Munich Re's Currency and Pricing Headwinds Drown Out a 57% Profit Surge

Munich Re's Q1 net profit soared 57% to €1.71B, yet shares hit a 2026 low on falling reinsurance prices and euro headwinds. Insider buying and a €2.25B buyback fail to stem decline.

Munich Re posted a first-quarter net profit of €1.714 billion, up 57% from €1.094 billion a year earlier, yet its shares have tumbled to €458.90 — a new 2026 low. That 16.41% year-to-date slide reflects a market more preoccupied with falling reinsurance prices and a strengthening euro than with the bottom-line beat.

The disconnect is stark. Operating profit came in at €2.230 billion and the insurance technical result reached €2.676 billion, but revenue slipped to €15.018 billion. Currency alone clipped nearly €800 million from the top line — a reminder that many contracts are written in dollars, while Munich Re reports in euros. The single-currency move cost the group €162 million in the first quarter after the euro appreciated from around $1.03 to as high as $1.20.

At the same time, the pricing cycle in reinsurance has turned negative. At the April renewal season, risk-adjusted prices dropped 3.1% and the volume of business written shrank 18.5% as the company held its ground on underwriting discipline. The next renewal window in July will be closely watched for signs of stabilisation.

Management bets on the stock, but the market isn't following

Between 12 and 18 May, five Munich Re executives bought a combined 174,361 shares. The purchases ranged from Dr. Achim Kassow’s 300 shares at €470.00 to Andrew Buchanan’s offshore block of 172,728 shares at €466.83. Mari-Lizette Malherbe invested nearly €197,800 at around €478.89, while Stefan Golling and Dr. Markus Rieß added 420 and 500 shares respectively at average prices above €476.

The insider buying has yet to arrest the decline. The share price remains 13.87% below its 200-day moving average of €534.10, confirming the entrenched downtrend.

Meanwhile, the company is executing its own buyback with force. Between 14 and 21 May, it repurchased 470,992 shares at a weighted average price of €477.6878, spending €224.987 million. That tranche brings the programme to roughly a quarter of the €900 million tranche authorised under the broader €2.25 billion buyback envelope, which runs until the annual general meeting on 29 April 2027. Combined with a dividend of €24.00 per share, the group expects to return €5.3 billion to shareholders this year.

Storm risk shifts from Atlantic to the Pacific — and that matters

Hurricane season typically dominates the narrative for reinsurers, but Munich Re’s latest forecast points to a less active Atlantic and a more active western Pacific. El Niño, which the US National Oceanic and Atmospheric Administration now sees with 82% probability from May to July and 96% through February 2027, tends to suppress Atlantic cyclones while fuelling typhoons.

For the Atlantic basin, the company expects 12 to 13 named storms, of which five to six could become hurricanes and two could reach Category 3 or higher (winds above 177 km/h). That is slightly below the long-term average.

In the western Pacific, the outlook is more ominous. Munich Re models 27 named storms, including 18 typhoons and 11 severe typhoons — above the 30-year averages of 24.5 named storms, 15 typhoons and 8.7 super typhoons. Japan, the greater China region and South Korea concentrate high insured values in industrial zones and dense urban centres, raising the potential for a single expensive landfall to rattle the profit forecast even in a moderate Atlantic season.

New York conference puts the narrative to the test

On 27-28 May, Munich Re will present at the Deutsche Bank Global Financial Services Conference in New York. Markus Winter, President and CEO of Munich Re America, is scheduled to meet investors at a moment when the market is reassessing the group’s ability to hit its full-year profit target of €6.3 billion.

The second half will be decisive. A stable July renewal round would ease pricing fears, while further euro strength would prolong the currency drag. Until the half-year report on 7 August, the interplay of buyback momentum, pricing trends and natural catastrophe losses will keep the stock caught between strong underlying earnings and external headwinds that show no sign of easing.