Munich Re says the business remains on track for a €2.8 billion ($4.3 billion) profit this year as was forecast in December, projecting financial consequences from COVID-19 would be on a “considerably smaller scale” compared to last year.

Last week the insurer announced overall net income fell 55.3% to €1.2 billion ($1.86 billion) last year, as losses linked to the pandemic took a toll on earnings. Its reinsurance arm recorded about €3.4 billion ($5.3 billion) in overall COVID losses, including €3.1 billion ($4.8 billion) that was related to property and casualty lines of businesses.

“In spite of the tremendous challenges posed by COVID-19, Munich Re closed out 2020 with a clear profit,” Chairman of the Board of Management Joachim Wenning said.

“All the pieces are in place. In 2021, we expect to meet the profit target that we envisaged prior to the pandemic. Our reinsurance business is ideally positioned to resolutely exploit opportunities for profitable growth in the improved market environment.”

The property and casualty arm reported earnings of €571 million ($884 million), down 63% from a year earlier. The combined ratio deteriorated to 105.6% from 100.2% as losses from major events - defined as €10 million ($15.5 billion) and above - blew out last year.

Major losses widened to €4.7 billion ($7.3 billion) from €3.1 billion in 2019. Most of the losses were linked to COVID restrictions and in connection with the cancellation or postponement of major events. On a smaller scale, there were also losses in other lines of property and casualty reinsurance, including business interruption.

Major losses from natural catastrophes cost the business €906 million ($1.4 billion), significantly lower from the year-earlier bill of €2.05 billion ($3.2 billion). The costliest natural catastrophe for Munich Re last year was Hurricane Laura, at €280 million ($433 million).

The property and casualty arm increased its premium volume to €24.6 billion ($38 billion) from €22.1 billion ($34.2 billion), supported by strong organic growth across most lines of businesses.

At the January renewals, the business managed to grow the volume of business written by 10.9% to €11.6 billion ($18 billion).

“Prices, terms, and conditions improved,” Munich Re said. “Rates increased particularly in parts of the non-proportional business. Prices improved to varying degrees around the world.

“Looking ahead to the upcoming renewal rounds in April and July, Munich Re anticipates that the market environment will remain positive and offer attractive growth opportunities.”