Munich Re-Chef v. Bomhard zum Ausblick auf 2016

We have to assume that our result this year will be significantly below last year's 3.1 billion, especially because this profit target does not yet include expenditure for the revised strategy of ERGO and the resulting costs, which will be accounted for in the second quarter. I said that ERGO will be able to present concrete figures on this. From January to March this year, there were again few major claims – that is good news – and yet the first quarter result, according to our current initial assessment, will be significantly behind last year and our expectations because the capital markets were very volatile in the first quarter. Share prices fell in particular and we will have to record write-downs. We will publish the result on May 10th. As I already said, we have fluctuations in quarterly results. Last year the lowest quarterly result was 525 million, the highest 1.075 billion. So you see it fluctuates. Why? As I said before, because we do not try to smooth these quarterly results artificially. Overall for the year 2016, the current year, I ask you not to assume that we can again exceed our profit target as I reported at the beginning. From today's perspective, it appears very ambitious. I will tell you why and give you three reasons. First: our income from capital investments is falling. Higher-yielding securities from the past are gradually maturing, and new investments at the same risk are then yielding less. We are responding by trying to diversify our capital investments even more broadly. That is why we are increasingly investing in infrastructure and renewable energy. In recent months, we have acquired a wind farm in Sweden, a photovoltaic plant in Great Britain, and shares in the motorway service stations of Tank & Rast here in Germany. Overall, however, we have only moderately increased the risk of our capital investments. And I have assured you several times: we will invest the money of our insured and shareholders solidly and not use it for speculation. That remains our policy. The unavoidable consequence, however, is that the overall return on our capital investments falls year by year as long as interest rates do not rise. With our risk appetite we can only slow this effect slightly, but not stop it, let alone reverse it. Second: prices in reinsurance remain under pressure. At best, if at all, we can expect a stabilization at a low level this year. Accordingly, margins are low in many lines of business. It is still enough to do business – I would add – but it could be better. And third: losses from natural catastrophes will not remain this low permanently. We do not even have to assume an above-average burden from natural catastrophes, only a statistically normal year, and that is enough to worsen our result compared to the previous year. In light of this assessment, we cannot maintain or even increase the result in the short term. Thanks to our strong balance sheet and our diversified business model, we do not need to be fearful in this phase. In the medium term, we have excellent prospects. The extent of underinsurance in the world offers enormous growth opportunities, and with our innovation strategy we will not only shape the digital transformation but also develop promising solutions for entirely new risks. The true art in insurance, even more in reinsurance, is what we call cycle management. That means one must be prepared to let business go, and naturally the result then breathes accordingly. Ladies and gentlemen, all our lives have become more uncertain worldwide. We are seeing increasing conflicts that apparently can only be resolved with difficulty or not at all through politics, and refugee flows will hardly recede, especially when the consequences of climate change become more dramatic. Behind us lies the warmest year since records began. The economy trembles before a consumption slump in China—an age-old severe test. I can unfortunately continue this list at will. We have rarely – and we observe this very professionally – experienced such a combination of uncertainty. In all this uncertainty, Munich Re behaves conservatively, acts sustainably in the best sense, and drives innovation. We do not chase quick money and we do not follow every trend. It is important to us to achieve long-term success. I believe we have managed this well in recent years, and we would like to continue this path with your support and with you at our side.