111 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Feb 28, 2020
Slide 1: Good progress towards 2020 ambition – Exploiting opportunities in an improving market environment
Analysts’ and Investors’ Call 2020 Good progress towards 2020 ambition – Exploiting opportunities in an improving market environment 28 February 2020 Please note: Presentation based on 2019 preliminary figures Image: Klaus Ohlenschläger / dpa Picture Alliance
Slide 2: Analysts' and Investors' Call 2020
Analysts' and Investors' Call 2020 Good progress Group finance 1 towards 2020 ambition Joachim Wenning 2 and risk Christoph Jurecka 3 ERGO Markus Rieß 4 Reinsurance Torsten Jeworrek 5 Additional information Analysts’ and Investors’ Call 2020 28 February 2020 2
Slide 3: Strong performance in 2019
Good progress towards 2020 ambition Strong performance in 2019 IFRS net income Solvency II ratio €2.7bn (€2.3bn) 237% (245%) Exceeds initial guidance of €2.5bn Well above target capitalisation Return on Equity Dividend per share €9.80 (€9.25) 1 9.2% (8.4%) Above cost of capital High pay-out to share
Slide 4: Ongoing business and earnings growth supports 2020 ambition
Good progress towards 2020 ambition Ongoing business and earnings growth supports 2020 ambition Reinsurance 1 Increase 2.3 €2.3bn 2.1 earnings1 €bn 2.7 2.8 2.5 2.3 2.3 Guidance Actual Plan Reduce 2019 2019 2020 complexity ERGO 1 €530m 400 440 2018 2019 2020 2020 Digital Guidance Actual transformatio
Slide 5: Reinsurance – Strategic growth initiatives well on track
Good progress towards 2020 ambition Reinsurance – Strategic growth initiatives well on track 2020 2018 2019 Continue ▪ Growth initiatives in P-C paying off ▪ Consolidate top position in mature (esp. in the US and Asia) – GWP +8%1 profitable markets ▪ Strong new business generation in Life growth pat
Slide 6: ERGO – Sustainably increasing profitability
Good progress towards 2020 ambition ERGO – Sustainably increasing profitability 2020 2018 2019 Successful ▪ ESP2 ahead of financial targets ▪ Tied agent productivity further completion ▪ ESP2 ahead of financial targets improved by 18%1 of ESP2 ▪ Tied agent productivity significantly increased by 20%
Slide 7: Business and earnings focus – Gradually increasing risk appetite in underwriting
Good progress towards 2020 ambition Business and earnings focus – Gradually increasing risk appetite in underwriting where opportunities are good Balancing growth and risk in property-casualty1 31% ▪ Disciplined growth in P-C Re in select mature/emerging 26%28% markets and business lines with unchan
Slide 8: New organisational set-up in investments aims to generate higher returns
Good progress towards 2020 ambition New organisational set-up in investments aims to generate higher returns Streamlining the organisation Improving risk-return profile Group approach Strategic level One consistent investment Further expand asset classes that still have strategy across the Group att
Slide 9: Systematically integrating sustainability criteria when creating value
Good progress towards 2020 ambition Systematically integrating sustainability criteria when creating value – Key achievements in 2019 Climate Sustainability Top positions in strategy risk management major SRI ratings Enabling new technologies Consequently improving risk DVFA Scorecard for Corporate
Slide 10: Shareholders participate in our earnings growth
Good progress towards 2020 ambition Shareholders participate in our earnings growth Sustainable dividend-per-share growth … … supports attractive shareholder returns3 €9.80 Peer 1 52.5% 3.10 Munich Re 44.0% Total pay-out Peer 2 43.6% 2005–2019 2005 20191 ~€ 30 bn 41.0% Peer 3 Ongoing share buy-backs
Slide 11: Outlook 2020
Good progress towards 2020 ambition Outlook 2020 Group Gross premiums written Net result Return on investment ~€52bn ~€2.8bn ~3% ERGO Combined ratio Gross premiums written Net result P-C Germany International ~>€17.5bn ~€530m ~92% ~94% Reinsurance Combined ratio Technical result, incl. fee income Gr
Slide 12: Presentation of business ambition beyond 2020
Munich Re Investor Day Presentation of business ambition beyond 2020 8 December 2020 Analysts’ and Investors’ Call 2020 12 Image: ipopba / Getty Images
Slide 13: Group finance and risk
Group finance and risk 2 Image: Vertigo3d / Getty ImagesiStockphoto
Slide 14: Financial results 2019 – Strong earnings despite high large losses and low/negative interest rates
Group finance and risk Financial results 2019 – Strong earnings despite high large losses and low/negative interest rates IFRS net income ▪ Earnings growth in Reinsurance despite challenging Q4 – improved underlying C/R of ~98-99% €2.7bn (€2.3bn) ▪ ERGO contributing €440m – ahead of its ESP targets
Slide 15: IFRS result Q4 2019
Group finance and risk – IFRS IFRS result Q4 2019 – Major drivers Reinsurance: €116m ERGO: €101m FX losses: Net income High large losses in P-C and Fully in line with run-rate –€241m €217m strengthening of disability of FY guidance assumptions in Australian life Tax income: (€238m) business (approx.
Slide 16: IFRS result FY 2019 – Operating performance supported by strong balance sheet
Group finance and risk – IFRS IFRS result FY 2019 – Operating performance supported by strong balance sheet Reserving Investments Taxes Strong Resilience to adverse Valuation reserves Ongoing prudent balance development, e.g. US casualty – increased to €33bn setting of reserves sheet unchanged reser
Slide 17: Prudent reserving protecting balance sheet against negative surprises
Group finance and risk – IFRS – Reserving Prudent reserving protecting balance sheet against negative surprises while continuously contributing to earnings strength Managing industry hot spots Munich Re impact Ongoing reserve releases 1 Asbestos De-risking with large Complex litigation, claims settl
Slide 18: Investment return – Resilience to low interest rates expected to persist
Group finance and risk – IFRS – Investments Investment return – Resilience to low interest rates expected to persist 3.2% 3.2% 3.2% RoI 2.8% Disposal ZZR financing, prudent ALM Negative 1.1 1.1 1.1 gains and usual portfolio turnover – impact on ~5bps 0.7 valuation reserves partly realised running yi
Slide 19: German GAAP (HGB) – Capital repatriation well funded
Group finance and risk – HGB German GAAP (HGB) – Capital repatriation well funded despite decline of distributable earnings HGB result below capital repatriation €3.8bn –1.3 HGB result 2018 1.5 –0.1 €3.0bn €bn 2.2 –1.0 Underwriting result –0.9 Equalisation provision €9.3bn Investment result +0.6 8.5
Slide 20: Sound economic capitalisation supports capital-management strategy
Group finance and risk – Solvency II Sound economic capitalisation continues to support our capital- management strategy – First-time application of VA for four ERGO entities Development of Solvency II ratio SII sensitivities % 302% 267% 245% 247 253 244% 237%3 220% 226 232 224 219 Optimal range 213
Slide 21: SCR development – Balanced risk profile between insurance and investment risks
Group finance and risk – Solvency II SCR development – Balanced risk profile between insurance and investment risks maintained SCR increase largely driven by selective business growth and low interest rates €bn Total SCR Property-casualty Life and Health (incl. diversification) 8.8 Insurance 7.6 Sel
Slide 22: Selected changes in disclosure as from Q1 2020
Group finance and risk Selected changes in disclosure as from Q1 2020 to increase comparability across segments and peers Current situation Changes as from Q1 20201 Group ▪ Focus on economic value creation, ▪ IFRS ROE1 to replace external RORAC stronger consideration of IFRS ▪ Harmonise allocation o
Slide 23: ERGO
ERGO 3 Image: dem10 / iStockphoto Getty Images
Slide 24: ERGO Strategy Programme (ESP) – On track to deliver targets 2020
ERGO ERGO Strategy Programme (ESP) – On track to deliver targets 2020 Actual Guidance Actual ESP guidance 2018 2019 2019 20202 Total premiums €18.7bn ~€18.5bn1 €18.9bn ~€18.5bn Net profit €412m ~€400m1 €440m ~€530m Investments (net, accumulated) €597m €908m2 €770m €1,008m Total cost savings (net, ac
Slide 25: ERGO Strategy Programme – Progress in focus areas
ERGO ERGO Strategy Programme – Progress in focus areas Germany Digital Ventures International ▪ Product portfolio optimisation continued, ▪ nexible ▪ High earnings contribution and profitability in simplified product approach shows first results ▪ Growth continued (~62k policies; +23%1; core markets
Slide 26: ERGO Group – Key financials 2019
ERGO ERGO Group – Key financials 2019 Group L&H Germany P-C Germany International GWP €17.5bn €9.2bn (€9.3bn) €3.5bn (€3.4bn) €4.7bn (€4.6bn)1 (€17.4bn)1 Growth in Life new book partially Strong growth – increase in Premiums increased in core markets compensates for back-book attrition; commercial a
Slide 27: Life and Health Germany – Addressing low-interest-rate environment in Life
ERGO Life and Health Germany – Addressing low-interest-rate environment in Life New book Back book ▪ ERGO Vorsorge as unified risk carrier for ▪ Progress in portfolio migration onto new GWP new product offering through merger1 IT platform €9.2bn ▪ Profitable new business concentrating on ▪ Foundatio
Slide 28: Life and Health Germany – Maintaining leading positions in Health
ERGO Life and Health Germany – Maintaining leading positions in Health Life Business development on track Extension of market leading position in Germany supplementary insurance GWP ▪ Strong and sustainable earnings contribution ▪ Market leader with >20% market share2; strong new business developmen
Slide 29: Property-casualty Germany – Ongoing profitable premium growth
ERGO Property-casualty Germany – Ongoing profitable premium growth Other Transport/ Marine Motor Business development on track 2020 level already almost achieved in 2019 ▪ Strong premium growth in 2019 – increases in ▪ Sustainable improvement in 2019 driven by Legal protection GWP commercial and ret
Slide 30: International – Sustainable increase of profitability
ERGO International – Sustainable increase of profitability Consolidated portfolio with leading positions Successful expansion in selected growth in core markets markets GWP1 ▪ Premium increase1 in both core and growth ▪ India (P-C, Health): HDFC ERGO with substantial (without JVs) markets premium gr
Slide 31: Reinsurance
Reinsurance 4 Image: John Lund Getty Images
Slide 32: Property-casualty – Earnings growth fully supports the 2020 ambition
Reinsurance – Financials 2019 Property-casualty – Earnings growth fully supports the 2020 ambition Net Combined result €1,562m (€1,135m) ratio 101.0% (99.4%) ▪ Strong volume increase by almost €2bn – ▪ Major losses (15.2%) above average earnings trajectory supported by growth ▪ Underlying combined r
Slide 33: Life and Health – Result below guidance on strain from Australia
Reinsurance – Financials 2019 Life and Health – Result below guidance on strain from Australia – Favourable experience in other markets Technical Net result1 €456m (€584m) result €706m (€729m) ▪ On aggregate positive claims experience ▪ Decline of technical result ▪ Strong contribution from new busi
Slide 34: Well positioned to profitably grow 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 Solutions Reinsurance Reinsurance P-C Life and Health 1 Sustainable new 2 E
Slide 35: Life and Health – Strong footprint in all major markets
Reinsurance Life and Health – Overview of major markets 1 Strong footprint in all major markets Canada (€1.7bn / 14%) Continental Europe (€1.0bn / 9%) Asia / MENA (€3.0bn / 26%) ▪ Attractive margins despite ▪ Sound but stagnating traditional business overall ▪ Pleasing development of new competitive
Slide 36: Strong new business generation continues
Reinsurance Life and Health – New business 1 Strong new business generation continues – Portfolio composition fosters steady earnings growth Core Ambition2 Strong footprint in Fundament of Technical result, incl. fee income traditional reinsurance earnings generation In-depth expertise in risk asses
Slide 37: January renewals 2020 – Overall positive outcome
Reinsurance Property-casualty – January renewals 2019 2 January renewals 2020 – Overall positive outcome Market developments Munich Re January renewals Further improving environment – Overall price increases over- uneven distribution across lines compensating loss-trend expectations and geographies
Slide 38: Select growth in firming market environment
Reinsurance Property-casualty – January renewals 2020 2 Select growth in firming market environment January renewals 2020 % 100 –10.3 89.7 +5.3 +9.3 104.4 €m 10,205 –1,046 9,159 +545 +950 10,655 Change in premium +4.4% Thereof price movement1 ~ 1.2% Thereof change in exposure for our share +3.2% Tot
Slide 39: Growth initiatives gaining traction – Profitable business expansion
Reinsurance Property-casualty – Strategic initiatives 2 Growth initiatives gaining traction – Profitable business expansion Gross premiums written1 €bn Mature Emerging Risk Solutions 22.1 markets2 +4% markets2 +21% business2 +14% 20.4 France: Successful re-entry and India: Executing growth strategy
Slide 40: Growth areas – Expansion of nat cat business globally
Reinsurance Property-casualty – Strategic initiatives 2 Growth areas – Expansion of nat cat business globally, but locally selective based on risk appetite and terms US Secondary perils, e.g. wildfire, only written with material price increases, nat cat otherwise reduced appetite in reinsurance for
Slide 41: US casualty – Sustaining a robust portfolio
Reinsurance Property-casualty – Strategic initiatives 2 US casualty – Sustaining a robust portfolio Global traditional % US traditional casualty book1 % casualty book1 approx. 40% of global traditional casualty book Workers’ Motor Workers’ Motor Workers’ Commercial comp.2 liability comp. liability c
Slide 42: Risk Solutions – 2019 with another step back to target profitability
Reinsurance Property-casualty – Risk Solutions 3 Risk Solutions – 2019 with another step back to target profitability Gross premiums written Combined ratio €5.0bn (€4.3bn) 100.7% (103.4%) Capturing profitable growth opportunities Normalised for large losses (aerospace) C/R in line with mid-nineties
Slide 43: We focus on tangible business impact – Innovative and more disruptive offerings
Reinsurance – Creating new strategic options 4 We focus on tangible business impact – Innovative and more disruptive offerings are gaining traction Munich Re Domain expertise in Efficient Global Financial Strong brand No IT strategic underwriting, claims, access to presence strength and reputation l
Slide 44: Munich Re New Ventures – Tapping opportunities in Canadian group insurance market
Reinsurance – Creating new strategic options 4 Munich Re New Ventures – Tapping opportunities in the CAD 44bn Canadian group insurance market Bringing concrete solutions to our clients with the vision to enhance the Group insurance market and create new income streams Platform Munich Re ▪ Create ~€1
Slide 45: Cyber insurance – One of Munich Re's main strategic growth areas
Reinsurance – Cyber (re)insurance 4 Cyber insurance – Continuously one of Munich Re’s main strategic growth areas Gross premiums written cyber portfolio1 US$ m 604 ▪ Early and full commitment to cyber allows us to shape the market and results in a lead position 473 ▪ Good profitability of the cyber
Slide 46: Additional information
Additional information 5 Image: imaginima / Getty Images
Slide 47: Segment income statement Q4 2019
Additional information: Group finance and risk Segment income statement Q4 2019 €m Reinsurance Reinsurance ERGO ERGO ERGO Total L/H1 P-C L/H Germany P-C Germany International Q4 2019 Gross premiums written 3,091 5,172 2,327 695 1,256 12,540 Net earned premiums 2,778 5,347 2,331 863 1,195 12,515 Inco
Slide 48: Segment income statement 2019
Additional information: Group finance and risk Segment income statement 2019 €m Reinsurance Reinsurance ERGO ERGO ERGO Total L/H1 P-C L/H Germany P-C Germany International 2019 Gross premiums written 11,716 22,091 9,238 3,500 4,912 51,457 Net earned premiums 10,540 20,566 9,191 3,362 4,621 48,280 In
Slide 49: IFRS P&L statements – Changes as from Q1 2020
Additional information: Group finance and risk IFRS P&L statements – Changes as from Q1 2020 Actual 2019 (restated) €m Reinsurance ERGO Munich Re L&H P-C L/H Germany P-C Germany International Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Slide 50: Actual vs. analysts' consensus
Additional information: Group finance and risk Actual vs. analysts’ consensus Operating result – Actual vs. analysts’ consensus1 €m Major developments in Q4 2019 Q4 2019 Consensus Delta Reinsurance Property-casualty Reinsurance Property-casualty –30 251 –281 Combined ratio: 112.5% (consensus: 105.1%
Slide 51: IFRS capital position
Additional information: Group finance and risk – Capitalisation IFRS capital position Equity €m Capitalisation €bn Equity 31.12.2018 26,500 Change in Q4 0.4 0.3 0.3 Consolidated result 2,707 217 4.2 0.3 0.3 3.8 3.8 Changes 2.8 3.7 Dividend –1,335 0 Unrealised gains/losses 3,661 –1,078 Exchange rates
Slide 52: Premium development
Additional information: Group finance and risk Premium development Gross premiums written €m Segmental breakdown €m Reinsurance ERGO Property-casualty Life and Health Germany 2018 49,064 22,091 (43%) (p 8.1%) 9,238 (18%) (p –1.1%) Foreign exchange 921 TOTAL ERGO Property-casualty Germany Divestments
Slide 53: Reconciliation of operating result with net result
Additional information: Group finance and risk Reconciliation of operating result with net result Reconciliation of operating result with net result €m 2019 Q4 2019 Operating result 4,004 580 Other non-operating result –665 –193 Currency result 73 –241 Net finance costs –222 –56 Taxes on income –483
Slide 54: Very strong reserve position – Actual basic losses below actuarial expectations
Additional information: Group finance and risk – Reserves Very strong reserve position – Actual basic losses continue to be consistently below actuarial expectations Reinsurance group – Comparison of incremental expected losses with actual reported losses1 €m By exposure year By line of business 10,
Slide 55: Positive run-off result despite reserve strengthening in selected portfolios
Additional information: Group Finance – IFRS view – Reserving position Positive run-off result despite reserve strengthening in selected portfolios without weakening resilience against future volatility Ultimate losses1 – Favourable actual vs. expected comparison facilitates ultimate reductions for
Slide 56: Response to benign emergence of basic losses
Additional information: Group Finance – Reserves – Property-casualty – Reinsurance Response to benign emergence of basic losses in line with considered judgement Actual vs. expected Changes in projection Business rationale Property Releases follow favourable indications ▪ Positive actual-versus-expe
Slide 57: Property-casualty provision for outstanding claims
Additional information: Group Finance – Reserves Non-life – Reinsurance Property-casualty provision for outstanding claims By line of business % By maturity % Other Third-party liability >15 years 0–1 years 6 (4) 37 (38) 4 (4) 35 (36) Aviation 3 (2) 10–15 years 3 (4) Credit 3 (3) 5–10 years TOTAL 12
Slide 58: Asbestos and environmental survival ratio 31 December 2019
Additional information: Group Finance – Reserves Asbestos and environmental survival ratio 31 December 2019 Munich Re (Group) – Net definitive as at 31 December 20191 €m Asbestos Environmental A&E total Paid 3,319 1,002 4,320 Case reserves 450 126 576 IBNR 618 175 793 Total reserves 1,067 301 1,368
Slide 59: Investment result
Additional information: Group finance and risk – Investments Investment result €m Q4 2019 Return1 2019 Return1 2018 Return1 Regular income 1,618 2.6% 6,751 2.8% 6,586 2.8% Write-ups/write-downs –24 0.0% –309 –0.1% –1,054 –0.5% Disposal gains/losses 1,108 1.8% 2,779 1.1% 1,582 0.7% Derivatives2 –509
Slide 60: Return on investment by asset class and segment
Additional information: Group finance and risk – Investments Return on investment by asset class and segment 2019 Regular Write-ups/ Disposal Extraord. Other ᴓ Market %1 income -downs result derivative result inc./exp. RoI value (€m) Afs fixed-income 2.3 –0.0 1.0 0.0 0.0 3.2 130,076 Afs non-fixed-in
Slide 61: Investment portfolio
Additional information: Group finance and risk – Investments Investment portfolio Investment portfolio % Fixed-interest securities1 % Land and buildings Fixed-interest securities Structured products Governments/ 4.7 (4.6) 53.9 (53.8) 4 (3) Semi-government Corporates 63 (64) Shares, equity funds TOTA
Slide 62: Fixed-income portfolio
Additional information: Group finance and risk – Investments Fixed-income portfolio Total Fixed-income portfolio % Bank bonds Governments/ 1 (2) Semi-government 53 (53) Structured products 2 (2) Loans to policyholders/ TOTAL Mortgage loans 4 (4) €208bn Cash/Other 5 (5) Corporates 13 (12) Pfandbriefe
Slide 63: Fixed-income portfolio
Additional information: Group finance and risk – Investments Fixed-income portfolio Total Rating structure % Regional breakdown % NR1 AAA Without With Total 5 (5) 43 (43) policyholder participation 31.12.2019 31.12.2018 Germany 4.8 22.0 26.8 28.2 BB 3 (3) TOTAL US 14.0 1.7 15.6 14.3 2.2 5.1 7.3 8.1
Slide 64: Fixed-income portfolio – Governments/semi-government
Additional information: Group finance and risk – Investments Fixed-income portfolio Governments/semi-government Rating structure % Regional breakdown % BB AAA Without With Total 2 (2) 43 (43) policyholder participation 31.12.2019 31.12.2018 Germany 3.1 20.8 23.9 25.1 BBB 7 (7) TOTAL US 15.2 1.3 16.5
Slide 65: Fixed-income portfolio – Pfandbriefe/covered bonds
Additional information: Group finance and risk – Investments Fixed-income portfolio Pfandbriefe/covered bonds Rating structure % Regional breakdown % NR AAA 31.12.2019 31.12.2018 1 (1) 77 (74) Germany 35.4 37.7 France 19.5 19.7 BBB UK 9.8 8.4 0 (1) TOTAL Netherlands 8.4 7.8 A €43.4bn Sweden Norway 5
Slide 66: Fixed-income portfolio – Corporate bonds
Additional information: Group finance and risk – Investments Fixed-income portfolio Corporate bonds (excluding bank bonds) Rating structure % Sector breakdown % NR AAA 31.12.2019 31.12.2018 0 (1) 2 (2) Industrial goods and services 14.2 13.7 <BB Utilities 13.6 16.2 2 (2) TOTAL AA Oil and gas 10.9 11
Slide 67: Fixed-income portfolio – Structured products
Additional information: Group finance and risk – Investments Fixed-income portfolio Structured products Structured products portfolio (at market values): Breakdown by rating and region €m Rating Region Market-to- AAA AA A BBB <BBB NR USA + RoW Europe Total par ABS Consumer-related ABS1 174 80 66 0 0
Slide 68: Fixed-income portfolio – Bank bonds
Additional information: Group finance and risk – Investments Fixed-income portfolio Bank bonds Rating structure % Regional breakdown % Total NR AAA Senior bonds Subordinated Loss-bearing 31.12.2019 31.12.2018 1 (0) 1 (0) US 26.1 8.8 0.5 35.4 43.4 Canada 11.4 0.0 0.0 11.4 5.4 <BB Germany 4.9 0.3 5.1
Slide 69: Sensitivities to interest rates, spreads and equity markets
Additional information: Group finance and risk – 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) +9.1 +4.4 –8.3 –15.7 Change in on-balance-sheet reserves, net (€bn)1 +2.
Slide 70: On- and off-balance-sheet reserves
Additional information: Group finance and risk – Investments On- and off-balance-sheet reserves €m 31.12. 31.12. 30.9. 31.12. p 2017 2018 2019 2019 in Q4 Market value of investments 231,885 231,876 253,521 247,310 –6,210 Total reserves 25,395 22,002 38,148 33,120 –5,029 On-balance-sheet reserves Fix
Slide 71: On- and off-balance-sheet reserves
Additional information: Group finance and risk – Investments On- and off-balance-sheet reserves €m On-balance-sheet reserves Off-balance-sheet reserves1 Total reserves (gross) 14,574 18,546 Provision for deferred premium refunds –6,200 –10,861 Deferred tax –1,782 –2,348 Minority interests –7 0 Conso
Slide 72: Breakdown of SCR – Increase driven by business growth and lower interest rates
Additional information: Group finance and risk – Risk management – Risk disclosure Breakdown of SCR – Increase driven by substantial business growth and lower interest rates Risk category Group RI ERGO Div. €bn 2018 2019 Delta 2019 2019 2019 Substantial growth of nat cat portfolio, Property-casualty
Slide 73: Property-casualty risk – Increase mainly driven by business growth
Additional information: Group finance and risk – Risk management – Solvency II Property-casualty risk – Increase mainly driven by business growth in P-C Reinsurance Top scenario exposures €bn €bn 2019 2018 (net of retrocession) – AggVaR1 Basic losses 4.0 4.0 2019 2018 Top exposures Major losses2 8.3
Slide 74: Life and Health risk
Additional information: Group finance and risk – Risk management – Life and Health risk Life and Health risk Life and Health – VaR1 €bn 1.6 2019 Longevity 1.5 2018 Mortality 4.3 3.6 Morbidity 3.4 2.7 Health 0.9 0.8 Other 0.5 0.3 Total 6.4 5.3 Overall increase driven by Reinsurance ERGO Lower interes
Slide 75: Market risk – Solvency capital requirement
Additional information: Group finance and risk – Risk management – Market risk Market risk – Solvency capital requirement Risk category Group RI ERGO Div. €bn 2018 2019 2019 2019 2019 Equity 3.6 4.2 2.8 1.5 –0.1 Exposure increase and rising markets Reduction of duration mismatch and increased downsi
Slide 76: Market risk – Interest-rate sensitivity
Additional information: Group finance and risk – Risk management – Market risk Market risk – Interest-rate sensitivity DV011 €m Portfolio duration Net DV01 Assets Liabilities Assets Liabilities Munich Re2 –1 (–4) 172 (146) 173 (150) 8.4 (7.5) 9.0 (8.2) Reinsurance 12 (4) 46 (34) 34 (30) 6.5 (5.0) 6.
Slide 77: Operational risk
Additional information: Group finance and risk – Risk management – Operational risk Operational risk Operational risk scenarios1 – VaR €m 500 Top exposures2 400 1 Inappropriate financial reporting RI (misreporting, erroneous tax statement) 2 Inappropriate financial reporting ERGO 300 3 Product flaws
Slide 78: Sensitivities of SII ratio
Additional information: Group finance and risk – Risk management Sensitivities of SII ratio Ratio as at 31.12.2019 237 % Interest rate +50bps1 247 Interest rate –50bps1 224 Spread +50bps GOV 226 Spread +50bps CORP 232 Equity markets +30% 253 Equity markets –30% 219 FX –20% 233 Inflation +100bps2 234
Slide 79: Preliminary SII ratios of Munich Re and solo entities
Additional information: Group finance and risk – Risk management Preliminary SII ratios of Munich Re and solo entities1 €bn EOF SCR S-II Ratio S-II Ratio Internal Model (without TM2) (without TM2) (without TM2) (incl. TM2) Munich Re 41.5 17.5 237% 274% Munich Reinsurance Company 41.9 17.5 239% 276%
Slide 80: ERGO Life and Health Germany (1)
Additional information: ERGO ERGO Life and Health Germany (1) Gross premiums written €m Major result drivers €m 2018 9,345 Q4 2019 Q4 2018 p 2019 2018 p Technical result 36 94 –58 271 552 –281 Foreign exchange 1 Non-technical result 239 118 120 410 238 172 Divestments/investments –5 thereof investme
Slide 81: ERGO Life and Health Germany (2) – Key figures
Additional information: ERGO ERGO Life and Health Germany (2) – Key figures Life Germany Health Germany GWP – Market view3 €bn Comprehensive insurance – ERGO number 2 in German market Key figures1 % 2017 2018 2019 5.5 Reinvestment yield 1.5 1.6 1.8 3.7 2.8 2.8 2.3 Average yield 3.0 2.9 2.8 Average g
Slide 82: ERGO Property-casualty Germany (1)
Additional information: ERGO ERGO Property-casualty Germany (1) Gross premiums written €m Major result drivers €m 2018 3,377 Q4 2019 Q4 2018 p 2019 2018 p Technical result 72 37 36 303 166 138 Foreign exchange 1 Non-technical result 48 18 30 105 62 42 Divestments/investments 0 thereof investment res
Slide 83: ERGO Property-casualty Germany (2)
Additional information: ERGO ERGO Property-casualty Germany (2) Combined ratio % Gross premiums written 2019 (2018) €m ◼ Loss ratio ◼ Expense ratio Other Fire/property 2017 97.5 278 (264) 684 (635) 64.1 33.5 2018 96.0 62.5 33.4 2019 92.3 60.3 32.0 Transport/Marine 243 (228) Q4 2019 93.2 60.7 32.5 TO
Slide 84: ERGO International (1)
Additional information: ERGO ERGO International (1) Gross premiums written €m Major result drivers €m 2018 5,057 Q4 2019 Q4 2018 p 2019 2018 p Technical result –20 7 –26 171 228 –57 Foreign exchange –28 Non-technical result 77 15 62 131 14 116 Divestments/investments –142 thereof investment result 1
Slide 85: ERGO International (2)
Additional information: ERGO ERGO International (2) Combined ratio % Gross premiums written 2019 (2018) €m Property-casualty Life 95.3 95.6 95.4 95.0 94.5 94.8 2,791 (2,840) 698 (843) TOTAL 93.3 €4,912m 91.8 (€5,057m) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Health 2018 2018 2018 2018 2019 2019 2019 2019 1,424 (1,37
Slide 86: Overweight in North America and traditional mortality risk
Additional information: Reinsurance Life and Health Overweight in North America and traditional mortality risk 30% 70% 55% 45% Mortality ~65% Canada Morbidity ~25% 25% Continental Europe 65% Longevity ~10% 10% 10% UK/Ireland 35% NA ~50% USA Europe ~30% 90% 65% Asia/MENA ~15% Asia / MENA Latin Americ
Slide 87: Reinsurance Life and Health
Additional information: Reinsurance Life and Health Reinsurance Life and Health Gross premiums written €m Major result drivers €m 2018 10,849 Q4 2019 Q4 2018 p 2019 2018 p Technical result 30 141 –111 329 503 –175 Foreign exchange 309 Non-technical result 128 40 87 520 427 94 Divestments/investments
Slide 88: Result below guidance – Growth of fee income partly balances lower technical result
Additional information: Reinsurance Life and Health Result below guidance – Growth of fee income partly balances lower than expected technical result €m 2019 2018 Gross premiums written ▪ Top-line growth in Europe, Asia and the US Gross premiums written 11,716 10,849 Mortality 51% 51% Technical resu
Slide 89: Financially Motivated Reinsurance – Strong demand prevails
Additional information: Reinsurance Life and Health Financially Motivated Reinsurance – Strong demand prevails Gross premiums written1 €m Technical result1 €m New business contribution2 €m % of total % of total % of total 4,793 154 257 4,306 136 231 127 214 205 3,313 178 88 68 35 47 31 32 1,264 1,20
Slide 90: Asia – Success through tailor-made market and client strategies
Additional information: Reinsurance Life and Health Asia – Success through tailor-made market and client strategies Gross premiums written1 €m Technical result1 €m New business contribution2 €m % of total % of total % of total 3,045 162 149 315 2,182 2,338 108 244 1,909 100 86 198 190 180 26 33 910
Slide 91: Longevity – Hold on to prudent underwriting approach
Additional information: Reinsurance Life and Health Longevity – Hold on to prudent underwriting approach Gross premiums written €m Liability p.a. €m Strategic proposition % of total 3,292 685 ▪ Portfolio comprises longevity 614 transactions in the UK ▪ Market entry in 2011 after in-depth 484 2,020 4
Slide 92: Financial Markets – Comprehensive market risk solutions
Additional information: Reinsurance Life and Health Financial Markets1 – Comprehensive market risk solutions for the financial services industry IFRS earnings contribution2 €m Strategic proposition ▪ Offer comprehensive solutions to manage market risks and returns globally 103 ▪ Innovate new busines
Slide 93: Reinsurance Property-casualty
Additional information: Reinsurance Property-casualty Reinsurance Property-casualty Gross premiums written €m Major result drivers €m 2018 20,437 Q4 2019 Q4 2018 p 2019 2018 p Technical result –344 56 –401 1,000 1,250 –249 Foreign exchange 638 Non-technical result 315 –122 436 763 284 479 Divestment
Slide 94: Consistently managing portfolio quality – Profitability exceeds cost of capital
Additional information: Reinsurance Property-casualty – Traditional portfolio Consistently managing portfolio quality – Profitability comfortably exceeds cost of capital Traditional P-C portfolio – Outlook 20201 ▪ Quite stable portfolio composition ILLUSTRATIVE with slight move to specialty lines ▪
Slide 95: US casualty – Closely monitoring adverse trends, reserving risks manageable
Additional information: Reinsurance Property-casualty – US casualty US casualty – Closely monitoring adverse trends, reserving risks manageable US casualty provisions for % Immediate response to early signs outstanding claims of adverse development Risk Solutions Traditional Continuous and strong re
Slide 96: US casualty market highly differentiated
Additional information: Reinsurance Property-casualty – US casualty US casualty market highly differentiated – Still allows us to seize opportunities while active risk management remains key Market observations Munich Re approach ▪ Social inflation reflects the changing values of society ▪ Long-term
Slide 97: Risk Solutions: particularly good results – Aerospace hit by large loss events
Additional information: Reinsurance Property-casualty – Risk solutions Risk Solutions: AMIG, F&C and MRS with particularly good results – Aerospace hit by large loss events Combined GWP growth Combined GWP growth ratio 20191 20191,2 ratio 20191 20191,2 American Modern (AMIG) 88% +17% F&C 93% +35% ▪
Slide 98: Reinsurance Property-casualty – Combined ratio
Additional information: Reinsurance Property-casualty Reinsurance Property-casualty – Combined ratio ◼ Basic losses ◼ Major losses ◼ Expenses % 2017 114.1 54.8 25.8 33.5 2018 99.4 53.6 11.6 34.2 112.5 2019 101.0 51.4 15.2 34.4 105.1 104.7 Q4 2019 112.5 46.4 27.4 38.7 102.0 97.9 100.7 88.6 87.7 Major
Slide 99: Retrocession – Stable programme structure despite a tightened market
Additional information: Reinsurance Property-casualty – Risk trading Retrocession – Stable programme structure despite a tightened market Retrocession – Maximum in-force €m Munich Re key channels protection per nat cat scenario1 Traditional retrocession Australia Cyclone US Windstorm NE US Windstorm
Slide 100: Munich Re's maximum in-force nat cat protection
Additional information: Reinsurance Property-casualty – Risk trading Munich Re's maximum in-force nat cat protection Nat cat protection before reinstatement premiums, as at January 2020 €m Risk swaps Sidecars 1,000 Indemnity retro 500 0 Australia US Windstorm US Windstorm US EU EU Japan Cyclone Nort
Slide 101: January renewals with satisfactory outcome – Overall portfolio profitability increased
Additional information: Reinsurance Property-casualty – January renewals 2020 January renewals with satisfactory outcome – Overall portfolio profitability increased Munich Re portfolio – Price and volume change in major business lines Total Property Casualty Specialty lines Business line Prop. XL Pr
Slide 102: January renewals 2020 – Split by line of business and region
Additional information: Reinsurance Property-casualty – January renewals 2020 January renewals 2020 – Split by line of business and region Split by line of business % Split by region % 3 3 Aviation 3 3 Latin America 5 5 Credit 7 9 Marine 25 North America 32 34 32 Property Asia/Pacific/Africa 13 11 2
Slide 103: January renewals – Almost half of total P-C book up for renewal
Additional information: Reinsurance Property-casualty – January renewals 2020 January renewals – Almost half of total P-C book up for renewal Total property-casualty book1 % Regional allocation of January renewals % Remaining business January renewals North America Europe 30 46 32 30 Latin America T
Slide 104: Cautiously optimistic outlook for upcoming renewals
Additional information: Reinsurance Property-casualty – January renewals 2020 Cautiously optimistic outlook for upcoming renewals Total P-C book1 Treaty business January April July Remaining January2 Worldwide Asia/Pacific/ Worldwide Rest of Asia/ Worldwide Rest of Asia/ 30 46 Africa Pacific/Africa
Slide 105: Renewal results – Nominal price change 2011–2020
Additional information: Reinsurance Property-casualty – January renewals 2020 Renewal results – Nominal price change 2011–2020 2.4 1.2 1.0 0.8 0.2 0.3 –0.5 –0.9 –1.6 –2.4 2011 2012 2013 2014 2015 2016 2017 2018 2019 20201 1 January renewals only. Analysts’ and Investors’ Call 2020 28 February 2020 1
Slide 106: Increased top line – Well-balanced diversified portfolio
Additional information: Reinsurance Property-casualty – Portfolio Increased top line – Well-balanced diversified portfolio Total P-C book % 1 Traditional % 2 Risk Solutions % Risk Tailor-made Nat cat XL Casualty Aerospace American Modern Solutions solutions 9 (7) 49 (51) 8 (11³) 21 (21) 23 (21) 25 (
Slide 107: Portfolio management and high share of proportional business support earnings resilience
Additional information: Reinsurance Property-casualty – Portfolio traditional Portfolio management and high share of proportional business support earnings resilience Traditional 1 % Aviation Casualty motor Proportional Facultative 1 (1) 30 (32) 75 (77) 9 (8) Marine 2 (2) TOTAL TOTAL Credit Casualty
Slide 108: Strong long-term growth in cyber (re)insurance expected
Additional information: Reinsurance Property-casualty – Cyber (re)insurance Strong long-term growth in cyber (re)insurance expected – Munich Re with leading-edge expertise and market presence GWP global cyber insurance market1 US$ bn Cyber insurance market with strong expected growth Rest of World 1
Slide 109: Financial calendar
Additional information: Shareholder information Financial calendar 2020 18 March Annual report (Group), Annual report (Company) 29 April Annual General Meeting 2020 7 May Quarterly statement as at 31 March 2020 6 August Half-year financial report as at 30 June 2020 5 November Quarterly statement as
Slide 110: For information, please contact
Additional information: Shareholder information 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 E-mail: tdzuba@mun
Slide 111: 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