MUNICH (Reuters) - Joachim Wenning admitted he would not be to everyone’s liking long before taking the helm of Germany’s Munich Re (MUVGn.DE).
That hard-nosed approach could prove valuable as the 52-year-old tackles falling profits, disgruntled investors and headwinds beyond his control at the German reinsurance titan.
Wenning, who has spent his entire career at Munich Re, took over as CEO on Thursday, more than a year after he was tapped to succeed Nikolaus von Bomhard, who retired after 13 years.
While shareholders praised von Bomhard for navigating the global financial crisis, low interest rates and declining reinsurance prices have eroded profit in recent years.
Investors are also impatient about other issues, including Munich Re’s unprofitable primary insurance unit Ergo, which they argue distracts from its reinsurance business, and numerous digital initiatives which they say have yet to pay off.
“I‘m glad that Mr Wenning has already agreed to take this on and cannot go back anymore,” von Bomhard told shareholders in Munich on Wednesday at the company’s annual general meeting.
Munich Re, which dominates the reinsurance industry, is facing fierce competition and falling prices along with its major rivals such as Swiss Re (SRENH.S), Hannover Re (HNRGn.DE) and Warren Buffett’s Berkshire Hathaway (BRKa.N).
Munich Re employees arrived at work on Thursday to find a video message from Wenning, under the headline “I am confident as I take on this role”, in which he addressed concerns about Ergo, reiterating a promise that it will contribute 600 million euros (501.87 million pounds) in profit from 2021.
But despite a deep restructuring announced in June, the cutting of 13 percent of its German workforce and plans to launch a digital insurer and a revamped product line, investor concerns persist about Ergo.
“I am slowly but surely losing patience with Ergo,” Daniela Bergdolt, vice president of private investor association DSW, told the annual meeting.
“We’ve been tinkering with it for about 18 years. When will we see a sustainable success with Ergo? When is the turnaround? Should we not have pulled the plug earlier?”
A focus for Wenning will be digital. Ergo is due to launch an insurer called “nexible” that can only be found online and has no call centre or branches. The company is also cautiously moving into the business of insuring against cyber risks.
Yet despite numerous initiatives, investors complain innovation is not yet paying off, with group profit likely to decline in 2017 for a fifth consecutive year.
Wenning, a German born in Jerusalem in 1965, has most recently been the board member with responsibility for life reinsurance and human resources and admitted on Wednesday that gender imbalance was still a problem.
Monika Zumstein, an official with the German Women Lawyers Association, pointed out at the AGM that only 4 percent of roles below board level are held by women.
But such criticisms seem unlikely to throw Wenning.
In an interview on Munich Re’s website last year, Wenning said: “For me, it is important to hear unpleasant realities, even if in the first moment they are hard to accept.”
“I am not everybody’s darling,” he said.
Editing by Alexander Smith