Munich Re employees should feel slighted by an 11.4% rise in compensation
You would have thought that employees of Munich Re have reason to be pleased. Compensation rose by a relatively healthy 11.4% in 2012, to reach €75.6k a head, on the back of a good year where profits increased by €712m to stand at €3.211bn.
However, much of the windfall resulted from the performance in its core business of reinsurance, which earned over €3bn – or five times more than 2011, when costs related to natural disasters and the eurozone debt crisis weighed on profits.
Employees in the reinsurance business weren’t exactly rewarded for their efforts – the firm doesn’t break out compensation in particular divisions, but headcount fell in reinsurance, by 69 people to stand at 11,094.
This was generally a year of cost-cutting at Munich Re, with its general insurance division feeling particular pain with over 1,500 of its 29,768 employees leaving in 2012. Its health insurance division cut over 160 employees, to put headcount at 3,766. Only the asset management division – which employs a comparatively modest 809 people – increased staff numbers.
The increase in redundancy costs is an obvious explanation for the compensation expense rise.
Reinsurance employees can feel aggrieved to be paying for cost-cutting in Munich Re’s general insurance business. Erstversicherungsparte (Ergo), one of the main primary insurance businesses at the firm, hit the headlines for hosting a https://www.spiegel.de/international/business/ergo-report-reveals-details-of-budapest-bathhouse-sex-party-scandal-a-850168.html sleazy sex party for its brokers in Bucharest in 2011.
Performance improved last year to a comparatively modest net profit of €247m – an increase of 59.4% on 2011.
"With a profit of €3.2bn, we have achieved a very good result," Munich Re CEO Nikolaus von Bomhard said. "Even if the consolidation of public finances and high unemployment will undermine economic growth in many developed countries, we remain optimistic about our business. For 2013, we are aiming for a profit of approximately €3bn."
