Munich Re Sees a Bargain in Its Own Shares Even as It Cuts Reinsurance Volume by 18.5%

Despite property-catastrophe reinsurance price cuts, Munich Re posts record profit, boosts dividend, and launches €2.25B buyback as insiders buy stock near 52-week low.

The world’s largest reinsurer is facing a textbook soft market, yet its boardroom and treasury are both signaling confidence in the stock at levels not seen in a year. Munich Re has slashed its property-catastrophe exposure by nearly a fifth to defend margins, while insiders and the company itself have been aggressive buyers of the dip.

According to broker Howden Re, prices in property-catastrophe reinsurance fell 15% to 20% during the June and July renewal rounds, with loss-free contracts seeing cuts of up to 25%. The culprit is an oversupply of capital chasing a limited pool of risk. Munich Re responded by simply walking away from contracts that no longer met internal return hurdles, deliberately shrinking its volume in affected lines by 18.5%. As a result, the risk-adjusted price decline in its own portfolio was a relatively modest 3.1% — far shallower than the market average — but the top line still took a hit: first-quarter revenue dropped 5.7% year-on-year to €17.11 billion.

That discipline, however, has not dented the bottom line. The group posted a record net profit of €1.7 billion in the first quarter, translating into a stellar 19.7% return on equity. With a solvency ratio of 292%, the balance sheet is rock-solid. Yet the stock has shed roughly 16% since the start of the year and was recently trading at €467.80, just 7% above the 52-week low of €437.50. That disconnect between operational strength and market perception has prompted several board members to act.

Board member Mari-Lizette Malherbe bought 413 shares in May, and four other executives also snapped up stock near the year’s trough. The buying spree sends a clear message, even as one major institutional holder pulls back: JPMorgan Asset Management trimmed its voting-rights stake to 2.99%, citing a multi-party agreement. Meanwhile, the company itself is scooping up its own paper with equal conviction. The €2.25 billion buyback program — the first tranche of €900 million runs until August 2026 — has already retired more than 850,000 shares since mid-May, tightening supply and boosting earnings per share.

Shareholders are also being rewarded with a dividend hike of a fifth to €24.00 per share, extending an unbroken 25-year streak of stable or rising payouts. Even at the current price, the yield is attractive. Analysts see further upside: the consensus price target stands at €564.57, implying a 22% gain from the recent level of €460.70 (which the stock touched early this week). But the gap to the all-time high of €605.00 remains a hefty 23% — a reminder of how far sentiment has soured.

The next major test comes in July, when the industry negotiates key renewal terms for the second half. In the April round, Munich Re already demonstrated its pricing power by capping its own premium decline at 3.1% while shedding volume. How much further it can resist the downward pressure will determine whether the full-year net profit target of €6.3 billion stays within reach. The full half-year report on August 7 will provide the first hard look at hurricane season losses and the impact of the July renewals. For now, the board’s own money is betting that the cycle has not yet broken the company’s stride.