Chairman of the Board of Management Nikolaus von Bomhard summed up the year as follows: “It was not an easy year given the high burdens from major losses, but we were nevertheless able to bring it to a successful close. With a profit of €2.43bn, we even slightly surpassed the target we had set ourselves. The year was good in particular because, despite very low interest rates, our 13.5% return on risk-adjusted capital came very close to our target of 15%.”
The beginning of 2011 was marked by natural catastrophes in Australia and New Zealand. In view of this major-loss burden in the first two months of the year, the profit target of around €2.4bn for 2011 can only be achieved if random major losses remain below the average to be expected in the further course of the year. Munich Re estimates that the claims burdens from the devastating earthquake in New Zealand, the floods in Brisbane and Cyclone Yasi will total around A$ 1.5bn, with the New Zealand earthquake alone accounting for A$ 1bn, although the initial provisional estimate for the earthquake in particular is subject to uncertainty. Von Bomhard emphasised that “Our core business is to carry losses from natural catastrophes. With primary insurance and reinsurance, we help to cushion at least the financial consequences of such events for the people and regions affected.”
Von Bomhard was generally optimistic regarding the further course of 2011 and the following years: “In reinsurance, our market and client proximity is paying off. We have the capacity to design complex reinsurance solutions for our clients, a fact that sets us apart from our competitors. At the same time, our products in the field of renewable energies and our concept for insuring offshore oil drilling are proof of our ability and willingness to foster innovation.” Von Bomhard also mentioned that the renewals of reinsurance treaties in the property-casualty segment at 1 January 2011 had been very satisfactory. Also, there was potential for profitable growth owing to clients’ increasing demand for solutions to transfer risk to financially strong reinsurers as a means of capital relief. Such contracts were responsible for around half a billion euros of new business during the renewals at 1 January 2011.
“In primary insurance, we successfully launched the ERGO brand on the German market in 2010. ERGO has already become a household name in Germany – a very important step forward for the Group as a whole and essential for ERGO’s further development in particular”, explained von Bomhard. In Munich Re’s youngest field of business, Munich Health, income grew and consolidation is on track.