Munich Re’s 57% Profit Surge Fails to Lift Shares as Currency Headwinds and Selective Underwriting Bite
21.05.2026 - 14:33:26 | boerse-global.de
A stellar first quarter at Munich Re has done little to arrest a slide in its share price, with the stock now hovering perilously close to its 52-week low. The reinsurer posted a 57% leap in net profit to €1.7 billion for the opening three months of 2026, but investors remain fixated on the drag from a strengthening euro and the insurer’s deliberate decision to walk away from low-margin business.
The shares have lost around 11% since the start of the year and closed Wednesday at €488.10, more than 9% below their 200-day moving average. On a 30-day view the decline is steeper at roughly 15%, with the current price of €482.60 just a few percentage points above the 12-month trough of €467.30. Short sellers have been unwinding their bearish bets, yet the technical picture remains fragile.
Currency translation is the chief culprit. The euro’s appreciation against the dollar – in which the group earns a large slice of its premiums – sliced group revenue by 5% to €15 billion for the quarter, a figure that fell short of analyst expectations. A year earlier turnover stood at €15.8 billion. Management blamed the shortfall squarely on exchange-rate losses.
Beneath the top line, however, the operating story is robust. Large losses tumbled to just €130 million, compared with more than €1 billion in the first quarter of 2025 when California wildfires struck. That drove the combined ratio down to an impressive 66.8%. Munich Re’s technical result – a broader measure of underwriting performance – climbed to nearly €2.7 billion.
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The group is putting margins ahead of volume growth. That was evident in the April renewal season, where the volume of business written shrank by almost 19% to €2 billion. Munich Re systematically walked away from contracts that did not meet its return targets, sacrificing top-line expansion to preserve pricing discipline. The strategy is winning praise from some analysts, but it adds to the revenue pressure.
Shareholder returns are not being neglected. A €900 million share buyback programme is currently underway, though it has done little to stem the stock’s slide. The reinsurer’s solvency ratio stands at a comfortable 292% – a figure that already accounts for a planned €2.25 billion in buybacks for the full year. That capital cushion far exceeds regulatory requirements.
In a separate move, the company is changing its auditor. KPMG will take over from EY after the board responded to the fall-out from the Wirecard scandal. Germany’s audit oversight body, APAS, had imposed a ban on EY taking on new audit mandates.
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Management is holding firm to its full-year net profit target of €6.3 billion, though the revenue goal of €40 billion now looks more ambitious. The forward guidance is for a gradual tilt away from the volatile property and casualty business. By 2030, the group wants life and health insurance plus its ERGO primary arm to contribute 60% of earnings.
Analyst opinion remains split, with ratings ranging from buy to neutral. The next major test comes in July, when the industry reconvenes for the mid-year treaty renewal round. Stable pricing would ease margin pressure, but a continuation of the dollar’s weakness would prolong the currency headache. For now, Munich Re’s operational strength is being overshadowed by forces largely beyond its control.
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