Munich Re’s Q1 Earnings Soar 57%, Yet Currency Drag and Pricing Discipline Weigh on Shares

Munich Re posts €1.71bn net profit, up 57%, but currency headwinds from a strong euro drag shares near year lows. Robust underwriting and capital returns offer support.

Munich Re delivered a blockbuster first quarter, with net profit leaping 57% to €1.71bn. But the stock, closing Friday at €475.10, sits within a whisker of its year low, a 13.5% decline since January and a 21% slide from the 52-week peak of €605. The widening gulf between operational strength and market sentiment sets the tone for the week ahead.

The culprit? Currency. Group insurance revenue slipped 5% to €15bn, undershooting analyst expectations of a rise. Finance chief Buchanan pointed to the euro’s sustained strength: at the start of 2025 the single currency traded around $1.03, but throughout the first quarter of 2026 it hovered between $1.15 and $1.20. With a large chunk of contracts denominated in dollars, the translation hit is directly visible in the euro-denominated premium line.

The underwriting engine, however, ran hot. The reinsurance giant’s combined ratio in property and casualty improved to 66.8% — well ahead of the 74.6% analysts had pencilled in — and normalized at 80.3%. The profit jump was amplified by easy comparisons: the year-ago quarter was hammered by California wildfire losses of around €800m. Group operating earnings rose to €2.23bn from €1.465bn a year earlier, with the P&C segment the primary driver.

Munich Re’s capital position remains unusually robust. The Solvency II ratio stood at 292% at quarter-end, far above the target corridor of 175–220%. That cushion gives the group ample firepower to absorb major loss events or accelerate capital returns to shareholders. For the 2025 financial year, Munich Re has already earmarked €5.3bn in combined dividends and buybacks. The dividend per share was raised 20% to €24.00, and a share repurchase tranche of up to €900m is scheduled to run until the end of August. For 2026, consensus forecasts a dividend of around €25.63 per share.

On the renewal front, pricing discipline is taking precedence over volume. At the April 1 contract renewals, Munich Re accepted a risk-adjusted price decline of 3.1% and let its written volume shrink by 18.5% rather than undercut its own return thresholds. Rival Hannover Re took the opposite tack and expanded its book. Finance chief Buchanan described the price level as “solid” and expects it to be “largely maintained” in the next major renewal round in July — a key event the market will be watching closely.

Shares ended the week at €475.10, up 1.4% on Friday but still nursing a weekly loss of 5.7%. Over the past 30 days the stock has shed 15.6%, and the 52-week low of €467.30 is barely a stone’s throw away. For the new trading week, defending the €475 area will be critical; a break below it could open the door to fresh lows.

On valuation, the stock trades at a price-to-earnings multiple of roughly 10 for 2026, and the dividend yield nudges 5% — income appeal that has done little so far to arrest the downward drift. With no near-term corporate catalysts on the horizon, all eyes turn to July’s renewal round as the next possible trigger for a change in direction.