Munich Re Launches €2.25 Billion Buyback as JPMorgan Cuts Profit Estimates but Keeps Overweight

Munich Re returns nearly 90% of net profit to shareholders via buyback and dividend, but a strong euro and shrinking portfolio keep shares below year-end levels despite a 57% profit jump.

The world’s largest reinsurer is spending heavily on its own stock even as currency headwinds and a shrinking underwriting portfolio keep the shares well below their year-end levels. Munich Re kicked off the first tranche of a fresh share repurchase programme on 14 May, allocating up to €900 million through the end of August, with the total buyback set to reach €2.25 billion by spring 2027. The move comes alongside a proposed dividend of €24.00 per share — nearly 90% of last year’s net profit returned to shareholders — but the equity remains under pressure, trading at €487.50 on Monday, roughly 11% below where it started 2026.

The disconnect between the company’s financial performance and its stock price is stark. In the first quarter, net profit surged to €1.714 billion from €1.094 billion a year earlier, fuelled by strong underwriting in property-casualty reinsurance. The solvency ratio stood at a comfortable 292%. Yet insurance revenue slipped to €15.0 billion from €15.8 billion, a decline the company attributes almost entirely to negative currency effects — the euro strengthened to as high as $1.20 during the period, eating into the value of dollar-denominated premiums.

Beyond the exchange rate, Munich Re is deliberately shrinking its exposure. At the April renewal season, the volume of business written dropped 18.5% as the reinsurer walked away from contracts that failed to meet its return thresholds. Management is prioritising margin protection over top-line growth, a strategy that guards profitability in the near term but temporarily suppresses revenue.

JPMorgan’s Kamran Hossain acknowledges the trade-off. This week he lowered his price target on Munich Re from €655 to €590 — a 10% cut — while maintaining an Overweight rating. The revision reflects reduced earnings estimates through 2028, trimmed by up to 5%, driven by anticipated profit declines in the property-casualty reinsurance segment. Hossain remains constructive, however, pointing to what he calls the company’s “Plan B”: diversification through life and health reinsurance and the primary insurer ERGO, which together help cushion the volatility in traditional reinsurance.

That view is broadly shared by the Street. The average analyst price target stands at €560, about 15% above Monday’s close, even though the stock has shed more than 14% over the past 30 days. The 52-week low of €467.30 was set on 13 May — barely a week ago — and the shares have since recovered modestly, adding around 2% on Monday to trade near €487. Despite the bounce, the stock remains well below its 200-day moving average, a sign that the longer-term trend is still shaky.

Munich Re is sticking to its full-year guidance of roughly €6.3 billion in net profit for 2026. The next big test comes in July, when renewal negotiations will reveal whether pricing power holds up. Stable rates would ease some of the pressure on the share price; a persistently weak dollar would prolong it. In the meantime, the company is betting heavily on its own equity — a vote of confidence that the market has yet to fully reward.