55 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Aug 10, 2021
Slide 1: Half-Year Financial Report as at 30 June 2021
Munich Re Group Half-Year Financial Report as at 30 June 2021 10 August 2021 Joachim Wenning Christoph Jurecka Half-Year Financial Report as at 30 June 2021 10 August 2021 1
Slide 2: Agenda
Half-Year Financial Report as at 30 June 2021 Agenda 01 Munich Re 02 Group finance 03 ERGO 04 Reinsurance 05 Additional information Half-Year Financial Report as at 30 June 2021 10 August 2021 2
Slide 3: Munich Re
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Slide 4: Munich Re Group Ambition 2025
Munich Re Group Ambition 2025 Making good progress towards scaling and shaping our business Expansion of core Scale Preference for organic growth Succeed Leverage superior underwriting Shareholders Growing earnings and RoE Uplift asset performance Clients Long-term partner – superior products, exper
Slide 5: ERGO on track to deliver on Ambition 2025
ERGO on track to deliver on Ambition 2025 Achievements in H1 2021 Germany International Digital projects and technology Secure profitability and market share Increase net profit contribution Expand new business models ▪ Very good new business development ▪ Strong premium growth (+7%), and continue I
Slide 6: Reinsurance leveraging favourable market environment
Reinsurance leveraging favourable market environment while building basis for future growth – Achievements in H1 2021 Life and health reinsurance Core P-C reinsurance Risk Solutions Build on growth of underlying markets Grow in mature and emerging markets Extend business based on strong client base
Slide 7: Successful July renewals support earnings path
Successful July renewals support earnings path Scale Overall price change ~ 2%, volume change 11.1% Volume change % Europe 25 Less positive price momentum compared with the US. Main drivers: Low interest rates, general market sentiment and uncertainty around COVID-19 20 North America 15 Strong rate
Slide 8: Munich Re profitably participates in a steadily growing cyber insurance market
Munich Re profitably participates in a Shape steadily growing cyber insurance market Global cyber market premium Disciplined participation in market growth Outlook USD bn ▪ Selective underwriting, improved by data- Less capacity available in ~20 driven approach the market ▪ Effective risk management
Slide 9: Recent up-tick in inflation is not challenging our financial targets
Recent up-tick in inflation is not challenging our financial targets Uncertainty about claims inflation … … well controlled by Munich Re Increase of insurers’ claims ▪ ERGO and L/H reinsurance business marginally exposed to inflation severity and frequency due to different drivers, e.g. ▪ P-C reinsu
Slide 10: Continuous improvements to uplift asset performance
Continuous improvements to uplift asset performance while considering ESG criteria – Achievements in H1 2021 ESG investment strategy ▪ Roadmap implemented to achieve climate ambition 2025 Close alignment with our AOA ▪ Implementation of ESG dashboard to derive investment decisions and enable commitm
Slide 11: Making good progress towards achieving our ESG targets
Making good progress towards Succeed achieving our ESG targets Environment Social Governance Ambitious decarbonisation targets Diverse workforce ESG criteria in BoM remuneration ▪ Climate protection targets for our ▪ 40% female managers by 2025 ▪ ESG criteria relevant for variable (re)insurance busi
Slide 12: Outlook 2021
Outlook 2021 Group Gross premiums written Net result Return on investment ~ €58bn ~ €2.8bn >2.5% (prev. ~ €57bn) ERGO Combined ratio Gross premiums written Net result P-C Germany International ~ €18bn ~ €0.5bn ~ 92%1 ~ 93% (prev. ~ €17.5bn) Reinsurance Combined ratio Technical result, incl. fee Gros
Slide 13: Group finance
Group finance
Slide 14: Financial highlights Q2 2021
Munich Re – Financial highlights Q2 2021 After strong results well on track to achieve annual targets Munich Re Q2 2021 (H1 2021) Net result Technical result Investment result Net result €m €m €m 1,695 €1,106m (€1,695m) 1,554 3,617 3,624 Reinsurance: Good underlying performance 1,074 1,106 overall a
Slide 15: Accumulated COVID-19-related financial impact for 2020 and H1 2021
Munich Re – COVID-19 Accumulated COVID-19-related financial impact for 2020 and H1 2021 €m Q2 2021: Provisions increased by €241m Re- ~ +€0.2bn ~€3.9bn ~ +€0.3bn ~€3.4bn ▪ Increase in P-C: €101m (largely driven by contingency insurance Contingency 1,853 business), L&H: €140m (higher-than-expected mo
Slide 16: Capital position
Munich Re – Capitalisation Capital position Equity Capitalisation €m €bn Equity 31.12.2020 Change in Q2 15.1 15.6 29,994 13.2 Consolidated result 1,695 1,106 12.0 12.4 Changes 0.3 0.3 0.3 Dividend –1,373 –1,373 0.3 0.3 3.8 5.0 5.1 4.0 Unrealised gains/losses –1,262 828 3.7 Exchange rates 528 –113 Sh
Slide 17: Investment portfolio
Munich Re – Investments Investment portfolio Investment portfolio1 Portfolio management % ▪ Increase of equity exposure due to investments Fixed-interest securities 54.5 (55.3) and favourable development of stock markets Loans 24.0 (25.6) ▪ Expansion of emerging-market bonds at the Total expense of
Slide 18: Investment result
Munich Re – Investments Investment result €m Q2 2021 Return1 H1 2021 Return1 H1 2020 Return1 Regular income 1,645 2.6% 3,073 2.5% 3,265 2.6% Write-ups/write-downs –77 –0.1% –248 –0.2% –1,567 –1.3% Disposal gains/losses 627 1.0% 1,610 1.3% 1,566 1.3% Derivatives2 –90 –0.1% –458 –0.4% 694 0.6% Other i
Slide 19: ERGO
ERGO
Slide 20: ERGO Life and Health Germany
ERGO ERGO Life and Health Germany Gross premiums written Major result drivers €m €m H1 2021 H1 2020 Q2 2021 Q2 2020 H1 2020 4,464 Technical result 188 46 142 72 –36 108 Foreign exchange 0 Non-technical result 30 89 –59 11 182 –171 Divestments/investments 0 thereof investment result 1,863 1,757 1
Slide 21: ERGO Property-casualty Germany
ERGO ERGO Property-casualty Germany Gross premiums written Major result drivers €m €m H1 2021 H1 2020 Q2 2021 Q2 2020 H1 2020 2,135 Technical result 121 145 –24 70 85 –15 Foreign exchange –2 Non-technical result 42 –20 61 55 –16 71 Divestments/investments 0 thereof investment result 140 47 110 4
Slide 22: ERGO Property-casualty Germany
ERGO ERGO Property-casualty Germany Combined ratio Gross premiums written in H1 2021 (H1 2020) % €m ◼ Loss ratio ◼ Expense ratio 2019 92.3 60.3 32.0 2020 92.4 61.9 30.5 Total €2,341m H1 2021 93.4 63.2 30.1 (€2,135m) Q2 2021 92.6 63.4 29.1 94.2 Motor 492 (470) Legal protection 221 (218) 92.1 93.2 93.
Slide 23: ERGO International
ERGO ERGO International Gross premiums written Major result drivers €m €m H1 2021 H1 2020 Q2 2021 Q2 2020 H1 2020 2,422 Technical result 129 111 18 78 75 3 Foreign exchange –24 Non-technical result 10 19 –9 –6 0 –6 Divestments/investments –2 thereof investment result 167 179 –12 72 79 –7 Organic
Slide 24: ERGO International
ERGO ERGO International Combined ratio Gross written premiums in H1 2021 (H1 2020) % €m 95.0 94.8 95.2 93.8 91.8 92.5 93.0 92.2 Property-casualty 1,472 (1,333) 90.1 Total €2,596m Life 307 (315) (€2,422m) Health 818 (774) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2019 2019 2019 2020 2020 2020 2020 2021 2021 H1 2021
Slide 25: Reinsurance
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Slide 26: Reinsurance life and health
Reinsurance Reinsurance life and health Gross premiums written Major result drivers €m €m H1 2021 H1 2020 Q2 2021 Q2 2020 H1 2020 6,411 Technical result 5 21 –16 9 7 2 Foreign exchange –197 Non-technical result 178 96 82 69 44 25 Divestments/investments 0 thereof investment result 411 400 11 166
Slide 27: Property-casualty reinsurance
Reinsurance Property-casualty reinsurance Gross premiums written Major result drivers €m €m H1 2021 H1 2020 Q2 2021 Q2 2020 H1 2020 11,680 Technical result 1,110 217 893 845 291 554 Foreign exchange –835 Non-technical result 538 428 110 351 122 228 Divestments/investments 0 thereof investment re
Slide 28: Property-casualty reinsurance
Reinsurance Property-casualty reinsurance Combined ratio % ◼ Basic losses ◼ Major losses ◼ Expense ratio 2019 100.2 51.4 15.2 33.6 2020 105.6 53.9 20.8 30.9 111.6 112.2 106.0 H1 2021 94.3 54.1 11.0 29.3 103.9 104.2 98.9 Q2 2021 90.1 53.7 6.8 29.6 99.9 90.1 Major Reserve Normalised 86.9 losses Nat ca
Slide 29: July renewals
Reinsurance July renewals Total property-casualty book1 Regional allocation of July renewals % % Europe 5 Worldwide 26 Total Asia/Pacific/Africa 32 Total €3.5bn €25bn Latin America 10 North America 26 Nat cat shares of renewable portfolio2 % Nat cat Other perils January renewals 42 January 11 89 Apr
Slide 30: Positive price dynamics continue
Reinsurance Positive price dynamics continue July renewals 2021 % 100 –10.2 89.8 +5.7 15.6 111.1 €m 3,528 –361 3,167 +202 +550 3,918 Change in premium +11.1% Thereof price movement1 ~ 2.0% Thereof change in exposure for our share +9.1% Total renewable Cancelled Renewed Increase New Estimated from 1
Slide 31: Additional information
Additional information
Slide 32: Segment income statement Q2 2021
Additional information: Group finance and risk Segment income statement Q2 2021 €m Reinsurance Reinsurance ERGO ERGO ERGO Total L/H1 P-C L/H Germany P-C Germany International Q2 2021 Gross premiums written 3,144 7,155 2,304 805 1,234 14,642 Net earned premiums 2,828 6,339 2,300 969 1,192 13,628 Inco
Slide 33: Segment income statement H1 2021
Additional information: Group finance and risk Segment income statement H1 2021 €m Reinsurance Reinsurance ERGO ERGO ERGO Total L/H1 P-C L/H Germany P-C Germany International H1 2021 Gross premiums written 6,202 13,486 4,569 2,341 2,596 29,193 Net earned premiums 5,602 12,082 4,532 1,837 2,347 26,39
Slide 34: Actual vs. analysts' consensus
Additional information: Group finance and risk Actual vs. analysts’ consensus Operating result – Actual vs. analysts’ consensus 1 KPIs – Actual vs. analysts’ consensus 1 €m €m Q2 2021 Consensus Delta Q2 2021 Consensus Impact2 Property-casualty reinsurance 1,196 779 417 Combined ratio 90.1% 92.9% 176
Slide 35: Premium development
Additional information: Group finance and risk Premium development Gross premiums written Segmental breakdown €m €m H2 2020 27,112 Foreign Total –1,059 exchange €29.2bn Divestments/ investments –2 Property-casualty reinsurance 13,486 (46%)( 15.5%) Organic change 3,143 Life and health reinsurance 6,
Slide 36: Development of combined ratio
Additional information: Reinsurance Development of combined ratio Combined ratio vs. basic losses % Combined ratio Basic loss ratio 100.7 105.1 103.9 111.6 106.0 99.9 112.2 104.2 97.3 86.9 98.9 90.1 55.3 50.4 54.8 50.1 54.7 46.4 54.7 54.1 55.6 51.4 54.4 53.7 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q
Slide 37: Return on investment by asset class and segment
Additional information: Investments Return on investment by asset class and segment H1 2021 %1 Regular Write-ups/ Disposal Extraord. Other ᴓ Market income -downs result derivatives result inc./exp. RoI value (€m) Afs fixed-income 1.8 0.0 0.7 0.0 0.0 2.5 136,350 Afs non-fixed-income 6.0 –1.2 4.0 0.0
Slide 38: Investment result – Reinsurance
Additional information: Investments Investment result – Reinsurance Life and health reinsurance €m Q2 2021 Return1 H1 2021 Return1 H1 2020 Return1 Regular income 171 2.3% 340 2.3% 386 2.6% Write-ups/write-downs –3 0.0% –5 0.0% –14 –0.1% Disposal gains/losses 13 0.2% 107 0.7% 50 0.3% Derivatives2 6 0
Slide 39: Investment result – ERGO
Additional information: Investments Investment result – ERGO Life and Health Germany €m Q2 2021 Return1 H1 2021 Return1 H1 2020 Return1 Regular income 960 3.1% 1,745 2.8% 1,768 2.8% Write-ups/write-downs –39 –0.1% –112 –0.2% –1,244 –2.0% Disposal gains/losses 317 1.0% 881 1.4% 1,064 1.7% Derivatives
Slide 40: Investment result – ERGO International
Additional information: Investments Investment result – ERGO International €m Q2 2021 Return1 H1 2021 Return1 H1 2020 Return1 Regular income 76 1.5% 147 1.4% 176 1.9% Write-ups/write-downs 6 0.1% 17 0.2% –22 –0.2% Disposal gains/losses 11 0.2% 51 0.5% 19 0.2% Derivatives2 –16 –0.3% –38 –0.4% 19 0.2%
Slide 41: Investment portfolio
Additional information: Investments Investment portfolio Investment portfolio Fixed-interest securities1 (%) 30.6.2021 31.12.2020 % Governments/Semi-governments 65 64 Pfandbriefe/Covered bonds 9 10 Cash/Other 0 1 Corporates 19 19 Total Banks 3 3 €251bn Structured products 4 4 Loans1 Governments/Semi
Slide 42: Fixed-income portfolio
Additional information: Investments Fixed-income portfolio Total Fixed-income portfolio % Total €207bn Governments/Semi-governments 55 (55) Loans to policyholders/Mortgage loans 4 (4) Pfandbriefe/Covered bonds 17 (18) Structured products 2 (2) Corporates 14 (14) Bank bonds 2 (2) Cash/Other 5 (5) App
Slide 43: Fixed-income portfolio
Additional information: Investments Fixed-income portfolio Total Rating structure Regional breakdown % % Without With Total policyholder 30.6.2021 31.12.2020 AAA 41 (41) BB 4 (3) participation AA 23 (24) <BB 1 (1) Germany 5.0 19.8 24.8 25.9 Total US 14.6 2.1 16.7 15.7 €207.1bn A 12 (12) NR 5 (5) Fra
Slide 44: Fixed-income portfolio: Governments/Semi-governments
Additional information: Investments Fixed-income portfolio Governments/Semi-governments Rating structure Regional breakdown % % Without With Total policyholder 30.6.2021 31.12.2020 AAA 46 (44) BB 2 (2) participation AA 30 (32) <BB 1 (0) Germany 3.8 18.9 22.6 24.0 Total US 16.6 1.6 18.2 16.9 €113.5bn
Slide 45: Fixed-income portfolio: Pfandbriefe/Covered bonds
Additional information: Investments Fixed-income portfolio Pfandbriefe/Covered bonds Rating structure Regional breakdown % % 30.6.2021 31.12.2020 Germany 31.3 32.2 AAA 75 (75) BBB 1 (1) France 22.1 20.9 UK 10.2 10.2 Total AA 22 (22) NR 1 (1) Netherlands 8.4 8.3 €34.7bn A 1 (2) Norway 5.4 5.7 Sweden
Slide 46: Fixed-income portfolio: Corporate bonds
Accounting view – Investments Fixed-income portfolio Corporate bonds (excluding bank bonds) Rating structure Sector breakdown % % 30.06.2021 31.12.2020 AAA 2 (2) BB 18 (17) Utilities 13.9 13.9 Total AA 5 (5) <BB 4 (3) Industrial goods and services 13.8 12.9 €29.7bn A 18 (19) NR 0 (1) Oil and gas 11.
Slide 47: Fixed-income portfolio: Structured products
Additional information: Investments Fixed-income portfolio Structured products Structured products portfolio (at market values): Breakdown by rating and region €m Rating Region Market- AAA AA A BBB <BBB NR USA + RoW Europe Total to-par ABS Consumer-related ABS1 273 208 31 0 0 0 393 118 511 101% Corp
Slide 48: Fixed-income portfolio: Bank bonds
Additional information: Investments Fixed-income portfolio Bank bonds Rating structure Regional breakdown Total % % Senior Sub- Loss- bonds ordinated bearing 30.6.2021 31.12.2020 US 34.6 4.1 0.0 38.8 31.6 AAA 0 (1) BB 5 (4) UK 8.6 0.7 0.2 9.5 11.4 Total AA 11 (16) <BB 0 (0) Germany 8.1 0.1 0.8 9.0 8
Slide 49: Sensitivities to interest rates, spreads and equities
Additional information: Investments Sensitivities to interest rates, spreads and equities1 Sensitivity to risk-free interest in €bn (change in basis points) –50bps –25bps +50bps +100bps Change in market value, gross +9.1 +4.4 –8.2 –15.6 Change in on-balance-sheet reserves, net +2.4 +1.2 –2.2 –4.3 Ch
Slide 50: On- and off-balance-sheet reserves
Additional information: Investments On- and off-balance-sheet reserves €m 31.12. 31.12. 31.3. 30.6. 2019 2020 2021 2021 in Q2 Market value of investments 247,310 252,789 248,707 250,597 1,890 Total reserves 33,120 37,269 30,397 31,135 738 On-balance-sheet reserves Fixed-interest securities 10,738
Slide 51: On- and off-balance-sheet reserves
Additional information: Investments On- and off-balance-sheet reserves €m On-balance-sheet reserves Off-balance-sheet reserves 1 Total reserves (gross) 14,499 16,636 Provision for deferred premium refunds –5,781 –8,821 Deferred tax –1,963 –2,247 Minority interests –11 – Consolidation and currency ef
Slide 52: Changes to shares in circulation
Additional information: Shareholder information Changes to shares in circulation Acquisition of Retirement of Weighted average number of shares in circulation 31.12. own shares in own shares in 30.6. Shares (millions) 2020 Q1 2021 Q1 2021 2021 (millions) Shares in 140.1 – – 140.1 143.6 140.3 140.1 1
Slide 53: Financial calendar 2021
Financial calendar 2021 Balance sheet media conference for 2020 financial statements Analysts’ and Investors’ call Half-Year Financial Report as at 30 June 2021 Annual General Meeting 2021 25 FEBRUARY 28 APRIL 10 AUGUST 17 MARCH 6 MAY 9 NOVEMBER Quarterly statement as at 31 March 2021 Quarterly stat
Slide 54: For information, please contact
For information, please contact Investor Relations team Christian Becker-Hussong Thorsten Dzuba Christine Franziszi Head of Investor & Rating Agency Relations Tel.: +49 (89) 3891-8030 Tel.: +49 (89) 3891-3875 Tel.: +49 (89) 3891-3910 Email: tdzuba@munichre.com Email: cfranziszi@munichre.com Email: c
Slide 55: 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