Munich Re’s Q1 Report Looms as Currency Squeeze Tests Underlying Strength

Munich Re faces currency headwinds from a surging euro but expects a 52% profit jump in Q1, with disciplined underwriting and cyber insurance driving long-term growth.

The Munich-based reinsurer is heading into its first-quarter earnings release on May 12 with a mixed bag of tailwinds and headwinds. While a relatively quiet period for natural catastrophes has bolstered the underwriting backdrop, a surging euro is eating into the value of dollar-denominated premiums, creating a tension that will be laid bare in the upcoming report.

Shares found some relief in midweek trading, climbing roughly 2.5% in Xetra dealings to €523.20. The bounce comes after the stock had drifted dangerously close to its 52-week low of €507.60, a level hit following the recent dividend adjustment. Earlier in the week, the stock had touched a yearly trough of €503 before rebounding, with market participants viewing the successful defence of the €500 mark as a potential turning point. The shares now trade just below their 200-day moving average, though analysts see substantial upside, with a consensus price target of €591.

The currency headache is the dominant theme for the current period. At the start of 2025, the euro was trading around $1.03, but during the first quarter it surged to as high as $1.20. Given that Munich Re books a significant portion of its contracts in US dollars, the translation effect is compressing reported premiums and earnings. This is not a new phenomenon — the same dynamic already cost the group a double-digit profit decline at the end of last year.

Management is countering with disciplined underwriting rather than chasing volume. At the turn of the year, the company shed unprofitable contracts, which pushed gross premium volume down to €13.7 billion. The broader market is feeling the pinch too, with rates for property catastrophe reinsurance falling 2.5% industry-wide, signalling a saturated market. The strategy of prioritising profitability over scale is showing results, however. Analysts at S&P Global expect a first-quarter profit surge of more than 52%, while the full-year earnings per share estimate stands at €50.20.

The long-term growth story remains centred on cyber insurance. A recent study pegs the global market at $15 billion, with artificial intelligence viewed by many executives as the top technology risk of the year. Munich Re is developing new coverage products to address these threats while simultaneously deploying machine learning internally to accelerate operations. The group is also restructuring its own workforce — its primary insurance arm Ergo plans to cut around 1,000 positions by 2030, relying on natural attrition and retraining rather than compulsory redundancies.

In a notable strategic shift, the group’s asset manager MEAG has joined forces with private equity firm Warburg Pincus to channel capital into European defence companies. For years, large institutional investors shunned the sector on ESG grounds, but that reluctance is now fading.

Chief executive Christoph Jurecka is holding firm on the full-year target of €6.3 billion in net profit, with a combined ratio of 80%. The May 12 report will provide the first hard evidence of whether the underlying business is robust enough to absorb the currency hit and still deliver on those ambitions.