Munich Re: Clearer valuation but a cloudier cycle

研报英文原文证据摘录

Munich Re: Clearer valuation but a cloudier cycle

Key Thoughts post 1Q26

We detail our thoughts for Munich Re post-1Q26.

After the first quarter of 2026, we update our figures, slightly reducing our EPS

estimates for 2026 by 1% and for 2027 by 2%. On net income we trim 26E net result -

2% and 27E -3%. Underwriting quality remains strong at Munich, as the company

continues to cut weaker business and protect margins in P&C Re. While we still consider

Munich to be best-in-class, there are currently few positive catalysts for an upgrade, no

change in pricing trends, and no new updates on capital returns—so we remain Neutral.

We have effectively set our €550 PO, placing our 27 P/E in-line with Munich Re’s 10Y

avg. P/E of 10.5x.

Munich's valuation looks appealing, but before committing based solely on value, we're

monitoring upcoming developments ahead of the 2Q26 results: namely, broker renewal

reports on June 1st and July 1st, as well as the start of the Atlantic Hurricane season

(June 1 - November 30). Both factors serve as negative indicators for the sector. Mid-

year renewal rates are expected to fall further from April levels, particularly in the highly

competitive US market. While a less active hurricane season could boost 2026 earnings,

it may put pressure on 2027 pricing. Overall, we see near-term headwinds that could

drive sector sentiment lower in the coming months.

Investors should keep these considerations in mind. We plan to stay proactive if there

are further market declines during hurricane season or following weak renewal data. Our

base case is for mid-year renewals to experience faster rate reductions (20-30% vs. the

previous 15-20%) in loss-free property catastrophe lines, which are usually the most

competitive, and where vast portions of U.S.