Ladies and gentlemen, a very warm welcome at the telephone media conference of Munich Re for the financial figures in Q3 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 on. Conference language today is English. With this, I hand over to Mr. Buchanan. Please, Andrew.
Thank you very much, Stefan, and good morning to you all. Let me now present our third quarter results. With a Q3 result of EUR 1.7 billion, I am pleased to report another strong quarter, building on the excellent performance of the first six months. Munich Re remains resilient and continues to deliver on its ambitious financial targets despite geopolitical uncertainty, heightened capital market volatility, and more challenging reinsurance markets. Importantly, our Q3 results stand out not only for their size, but also for their quality. We delivered this strong performance while further strengthening our balance sheet, which I will come back to later.
After nine months, our net result stands at EUR 5.7 billion. Given the performance so far, we have raised our full-year guidance from EUR 6.3 billion- EUR 6.6 billion. Overall, we continue to navigate the current environment from a position of strength and remain on track to achieve the targets of our Ambition 2030. With that short introduction, let me move straight to page four of our slide pack and give you an overview of our performance after nine months. On this page, you see a number of key figures. Let me highlight some of the most important points before we come to the details later. Let me start with the group result in the top left.
In the third quarter, we achieved a net result of EUR 1.7 billion, compared with EUR 2 billion in the prior year quarter, which was a truly exceptional quarter. More importantly, for the first nine months, our net result reached EUR 5.7 billion, around EUR 500 million above the same period last year. The strong earnings development is also reflected in our return on equity, which you can see in the bottom left. For the first nine months, return on equity stands at 21.9%, compared with 20.8% in the prior year period.
This is comfortably above our long-term ambition of more than 18%. Looking at the three charts in the top right now, the development varies across the different result components. The total technical result for the first nine months is slightly below the prior year level, while the net financial result improved considerably. The operating result stands at around EUR 7.5 billion, slightly above the prior year period. Let me briefly take you through the main drivers, starting with reinsurance, shown in the blue text at the bottom of the slide.
The reinsurance business field contributed EUR 1.5 billion to the group result in the third quarter and EUR 4.8 billion in the first nine months. Within that, P&C reinsurance and Global Specialty Insurance continued to benefit from lower-than-expected major losses. In P&C Re, the combined ratio was 80.0% in the third quarter and 72.2% for the first nine months. GSI recorded a combined ratio of 83.9% for the quarter and 85.5% after nine months. Life and Health reinsurance also delivered a very solid performance, with a total technical result of just below EUR 500 million in the third quarter.
Turning to the ERGO business field, the business contributed EUR 263 million to the group net result in the third quarter and EUR 819 million in the first nine months. With this, ERGO is well on track to achieve its full-year net result target of around EUR 0.9 billion. Overall, after nine months, we can be very satisfied with the performance across the group. Let's move now to page five and our capital position. Starting with IFRS equity on the top left, it stands at EUR 33.4 billion at the end of September, broadly unchanged from the beginning of the year.
Our strong earnings of EUR 5.7 billion and positive currency effects were largely offset by the dividend payment, by share buybacks, and lower unrealized gains, mainly reflecting the increase in interest rates in the third quarter. Our debt leverage, in the graph on the top right, remains at a very low level of 11.6%. Let me now turn to our Solvency II ratio in the bottom right, which remains very strong at 301%, slightly down from the previous quarter. This largely reflects higher capital requirements from profitable business growth, particularly in Life and Health reinsurance, partly offset by our strong operating performance and the positive impact of higher interest rates.
In line with Ambition 2030, we continue to deploy capital through profitable business growth and selective M&A, such as the recently announced acquisition of At-Bay, which we expect to complete early next year. At the same time, we aim to ensure that shareholders participate in Munich Re's earnings growth through attractive capital returns. We will provide an update on this in late February once the full-year figures are finalized. Now let's turn to our investments on page six. Our investment portfolio amounts to EUR 237 billion and remains broadly diversified across asset classes. Given our long-term investment approach, the overall portfolio mix remains relatively stable. There have, however, been some shifts during the year.
We have continued to increase our allocation to alternative investments while reducing our exposure somewhat to government bonds in developed markets. The most notable development in the third quarter was the further increase in our reinvestment yield. It rose by 40 basis points to 4.7%, allowing us to invest at increasingly attractive yields. Let me move directly to our investment results on the next page. Let me start at the bottom of the main table on page seven. The investment result for the third quarter amounted to EUR 1.9 billion, corresponding to a return on investment of 3.2%. For the first nine months, however, the return on investment stands at 3.9%, comfortably within our full-year guidance.
The quarter was characterized by a significant increase in interest rates. This led to some disposal losses and negative fair value effects, particularly in our fixed income portfolio. We also saw some negative fair value changes in our equity investments. In the top row of the table, you can see that regular income was very strong at EUR 2.3 billion, corresponding to a running yield of 4%, remaining at the high level of the previous quarter. Looking ahead, the higher interest rate environment is increasingly working in our favor. As I mentioned on the previous slide, our reinvestment yield increased further to 4.7% in the third quarter.
We are gradually seeing these higher yields flow through to our regular investment income, providing further support as we move into next year. I now move away from group-level topics and into some details of the individual segments, coming to section two of the pack, which is ERGO. On page nine, we start with ERGO Germany. ERGO Germany contributed EUR 118 million to the group result in the third quarter, with a total technical result of EUR 418 million. In Life and Health, we saw a pleasing technical performance. This was supported by a strong contribution from the PAA business and a CSM release of EUR 215 million, slightly above expectations.
In P&C Germany, we achieved a good combined ratio of 89.8%. This reflects continued good technical profitability, while we also maintained our cautious approach to claims reserving. Looking at insurance revenue at the bottom left, we also saw good growth in the first nine months, reaching EUR 11.8 billion compared with EUR 11.2 billion in the previous year, an increase of over 5%. Growth came from both Life and Health and P&C, with a particularly strong contribution from health. Finally, looking at the CSM, this stands at around EUR 9.4 billion at the end of September.
New business and positive operating effects partly compensated for the release of CSM into earnings. Now let's turn to ERGO International on slide 10. The international business delivered a very strong net result of EUR 145 million in the third quarter, supported by a solid operating performance and the first-time full consolidation of ERGO China Life. If you look at the top right, the total technical result came in at EUR 230 million, clearly above the prior year quarter. Technical profitability in International Life and Health was strong and significantly above expectations. This also reflected a sustained high CSM release, particularly in Spain and Belgium health, as well as a better-than-expected contribution from the PAA business.
In P&C International, we achieved a combined ratio of 89.0%, in line with our full-year guidance and supported by a good technical performance across most of our major markets. Looking at insurance revenue at the bottom left, we saw a significant increase to EUR 5.6 billion in the first nine months. This was supported by ERGO NEXT in United States , as well as the first-time consolidation of ADB Gjensidige and also ERGO China Life being consolidated. In addition, we saw good organic growth, particularly in Poland and Belgium.
Finally, the CSM increased to around EUR 3.0 billion at the end of September. The increase was mainly supported by strong new business, including that first-time consolidation of China Life that I already mentioned, as well as positive operating effects. Now we move into section three of the pack, the reinsurance business field, and turning to page 12 for reinsurance life and health. Let me start again at the top right. Life and health reinsurance delivered a total technical result of EUR 493 million in the third quarter, above the pro-rata annual target.
The result benefited from a positive experience, particularly in mortality. This was partly offset by assumption updates following adverse experience in specific disability portfolios. Insurance-related financial instruments also made a very positive contribution, supported by strong business growth, although rising interest rates had some offsetting effect. After nine months, the total technical result now stands at EUR 1.5 billion, around EUR 300 million above the prior year period. We are very well on track to achieve our full-year target of EUR 1.9 billion.
If you look at the insurance revenue at the bottom left, you can see strong growth to EUR 10.4 billion after nine months, reflecting good business growth across all major regions. And finally, the CSM at the bottom right increased further to EUR 16.5 billion, mainly driven by strong new business, the recognition of large transactions in the third quarter, and positive currency effects, further strengthening the basis for future earnings. Now I come to reinsurance P&C on slide 13. Let me start with insurance revenue. After nine months, insurance revenue stands at EUR 12.4 billion, so down 9% compared with the previous year, or down 7% on an FX-adjusted basis.
The EUR 12.4 billion reflects both foreign exchange effects and the business reductions we have deliberately made over the course of the year in actively managing the cycle and reducing our shares in business that no longer met our requirements. Turning to the combined ratio, we achieved a very good 80.0% in the third quarter, supported by a lower-than-expected major loss burden. The major loss ratio for the quarter came in at 14.9%. Higher interest rates increased the discounting benefit on newly incurred claims. This positive effect was partly offset by our cautious approach to the balance sheet, releasing only 2% of reserves for basic losses from prior years instead of the usual 6%.
Looking at the underlying development, the normalized combined ratio was 82.4% in the third quarter. This reflects the gradual earn-in of recent renewals, as well as changes in the business mix. We may see some further upward movement in the normalized combined ratio in the fourth quarter, reflecting the large structured transaction we mentioned in our Q2 earnings call, the continued earn-in of renewals, as well as a certain amount of seasonality. Overall, however, the combined ratio after nine months stands at a very strong 72.2%, and we therefore expect to outperform our full-year guidance.
I will conclude the reinsurance part of my presentation with Global Specialty Insurance. Here, insurance revenue after nine months stands at EUR 6.4 billion, slightly below the prior year period. This was mainly due to negative foreign exchange effects. On an FX-adjusted basis, however, insurance revenue grew by 2.3%. Turning to the combined ratio, GSI delivered a very good 83.9% in the third quarter, also benefiting from benign major losses. After nine months, the combined ratio stands at 85.5%, well below our full-year guidance. Here, similar to P&C Re, we expect to outperform our full-year target. And with that, I return to group level with the updated outlook for 2026, which you can see on slide 16 of our pack.
Overall, with a net result of EUR 5.7 billion after nine months, we are firmly on track to once again exceed our annual profit target. This would be the sixth consecutive year. As mentioned, we intend to continue strengthening our balance sheet where appropriate in the fourth quarter. This could include realizing further disposal losses in our fixed income portfolio in order to reinvest at higher yields. Given our strong performance after nine months, we have also raised our full-year net result target for the Munich Re group from EUR 6.3 billion- EUR 6.6 billion. The increased result is expected to come from reinsurance, where we have increased the net result outlook to EUR 5.7 billion.
We have also adjusted our guidance for P&C Reinsurance and GSI, where we now expect combined ratios of below 80% and below 90%, respectively. Looking ahead to next year, we will disclose our financial outlook for 2027 on December 10th, by which time our planning process will have been completed. Ladies and gentlemen, that concludes my presentation of our third quarter results. I now look forward to answering your questions, but first I will hand back to Stefan Straub.
Thank you for the presentation, Andrew. We now start with the Q&A session. If you'd like to raise a question, please raise your hand virtually. After I call on you, please activate your microphone and state your name and the media outlet you represent before asking your questions. Thank you. First question comes from Ben Dyson, please.
Hi, morning. Ben Dyson from S&P Global Market Intelligence. Just the first one on the profit targets. I'd just be interested if you could say if there are any, I guess, any reasons why you might not hit that. Are there any potential hurdles you see to hitting that target? The reason I ask is just because you're almost there at the nine-month stage. You're only less than a billion away, and you usually earn more than EUR 1 billion in a quarter.
So, yeah, I'd just be interested if you could say if there's any sort of hurdles in the way of that. Then, yeah, just the second question, similarly, just on the lower reserve releases in P&C Reinsurance. You say that's down to more caution on the balance sheet. Could you say what the source of that caution is and what's driving your decision there? Thank you.
Good morning, Ben. Thank you for your questions. The first question about what would the hurdles be to meet the revised target. I would say first up that I do feel comfortable about that target. I think we thought carefully, and I would consider that our chances of reaching that target are good. Having said that, I really do have to respect what's going on in the world, and I would mention two important caveats that won't come as a huge surprise. The one is the capital markets are volatile and unpredictable at the moment.
Whether it's macroeconomic effects, whether it's war, whether it's sovereign debt, there are a lot of things going on, and I have to respect the fact that I can't rule out a difficult Q4 in the capital markets. The second thing is, Q4, historically speaking, has also been a relatively heavy quarter for outlier losses. Not as high as Q3, which I would say is probably the peak, but especially with the El Niño phenomenon that we're observing around the world at the moment, the opinion, the expert opinion seems to be that the balance of risk this year shifts somewhat away from the North Atlantic and hurricanes towards things that are happening in Asia- Pacific and elsewhere in the world.
Of course, earthquake season is all year round, as you know, and we had at least two earthquakes in Q3, so it's fresh in my mind. Of course, there's also the possibility of a very high outlier quarter in Q4. I have to respect both of those risk factors in saying that the EUR 6.6 billion is not guaranteed. Coming to your second question, which is about the lower reserve releases. Indeed, we have decided to proceed a bit more cautiously.
We've decided to essentially slow down a bit in the usual routine that we follow, which is that in the first three quarters of the year, we release reserves for basic losses for prior periods rather on a bulk basis, so in a sort of rather top-down way. Only in Q4, when we complete our big bottom-up annual review of the reserves, then we come up with the final number for the full year. The releases that we do in the first three quarters, you should always treat as provisional or preliminary releases, which is our attempt to smooth the releases over the year rather than having one big bang in the fourth quarter.
What I really don't want to do today is preempt the outcome of our annual reserve review. That's still in progress, and I would just say the signs are overall pretty positive. I'm not concerned about where our reserve review will land. I think the reserves are in good shape. Of course, what we will do is look carefully through the portfolio for any areas of potential vulnerability, areas where perhaps we don't have the level of security in the reserves that we would usually like to have.
Of course, based on recent news flow in the market, we'll look at U.S. casualty the way we always do. We thought, well, if we think that we are going to be cautious anyway, let's anticipate that a little bit in Q3 by slowing down our rate of releases. But what I can assure you is that it is not triggered or driven by any specific problem that I am worried about today.
Thank you very much.
Thank you. The next question comes from Friederike Krieger, please.
Good morning. I was wondering what is the expectation concerning the recent renewals in January? Will the prices decline further, and in which point in the cycle are we from your point of view? Aon and Blackstone started their reinsurance facility now. Isn't this a threat for reinsurers?
Thank you. Let me take those two questions in the order in which you asked them. Firstly, on renewals, coming up to January 1st, of course, this is a very important topic, and our colleagues are working hard to prepare and talking to the brokers and clients about this. I have to say, with seven weeks to go, the situation is not clear yet. A lot of the conversations are still at quite an early stage. I think the various negotiating parties are positioning themselves. I think each party is negotiating for what they would like to get out of the renewal.
I think it is clear that given the strong supply of capital in the industry and the relatively low level of outlier losses that we saw in Q3, it is clear that there will continue to be downward pressure on prices. I think what is not clear is the extent to which those attempts are successful. I am quite far away from being able to predict a price change number at this stage. I would also say I think the conversation is broadening out a little bit. In some cases, clients and brokers are trying to achieve other changes in their programs on the T&C side, and so the emphasis and the focus shifts a little bit away from price.
I would love to be able to give you a much more precise estimation, but I cannot, other than to say it will again be a tough renewal. I think, again, there will be downward pressure on prices, but I think we need to see where that lands. In terms of the price levels, what I would say to you, and this is really the positive part, is that P&C Re business in general is still adequately priced technically. So, it would not be right at this point to say that we are now in a soft market in the sense of business being written on a large scale in loss-making terms or technically inadequate terms. I do not think that would be right at this stage.
I think people who study this closely would probably say that we are back to the price levels of 2021-ish, something like that. That was not the depth, the low point of the previous soft market. Also, to the best of my knowledge, the market continues to be disciplined and fact-based and professional. I am not aware of, let us say, highly aggressive or panicked behavior on any sides. You mentioned specifically the new Cortina vehicle that has been announced by Aon and Blackstone, which I understand has been approved at Lloyd's through the trade press.
I would say upfront that I do not have any specific inside knowledge of how that facility will work or what the take-up rates will be. I think the important thing for us as a lead reinsurer is that what we bring to our clients and brokers is a full package, not only of large capacity, but also support on claims, underwriting, technology, and other things. So, we would naturally see our role as a potential anchor for large programs. So at this stage, there is no indication that we would lose shares or specifically have to cut prices as a result of those kinds of vehicles. Thank you for your questions.
At the moment, I cannot see any additional questions, so if you have one, please raise your hand virtually. If this is not the case, thank you very much for the presentation, Andrew, and the Q&A session.
Thank you very much.
Thank you to all participants in the call. The next financial results will be presented on February 25th, 2027, when we will present Munich Re's full-year figures 2026. Before this, we will also publish our financial outlook for 2027 on 10th December 10th. In the meantime, we are happy to stay in contact with you. Having said this, I close this media call. I wish you all the best and talk to you soon. Bye-bye.