Currency Hits Munich Re's Revenue Even as Profit Jumps 57% and Payouts Rise

Despite a 57% profit surge to €1.71B, Munich Re saw reinsurance revenue fall 5% and stock drop 21% as strong euro and soft pricing weigh. Capital returns remain robust.

Munich Re’s decision to walk away from underpriced contracts saw its reinsurance book shrink by 18.5% in the first quarter, even as profits surged 57% to €1.71 billion. The trade-off is a stock that has slid 21% from its 52-week high as currency headwinds and pricing pressure overshadow the underlying strength.

The first-quarter net profit of €1.71 billion compares with a year?ago period that was hit by the California wildfires, which alone cost the group roughly €800 million. The property-casualty reinsurance division posted a 145% profit increase, while the combined ratio improved to 66.8% — well ahead of the 74.6% analysts had pencilled in.

Yet revenue disappointed. Insurance revenue fell 5% to €15 billion, missing expectations of an increase. Finance chief Buchanan blamed the strong euro: at the start of 2025 one euro was worth around $1.03, but during the first quarter of 2026 it traded consistently between $1.15 and $1.20. Because many contracts are denominated in dollars, the exchange rate directly cuts premiums reported in euros.

Pricing in the April renewal round also proved softer, with risk?adjusted prices declining 3.1%. Munich Re chose not to renew contracts that failed to meet its minimum return targets, causing written volumes to contract 18.5%. Rival Hannover Rück took the opposite approach and expanded its book. Buchanan described the pricing environment as still “solid” and expects the level to be “largely maintained” in the July renewal round — a concrete test of that confidence.

For the full year, Munich Re sticks to its forecast of roughly €64 billion in insurance revenue and about €6.3 billion in net profit. The dividend has been raised 20% to €24.00 per share, implying a yield that one analysis puts at 4.5% and another at roughly 5% based on the current share price of €475.10. The group is also executing a buyback programme that runs until April 2027; the first tranche of up to €900 million is to be completed by the end of August. Together with the dividend, Munich Re is returning around €5.3 billion for the 2025 financial year.

Despite the strong capital return, the stock has been under pressure. The €475.10 closing price on Friday sits just above its 52?week low and about 21% below the year’s high of €605.00. Valuation models in one analyst report peg fair value at around €582, implying significant upside. The trailing price?to?earnings multiple stands at just over nine, while the forward P/E for 2026 is roughly ten — levels that historically signal a discount.

Market participants are now waiting for the July renewal round as the next catalyst. In the near term there are no company?specific triggers, and the share price remains vulnerable to currency swings and large?loss developments. The technical support around €475 will be closely watched; a break below that level could invite further selling.