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The insurance industry has proven to be particularly robust in recent years, generating stable returns despite global uncertainties. High demand for reinsurance and primary insurance solutions, a favorable claims development overall, strong pricing power in an inflationary environment, and solid capital market performance have caused many insurance stocks to rise sharply. In this environment, Munich Re (ISIN: DE0008430026), one of the world's leading reinsurers, plays a central role. Shareholders are also benefiting from this. They have achieved a long-term performance of 480 percent over 20 years with the stock. In addition, there have been substantial dividends. The stock has been rising sharply since mid-2022.
Source: Munich Re stock price
There are many reasons for this, as described above. It is currently difficult to imagine a reversal of this trend. In addition, the stock is still trading at a favorable price-earnings ratio of 11. There are also attractive initial yields of almost 4 percent. Munich Re stock is therefore aimed at investors who are looking for a long-term investment in an established and financially strong company that offers opportunities for stable returns even in uncertain times. In the following, we take a look at the latest quarterly figures, the outlook for 2025, dividend development, valuation, and the key opportunities and risks in our Munich Re stock analysis.
Munich Re is a German primary and reinsurance group, a member of the DAX 40 and an international employer with over 44,000 employees. With insurance revenue from insurance contracts concluded of just over €60 billion in the 2024 financial year, it is not a small insurer, but a systemically important large corporation in the financial sector. Around €40 billion of this comes from reinsurance, and around €20 billion from primary insurance business. In 2024, it also managed around €240 billion in assets. The group also plays an important role internationally and has locations in more than 50 countries.
Munich Re's sources of income can essentially be divided into three areas:
The most important source of income is insurance and reinsurance premiums. In reinsurance, Munich Re receives payments from primary insurers who pass on part of their risks to it in order to secure their own stability. The business comprises property and casualty reinsurance for natural disasters, industrial and liability risks, and motor insurance, as well as life and health reinsurance, which covers risks such as mortality, longevity, and healthcare costs. Through its subsidiary ERGO, Munich Re is also active in the primary insurance business, where it generates income from premiums paid by private and corporate customers in the areas of life, health, pensions, legal protection, and property/casualty insurance.
Another key source of income is investment income. Premiums collected are invested on the capital market until a claim is paid. Munich Re relies on a broadly diversified portfolio of bonds, equities, real estate, and alternative investments such as infrastructure and private equity. Income is generated here through interest, dividends, capital gains, and rental income. Given the very large investment volume of well over €200 billion, investment income contributes significantly to the overall result. In 2024, for example, it amounted to over €7 billion – €5.5 billion of which came from interest.
Munich Re also generates other income from specialized risk transfer solutions, such as catastrophe bonds and securitizations, as well as from consulting and services in the areas of data analysis, risk modeling, and actuarial consulting. Additional income is generated by subsidiaries and investments that provide distributions or dividends.
Although insurance revenue declined slightly due to unfavorable currency effects, Munich Re significantly increased its earnings in the second quarter of 2025. Operating business developed very strongly, supported by a low overall level of major claims and solid performance in the two major business segments of reinsurance and ERGO. Specifically, insurance revenue from concluded insurance contracts declined by 1.2 percent in the second quarter of 2025, but revenue still increased by around one percent. Earnings grew significantly more strongly, with EBITDA up 44 percent. Net profit remained up 28 percent at two billion euros.
Source: Munich Re financial data
While property and casualty reinsurance benefited from an exceptionally favorable claims development, the life and health segment was impacted by several large claims. The newly reported Global Specialty Insurance segment also achieved a very good result. ERGO also contributed to the Group's profit with a higher underwriting result in Germany and continued positive development in its international business. In the investment area, rising stock prices and improved results from derivatives provided tailwinds, while currency losses, particularly due to the weak US dollar, had a dampening effect. Although equity declined as a result of dividend payments, stock buybacks, and exchange rate effects, the solvency ratio remained stable at a very high level. Let's move on to the outlook.
Munich Re remains optimistic about the coming quarters and sees attractive business opportunities in the market environment. Despite individual adjustments, the company is sticking to its earnings forecast for the 2025 financial year and is still aiming for a consolidated profit of around €6 billion. In reinsurance, however, the revenue forecast was revised slightly downward from €42 billion to €40 billion due to business and exchange rate developments. Accordingly, Munich Re now expects insurance revenue for the entire group to be €62 billion, down from the previous forecast of €64 billion. The other targets set out in the 2024 annual report remain unchanged. As usual, the company points out that the forecasts are subject to uncertainties. These include geopolitical tensions, macroeconomic developments, the course of major losses, and the possible effects of currency and capital market movements or tax changes.
Source: Sales and Margin forecast
The upward trend could also continue in the long term. After all, Munich-based companies are benefiting from several positive developments. These include positive inflation, which can be passed on to policyholders thanks to pricing power, higher interest rates than a few years ago, and, of course, a solid combined ratio.
Source: Revenue estimates
This trend is likely to continue in the future. At least, analysts are forecasting further increases in revenue. On average, revenue growth is expected to be in the mid-single-digit range. Net margins could rise at a similar rate, but are likely to suffer from higher volatility.
Munich Re's dividend is in excellent shape and is impressive in terms of both its level and its stability. With a current dividend yield of 3.7 percent, the initial yield is solid and attractive, even if it remains slightly below the long-term average of 4.6 percent.
However, the long-term average shows that Munich Re traditionally offers its shareholders an above-average payout. The high dividends were not achieved at the expense of a high payout ratio. The payout ratio for the last three years is only around 41 percent, which can be classified as very sustainable and conservative. The figure also signals that sufficient profits remain within the company to finance further growth and buybacks, while at the same time paying a reliable dividend. The high returns are therefore primarily the result of the favorable valuation of the stock. The continuity of dividend payments is particularly positive: the dividend has been paid continuously for 25 years and has never been reduced.
Source: Munich Re dividend history
In addition, dividends have grown strongly over the last five years, averaging 15.3 percent per year.
Source: Dividend analysis
With a total of 14 out of a possible 15 points in the rating, Munich Re is one of the most attractive dividend stocks on the German market. The combination of solid returns, a sustainable distribution policy, a reliable track record, and dynamic growth makes the stock a real top scorer for income investors.
Given its good dividend history and solid payout ratio, Munich Re's dividend can be considered reliable. This impression is reinforced by the expected new record results of €6 billion. If this actually happens, the dividend could also be increased, provided the Group's financial situation allows. Analysts currently expect dividends to remain at the level of €20.
The dividend is usually paid one day after the Annual General Meeting, which votes on the dividend proposal. The next Annual General Meeting is scheduled for April 29, 2026.
The 138th Annual General Meeting took place last year on April 30, 2025. An annual dividend of €20 was approved for the 2024 financial year. This was €5 higher than in the previous year.
Despite the sharp rise in the stock price, Munich Re stock remain attractively valued in the current environment.
Source: Key metrics
With an expected P/E ratio of 11.4, the company is trading at a relatively favorable price compared to many other insurers and its own historical valuation. The current P/E ratio of 18 is naturally higher, but does not take into account the expected earnings growth. Historically, the stock has traded at P/E ratios of 13.8.
Ultimately, this level of valuation also signals to some extent that the market considers earnings growth to be solid and that no excessive expectations are priced in.
Source: Price/Earnings vs. Dividend Yield
At the same time, with a dividend yield of around 3.6 percent, the stock offers an attractive current return that is certainly interesting compared to safe government bonds. Historically, however, there has been more to be had, with 4.9 percent. In conjunction with the stable distribution policy of recent years, this certainly underlines Munich Re's character as a high-dividend stock. And even though analysts do not expect any further dividend increases in the near future, I could at least imagine slight increases if the forecasts are met. The combination of a moderate P/E ratio and a robust dividend yield also suggests that the stock currently offers a balanced risk/reward profile. Investors thus benefit both from the solid dividend and from the possibility that the valuation range could swing slightly upward again in the future if business figures remain good. However, the risks associated with insurance companies should not be underestimated, even if things have seemingly only been looking up in recent years.
The main risks for Munich Re are primarily external factors. Natural disasters or unexpectedly high claims could significantly impact results. In addition, there are currency and capital market fluctuations, which Munich Re is already feeling the effects of today. They influence both insurance revenue and investment income. The latter could even weigh more heavily than natural disasters themselves. Geopolitical uncertainties, inflation trends, and changes in tax or regulatory conditions also pose risks. However, opportunities have tended to arise in this area in the recent past. Last but not least, intense competition in the reinsurance business and an incorrect assessment of claims trends could also impact profitability.
Munich Re continues to perform solidly in the second quarter of 2025, confirming its position as one of the world's leading reinsurers. The company benefits not only from its strong market position, but also from stable premium income, strong investment income, and disciplined management. Despite individual burdens from currency effects and isolated higher major losses, profitability remains high, the solvency ratio stable, and the dividend policy attractive.
With a moderate P/E ratio, a robust dividend yield, and a long-term proven business model, the stock offers both stability and prospects for growth. In my opinion, Munich Re remains a reliable stock that combines solid earnings with a balanced risk/reward profile. Analysts also forecast rising revenues and profits for the future. For the coming year, analysts forecast an average price potential for the stock of around 5.9 percent. Just under half of analysts rate the stock as a buy, while slightly fewer recommend holding it.
Source: Munich Re target price
However, given the cyclical nature of the business and the recent fall in interest rates, it may well be advisable to wait and see. Anyone who sets an alert in StocksGuide to take a closer look at the stock at a later date could set a marker at a dividend yield of 4.5 percent.
The author and/or persons or companies associated with StocksGuide own or may own shares of Munich Re. This article represents an expression of opinion and does not constitute investment advice. Please note the legal information.