Reinsurance giant Munich Re aims for huge profits despite LA fires

Despite the devastating wildfires in California and the associated costs, executives at Munich RE, the world's largest reinsurer, are still expecting a massive increase in profits in 2025.

Munich Re's chief executive, Joachim Winning, confirmed the German company's target for net profits of €6 billion ($6.3 billion) on Wednesday, even though Munich Re is expecting to take significant losses on the fires around Los Angeles.

As a reinsurance firm, the Munich-based financial giant primarily offers insurance to insurance firms. Because a number of big US insurers are among its customers, the disastrous fires are expected to lead to big payouts from Munich Re.

"But it will certainly remain well below the provision we always have for natural catastrophes,” said Thomas Blunck, a member of Munich Re's executive board who oversees reinsurance at the company. "So it's not throwing us off course at all."

In the United States, the total insured losses for the industry are estimated at between €20 billion and €30 billion. According to Blunck and Wenning, it is not yet clear how much of this will affect Munich Re - especially as the fires have not yet been extinguished.

Wenning said that 2024 was already a record year for Munich Re, although he did not name a figure. The company had targeted net profits of more than €5 billion.

Hitting Munich Re's profit targets for 2025 would mean an increase of more than 20%.

The insurance industry has so far been largely unaffected by the poor global economy.

Whether Munich Re achieves its profit targets has always depended heavily on the forces of nature in the US.

North America is the region of the world where hurricanes, tornadoes, ordinary storms, fires and other natural catastrophes regularly cause much higher insured losses than in other parts of the world.