Reinsurers Munich Re and Hannover Re both reported that first-quarter results are on track to meet their annual targets, despite Q1’s higher level of catastrophe claims.

Munich Re reported consolidated first-quarter profit rose 22 percent to €557 million (US$607 million), compared with €436 million ($475.4 million) reported in Q1 2016.

Despite a significant increase in major property/casualty losses, Munich Re achieved “a gratifying quarterly result,” which was due in “large part to the good investment result,” said CFO Jörg Schneider, who noted that the company is on track to meet its full-year profit target.

The group’s reinsurance property/casualty business was hit by several major natural catastrophe claims and hence saw a 20 percent drop in Q1 profit to €340 million ($370.8 million), compared with €425 million ($463.4 million) reported for the same period last year.

Cyclone Debbie is Munich Re’s largest single nat cat loss with a price tag of €100 million ($109 million). The company said its results also were hit by “an unusual accumulation of significant but localized natural catastrophe events in the USA.”

Overall major-loss expenditure (manmade and nat cat) increased significantly during Q1 2017 to €403 million ($439.4 million), compared with €100 million ($109 million) during Q1 2016.

With a combined ratio of 97.1 percent (2016: 88.4 percent), Munich Re said it is on track to achieve its target of 97 percent for the full year.

The reinsurance business reported a 5.5 percent increase in Q1 gross premiums written to €8.1 billion ($8.8 billion), compared with €7.6 billion ($8.3 billion) reported in Q1 2016.

April Renewals

Pressure on prices and terms and conditions remained intense during the April 1 renewals, although some easing was seen. “The overall decline in prices was 0.5 percent for the April renewals, and thus much less pronounced than for the renewals at April 2016. Munich Re was able to take advantage of selective opportunities in certain markets, such as in Japan,” the company said.

Hannover Re Results

Meanwhile, Hannover Re said it has made a good start to the year, reporting a 2.4 percent decline in Q1 group net income to €264.8 million ($288.8 million), compared with last year’s level of €271.2 million ($295.7 million).

Hannover Re CEO Ulrich Wallin said the quarterly result provides a good basis for achieving the company’s annual targets. The successful completion of the first quarter further supports the raising of the guidance for the full-year group net income from more than €950 million ($1 billion) to more than €1 billion ($1.1 billion), added Wallin.

Hannover Re’s property/casualty reinsurance business reported net income of €215.4 million ($234.9 million), an increase of 5.4 percent over last year’s net income of €204.3 million ($222.8 million).

Major losses during the first quarter came to €133.7 million ($145.8 million), compared with €55.5 million ($60.5 million) during the same quarter last year. Similar to Munich Re, the largest single loss for the company was Cyclone Debbie at €50 million ($54.5 million).

The P/C reinsurance business reported a combined ratio of 95.6 percent, compared with 94.7 percent reported during Q1 2016.

Gross written premiums for the P/C business rose by 12.5 percent to €2.8 billion ($3.1 billion) during the quarter, compared with last year’s total of €2.5 billion ($2.7 billion).

In comments on the April renewals, the company said it concentrated on “its existing business in order to safeguard the continued good quality of the property and casualty reinsurance portfolio,” given the predominantly soft state of the market.

“The premium volume booked from the treaty renewals as of April 1, 2017 contracted by 4.9 percent,” Hannover Re said in a statement.

*This story appeared previously in our sister publication Insurance Journal.