Half Year 2020 Muenchener Rueckversicherungs Gesellschaft AG in Muenchen Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kamran Hossain - RBC Capital Markets, Research Division - Analyst : Two questions for me. The first one is just on pricing. You -- yes, Joachim, your comments at the beginning on reinsurance pricing were -- for Munich Re, though, it's surprisingly positive. Now I know you're kind of super cautious on these things over the years, but you sounded -- it's actually upbeat there. I just struggle to kind of reconcile it with a 2.8% price increase. I know it's good, but it doesn't quite feel like it's as monumental as the kind of environment that perhaps you're describing. So maybe could you help me to just understand the difference between kind of your 2.8% and things really moving very kind of significantly on pricing or whether that's kind of one thing? And the second question is as I sit here at home working from my computer, are we seeing any changes in the cyber book? What's the loss experience being like in the first half in cyber? Have IBNR just kind of gone up there as well as we potentially find out those being all [hacks], et cetera, ransomware attacks in the first half? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2020 / 11:00AM, MUVGn.DE - Half Year 2020 Muenchener Rueckversicherungs Gesellschaft AG in Muenchen Earnings Call Joachim Wenning - Mnnchener Rnckversicherungs-Gesellschaft Aktiengesellschaft in Mnnchen - Chairman of the Management Board So I will take the first one. So with regard to pricing, why is our talk now pretty confident with regard to it. It has been the -- very clearly, it has been the highest rate change and rate increase since many, many years, according to the methodology that we are applying. You're aware that every peer is applying a different methodology. But if you give ours credit, in 1/7 renewal, it is the highest since a very long time. So that's one evidence. The -- and if you read 2.8%, you might say, come on, it's 2.8%, but it's not 10%, it's not 5%, it's not 15%. Why are they so bullish? There is certain lines of business or certain areas, of course, where the rate increase is deeply into double-digit percentage points. There is others where it's 5%. What we see also in the qualitative side, it's not only those layers or those programs that were loss-making which benefit from rate increases. We also now see a spillover from loss-making into not loss-making areas or lines of business. And that's a new -- that's a good development from our perspective. That is what describes a hard market and the 2.8% that you apply across on the whole portfolio of the P&C business. So if you translate this into amounts, those are good amounts. Christoph Jurecka - Mnnchener Rnckversicherungs-Gesellschaft Aktiengesellschaft in Mnnchen - CFO & Member Management Board Cyber. Well, the -- we are full of a key opinion that the cyber market globally will continue to grow in a very, very, very fast way. So assumption goes up to maybe a EUR 20 billion cyber market in some years from now. And obviously, our strategy is to participate in that market. Margins are attractive so far. But we always have to look at that with a certain level of cautiousness because, finally, also the claims experience, you cannot rely so much on statistics from many decades you're looking at, but it's more -- a really -- a very recent development. You have to incorporate also in pricing. So we think margins are fine. But I wouldn't be too enthusiastic too early about that given all the trends and the claims developments we have to look at anyway. But the growth ambition is there. We are participating in the growth with a variety of entities toward our group in primary as well as in reinsurance, having a global market share around 9%, 10% or something, and regard ourselves as a clear #1 player in this area and globally.