COVID-19 – we cannot ignore it V – Munich Re

In our series about Corona we should have a financial institution and Munich Re is the candidate we selected. Munich Re is a re-insurance company, based in Germany. A re-insurance company is an insurance company for insurance companies – covering for extreme claims or unexpectedly high volumes of claims.

Photo by Lavir_Hamil on Pixabay

Our big question is still whether Munich Re felt the impact of Corona. Let’s have a look at the 3D-graph visualising our selection (Revenue, Cash-flow from operating activities, Equity, total Liabilities: RCEL). There is no real “revenue”, but the inflow of premiums can be considered as an equivalent. The way to survive is park the premiums in investments during the good years (low total claims amount) to have buffers for the bad years (the ones with high claims). The premium-income as revenue, free cash-flow, equities and liabilities are found in the annual (2019)  and quarterly/half year reports (2019 H1 and 2020H1). Not all reports were found easily, but then also spreadsheets with the financial details can be downloaded from the site. Munich Re publishes its figures in EUR and therefore I had to convert to USD again, but this time conversion rates used by the company were offered in the documents themselves. No need to look for the rates!

Double-clicking the screenshot will open the 3D-graph in your browser. Beware: thegraph haw so many companies that zooming out is necessary to see the whole picture! Clicking the right mouse-button and moving the mouse up and down at the same time, will zoom the graph in and out. For maniputalion of this 3D-graph: Clicking left while moving the mouse will tilt the graph in different directions. Double clicking in the graph translates it and readjusts the centre at the same time. Just try it – If you don’t know how to get the normal position back, refresh the page in your browser.

Preparing the input-file, I realised that I made the same mistake as last time with BP: Munich Re is huge, especially compared to Qantas and Wyndham. This giant looks more like an oil-major than like the largest hotel-chain in the word or a large airline! Again we will have a graph where the new company is pushing the others close to invisibility (although zooming is always possible of course).

Then there is something else which surprised me: the three “buildings” look very similar! Only the green roof (Cash-flow from operating activities) was much higher in 2019 H1 and that’s odd! Althoug Corona started in China at the end of 2019, it could hardly be responsible for the high impact (decrease in Cash-flow) in 2019 H2. Looking for Corona in the annual report for 2019, this sentence was found (p. 175):  

“Munich Re does not expect the consequences of the coronavirus to have any overall material effect on the annual result. However, the more this virus spreads, the greater the impact could be on Munich Re.”

It’s clear that is wasn’t Corona, causing the drop in Cash-flow, but what else could have caused it? In the same annual report it says [edited]:

“Aggregate losses from natural catastrophes totalled EUR 2053 mln. for the full year. […] The biggest lossevents of the year were Typhoons Hagibis and Faxaiin Japan, for which we expect total expenditure of around EUR 1300 mln…”

Even with an annual Cash-flow of over 10 bln. It’s a lot of money and it will certainly lower both cash-flow and profit. For 2020 H1 the situation isn’t any better. Despite the expection that Corona most likely would have a limited impact, the worst case scenario became true [edited]:

“Overall, we incurred COVID-19-related losses totalling around EUR 1.5 bln in reinsurance in the first half of the year.”

In the end we can conclude that the natural disasters in 2019H2 camouflaged the losses due to Corona in 2020H2.

After completing the series, we will create separate graphs combining BP, Munich Re and probably other companies and then the smaller ones like Wyndham and Qantas on another 3D-graph. Don’t forget to download your free copy of AnRep3D. Short tutorials, explaining different parts of AnRep3D are available at our Youtube-channel

Follow @AnRep3D on Twitter, to be informed about new posts.

About AnRep3D

AnRep3D is the new company, founded after the handover of Scientassist (together with VRBI) to one of my sons. From now I will focus on three-dimensional graphs for the financial markets, showing the main figures from annual reports in comparison. As per 2021 a second product is available: EnRep3D. It is meant to visualise energy. Although the engine is the same, the texts, manual, website and examples (including blogposts) are focused at energy.
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