Munich Re reported second-quarter proft that exceeded analyst estimates on “very low” major-loss expenditures in its property-casualty reinsurance business.
Net income amounted to about €2.2 billion ($2.5 billion) in the three months through June, the Munich-based reinsurer said in a preliminary earnings release Friday. The analyst consensus compiled by Bloomberg had anticipated €1.66 billion.
Munich Re’s shares were down 0.2% at 1:32 p.m. in Frankfurt.
The company also pointed to a “pleasing operational performance” overall and a “very strong investment result” in the quarter. It said its primary insurance unit Ergo delivered a profit of about €300 million.
The earnings mark the second quarter under new Chief Executive Officer Christoph Jurecka. The former finance chief took over from long-serving Joachim Wenning at the beginning of the year.
Based on earnings in the first two quarters, Munich Re sees itself on track to meet the net result target of €6.3 billion for the full year. The company will publish detailed results on August 7.
However, the true picture of transits is muddied by the fact a number of vessels have been crossing the waterway with their transponders turned off even before the interim peace deal between Washington and Tehran had fallen into place.
Despite the drop-off in requests for cover, brokers and underwriters said that some owners were still showing an interest in making the journey.
“I think that it would be fair to say that the requests for quotes has dropped off given a reluctance to commit to transits, although we are still receiving inquiries and terms are available,” said Simon Lockwood, head of shipowners, Marine GB, at broker Willis Towers Watson Plc.
The cost of cover has remained high throughout and hasn’t increased much since the peace deal has frayed, Lockwood said. However, other brokers have seen premiums inch higher.
Marcus Baker, global head of marine at Marsh, the world’s largest broker, said that rates have risen to anywhere between 2% and 6% of the value of a vessel from a fraction of a percent in pre-conflict times.At the higher end of that range, it would cost $6 million to insure an oil tanker worth $100 million while transiting Hormuz, although owners often receive large no-claim discounts that can reduce headline rates.
