Munich Re Wields Buyback as Q1 Earnings Surge Fails to Stem Share Slide Near 52-Week Floor

Munich Re posts 57% profit jump to €1.714B, but shares near 52-week low. €5.3B shareholder return via buyback and dividend. Fitch flags declining rates and volume.

The gap between Munich Re’s operational strength and its stock-market performance has rarely been wider. The Dax-listed reinsurer posted a 57% jump in first-quarter net profit to €1.714 billion, yet its shares continue to trade just a whisker above a 52-week low. On Friday, the stock changed hands at €470.50, only €3.20 clear of the trough of €467.30 hit earlier in the year. Since January, the equity has shed more than 14% of its value.

Management is turning the weakness to its advantage. The €2.25 billion share buyback programme announced last year is running at full throttle. In the third week of May alone, Munich Re purchased 470,492 of its own shares on Xetra, paying an average price between €466 and €485 per share. On 21 May, it bought 470,992 shares at an average of €479.54. The buyback, combined with a planned dividend of €24.00 for the 2025 financial year, will return a total of €5.3 billion to shareholders.

The scale of the capital return is underpinned by a robust solvency ratio of 292%, well above the internal target of 200% and already incorporating the buyback’s impact. Analysts, meanwhile, see material upside: the consensus fair value for Munich Re stands at €569.00 per share.

Q1 Profit Boosted by Calm Catastrophe Season

The first-quarter numbers look stellar on the surface. Earnings per share climbed to €13.41 from €8.34 a year earlier. The combined ratio in property & casualty reinsurance improved sharply to 66.8% from 83.9%, driven largely by a collapse in major losses from €1.008 billion to just €130 million. The absence of a repeat of the devastating Los Angeles wildfires that weighed on the prior-year period was the primary factor.

Yet that tailwind is inherently statistical rather than structural. The operational result — €2.230 billion, with an annualised return on equity of 19.7% — still marks a strong improvement over last year’s 13.3%, but it owes a significant debt to low large-loss frequency.

Fitch Flags Rate Decline and Volume Squeeze

Rating agency Fitch has sounded a more cautious note. While it acknowledges that the four largest European reinsurers — Munich Re, Swiss Re, Hannover Re and SCOR — collectively lifted their annualised ROE to 21.4% in the first quarter from 17.5%, it points to two worrying trends. Combined premium income for the group fell by around 5% in the quarter. And at the April 2026 renewals, average property & casualty rates dropped by 3.7%.

Munich Re’s own renewal experience was even more pronounced in certain segments. The price decline in its renewed portfolio came in at 3.1%, while the volume of business written shrank by 18.5% to just €2.0 billion. The company appears to be prioritising margin discipline over top-line growth, a strategy Fitch says should still allow the big reinsurers to meet their 2026 profitability targets — provided they stick to disciplined underwriting.

July Renewals Set the Next Test

The next major checkpoint is the July renewal season, where contracts for the second half of the year are negotiated. Munich Re expects price declines to continue, but believes overall conditions remain favourable and that contract terms can still be improved. The question is whether the competitive pressure that has already bitten into the April renewals will intensify further.

For now, the share buyback offers a floor under the stock. Buying at an average price below €480, the company is effectively signalling that it views its own equity as undervalued. But with fundamental headwinds building, the market will be watching closely to see whether operating results can sustain their momentum — or whether the current share price is the canary in the coal mine.