Munich Re reports wildfire losses but sticks with profit outlook
Munich Re's shares dropped by around 5% this morning in Europe, after the reinsurer company reported a steep fall in its first-quarter net profit. The net result came in at €1.09 billion in the first quarter of 2025. This compares with €2.12bn in the previous year. According to the German reinsurer's quarterly report, the drop in earnings was mainly driven by major claims and the volatility in the capital markets.
Wildfires in Los Angeles were the main source of a major loss of expenditure, costing the company €1.1bn.
According to reinsurance broker Gallagher Re's latest Natural Catastrophe and Climate Report, the Los Angeles wildfires accounted for an estimated $65bn in economic losses and up to $40bn in insured losses.
'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,' Munich Re's CFO, Christoph Jurecka, said. 'This exemplifies the Munich Re Group's resilience, boosted once again by the prudent management of our business portfolio.'
Beyond the losses caused by the US wildfires, the company's investment result was also driving down the overall result, coming in at €1.32bn for the first three months, down from €2.16bn in the previous year, mainly due to noticeable swings in interest rates.
The company also lost half a billion euros in currency exchange, mainly driven by the impact of the weakening dollar.
Insurance revenue from insurance contracts rose to €15.8bn. Within this segment, the group's own ERGO, one of the largest insurance groups in Europe, brought in one-third of this revenue and showed particularly strong growth in international business. Ergo International increased its revenue by the fastest rate among Munich Re's divisions, by 8.8%, compared to the previous year.
ERGO has recently gained access to the US small business insurance market after Munich Re acquired Next Insurance in March. This could boost the overall earnings of Munich Re, which has just reaffirmed its fiscal outlook.
'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,' Jurecka said.
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