Ladies and gentlemen, a very warm welcome at the telephone media conference of Munich Re for the financial figures in Q1 2026. Munich Re's Chief Financial Officer, Andrew Buchanan, will present and explain the results to you. Afterwards, we are happy to get your questions. The conference call will be streamed live on our webpage, munichre.com, and the recording can be found there later today. Conference language today is English. A German translation is available as well. Please feel free to raise your questions in either English or German. With this, I like to hand over to Mr. Buchanan. Please, Andrew.
Thank you very much, Stefan, and good morning from me as well to all of you. I am very pleased to present our figures for Q1 of 2026. Munich Re made a strong start to the year, delivering a pleasing net result of EUR 1.7 billion. This performance underscores the group's resilience amid elevated geopolitical and macroeconomic uncertainty. The direct impact of the conflict in the Middle East on our underwriting result remained very manageable. By contrast, heightened volatility in capital markets weighed on the performance of our investment portfolio. In short, the narrative for the quarter is straightforward. Strong underlying operating performance across all business segments, supported by benign major loss experience, was largely offset by weaker investment and currency results. Importantly, for the full year, we are on track to achieve our expected result of EUR 6.3 billion.
In my slide pack, slide 4 contains the most important figures, and I will guide you through them and point out some important aspects. In the top left, you can see the group result of EUR 1.7 billion for the first quarter that I mentioned a minute ago. This result is significantly above the first quarter of the previous year, which was heavily affected by the L.A. wildfires. Since this result, after 3 months, is above our proportional earnings expectation, you can see that we are well on the way to achieving the target of EUR 6.3 billion. Accordingly, the return on equity after 3 months is also very high. You can see this in the bottom left, a 19.7% return on equity for the quarter.
The three charts in the top right of the slide show the total technical result, the net financial result, and the operating result, so all components of the net result in the top left corner. In all of these categories, we are currently higher than in the same quarter last year. Some of the drivers for this are mentioned in the text below the graph on the slide. I will mention briefly that in P&C Reinsurance, a major loss ratio of only 3.5% for the quarter supported the delivery of an outstanding combined ratio of 66.8%, which is well below the full year guidance of 80%. Global Specialty Insurance, GSI, also delivered an excellent combined ratio of 83.7%, where the guidance for the full year is 90%.
Life & Health Reinsurance delivered a very solid total technical result of EUR 500 million and is well-positioned to achieve the guidance of EUR 1.9 billion for the full year. Turning to ERGO, a result of EUR 235 million in the quarter, a very promising start towards achieving the 2026 net profit target of EUR 0.9 billion. Of that, ERGO Germany contributed EUR 157 million. ERGO International contributed EUR 78 million. Both in reinsurance and in ERGO, we were able to absorb burdens from investment and currency results, underlying the resilience of the business overall. A very satisfying start to the year, and I will go into more detail on those segments in a few minutes' time. Turning to slide 5 and the capital position, this is key to our ability to cover peak risks in particular.
On the left, you can see that our IFRS equity increased by more than EUR 1 billion in Q1, finishing at EUR 34.6 billion, where the positive effect of the net earnings more than compensated for the outflows from the final tranche of the previous share buyback program, the 2025/26 program, which was completed before our annual general meeting. In the graph on the right, you can see that the leverage ratio has reduced slightly, driven by the increase in IFRS equity, as well as the additional CSM, contractual service margin, which we also include in the denominator of the ratio when we calculate the leverage. Turning to the Solvency II ratio, bottom right, you can see that it has declined to 292 from the starting point of 298% at the year-end.
This reflects the fact that we have now subtracted the entire EUR 2.25 billion of the new share buyback program, the 2026/27 program, even though the shares are likely to be repurchased in stages through until the annual general meeting of next year. This effect, this downward effect, was dampened by a solid quarter of economic earnings, which helped to bring the ratio back up by a few percentage points. Now I come to our investment portfolio and our investment strategy, starting with slide 6. You can see top left a total of EUR 238 billion in investments for the Munich Re Group overall, as well as the allocation between major asset classes. You are, I'm sure, already familiar with this, the allocation does not change much from quarter to quarter, as we are long-term oriented investors.
Nevertheless, I can report that we slightly increased the equity quota, net of derivatives, to 3.3% in the quarter. We have also slightly expanded our investments in alternative assets. Quite satisfying, if you look at the chart on the bottom left, we benefit from a higher reinvestment yield of now 4.2% in Q1. This increase shows that volatility in the capital markets does not only present risks, but also creates opportunities, and I expect this pleasing reinvestment yield to support our investment income in the coming quarters. To the investment result itself on slide 7, here I may start at the bottom of the graph. You can see that the investment result for the first quarter amounted to just under EUR 1.7 billion.
Hopefully everyone can see the number of EUR 1,682 that we have for Q1. This corresponds to a return on investment of 2.9%, which was a significant improvement compared to Q1 of 2025. It is a little below our guidance for 2026, where we said that we aim to achieve at least 3.5% return on investment. Rising oil and gas prices triggered renewed inflation concerns, prompting volatility across bond and equity markets. As a result, we recorded negative fair value changes in both our fixed income and listed equity portfolios. These effects were largely offset by positive revaluations in alternative investments and commodities, demonstrating the value of diversification also within our investment portfolio.
Moving back up to the top of the graph on this slide to the running yield, this came in slightly below expectations in the first quarter and was broadly flat compared with Q1 2025. You can see the regular income number of 3.5% there, in the top. That remained below the elevated level of 3.7% that we saw in Q4 of 2025. The main effects that explain this development in Q1 are, firstly, that we experienced typical quarterly volatility in private equity distributions, which were higher in Q4 of last year and which were lower than usual in Q1 of this year. Second, regular income was temporarily affected by the accounting treatment of inflation-linked bonds, which have not yet reflected the recent increase in consumer price inflation, which was predominantly in the second part of Q1.
Fortunately, in this regard, we expect a catch-up effect in Q2 once the latest CPI developments are reflected. Also not to forget that we are coming into dividend season for our equity holdings. Moving into chapter two of this presentation, I comment on each of the market-facing business segments, starting with ERGO. On page nine, we set out the results for ERGO Germany. In the shaded box at the top left, you can see, starting with the third bullet actually, that the contribution to earnings was a net result of EUR 157 million. Looking at the chart on the top right, you can see that the total technical result was even higher at EUR 425 million, clearly above last year's figure, which was already very good. What is the reason for this?
It is mainly due to an increase in earnings in the short-term business, such as travel insurance and short-term health insurance. These contributed nicely to the improvement. The long-term life business has remained fairly stable but also within expectations, with a CSM release into our P&L of EUR 210 million. In P&C, there was once again a very good combined ratio of 86.7%, driven by a very low major loss burden. Regarding insurance revenues at the bottom left, these have slightly declined compared to the previous year. This was mainly due to the life business. Bear in mind also that our classic life business in Germany is in run-off. While the P&C business continued to grow, especially in fire and property lines.
The CSM, which we have on the bottom right, increased compared with year-end 2025 as positive operating effects in long-term health and life exceeded releases into earnings. Moving to slide 10 and ERGO International. The international business delivered a solid net result of EUR 78 million, driven by good operating performance. Which was partly offset by a lower contribution from our joint ventures compared with what we had in the prior year quarter, which was exceptionally strong. If you first look again at the top right and the total technical results, you can see that this is below last year. This is because technical profitability in life and health was below expectations, but that is primarily due to a one-off effect from a portfolio sale in the Belgian life business.
In P&C, a combined ratio of 89.5% came in broadly in line with the full year guidance of 89%, despite quite some weather related claims in Poland and the Baltics following severe winter conditions. If you then look at the insurance revenue at the bottom left, you can see an increase, which is also quite significantly assisted by our recent acquisition of ERGO NEXT. It is currently shown here in the line of the chart, the line of the graph labeled divestments slash investments. Overall, I am pleased to report that the development of ERGO NEXT Insurance continues very much according to plan. If you then look at the bottom right, you will see an increase in the CSM. The new business CSM stands at EUR 180 million, slightly below the level of last year.
The increase in Q1 is mainly also due to operating changes, especially resulting from tariff updates to reflect economic assumptions in the Belgian health business. Moving into the reinsurance chapter of the presentation and page 12, where we have Life & Health Reinsurance. Overall, the quarter can be characterized as relatively quiet but also very solid. Let's start again with the total technical results on the top right. The Life & Health business delivered a result of EUR 500 million, slightly above the pro rata annual target. Compared with the prior year, the figure may initially appear a bit low, but the prior year quarter, the number of EUR 608 that you can see there, was inflated by very positive experience in the U.S., reflecting better claims development than expected, and not at the level that we would consider the normal underlying level.
If you then jump down to the bottom right, you will see that the stock of the contractual service margin increased further by around half a billion EUR, driven by solid business growth and positive currency effects. As you know, the CSM essentially stores the profits of the future, providing a strong foundation for sustainably high technical results. Now I come to the reinsurance property and casualty business on slide 13 and start with the insurance revenue. This declined by 19.8% compared to the first quarter of the previous year, down to the level of EUR 3.9 billion. Looking bottom left, you can see the final number of EUR 3,923 there as the revenue for Q1. Partly, this is still affected by foreign currency effects, as most major currencies depreciated against the euro in 2025, especially the US dollar.
The reduction also includes organic changes that we have deliberately initiated because we try not to renew business that does not meet our return requirements. The combined ratio, as I mentioned earlier, was significantly below expectations at 66.8% due to low major losses. When normalized for the low major loss experience, the combined ratio stands at 80.3%, which is within expectations and provides a solid basis for maintaining strong profitability in 2026. At the same time, we acknowledge some upward pressure on that ratio, reflecting the outcomes of the January and April renewals, as well as a higher expected level of major losses, which we have increased by 1 percentage point to 18%. I come to the April renewals in P&C Reinsurance specifically on slide 14.
As you know, our reinsurance business is mostly renewed on 3 dates each year, first of the month in January, April, and July. The April renewal mainly focuses on the Asian markets, but also includes some global business covering Europe, America, and Latin America. The April renewals produced a good outcome despite a more competitive environment. Overall, we actively reduced renewed treaty volume by 18.5% to maintain portfolio quality while largely preserving terms and conditions. Please be aware that this decline refers to a rather small book that has been renewed in April, representing about 11% of the total P&C portfolio.
That is important to understand and to bear in mind that the 18.5% reduction refers to a portion of the portfolio which itself is 11% of the total in P&C Reinsurance. Pricing remained the main battleground in the April renewals, most notably in natural catastrophe business, which accounted for more than 30% of our renewal volume in April. This drove a risk-adjusted price decline of 3.1% in our portfolio. As always, this price change is fully risk adjusted, which means conservative inflation and other loss trend assumptions and model changes are taken into account. However, based on very good starting levels, we consider the margins on the business we retained to still be healthy overall. Now I come to the GSI segment.
As a reminder, this is a primary insurance business that thrives on underwriting complex or specialized risks globally with a current geographical focus on the U.S. and also the U.K. Since a large portion of the business is in the U.S., currency effects naturally play an important role here. You can see this at the bottom left with the premium volume, which declined by 7.5% compared to the same quarter last year, almost exclusively due to negative foreign currency effects. Similar to the P&C Reinsurance segment, the combined ratio in GSI was also comfortably below the full year guidance. The combined ratio of 83.7 was better than expected, supported by benign loss experience and also a lower expense ratio. With that, I come to the outlook, which you can see on page 17 of the presentation.
Our 2026 outlook remains unchanged. We continue to expect a net result of EUR 6.3 billion for the group. We acknowledge that achieving our reinsurance revenue guidance of EUR 40 billion certainly has become more challenging than initially anticipated when we set the outlook 5 months ago. Nevertheless, our guidance remains within reach. Reasons why I say that are, firstly, that Q1 revenue included some negative premium adjustments based on reporting from clients that we receive with a time lag and where we do not expect these to recur over the remainder of the year. Secondly, we also see attractive business opportunities ahead.
Q1 was a relatively quiet quarter in terms of large deal activity, which we expect to accelerate over the remainder of the year based on a healthy deal pipeline. This is especially the case for Life and Health. There is also potential in P&C. Overall, we can look back on a successful Q1 and are confident in the outlook for the rest of the year. That concludes my presentation on the first quarter figures.