Reinsurance industry giant Munich Re has today reported a net result of €1.1 billion for the first quarter of 2025, despite losses from the Los Angeles, California wildfires in January of around €1.1 billion, which pushed the combined ratios for property and casualty (P&C) and Global Specialty Insurance (GSI) above target.

The total California wildfire loss estimate is slightly lower than the €1.2 billion anticipated by the firm when it released its full year 2024 results back in February, but is still significant.

The majority, around €800 million of Munich Re’s wildfire loss hit the P&C reinsurance business, with the firm reporting major losses from natural catastrophes of €757 million in Q1 2025 for P&C, up on last year’s €189 million, as man-made major losses fell slightly to €251 million from €262 million.

All in all, the P&C segment experienced claims costs from major losses of more than €1 billion in Q1 2025, compared with just €450 million in Q1 2024. As a result of the LA wildfire-driven elevated loss experience, the P&C reinsurance segment’s combined ratio deteriorated to 83.9% in Q1 2025 compared with 69.7% in Q1 2024. The segment’s net result declined to €343 million from €1.2 billion last year, while insurance revenue from insurance contracts issued rose to €4.9 billion from €4.7 billion.

This quarter, for the first time, Munich Re has reported on GSI, previously part of the P&C business, as a separate segment. GSI posted a net result of €8 million in Q1 2025 compared with €163 million in Q1 2024, with a combined ratio of 95.5%, up on last year’s 87.6%. The wildfires were the largest single claims event for the GSI segment in the quarter at around €200 million. within GSI, insurance revenue from insurance contracts issued increased to €2.3 billion from €2.1 billion.

Partially offsetting the dip in P&C and GSI profit, Munich Re’s life & health reinsurance segment delivered a Q1 2025 technical result of €608 million. which is up on Q1 2024’s €484 million, as the net result rose to €501 million from €487 million. Insurance revenue from insurance contracts issued increased slightly year on year to €3.1 billion.

Overall, the reinsurance segment contributed €853 million to Munich Re’s Q1 2025 net result, which is down on Q1 2024’s €1.9 billion. Insurance revenue from insurance contracts issued rose to €10.3 billion from €9.9 billion, although the technical result decreased to €1.5 billion and the operating result to €1.1 billion, compared with €2.1 billion and €2.6 billion, respectively, in Q1 2024.

The global reinsurer has also provided an update on its April renewals, revealing that it managed to increase the volume of business written by 6.1% to €2.8 billion, citing a still “favourable” environment despite growing market challenges.

“Munich Re was thus able to leverage both its close relationships with clients and its expertise to tap into attractive business opportunities arising from the expansion of existing client relationships as well as new business – particularly in India, Latin America and Europe. It was possible to maintain the portfolio’s high quality thanks to stable contractual terms and conditions. Munich Re consistently discontinued business that did not meet expectations with regard to prices or terms and conditions,” explains the firm.

Adding: “Although prices fell overall, they mostly compensated for the higher loss estimates in some areas, which were primarily attributable to inflation and other loss trends. Primary insurance prices also increased in many markets, with Munich Re benefiting as regards proportional reinsurance contracts. Despite a 2.5% drop, the high price level of Munich Re’s portfolio changed little overall. When adjusted for portfolio diversification effects, rates dropped by 1.7%. These figures are, as always, risk-adjusted. In other words, price increases are offset if they are associated with increased risk and, consequently, elevated loss expectations.

“Despite market pressure increasing, Munich Re expects the environment to remain positive in the upcoming July renewal round.”

Back to the Q1 2025 results and specifically to ERGO, Munich Re’s primary insurance arm, the net result rose to €241 million from €226 million, as insurance revenue from insurance contracts issued grew to €5.6 billion in Q1 2025 from €5.2 billion in Q1 2024.

The reinsurer highlights particularly strong growth in ERGO’s international business, which generated a higher technical result in the quarter, more than offsetting a slight decrease at ERGO Germany.

On the asset side of the balance sheet, Munich Re’s investment result decreased to €1.3 billion in Q1 2025 from €2.2 billion in Q1 2024, while regular income from investments increased to €2.1 billion from €1.8 billion, driven in part by sustained high interest rates.

The Q1 investment result represents a return of 2.2% on the average market value of the portfolio, compared with 3.8% last year.

So, all in all, Munich Re’s group net result came down, but insurance revenue from insurance contracts issued rose to €15.8 billion from €15.1 billion. The company’s total technical result declined to €2.1 billion from €2.7 billion, driven by the higher loss costs in P&C reinsurance. The operating result decreased to €1.5 billion from €2.9 billion, as the annualised return on equity decreased to 13.3% for Q1 2025 from 27.2% in Q1 2024.

“Although Munich Re did not emerge unscathed from the devastating wildfires in Los Angeles in January 2025, we nevertheless managed to generate a quarterly profit of €1.1bn. This exemplifies the Munich Re Group’s resilience, boosted once again by the prudent management of our business portfolio. For example, the impressive contributions to the net result from life reinsurance and from ERGO partially offset the higher combined ratios for property-casualty reinsurance and Global Specialty Insurance. We’re sticking with our profit guidance of €6bn for the 2025 financial year – thanks in no small part to ongoing favourable market conditions and the high quality of our portfolio,” said Christoph Jurecka, Chief Financial Officer.

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