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# Munich Re Keeps Rating Despite Catastrophe Drag
- URL: https://www.riskmarketnews.com/munich-re-keeps-rating-despite-catastrophe-drag/
- Published: 2012-05-25T19:22:00.000Z
- Updated: 2012-05-25T19:22:00.000Z
- Author: Chris Westfall

Reinsurance giant Munich Re had its AA- debt rating affirmed by Fitch on Friday despite what the agency describes as “weakened” capital levels and less-than-strong property/casualty underwriting results. 

“Munich Re benefits from the superior franchise of its reinsurance operations. However, in Fitch’s opinion Munich Re’s underwriting performance in the P&C reinsurance segment is a weakness relative to peers,” Fitch said in a statement. 

The statement added that although Munich Re’s catastrophe risk was “reasonable” given is diversified perils capital position, P/C reinsurance performance was a drag on the reinsurer’s balance sheet. 

Munich Re reported earlier this month “moderate” major losses in its property-casualty segment, with a total loss of to 264 million euros after retrocession and before tax. The P/C segments combined ratio was 94.6% of net earned premiums, with two points attributed to major losses prior to 2012.

“Fitch notes that in a year of more normalized catastrophe activity the group generates the majority of its profits from its P&C reinsurance operations, benefiting from overall solid margins within its catastrophe book,” the statement said, adding that the German reinsurer was able to push for rate increase of between 2% and 5% in the January and April renewals.

“Ratings could be upgraded if Munich Re improves profitability on a sustainable basis to a return on equity of 10% or above and a combined ratio of 96% or  
lower, provided the capital base remains strong on a risk-adjusted basis,” Fitch added.   

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