Muenchener Rueckversicherungs-Gesellschaft in Muenchen AG Q1 2025 Earnings Call Transcript

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

Question: Andrew Baker - Goldman Sachs Group, Inc. - Analyst : Great, thank you for taking my questions. First one, just interested in your outlook for the midyear renewals versus what you've seen in 1/1 and 1/4. And it looked like, in April, you're willing to give up a bit more margin for volume. So just curious how you're thinking about volume versus margin against this backdrop for the midyear. And then secondly, we just heard from one of your peers that they'd be willing to use reserving buffers not just to manage sort of large loss volatility but also to support earnings if we do see a softening cycle. Can you just remind me your philosophy here? I think you've said in the past, you'd be less inclined to use buffers to support earnings in this softening cycle. But can you just remind me where we're at on that. Thank you.

Question: Andrew Baker - Goldman Sachs Group, Inc. - Analyst : Great, thank you very much.

Question: Michael Huttner - Joh. Berenberg, Gossler & Co. KG - Analyst : Fantastic. Thank you very much. So Life Re, the insurance service result, EUR608 million. Your guidance, EUR1.7 billion, would imply just over EUR400 million a quarter. And here, you've got an experience variance of around EUR150 million. Can you explain what the -- where the experience variance is coming from and whether it's structural? I'd love you to say structural and that US mortality has turned the corner. And I'd love you to say, if you remember the dinner, that it's all coming from these or partly from these obesity drugs. But obviously, facts are better. And then you said the solvency stayed largely flat, and this is despite the EUR2 billion deducted for the buyback. So how do I've completely forgotten, or I've never asked. The you have EUR2.1 billion net profit of EUR1.1 billion net profit. Did you if I deduct the dividend accrual, I'm not sure that's what you do, but and then add the and deduct the buyback, then I'm down quite a lot, which implies that something else was very, very positive in the quarter. I just wondered if you could help me out.

Question: Michael Huttner - Joh. Berenberg, Gossler & Co. KG - Analyst : Wonderful, thank you very much.

Question: Kamran Hossain - JPMorgan Chase & Co - Analyst : Hi, morning, I've got two questions. The first one is on GSI. Just I mean, I guess, looking back at the disclosure we got yesterday plus today's quarter, you haven't hit the 90% combined ratio target in full for the last five quarters. Just interested in what the plan is to get this back to target. And just to clarify on this as well, I think, Christoph, you said the number would have looked better today, but the you don't include the internal reinsurance effects. So I just wanted to clarify whether the 90% includes that target or not or whether it should trend a little bit above 90% and actually you get a benefit in P&C Re. The second question is on I guess, on the life business. We've seen very strong new business generation. I think the market, we've seen some deals that include US long-term care. Could you maybe elaborate on your appetite for kind of whether you want to take a long-term care business and whether the business you put on in this quarter and previous quarters have included long-term care? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Kamran Hossain - JPMorgan Chase & Co - Analyst : Okay. Thanks very much, Christoph.

Question: Ivan Bokhmat - Barclays Bank - Analyst : Hi, good morning. Thank you very much. My first question would be on the outlook and the guidance. I mean one element that we have there is the insurance revenue growth, EUR42 billion for reinsurance, EUR64 billion for the group. So I'm just wondering, given the building up of the FX headwind, is that the target that you'll be would have full confidence in reiterating? Should we expect some acceleration of this run rate later in the year? And maybe on that topic of FX headwind, you could just comment on how do you think about that? The second question is, in fact, on the FX. You've historically been taking a substantial long dollar position, both structurally and strategically as part of the investment book. So I'm just wondering whether that has changed right now. I mean how do you think about the potential FX impact in Q2 and later in the year? And what's your appetite over there?

Question: Ivan Bokhmat - Barclays Bank - Analyst : Can I just follow up on that, please? On the FX impact, maybe you could talk about the sensitivity of your earnings, let's say, to a 10% devaluation of the dollar.

Question: Shanti Kang - BofA Securities - Analyst : Hi, good morning. See, last week, we heard from a company that mentioned that they were able to secure an aggregate cover, which was expected to buy in a 1-in-4 and a 1-in-5 type scenario, which is lower than we typically expect. But I was just curious to hear more about your participation in the aggregate market today. And then the second question was, obviously, on solvency, it's level. Clearly, capital generation is very strong. I was just curious, given the comments earlier this year on M&A, I think you mentioned you'd look in Global Specialty. And I was just wondering what size or scope of M&A you'd be looking at within that segment, for example, or if it would be outside of Global Specialty as well.

Question: Shanti Kang - BofA Securities - Analyst : Great, thank you.

Question: Darius Satkauskas - Keefe, Bruyette, & Woods, Inc. - Analyst : Two questions, please. Do you still see US property cat as a growth opportunity in the near term, given the sort of trends and the fact that inflation was has been eroding nominal attachment points, et cetera, even if you managed to sort of defend it since the move up in 2023? And then would it be possible to give us some color of where you think through-the-cycle normalized combined ratio for GSI is?

Question: Darius Satkauskas - Keefe, Bruyette, & Woods, Inc. - Analyst :

Question: Darius Satkauskas - Keefe, Bruyette, & Woods, Inc. - Analyst : Thank you.

Question: Vinit Malhotra Mediobanca - Banca di credito finanziario S.p.A. - Analyst : Yeah, thank you. Good afternoon. If I can just ask on the -- there is this push on the casualty side outside the US, and we also know that one of your other peers has a stated target on a growth area. And today, you're also growing in that market. Could you just comment a bit about how attractive is it, what's the competition, what's the risk? And second question, again, on P&C Re, on the loss component where there was, I think, at least to me a surprise, a negative effect. Can you just comment a bit because I think one of your other peers noted that market was profitable now, pretty positive? So just curious as to what drove that increase. And if I can ask the GSI 90% is gross number, no internal in that? Am I correct?

Question: Vinit Malhotra Mediobanca - Banca di credito finanziario S.p.A. - Analyst : Sure, thank you very much, sir.

Question: Iain Pearce - Iain Pearce BNP Paribas Exane - Analyst : Hi, good morning. Thanks for taking my questions. The first one was just on the Global Specialty growth outlook. So the sort of EUR10 billion you talked about at the full year presentation, it looks a bit stretched based on the underlying growth, particularly if you factor in the likelihood of FX headwinds going forward. So do you still see the EUR10 billion as a reasonable number? And also, if you could touch on what you're seeing in terms of pricing within the Global Specialty segment, that would be very helpful. And I think there was a question from Chris about American Modern growth opportunities, which might have been covered when we were talking about the tax item. And the second question was on the currency result. So clearly, we have negative FX items in P&C Re, which was sort of expected. There's quite a big negative FX item or currency results in ERGO Germany, which I struggle to understand given the jurisdiction. So if you could touch on what's driving that, that would be very helpful as well. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Faizan Lakhani - HSBC - Analyst : Hi there, thank you for my questions. The first was on the discounting benefit that's meant to be structurally higher for the rest of this year. You mentioned there'd be an offset on the IFIE. Would it be right to say, given the timing difference, that you get an elevated benefit this year relative to next year? Second question is on GSI. I know you don't provide a budget for the nat cat losses, but given the fact that you said that the experience is in line and that you're opening at 95.5% Q1, can we assume once we adjust for LA wildfire that you have sort of 4- to 5-point budget for nat cat? Is that the right way to think about it? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: James Shuck - Citigroup Inc. - Analyst : Thanks. Good afternoon. Just on the IFIE versus discount rate benefit topic again. So the -- if I understood you correctly, just in your answer to that last question, you said that the combination of those 2 are in line with expectations. I think kind of what we're trying to get to is, is that positive or negative expectation for the full year? And I'm interested, I mean, you've said in the past that you will offset any positive and add it to an unspecified reserve and then that will be released in the future as interest rates start to come down. How will we see that release come through? Will it manifest through the attritional loss ratio? Or will you separately identify it for us in the normalization of your combined ratio in PC Re? That's my first question. Secondly, on Next. So I just had a couple of questions kind of actually on this business because I struggle to see how you can get to a mid-triple-digit granted US GAAP net income in the midterm. There's revenues of EUR548 million currently in the pack that you disclosed. And even if I grow that at 20% per annum for the next kind of 2, 3 years, to get to mid-triple digit, you're talking about a significant margin on that kind of revenue. And that business made a loss of EUR94 million in '24. So perhaps you can just help me understand the glide path to mid-triple digit for Next, please?