Munich Re Earnings: Good Results So Far in 2023; Shares Fairly Valued

Munich Re MUV2 has reported a strong set of results for the first 9 months of the year with a net income of EUR 3.59 billion, so far. Management has also raised its guidance to nearly EUR 1.2 billion per quarter, so EUR 4.5 billion in net income for the full year, quite a bit above the EUR 4.2 billion in net income that we forecast for this year. The numbers reported on Nov. 8 mean that Munich has generated a return on equity of 13% as of the end of September and is probably going to generate a return on equity above 15% for the full year. Both these numbers are quite a bit above the company’s 11% cost of equity.

Major loss expenditure has been lighter this year than usual. Life and health reinsurance is performing ahead of our expectations, yet there are substantial changes here under the new accounting regime IFRS 17. We maintain our no moat rating and EUR 350 per-share fair value estimate until we remodel the business and take a good look at the new long-term earnings drivers under this new regime.