Munich Re’s Currency Headwind Threatens to Dampen a Quarter of Record Capital Returns

Munich Re plans €5.3B in dividends and buybacks, but a surging euro erodes dollar earnings, dragging shares near a 52-week low ahead of Q1 results.

The disconnect between Munich Re’s operational muscle and its languishing share price has rarely been starker. The reinsurance giant is poised to shower shareholders with €5.3 billion in combined dividends and buybacks this year, yet its stock hovers near a 52-week low. The culprit? A surging euro that is eroding the value of dollar-denominated earnings just as the group prepares to report first-quarter results.

A Quarter-Century of Dividend Growth Continues

On 5 May, Munich Re will pay a dividend of €24.00 per share — a 20% increase on the prior year and the 25th consecutive annual hike. The payout is part of a broader capital return programme that includes a share buyback of up to €2.25 billion, which management plans to execute and cancel by April 2027. The supervisory board’s relevant committee must still give formal approval for the buyback, but the trajectory is clear: the group is returning record sums to investors even as the market marks down its equity.

The stock closed the week at €513.20, roughly 15% below its 52-week high of €605 and down about 6.5% since the start of the year. Analysts point to a yawning gap between the company’s financial strength and its valuation, with the share price failing to reflect the underlying momentum in the core reinsurance business.

The Strong Euro Casts a Shadow Over Q1

The first quarter was operationally benign, with no major catastrophe losses to speak of. But a more insidious threat has emerged: the euro’s sharp appreciation against the US dollar. At the start of 2025, the single currency was trading at around $1.03. During the first quarter, it briefly surged past $1.20. Since Munich Re conducts a substantial portion of its business in dollars, the translation effect will weigh directly on reported premiums and earnings.

The currency hit is not new. In previous periods, foreign exchange losses have carved deep holes in the group’s accounts, with the most recent negative impact reaching €1.4 billion. The underlying operational performance may have been stronger than the headline figures suggest, but the strong euro risks masking that progress when the Q1 numbers are published on 12 May. The group’s full-year net profit target of €6.3 billion — built on a record €6.12 billion in 2025, the fifth consecutive year of beating its own goals — requires a solid start to the year, and the dollar headwind is making that task harder.

Auditor Overhaul and Board Renewal

At the annual general meeting in Munich on 29 April, shareholders formally approved KPMG as the group’s new auditor for the 2026 financial year. The change follows the fallout from the Wirecard scandal: the audit oversight body APAS imposed fines on EY, the previous auditor, and temporarily barred the firm from taking on new mandates for public-interest entities. KPMG will also audit Munich Re’s sustainability report going forward.

The AGM also marked a generational shift on the supervisory board. Clement B. Booth stepped down at the conclusion of the meeting, while former CEO Joachim Wenning will join the board after the statutory cooling-off period expires.

ERGO’s AI-Led Restructuring and Cost Targets

Beneath the surface, Munich Re is reshaping its operations. Its primary insurance subsidiary ERGO plans to cut around 1,000 jobs by 2030, primarily in call centres, claims handling, and routine document processing — roles increasingly being automated by artificial intelligence. The group has ruled out compulsory redundancies until 2030 and expects to retrain roughly 700 employees for new roles.

The restructuring is designed to deliver annual cost savings of €600 million by the end of the decade, with €200 million of that targeted for 2026 alone. The efficiency drive comes as the group pursues a return on equity target of more than 18%, a goal that will be tested if currency headwinds persist.

Climate Criticism Intensifies

Environmental group Urgewald used the AGM to attack Munich Re’s climate strategy. While the reinsurer has partially excluded new LNG terminals from its underwriting — provided they are not directly linked to new gas fields — it continues to insure fossil fuel infrastructure. The company has set a complete exit from coal insurance for 2040, but has no binding end date for oil and gas coverage. This stance drew sharp rebukes from activists, particularly given that Munich Re itself estimated global natural catastrophe losses at $320 billion in 2024.

The Q1 results on 12 May will reveal whether the strong euro has already begun to undermine the group’s ambitious 2026 targets — and whether the market’s pessimism is justified, or simply a case of currency noise drowning out a fundamentally strong signal.