Munich Re - One record chases the next

Munich Re was founded in 1880 by Carl Thiem, independently of the main company. At the beginning, most reinsurance companies focused on a few prestigious clients, Thieme for example focused on a broader range of cedants to promote stronger premium growth, a strategy of risk diversification and favoring partners over unilateral risk transfer.

Profit development

Just a few days ago, the company presented strong quarterly figures:

In the first quarter, net profit rose from EUR 1.271 billion to EUR 2.14 billion. The return on equity recently exploded from 17.6% to 27.3%. In the first quarter, Munich Re achieved a return of 4.6% per year on its investment portfolio.

Much more important was the management's statement that the company would very likely exceed its annual target with a profit of EUR 5 billion. Of course, when the first quarter already accounts for almost half of the profit forecast for the whole year. However, analysts are only expecting earnings per share of EUR 10.56 in the second quarter. In the first quarter, it was already EUR 15.89.

Outperformance

Nevertheless, insurance company shares are still in high demand and this will likely remain the focus of investors for the time being. No apparent serious business difficulties, high profits and new record highs in the share price remain in demand. The share has once again managed to outperform the DAX.

Chart technical outlook

In terms of chart technology, a new record high has been reached thanks to the quarterly figures. The share is now consolidating the breakout above EUR 454. If this consolidation continues, a return to the support area at EUR 436 would not be unlikely. Here, one could certainly start looking for anti-cyclical entries.

If, however, new buying interest develops immediately, market participants are likely to continue buying the stock. The medium-term focus is on the target of around EUR 515.

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