The resurer took a hit of almost $1 billion to its investment portfolio in a volatile quarter for financial markets, which led to a slump in the profit of Bloomberg Munich Re.
In the three months through June, the company wrote down its holdings' value by 908 million euros $926 million, mainly due to declines in the value of its equity investments. The group's income was reduced by half, and the group's profit was reduced by 31% to 768 million euro, according to a statement Tuesday.
While Munich Re said it had a target for a profit of 3.3 billion euros this year, it warned that volatile markets, economic slowdown and the financial fallout from Russia's invasion of Ukraine had increased uncertainty. In March, Munich Re suspended new business in Russia and Belarus and said it would stop investing there.
The reinsurers already wrote down the value of Russian and Ukrainian bonds by almost 700 million euros in the first quarter, and also booked around 200 million euros in war-related reinsurance costs in the first half of the year.
In an interview with Bloomberg Television, Christoph Jurecka, Munich Re Chief Financial Officer, said that we can only book numbers based on what we know. It is still a lot of uncertainty around, and it is still in the early days. There are major losses from natural disasters that are posing a challenge, increasing by about a quarter. In the quarter, the drought in South America caused the costliest natural catastrophe for Munich Re, with losses of around 130 million euro.
The extreme heat and arid conditions this summer have resulted in water scarcity and wildfires in Europe. It is hard to put an exact figure on costs from those events, as their effects take a long time to emerge, Munich Re said earlier.
In July of the reinsurance renewals, Munich Re increased the volume of business by 6% while keeping prices stable. The renewals were focused on the Americas and Australia, and with global clients.
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