Munich Re’s Contradiction: Heavy Buybacks and Reduced Reinsurance as Shares Languish

Munich Re slashes retrocession cover, cancels sidecars, and buys back shares near 52-week low, while banks cut price targets on nat cat pricing pressure.

Munich Re is executing a bold, two-pronged capital strategy that pits internal confidence against external skepticism. On one side, the insurer has slashed its retrocession cover from $1.55 billion to just $600 million and pulled the plug on two long-standing sidecar structures, Eden Re and Leo Re, alongside a catastrophe bond. The message from the top floor is unambiguous: with a Solvency II ratio of 292 percent — well clear of the internal 200 percent target — the group sees no need to pay outsiders to absorb risk it can comfortably carry itself.

Yet that self-reliance extends further. In the span of a single week, Munich Re bought back roughly 471,000 of its own shares at weighted average prices between €466.53 and €484.88. The stock now trades near €473.70, almost hugging its 52-week low of €467.30. The buyback programme, capped at €2.25 billion total, kicked off with a first tranche of up to €900 million on 14 May that runs until 21 August. Acquired shares are slated for cancellation, which will lift earnings per share.

The show of faith in its own valuation stands in sharp contrast to the view from the Street. Several major banks have trimmed their price targets: JPMorgan cut to €590, Goldman Sachs to €557, and Citigroup to €511.10. The reason lies in persistent pricing pressure in the natural catastrophe business, which accounted for over 30 percent of the April renewal volume. Risk-adjusted prices there fell 3.1 percent, and Munich Re let the written volume drop by 18.5 percent by walking away from contracts that failed its minimum thresholds.

Operationally, the group remains on firm footing. Net profit hit a record €6.12 billion in 2025, beating forecasts, and 2026 began with a strong first quarter: net earnings of €1.714 billion and a combined ratio of 66.8 percent in the property-casualty reinsurance segment. The full-year target of €6.3 billion in net income has been reaffirmed.

The stock’s slide — down roughly 14 percent year-to-date and 11.5 percent below its 200-day moving average — sits oddly next to those numbers. The relative strength index at 78.4 even suggests short-term overbought conditions, an unusual reading for a stock so close to its yearly floor.

The storm season adds another layer of uncertainty. Munich Re sees 12 to 13 named cyclones in the North Atlantic, below the historical average, but the West Pacific poses a bigger threat. El Niño is expected to intensify into a rare “super El Niño,” which tends to spawn more powerful typhoons.

The company will discuss its strategy at the Deutsche Bank Global Financial Services Conference on 27–28 May, and the next major renewal round in July will test whether pricing can stabilise. A further strengthening of the euro against the dollar could compound the headwind. For now, Munich Re is betting heavily on its own balance sheet — both by retaining more risk and by buying its own shares — even as the market keeps its distance.