Friday 8 November 2013

Münchener Rückversicherung report Q3 2013

Q3 2013, MüRe, Report

I was not very happy with my own graphical skills and have therefore decided to take pictures of the front page of the quarter reports that I am making a summary of instead of the ugly triangle that I used the last couple of times. On the other hand some companies have very basic quarter report so the picture might not always look nice but at least better than my failed graphical attempt.

The stock market responded with disappointment (-2% today) concerning the third quarter report from Münchener Rückversicherung and the question is... should they?

Yes and no will be my response. Yes, because they did indeed have a bad quarter which is to a certain extent due to some more catastrophes have occurred lately. The CEO was in his letter going on about the risks and slowed growth in emerging countries so much that I even managed to get bored. The full Q3 report can be found here.

So lets take a look at what they highlighted in figures all taken from the report:

Q3, 2013, MüRe, Key Figures

What we see here is that when we compare third quarter 2012 and the third quarter 2013 then there is a significant difference in especially profit since it is -44% and looking at the running three quarters we see that the profit is down by -21% which is indeed bad but especially the last quarter. But people... we should not forget that 2012 was an extra ordinary year for MüRe with almost no catastrophes happening at all. What I tended to like much less is that their book value has gone down from 152 € / share in Q3 2012 to 143 € / share today. This means that MüRe is now trading at a P/B of 1.06 and I liked it better when it was below 1. they also very clearly adjusted their values for the full year with decreased revenue as well as decreased profits which of course annoys the market and leads to decreased valuation.

They have also decided to spend up to 1 billion € on buying back shares which is the equivalent of around 3.5% of the total shares before the next annual meeting. If they have a good final quarter and without decreasing but keeping the dividend then it will become close to a zero year for MüRe but as a shareholder I am well paid for my efforts of... hmmm... I guess for my online voting on the annual meeting...

Conclusion: I have full confidence in MüRe (even though I dislike ERGO) and will continue to keep my shares and collect my nice dividend and increased ownership due to the share buy back program that has been going on since 2006 to a smaller or larger extent.

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