Munchener Ruckversicherungs-gesellschaft Ag · XETR:MUV2

Munchener Ruckversicherungs-gesellschaft — Munich Re — Q1 2017 Earnings Presentation

50 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, May 9, 2017

1. Slide 1: Quarterly statement as at 31 March 2017

   http://www.presentationworks.de Image: Getty Images/fStop Quarterly statement as at 31 March 2017 9 May 2017 Jörg Schneider

2. Slide 2: Agenda

   Agenda 2 20 1 Munich Re (Group) 4 Outlook 7 2 ERGO 5 First-time publication SFCR reports 22 13 3 Reinsurance 6 Backup 31 Quarterly statement as at 31 March 2017 2

3. Slide 3: Munich Re (Group) – Financial highlights Q1 2017

   Munich Re (Group) – Financial highlights Q1 2017 Q1 result in line with expectations – Well on track to achieve annual targets Munich Re (Group) Q1 2017 (Q1 2016) Net result Technical result €m Investment result €m Net result €m €557m (€436m) 945 Good underwriting performance, 2,151 strong investmen

4. Slide 4: IFRS capital position

   Munich Re (Group) – Capitalisation IFRS capital position Equity €m Capitalisation €bn Equity 31.12.2016 31,785 0.4 0.4 0.4 0.4 0.4 Consolidated result 557 4.2 0.3 4.4 4.2 2.8 Changes 4.4 Dividend – 4.4 Unrealised gains/losses 221 Exchange rates –101 Share buy-backs –326 Other 23 15.3 Equity 31.3.201

5. Slide 5: Investment portfolio

   Munich Re (Group) – Investment portfolio Investment portfolio Investment portfolio1 % Portfolio management in Q1 Land and buildings Fixed-interest securities  Ongoing geographic diversification 2.9 (2.9) 55.9 (56.3)  Slight decrease in corporate bonds Shares, equity funds and participating interes

6. Slide 6: Investment result

   Munich Re (Group) – Investment result Investment result Investment result (€m) Q1 2017 Return1 Q1 2016 Return1 Regular income 1,634 2.8% 1,628 2.8% Write-ups/write-downs –26 –0.0% –219 –0.4% Disposal gains/losses 1,048 1.8% 218 0.4% Derivatives2 –362 –0.6% 74 0.1% Other income/expenses –143 –0.2% –1

7. Slide 7: ERGO

   ERGO Quarterly statement as at 31 March 2017 7

8. Slide 8: ERGO Life and Health Germany

   ERGO ERGO Life and Health Germany Q1 2017 vs. Q1 2016 Gross premiums written €m Major result drivers €m Q1 2016 2,333 Q1 2017 Q1 2016  Technical result 102 83 19 Foreign exchange –4 Non-technical result 71 95 –24 Divestments/investments 0 thereof investment result 1,337 1,266 71 Organic change –5 O

9. Slide 9: ERGO Property-casualty Germany

   ERGO ERGO Property-casualty Germany Q1 2017 vs. Q1 2016 Gross premiums written €m Major result drivers €m Q1 2016 1,219 Q1 2017 Q1 2016  Technical result 16 14 1 Foreign exchange –3 Non-technical result 29 –48 77 Divestments/investments 0 thereof investment result 49 –15 64 Organic change 23 Other

10. Slide 10: ERGO Property-casualty Germany

    ERGO ERGO Property-casualty Germany Combined ratio % Gross premiums written €m  Loss ratio  Expense ratio Other Motor 115 345 2015 97.9 64.7 33.2 2016 97.0 61.9 35.1 Legal protection 119 Q1 2017 99.1 63.3 35.8 TOTAL 103.9 €1,240m 100.0 Fire/property 98.6 99.1 239 96.1 93.4 96.1 93.3 Liability Pers

11. Slide 11: ERGO International

    ERGO ERGO International Q1 2017 vs. Q1 2016 Gross premiums written €m Major result drivers €m Q1 2016 1,335 Q1 2017 Q1 2016  Technical result 45 28 16 Foreign exchange –3 Non-technical result 7 33 –27 Divestments/investments –31 thereof investment result 74 141 –67 Organic change 15 Other –35 –63 2

12. Slide 12: ERGO International – Property-casualty, including Health

    ERGO ERGO International – Property-casualty, including Health Combined ratio % Gross premiums written €m  Loss ratio  Expense ratio Other Poland 281 279 2015 104.7 65.3 39.4 Turkey TOTAL Spain 2016 98.0 51 €1,092m 232 64.9 33.1 Greece Legal protection 74 175 Q1 2017 96.3 65.3 31.0 Combined ratio Q

13. Slide 13: Reinsurance

    Reinsurance Quarterly statement as at 31 March 2017 13

14. Slide 14: Reinsurance Life and Health

    Reinsurance Reinsurance Life and Health Q1 2017 vs. Q1 2016 Gross premiums written €m Major result drivers €m Q1 2016 3,096 Q1 2017 Q1 2016  Technical result 145 63 81 Foreign exchange 151 Non-technical result 48 –61 109 Divestments/investments 0 thereof investment result 221 80 141 Organic change

15. Slide 15: Reinsurance Property-casualty

    Reinsurance Reinsurance Property-casualty Q1 2017 vs. Q1 2016 Gross premiums written €m Major result drivers €m Q1 2016 4,528 Q1 2017 Q1 2016  Technical result 387 755 –368 Foreign exchange 68 Non-technical result 104 –238 342 Divestments/investments 0 thereof investment result 470 101 369 Organic

16. Slide 16: Combined ratio

    Reinsurance Combined ratio Combined ratio %  Basic losses  Major losses  Expense ratio 101.9 2015 89.7 50.8 6.2 32.6 99.8 2016 95.7 54.2 9.1 32.4 94.5 93.3 97.1 Q1 2017 97.1 55.1 9.6 32.4 92.5 88.4 Major Reserve Normalised losses Nat cat Man-made releases1 combined ratio2 78.6 Q1 2017 9.6 3.7 5.9

17. Slide 17: April renewals – Main renewal date in Japan, high nat cat share

    Reinsurance – April renewals 2017 April renewals – Main renewal date in Japan, high nat cat share Total property-casualty book1 % Regional allocation of April renewals % Remaining business Business up for January renewal Rest Europe 29 50 6 35 Worldwide TOTAL Latin America 19 €1.7bn 3 Japan North Am

18. Slide 18: Cycle-management measures lower top line – Slowing of price declines confirmed

    Reinsurance – April renewals 2017 Cycle-management measures lower top line – Slowing of price declines confirmed once again April renewals 2017 % 100 –13.6 86.4 –5.7 10.1 90.8  Active portfolio management measures only partly €m 1,670 –226 1,444 –96 +169 1,517 compensated for by new Change in premi

19. Slide 19: Outlook for July renewals – Regional focus on North America and Latin America

    Reinsurance – Outlook for July renewals Outlook for July renewals – Regional focus on North America and Latin America, main renewal date in Australia Regional allocation of July renewals % Outlook for July renewals North America Worldwide  Capacity and competition expected to remain 29 28 high unle

20. Slide 20: Outlook

    Outlook Quarterly statement as at 31 March 2017 20

21. Slide 21: Unchanged outlook 2017

    Unchanged outlook 2017 Group Reinsurance ERGO Gross premiums written Gross premiums written Gross premiums written €48–50bn €31–33bn €17–17.5bn Net result Net result Net result €2.0–2.4bn €1.8–2.2bn €150–200m Return on investment Combined ratio1 Combined ratio ~3% ~97% ~99% ~98% Germany Internationa

22. Slide 22: First-time publication SFCR reports

    First-time publication SFCR reports Quarterly statement as at 31 March 2017 22

23. Slide 23: SFCR confirms Munich Re's sound risk management and economic management framework

    First-time publication SFCR reports SFCR confirms Munich Re’s sound risk management and economic management framework 1 Strong SII ratio of 267% … 1 2 High quality of capital … allows for long-term track record of attractive Conservatively calibrated Group internal model and capital repatriation whi

24. Slide 24: Strong capitalisation facilitates attractive shareholder returns

    First-time publication SFCR reports 1 Strong capitalisation facilitates attractive shareholder returns Solvency II ratio1 HGB distributable earnings 267% €4.2bn Well above Safeguards target capitalisation capital repatriation Dividend per share Share buy-back Cash yield €8.60 €1bn 8.5%  +4.2% Until

25. Slide 25: Munich Re's SII ratio well above target capitalisation

    First-time publication SFCR reports Munich Re’s SII ratio well above target capitalisation 1 SII ratio continuously in a very comfortable range1 >220%: Above target capitalisation  Capital repatriation 277% 302% 267%2  Increased risk-taking 267%2 EOF SCR  Holding excess capital to meet external c

26. Slide 26: Prudent Munich Re (Group) Internal Model calibration

    First-time publication SFCR reports 2 Prudent Munich Re (Group) Internal Model calibration Specific features of Group Internal Model (GIM) Relevant driver of capital requirements  GIM approved by core college of insurance supervisors (BaFin,  Migration, default (credit risk) and spread variations

27. Slide 27: High quality of capital

    First-time publication SFCR reports 2 High quality of capital Shows in IFRS … … the same as in Solvency II Goodwill Tier 1 unrestricted Tier 1 restricted2 87% 3% 8.9% €28bn Moderate in relation to unrealised TOTAL Tier 2 shareholders’ equity investment gains €40.7bn 8% Debt leverage1 Strong balance

28. Slide 28: SII ratio remains comfortable in typical stress scenarios

    First-time publication SFCR reports 3 SII ratio remains comfortable in typical stress scenarios SII ratio sensitivity1 Spread gov +100bps (246%)5  Reduced interest rates and Interest rates Spread corporates recognition of negative interest –50bps2 +100bps (248%) (240%)5 rates in internal model cont

29. Slide 29: SII ratios of Munich Re (Group) and solo entities

    First-time publication SFCR reports SII ratios of Munich Re (Group) and solo entities1 4 EOF SCR S-II Ratio S-II Ratio Good financial flexibility €bn (without LTG) (without LTG) (without LTG) (incl. LTG)  Limited dependency on dividend Munich Re (Group) 40.7 15.3 267% 316% upstreaming – Munich Rein

30. Slide 30: SFCRs give detailed overview of Munich Re's governance, risk management and valuation framework

    First-time publication SFCR reports SFCRs give detailed overview of Munich Re’s highly 4 developed governance, risk management and valuation framework A Business and performance B System of governance  Underwriting performance  Description of the C Risk profile  Per risk category: D Valuation for

31. Slide 31: Backup

    Backup Quarterly statement as at 31 March 2017 31

32. Slide 32: Premium development

    Backup: Munich Re (Group) Premium development Gross premiums written €m Segmental breakdown €m Reinsurance ERGO Q1 2016 12,511 Property-casualty Life and Health Germany 4,558 2,324 (35%) ( 0.7%) (18%) ( –0.4%) Foreign exchange 210 ERGO Divestments/ Property-casualty Germany investments –31 1,240 (

33. Slide 33: Reconciliation of operating result with net result

    Backup: Munich Re (Group) Reconciliation of operating result with net result Reconciliation of operating result with net result €m Q1 2017 Operating result 952 Other non-operating result –153 Goodwill impairments 0 Net finance costs –54 Taxes –188 Net result 557 Other non-operating result €m Tax rat

34. Slide 34: Actual vs. analysts' consensus

    Backup: Munich Re (Group) Actual vs. analysts’ consensus Operating result – Actual vs. analysts’ consensus1 €m Major developments in Q1 2017 Q1 2017 Consensus Delta Reinsurance Property-casualty Combined ratio: 97.1% (consensus: 95.2%) – major-loss ratio: 9.6%, Reinsurance Property-casualty 491 600

35. Slide 35: Development of combined ratio

    Backup: Reinsurance Development of combined ratio Combined ratio vs. basic losses % Combined ratio Basic loss ratio 101.4 91.3 91.2 92.3 93.3 94.5 88.4 99.8 92.5 101.9 97.1 78.6 54.6 55.3 54.9 57.6 54.1 54.0 56.2 55.3 46.4 36.8 51.1 55.1 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 201

36. Slide 36: Breakdown of regular income

    Backup: Investments Breakdown of regular income Investment result – Regular income (€m) Q1 2017 Q1 2016 Change Afs fixed-interest 752 828 –76 Afs non-fixed-interest 140 107 33 Derivatives 33 31 1 Loans 488 512 –24 Real estate 99 98 0 Deposits retained on assumed reinsurance and other investments 123

37. Slide 37: Breakdown of write-ups/write-downs

    Backup: Investments Breakdown of write-ups/write-downs Investment result – Write-ups/write-downs (€m) Q1 2017 Q1 2016 Change Afs fixed-interest –1 –48 47 Afs non-fixed-interest –16 –150 134 Loans 2 –40 41 Real estate –31 –21 –10 Deposits retained on assumed reinsurance and other investments 20 38 –1

38. Slide 38: Breakdown of net result from disposals

    Backup: Investments Breakdown of net result from disposals Investment result – Net result from disposal of investments (€m) Q1 2017 Q1 2016 Change Afs fixed-interest 48 48 0 Afs non-fixed-interest 312 –3 315 Loans 679 172 507 Real estate 6 10 –4 Deposits retained on assumed reinsurance and other inv

39. Slide 39: Return on investment by asset class and segment

    Backup: Investments Return on investment by asset class and segment Q1 2017 %1 Regular income Write-ups/-downs Disposal result Extraord. derivative result Other inc./exp. RoI ᴓ Market value (€m) Afs fixed-income 2.3 0.0 0.1 0.0 0.0 2.4 131,422 Afs non-fixed-income 3.4 –0.4 7.6 0.0 0.0 10.6 16,437 De

40. Slide 40: Investment result by segment

    Backup: Investments Investment result by segment Investment result – Reinsurance Life and Health €m Q1 2017 Return1 Q1 2016 Return1 Regular income 201 3.0% 173 2.6% Write-ups/write-downs 0 0.0% –14 –0.2% Disposal gains/losses 41 0.6% –21 –0.3% Derivatives2 –7 –0.1% –44 –0.7% Other income/expenses –1

41. Slide 41: Investment result by segment

    Backup: Investments Investment result by segment Investment result – ERGO Life/Health Germany €m Q1 2017 Return1 Q1 2016 Return1 Regular income 860 2.9% 890 3.0% Write-ups/write-downs –17 –0.1% –96 –0.3% Disposal gains/losses 838 2.8% 226 0.8% Derivatives2,3 –277 –0.9% 302 1.0% Other income/expenses

42. Slide 42: Investment result by segment

    Backup: Investments Investment result by segment Investment result – ERGO International €m Q1 2017 Return1 Q1 2016 Return1 Regular income 107 2.6% 137 3.6% Write-ups/write-downs –7 –0.2% –18 –0.5% Disposal gains/losses 21 0.5% –3 –0.1% Derivatives2 –37 –0.9% 31 0.8% Other income/expenses –10 –0.2% –

43. Slide 43: Sensitivities to interest rates, spreads and equity markets

    Backup: Investments Sensitivities to interest rates, spreads and equity markets Sensitivity to risk-free interest rates – Basis points –50 –25 +50 +100 Change in gross market value (€bn) +8.4 +4.1 –7.7 –14.8 Change in on-balance-sheet reserves, net (€bn)1 +2.0 +1.0 –1.8 –3.6 Change in off-balance-sh

44. Slide 44: On- and off-balance-sheet reserves (gross)

    Backup: Investments On- and off-balance-sheet reserves (gross) €m 31.12.2014 31.12.2015 31.12.2016 31.3.2017 Market value of investments 235,849 230,529 236,153 235,399 Total reserves 31,470 25,969 28,496 26,180 On-balance-sheet reserves Fixed-interest securities 11,967 7,886 8,649 7,815 Non-fixed-i

45. Slide 45: On-balance-sheet reserves

    Backup: Investments On-balance-sheet reserves On-balance-sheet reserves €m 31.3.2017 Change Q1 Investments afs 11,126 –447 Valuation at equity 118 38 Unconsolidated affiliated enterprises 63 –27 Cash-flow hedging 21 5 Total on-balance-sheet reserves (gross) 11,327 –431 Provision for deferred premium

46. Slide 46: Off-balance-sheet reserves

    Backup: Investments Off-balance-sheet reserves Off-balance-sheet reserves €m 31.3.2017 Change Q1 Real estate1 2,450 37 Loans 11,692 –1,899 Associates 711 –23 Total off-balance-sheet reserves (gross) 14,853 –1,885 Provision for deferred premium refunds –10,498 1,691 Deferred tax –1,325 97 Minority in

47. Slide 47: Changes to shares in circulation

    Backup: Shareholder information Changes to shares in circulation Acquisition of Retirement of Weighted average number of shares in circulation Shares 31.12. own shares in own shares in 31.3. (millions) 2016 Q1 2017 Q1 2017 2017 (millions) Shares in 156.9 –1.8 – 155.1 172.2 165.9 circulation 160.0 15

48. Slide 48: Financial calendar

    Backup: Shareholder information Financial calendar 2017 9 August Half-year financial report as at 30 June 2017 9 November Quarterly statement as at 30 September 2017 2018 6 February Preliminary key figures 2017 and renewals Balance sheet press conference for 2017 financial statements 15 March Analys

49. Slide 49: For information, please contact

    Backup: Shareholder information For information, please contact Investor Relations Team Christian Becker-Hussong Britta Hamberger Angelika Rings Head of Investor & Rating Agency Relations Tel.: +49 (89) 3891-3504 Tel.: +49 (211) 4937-7483 Tel.: +49 (89) 3891-3910 E-mail: bhamberger@munichre.com E-ma

50. Slide 50: 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

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