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Euro am Sonntag share check: Munich Re share: target cashed, but high dividend stands | message


by Klaus Schachinger, Euro on Sunday

Due to the effects of the Corona crisis, Munich Re cashed in its earnings forecast for the year and stopped the share buyback worth one billion euros. However, the proposal for the Annual General Meeting on April 29 to increase the dividend for 2019 from EUR 9.25 to EUR 9.80 per share was confirmed. Despite the likely write-downs on investments in shares and bonds as a result of the downward slide on the capital markets, the solvency ratio was “in the comfortable range between 175 and 220 percent”, the reinsurance group said.

The solvency ratio is an indicator for the capital reserves to hedge risks from the insurance business. A quota of 100 percent is required by law. Munich Re reported 234 percent for 2019.

Despite the profit warning, the stock came under only moderate pressure. The fact that the reinsurer confirmed the increase in the dividend was registered positively. The other measures had already been expected by some, such as DZ Bank analyst Thorsten Wenzel, when on March 18 the group surprisingly confirmed its goal of generating a profit of 2.8 billion euros in the current year. Even back then, Wenzel warned that the solvency ratio had certainly suffered from the turmoil on the capital market, since price losses on the stock market, falling interest rates and higher risk premiums on bonds all had a negative impact. The analyst believes a decline in the key figure to around 200 percent is plausible. As long as the quota remains in the target corridor of the group of 175 to 220 percent, the dividend will “not be touched”, says Wenzel.

The burden of the corona pandemic the world’s largest reinsurer estimated at a maximum of around two billion euros in March. In the event of “a global pandemic amounting to a 200-year event”, 1.4 billion euros of this would be incurred in life and health insurance, the annual report says. In property and casualty insurance, a “medium to high three-digit million euro charge” can be expected, primarily due to the cancellation of major events such as the Olympic Games. Further details are expected to be available at the Annual General Meeting at the end of April.

Validation: The technical support for the chart between 145 and 160 euros safeguards the price against slipping.



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