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Munich Re profits hit by poor investment performance

German reinsurance giant Munich Re reported a drop in its second-quarter profit on Tuesday as market volatility took a toll on investments, but the firm maintained its 2022 performance target.

The group’s preliminary net profit reached 768 million euros ($785 million) between April and June, down from 1.1 billion in the same period last year.

Munich Re, whose business consists mostly in covering the risks taken on by insurers, said the value of its holdings had slumped by 908 million euros, mainly due to losses on equity investments.

Its profit target of 3.3 billion euros for 2022 remains unchanged, though it warned of “considerable uncertainty owing to fragile macroeconomic developments, volatile capital markets and the unclear future of the pandemic”.

CEO Joachim Wenning said the group had posted a “solid quarterly result despite fierce headwinds from inflation, the cooling economy and the war in Ukraine”.

Munich Re lost 90 million euros as a result of Russia’s invasion of Ukraine, while the bill for natural disasters came in at 253 million euros.

The drought in South America alone cost the group 130 million euros, it said.

However, premiums beat expectations to rise 8.3 percent year-on-year in the second quarter to almost 16 billion euros, boosted by growth in property-casualty reinsurance.