross written volume shrank 18.5 percent to €2.0bn, while risk-adjusted prices softened by 3.1 percent. Management's message is one of discipline over market share, but the market is reading the same data as a sign that pricing power is slipping. For the July renewal the group expects broadly stable rates, though Buchanan will be pressed on whether that optimism is justified.
A stronger euro adds another layer of pressure. With a large chunk of premiums and earnings denominated in US dollars, the exchange rate is eating into reported figures. The annual profit target of €6.3bn, reaffirmed by the board, assumes normal major losses and stable capital markets — two assumptions that now look less certain.
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Insiders put cash on the line
Against the gloomy backdrop, Munich Re is putting its money where its mouth is. The buyback programme, already factored into the solvency ratio, authorises repurchases of up to €2.25bn. The first tranche of €900m began on 14 May and is expected to run until late August. In the first six trading days alone the group bought back almost 471,000 shares for roughly €225m, or a quarter of the first tranche.
Several board members also stepped up between 12 and 18 May. Dr Markus Rieß bought 500 shares at €476.50, Stefan Golling 420 shares at an average of €476.19, and Dr Achim Kassow 300 shares at €470 each. On the same day board member Mari-Lizette Malherbe acquired 413 shares at an average of €478.89, investing nearly €200,000. Such insider purchases are often read as a vote of confidence, though they have so far done little to stem the decline.
Dividends, job cuts and hurricane risks
On 5 May the group paid a dividend of €24.00 per share, a 20 percent increase on the prior year. Combined with the buybacks, total shareholder distributions for the 2025 financial year reached roughly €5.3bn, or close to 90 percent of net profit.
At the ERGO subsidiary, meanwhile, around 1,000 jobs are being cut by 2030 at a rate of about 200 per year. A reconciliation-of-interests agreement with employee representatives rules out compulsory redundancies during that period.
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The atlantic hurricane season also looms. Munich Re's in-house forecast calls for 12 to 13 named storms, five or six of which should reach hurricane strength. The expected return of El Niño is likely to dampen activity in the Atlantic but increase typhoon risks in the northwestern Pacific — a reminder that the industry's earnings are never more than one storm season away from disruption.
Buchanan's appearance in Zurich will not include a new earnings release, but the tone he strikes on pricing discipline and selectivity could set the narrative until the half-year report on 7 August. For now, the market seems to be asking one question: if record profits cannot lift the stock, what will?
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