Munich Re’s Stellar Underwriting Hit by Pricing Headwinds as Insiders Bet on Recovery

Munich Re posts stellar 66.8% combined ratio and 57% profit surge, yet falling premium revenue and pricing pressure push shares down 14% in 2025.

Munich Re posted a combined ratio of just 66.8% in property-casualty reinsurance for the first quarter — a figure that means less than 67 cents of every premium euro went to claims and expenses. That kind of underwriting discipline would normally send shares higher, but the stock is trading at roughly €473, barely above its 52-week low and down some 14% since the start of the year. The market is instead focused on the top-line squeeze.

Net profit surged 57% to €1.71 billion in the quarter, and the group reaffirmed its full-year target of €6.3 billion. Yet premium revenue, adjusted for currency effects, slipped to around €15 billion. Chief Financial Officer Andrew Buchanan acknowledged that the €40 billion premium target for the reinsurance unit has become “significantly more challenging,” blaming negative premium adjustments and a weak April renewal season. The volume written in that round tumbled 18.5%, driven largely by Asian markets where prices fell an average of 3.1%.

Analysts have responded cautiously. Erste Group cut its rating on Munich Re from “Strong Buy” to “Hold,” following an earlier price-target reduction by Berenberg Bank. The stock now trades at a price-to-earnings ratio of roughly 9 to 10, a level that ordinarily screams value. But the market is waiting for evidence that pricing pressure is easing.

Rising confidence from the boardroom offers a counterpoint. Three members of the executive board purchased shares this week worth more than half a million euros, buying near the stock’s recent trough. Such insider accumulation is often seen as a signal that management considers the sell-off overdone.

Behind the scenes, the balance sheet remains formidable. Equity under IFRS rose to €34.6 billion, and the Solvency II ratio, while edging down from 298% to 292%, still sits far above regulatory minimums. That capital strength supports a generous shareholder payout: a dividend of €24.00 per share was distributed for 2025, and a €2.25 billion share buyback programme is slated to run through 2026 and 2027. Management has also laid out a medium-term target of average annual earnings growth of 8% through 2030.

Technically, the stock has ground to recover. It remains well below the 200-day moving average of €537.61, and the relative strength index of 72 suggests short-term overbought conditions after a modest one-day gain. The key catalyst for any re-rating, analysts say, is whether catastrophe losses stay within normal bounds in coming quarters. If they do, Munich Re’s operational strength should eventually start to show up in the share price.