Profit Surge at Munich Re Fails to Reverse Stock Slide as Euro Strength and Volume Cuts Take Their Toll

Munich Re posts stellar Q1 results with €1.71B net income and 66.8% combined ratio, yet shares tumble 14% as strong euro and margin-first strategy weigh on revenue.

The numbers coming out of Munich Re’s first quarter were nothing short of impressive — net income jumped to €1.71 billion, the combined ratio in property-casualty reinsurance hit a stellar 66.8%, and the operating result topped €2.2 billion. Yet the stock tells a different story. Since the start of the year, shares have shed roughly 11%, and a sharper 14% tumble in the past month dragged them to a 52-week low of €467.30. Even after a modest recovery to around €487, the equity remains well below its 200-day moving average of €536, a technical threshold that underscores the prevailing bearish sentiment.

The disconnect between operational strength and market performance stems largely from two factors: a persistently strong euro and a deliberate decision to walk away from business that doesn’t meet the board’s return targets. Insurance revenue slid to just under €15 billion in the first quarter, down from €15.8 billion a year earlier, as a firming single currency eroded the value of premiums earned in dollars. That top-line pressure was exacerbated during the April renewal season, where Munich Re wrote only €2 billion in new business — a 19% contraction from the prior round. The group systematically declined contracts that failed to clear its margin hurdles, sacrificing volume in favour of underwriting discipline.

That discipline is reflected in the capital position. Munich Re’s solvency ratio stands at 292%, a level that already factors in the planned €2.25 billion share buyback programme. The management has reiterated its full-year net profit target of €6.3 billion, signalling confidence that the margin-first approach will continue to pay off even as revenues shrink.

Away from the numbers, the company is switching auditors. KPMG will take over from EY after the regulator APAS imposed a ban on EY picking up new audit mandates following the Wirecard scandal. The supervisory board moved quickly to appoint KPMG, sidestepping any potential disruption to the 2026 audit cycle.

Short sellers, sensing the stock may have been oversold, have been closing out their bearish positions. But the technical picture remains fragile. The next meaningful catalyst on the horizon comes on May 27–28, when Munich Re’s management presents at Deutsche Bank’s Global Financial Services Conference in New York. A confident showing there could provide the spark needed to challenge the 50-day moving average near €529.

For now, the market is weighing a solid operational backdrop against headwinds that are unlikely to abate soon. The July renewal round will offer another key test — stable pricing could ease the pressure on the stock, but any further strengthening of the euro would only prolong the squeeze.