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Munich Re profits slump as coronavirus hits insurance business

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Munich Re shares fell sharply on Thursday after the giant German reinsurer set aside a 2020 profit target as the authorities launch new lockdown measures in the face of a second wave of the global pandemic.

“The scale of the wave that is sweeping through Europe is greater than I myself had assumed eight weeks ago,” Munich Re Chief Executive, Christoph Jurecka said.

Speaking on a conference call with journalists, Jurecka declined to rule out Munich Re slipping into a fourth-quarter loss after its third-quarter net profit plummeted by 77 per cent to 202 million euros (239 million dollars) compared with a year earlier.

The insurance business has been hit hard by the coronavirus crisis as a result of the cancellation of major events and the slump of business faced by companies. Reinsurers handle the risks of general insurers.

In addition, losses from US storms and forest fires along with the explosion in Beirut earlier this year hit the group’s results.

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One of world’s largest reinsurers, Munich Re also believes the new pandemic restrictions could lead to further insurance losses.

The group warned that it could face investment losses if financial markets took a big blow due to the current uncertainty unleashed by the coronavirus.

Munich Re shares slumped by 3.43 per cent to 208.20 euros in morning trading on the Frankfurt stock market following the release of the company’s latest financial report.

The group’s share has lost around a fifth of its value since the start of the year and as the crisis has gathered pace.

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