35 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Mar 20, 2019
Slide 1: Executing business opportunities – Good start to the 2020 ambition
BALANCE SHEET PRESS CONFERENCE 2019 Executing business opportunities – Good start to the 2020 ambition Munich, 20 March 2019 Image: AdobeStock/LuckyStep
Slide 2: Agenda
Agenda Executing business opportunities 2 Joachim Wenning 1 Group finance and risk 13 2 Christoph Jurecka 3 ERGO 20 Markus Rieß 4 Reinsurance 27 Torsten Jeworrek Balance sheet press conference 2019 2
Slide 3: Strategic priorities and rigorous execution pave the way for profitable growth
Executing business opportunities Strategic priorities and rigorous execution pave the way for profitable growth Deliver on Focus on profitability in capital repatriation INCREASE underwriting, investments EARNINGS and new business Secure long-term Business focus, earnings power REDUCE divest from su
Slide 4: Reduce complexity – Making the organisation more focused and efficient
Executing business opportunities Reduce complexity – Making the organisation more focused and efficient REINSURANCE ERGO Cost savings well on track, more efficiency Cost savings well on track, more efficiency Achieve admin. cost savings of ~€200m by 20201 Cost savings of €174m out of €279m achie
Slide 5: Successfully mastering the digital transformation – Good progress in 2018
Executing business opportunities Successfully mastering the digital transformation – Good progress in 2018 REINSURANCE ERGO Internet of Things Actively addressing industry trends Build and scale up loss prevention and finance-related Pilot and introduce new solutions throughout the entire products a
Slide 6: Progress in interlocking business models between primary insurance and reinsurance
Executing business opportunities Progress in interlocking business models between primary insurance and reinsurance Product Sales and Underwriting/ Strategy Innovation development distribution policy administration Group-wide solution to Common initiatives for Joint life product develop- MGA
Slide 7: Delivering on targets – Profitable earnings growth in 2018
Executing business opportunities Delivering on targets – Profitable earnings growth in 2018 REINSURANCE ERGO GROUP NET RESULT NET RESULT NET RESULT €2.1–2.5bn €1.8–2.2bn €412m €2.3bn €1.9bn €250–300m Guidance 2018 2018 Guidance 2018 2018 Guidance 2018 2018 Profitable growth in P-C, Strong earnings c
Slide 8: ERGO Strategy Programme and growth in reinsurance are the major drivers to deliver on our 2020 ambition
Executing business opportunities ERGO Strategy Programme and growth in reinsurance are the major drivers to deliver on our 2020 ambition OUTLOOK 20191 ~€2.8bn REINSURANCE ~€2.5bn Net P-C L/H technical result €2.3bn result combined ratio2 incl. fee income ~€2.1bn ~98% ~€500m ERGO Net P-C combined rat
Slide 9: Consistent business and earnings focus – Rigorously using leeway of largely unchanged risk appetite
Executing business opportunities Consistent business and earnings focus – Rigorously using leeway of largely unchanged risk appetite UNDERWRITING INVESTMENTS Selective business growth in P-C Reinsurance Generate higher investment result under new CIO while not compromising on earning requirements re
Slide 10: Systematically integrating sustainability criteria when creating value – Key achievements in 2018
Executing business opportunities Systematically integrating sustainability criteria when creating value – Key achievements in 2018 Climate ESG in core Governance strategy business Enabling new technologies for a Sustainability criteria deeply New remuneration system for the low-carbon economy entren
Slide 11: Strong balance sheet, dividend increase and continuation of €1bn share buy-back in 2019
Executing business opportunities $ € Strong balance sheet, dividend increase and continuation of €1bn share buy-back in 2019 Sustainable dividend-per-share growth SOLVENCY II 245% €9.25 Well above target capitalisation 3.10 Total pay-out 2005–2018 €3.8bn DISTRIBUTABLE Safeguards ~€ 27 bn 2005 20181
Slide 12: Focus on TSR – 70% of the Board of Management's long-term variable remuneration linked to relative TSR
Executing business opportunities Focus on TSR – 70% of the Board of Management’s long- term variable remuneration linked to relative TSR to peers Committed to leveraging drivers of TSR … … to deliver attractive returns to our shareholders Peer 1 23.2% Profitable earnings growth – Peer 2 17.1% Optimi
Slide 13: Group finance and risk
Group finance and risk Balance sheet press conference 2019 13
Slide 14: Striking the balance – Efficient management of different metrics safeguards payouts to shareholders
Group finance and risk Striking the balance – Efficient management of different metrics safeguards payouts to shareholders SOLVENCY II Core metric of our risk management RATING Maintain financial strength to support our business IFRS Basis for performance management HGB Financing source of capital r
Slide 15: Munich Re delivers good underlying results according to all metrics
Group finance and risk Munich Re delivers good underlying results according to all metrics €2.3bn (€0.4bn) 245% (244%) Meets guidance Well above target capitalisation IFRS NET INCOME SOLVENCY II RATIO ECONOMIC EARNINGS HGB RESULT €1.9bn (€2.3bn) €2.2bn (€2.2bn) Adverse capital market Safeguards deve
Slide 16: Solid balance sheet limits downside while providing a good basis for earnings growth
Group finance and risk Solid balance sheet limits downside while providing a good basis for earnings growth PROTECT DOWNSIDE SUPPORT EARNINGS € Resilience to Ongoing reserve RESERVING adverse development releases Defensive Usual harvesting of INVESTMENTS portfolio unrealised gains Prudent setting So
Slide 17: Strong reserving position – Protection against adverse development while contributing to earnings strength
Group finance and risk Strong reserving position – Protection against adverse development while contributing to earnings strength PROTECT DOWNSIDE S U P P O R T E A R N I N G1S % Global hot spots well managed Ongoing reserve releases MOTOR LIABILITY 7.2 UK: Significant reduction of USA: Continually
Slide 18: Investment portfolio – Resilience to capital market shocks while providing reliable earnings contribution
Group finance and risk Investment portfolio – Resilience to capital market shocks while providing reliable earnings contribution PROTECT DOWNSIDE SUPPORT EARNINGS Well-balanced profile Ongoing disposal gains Low exposure to risky assets1 ~45% Unrealised gains Net disposal gains €bn Equity 31.5 26.0
Slide 19: Solvency II ratio – Stable capitalisation despite volatile capital markets
Group finance and risk Solvency II ratio – Stable capitalisation despite volatile capital markets Keeping SII ratio above the optimal range 302% Buffer against macro- Provides financial and economic uncertainty strategic optionality 267% 244% 245% 220% Optimal range 175% 140% $ € 100% No significant
Slide 20: ERGO
ERGO Balance sheet press conference 2019 20
Slide 21: ERGO Strategy Programme (ESP) on track – Consistent financial delivery and consequent strategic execution
ERGO ERGO Strategy Programme (ESP) on track – Consistent financial delivery and consequent strategic execution Total premiums €bn Net profit €m Investments €m Total cost savings €m Combined ratio (net, accumulated) (net, accumulated) P-C Germany 19.5 ~530 279 18-19 1,008 18.7 >3502 412 250-3001 760
Slide 22: ERGO Strategy Programme – Highlights
ERGO ERGO Strategy Programme – Highlights 2016 2018 2020 Launch of ESP Current status Ambition Sales Separated, partially integrated Full integration of sales forces into one Continuous increase of efficiency sales forces organisation; tied agent productivity agent productivity increased by ~25% s
Slide 23: Framework for digitalisation at ERGO
ERGO Framework for digitalisation at ERGO Enabling technology and innovation Voice: Pioneer offering E2E insurance Addressing AI and robotics: Accelerating process sale for travel insurance via Alexa industry trends automation with first promising results Legacy systems: First results replacin
Slide 24: Life and Health Germany
ERGO Life and Health Germany Status 2018 Life Health GROSS PREMIUMS WRITTEN New IT platform: Reducing legacy risks, Strong position in comprehensive insurance lifting efficiency gains Stable and attractive earnings contribution €9.3bn (€9.2bn) Life portfolio management partnership Offering for
Slide 25: Property-casualty Germany
ERGO Property-casualty Germany Status 2018 Combined ratio – On track to 92% target 99 ESP guidance GROSS PREMIUMS WRITTEN Improvement driven by 98 Actual Top-line growth €3.4bn (€3.3bn) 97.5 96 Decrease in expense ratio mainly driven by realisation 97.0 of efficiency gains and decreasing ESP inv
Slide 26: International
ERGO International Status 2018 Strengthen presence Capture opportunities in in core markets dedicated growth markets GROSS PREMIUMS WRITTEN P-C €2.8bn (€2.8bn) Poland and Baltics: Significant contribution, Positive development in major growth continuous high profitability of motor business marke
Slide 27: Reinsurance
Reinsurance Balance sheet press conference 2019 27
Slide 28: Reinsurance – Financials 2018: Good 2018 performance
Reinsurance – Financials 2018 Good 2018 performance PROPERTY-CASUALTY LIFE AND HEALTH NET RESULT NET RESULT €1,135m (–€476m) €729m (€596m) Sound underlying profitability despite Improvement in line with technical higher frequency of smaller and result and high investment result medium-sized losses T
Slide 29: Reinsurance business delivers on 2020 ambition
Reinsurance – 2020 ambition Reinsurance business delivers on 2020 ambition PROPERTY-CASUALTY REINSURANCE LIFE AND HEALTH Execution of Growing result contributes growth strategy NET RESULT to Group ambition Profitable growth Continuous earnings growth ~€2.3bn strategy gaining traction ~€2.1bn fro
Slide 30: Sustainable new business proposition and active portfolio management foster earnings growth
Reinsurance Life and Health Sustainable new business proposition and active portfolio management foster earnings growth Technical result and fee income €m Steady earnings growth Fee income Strong footprint in traditional reinsurance as Technical result 584 the core of new business generation Targe
Slide 31: Munich Re is well positioned to profitably grow its core business fields and drive innovation
Reinsurance Munich Re is well positioned to profitably grow its core business fields and drive innovation in the industry Data-driven Trends Expanding the boundaries of solutions Reshuffling insurability the value Risk chain Traditional Reinsurance Solutions Reinsurance P-C Life and Health 1 Sustain
Slide 32: Strategic initiatives are delivering
Reinsurance Property-casualty – Strategic initiatives 2 Strategic initiatives are delivering BUSINESS Top position in Smart growth in Capital management GROWTH core mature markets core emerging markets solutions Expansion in currently under- Focus on Asia, Latin America Expanding global repres
Slide 33: We focus on tangible business impact – Innovative and more disruptive offerings are gaining traction
Reinsurance – Creating new strategic options 4 We focus on tangible business impact – Innovative and more disruptive offerings are gaining traction MUNICH RE STRATEGIC ADVANTAGES Domain expertise in underwriting, claims, risk management Efficient access to new solutions Global presence Financial str
Slide 34: Internet of Things – Developing insurance, finance and technology solutions
Reinsurance – Creating new strategic options 4 Internet of Things – Developing insurance, finance and technology solutions SME MID to LARGE LARGE INDUSTRIAL Insurance and financial solutions Loss prevention via End-to-end IoT Financial asset and sensor deployment implementations risk management Dire
Slide 35: Disclaimer
Disclaimer This presentation contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the a