Munchener Ruckversicherungs-Gesellschaft AG · XETR:MUV2
Munchener Ruckversicherungs-Gesellschaft — Munich Re — Investor Day (June 2015)
138 slides from Munchener Ruckversicherungs-Gesellschaft's investor day presentation, Jun 30, 2015
Slide 1: Investors' Day: Reinsurance operations in Asia-Pacific
© Christian Hörmann – PresentationWorks Investors' Day Reinsurance operations in Asia-Pacific London, 30 June 2015 Investors’ Day Asia-Pacific 1
Slide 2: Agenda
Agenda Introduction Becker-Hussong 2 General introduction to Asia Wenning 9 P-C reinsurance in Greater China Chang 21 P-C reinsurance in Southeast Asia and South Korea Buholzer 40 P-C reinsurance in India Kotak 58 P-C reinsurance in Japan Eckl 63 Life reinsurance in Asia Cossette 76 General introduc
Slide 3: Today's speakers
Introduction Today’s speakers Joachim Wenning Roland Eckl Member of the Board of Management Chief Executive Life Reinsurance Asia Pacific, Australasia/Japan/India/ Indian Subcontinent Steven Chang Daniel Cossette CEO Head of Asia Pacific Munich Re Beijing Branch Life Reinsurance Claudia Buholzer Lud
Slide 4: Why hold an Investors' Day on reinsurance operations in Asia-Pacific?
Introduction Why hold an Investors' Day on reinsurance operations in Asia-Pacific? Attractive markets – Expected real premium growth1 Opportunities in p-c – e.g. insurance gap in nat cat2 300 Emerging Asia 9.3 % Overall losses U$bn 8.2 Insured losses Mature Asia-Pacific 1.7 200 2.4 North America 2.5
Slide 5: Munich Re Group – A strong presence in Asia-Pacific
Introduction Munich Re Group – A strong presence in Asia-Pacific Group presence in Asia-Pacific – Gross written premium as at 31.12.2014 % ERGO1 Reinsurance 0.4 97.0 TOTAL €4.7bn Munich Health Reinsurance only 2.6 Reinsurance, ERGO and/or Munich Health Group synergies Capital/ Joint Knowledge Reinsu
Slide 6: P-C reinsurance business in Asia-Pacific – Written by different business units
Introduction P-C reinsurance business in Asia-Pacific (APAC) – Written by different business units P-C reinsurance – GWP Asia-Pacific1 €bn P-C reinsurance – GWP1 % 11 Japan Germany, Asia/Pacific, Africa (GAPA) 12 SEA/Korea Greater TOTAL Asia-Pacific 36 China Greater Australia, Germany Middle €16.7bn
Slide 7: SFR business in Asia-Pacific – Mainly credit and industrial business
Introduction SFR business1 in Asia-Pacific – Mainly credit and industrial business in China and Australia SFR in Asia-Pacific – GWP by line of business2 % SFR in Asia-Pacific – GWP by region2 % Aviation/ Credit Other China Space 55 21 54 5 TOTAL India TOTAL €168m 5 €168m Agriculture CIP3 Thailand Au
Slide 8: Life reinsurance business in Asia-Pacific – Higher share of critical illness and disability
Introduction Life reinsurance business in Asia-Pacific – Higher share of critical illness and disability products ILLUSTRATIVE Life reinsurance – GWP1 % 40% 10 Japan 40% 50% UK SEA/South 20 Korea Canada Greater 10% TOTAL Asia-Pacific 25 China 5% Continental €10.0bn 16% 60% Europe 45% Australia/ 45 1
Slide 9: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurancein Asia Cossette General introduction to Australia/Ne
Slide 10: Emerging Asia's economies are expected to remain global growth drivers
General introduction to Asia Emerging Asia’s economies are expected to remain global growth drivers Regional split of global GDP % Nominal GDP €tn Rest of world 12 16 Mature Asia Emerging Asia 18 14 9 Mature Asia 9 20 11 Emerging Asia 30 25 7 7 North America 5 6 5 3 Europe 35 30 2004 2014 2004 2010
Slide 11: Emerging Asia expected to catch up with insurance penetration
General introduction to Asia Emerging Asia expected to catch up with insurance penetration Life insurance % Property-casualty insurance % ILLUSTRATION ILLUSTRATION Expectation for 2020 Expectation for 2020 Insurance penetration1 Insurance penetration1 Mature Asia2 Mature Asia2 Emerging Asia3 Emergin
Slide 12: P-C: Protection gap in Asia – Underinsured market exposed to natural catastrophes
General introduction to Asia P-C: Protection gap in Asia – Underinsured market highly exposed to natural catastrophes Asia – Overall and insured nat cat losses US$bn Overall and insured nat cat losses per continent1 % 250 Overall losses Insured losses 8 43 28 200 Europe North Asia America 150 5 100
Slide 13: Life: Catch-up potential in Emerging Asia
General introduction to Asia Life: Catch-up potential in Emerging Asia Emerging Asia1 Mature Asia2 Population Young … … and growing Ageing … … and shrinking Age By age groups (2010) m bn Age By age groups (2010) m bn group group 4 >100 0.2 0,2 >100 Female Male Female Male 90-100 90-100 80-90 80-90 3
Slide 14: Munich Re – Strong footprint in Asia
General introduction to Asia Munich Re – Strong footprint in Asia Having conducted business in Asia since 1912, Munich Re has established various offices over the years 1962 Hong Kong 1967 Tokyo Beijing Seoul Tokyo Shanghai 1975 Singapore Taipei 1981 Kuala Lumpur Mumbai Hong Kong Taipei Kuala Lumpur
Slide 15: Munich Re portfolio in Asia – Premium development
General introduction to Asia Munich Re portfolio in Asia – Premium development Asian operations – Gross written premium €bn Life Life Sustained growth across all major markets Property-casualty Significant broadening of traditional business – 3.3 continued strong contribution of FinMoRe with vol
Slide 16: Munich Re portfolio in Asia – Pleasing profitability
General introduction to Asia Munich Re portfolio in Asia – Pleasing profitability P-C – Underwriting result €m P-C – Combined ratio % 190.4 Actual 2011 burdened by exceptionally 1 555 534 285 Normalised high nat cat losses 258 Competitive environment becoming noticeable while underlying profitab
Slide 17: Life reinsurance – Portfolio composition
General introduction to Asia Life reinsurance – Portfolio composition Risk-return profile of selected sub-portfolios relative to core business Higher ILLUSTRATION Traditional mortality/ FinMoRe FinMoRe critical illness High strategic relevance and Asset Representing the core – strong bottom-line con
Slide 18: Reinsurance property-casualty – Geographic portfolio overview
General introduction to Asia Reinsurance property-casualty – Geographic portfolio overview Result volatility of market vs. profitability % Sustain portfolio ILLUSTRATION Manage volatility Higher Developed market with Sustain portfolio Manage volatility Achieve sufficient profits comparatively lo
Slide 19: Specifics of the Asian markets
General introduction to Asia Specifics of the Asian markets Regulatory environment Considerable changes in Nationalisation/trade barriers, Changing political regulatory framework, e.g. China e.g. Indonesia environment Emerging Asia Mature Asia Diverging market needs Demand for capital ranging fr
Slide 20: What makes Munich Re different in Asia
General introduction to Asia What makes Munich Re different in Asia Asian Expected to remain the most attractive growth region despite some challenges markets Strong Market-leader position and well-established player in many dynamic growth areas footprint Capital Reliable provider of significant cap
Slide 21: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurancein Asia Cossette General introduction to Australia/Ne
Slide 22: Greater China – Two different faces
P-C reinsurance in Greater China Greater China – Two different faces Annual real GDP growth % Gross national income per capita ‘000 USD1 12 80 ML China Hong Kong Hong Kong Taiwan Taiwan ML China 9 60 6 40 3 20 0 0 2010 2011 2012 2013 2014 2020e 1990 2000 2010 2020e Mainland China (ML) – The global
Slide 23: Economic ties getting closer as the country opens up its market further
P-C reinsurance in Greater China Economic ties getting closer as the country opens up its market further 1981 – Office opened in Taipei Taiwan China 1956 – Established business connections in China 1997 – Representative offices opened in Beijing and Shanghai 2003 – First international reinsurer to H
Slide 24: Substantial premium growth vs. small underwriting margins
P-C reinsurance in Greater China Substantial premium growth vs. small underwriting margins Gross written premiums €bn Underwriting margins1 % ML China 4.7 Hong Kong Taiwan 250.6 2.7 2.9 CAGR +17% 0.8 0.5 170.1 CAGR +24% 98.3 85.6 74.1 49.8 57.6 35.8 –4.5 2009 2010 2011 2012 2013 2014e 2017e 2020e 20
Slide 25: Primary insurance market dominated by motor business and top 4 domestic insurers
P-C reinsurance in Greater China Primary insurance market dominated by motor business and top 4 domestic insurers ML China: Market development – GWP % ML China: Market share of P-C insurers (2014) % €241bn CAGR Foreign PICC 13 Other 21% 2 33 CAGR Marine 11% +20% 1 Casualty 15% 4 Motor 18% Other Ping
Slide 26: Disproportionate growth in reinsurance due to reduced motor cessions
P-C reinsurance in Greater China Disproportionate growth in reinsurance due to reduced motor cessions Greater China – GWP vs. ceded premium €bn Leading onshore reinsurers in Greater China – GWP Primary insurance premium 4 €bn Ceded premium 3 Cession rate (%) 98.3 2 85.6 1 74.1 0 2009 2010 2011 2012
Slide 27: Munich Re's global risk expertise fits reinsurance buying motivation
P-C reinsurance in Greater China Munich Re’s global risk expertise fits well with the reinsurance buying motivation in emerging markets Reinsurance buying motivation in Greater China Risk transfer ML China Taiwan Hong Kong Capacity Capacity Reactive reinsurance buying based Capital on loss records m
Slide 28: New national 10 articles highlight importance of insurance
P-C reinsurance in Greater China “New national 10 articles” highlight importance of insurance in supporting national development 1 2 3 4 5% insurance Insurance as Develop Refine nat cat penetration and part of social liability insurance RMB 3,500 premium security system insurance mechanisms per capi
Slide 29: C-ROSS – China evolving to a risk-based capital regime
P-C reinsurance in Greater China C-ROSS1 – China evolving from a current volume- based to a risk-based capital regime Current solvency regime in China (Solvency I) Similar to Solvency I, based purely on premium and incurred loss amount of the insurer Minimum capital calculation based on previous
Slide 30: C-ROSS: Impact on primary and reinsurance
P-C reinsurance in Greater China C-ROSS: Impact on primary and reinsurance Primary market and deregulation Reinsurance market and deregulation C-ROSS C-ROSS Motor deregulation Underwriting loss Capital management Innovation C-ROSS may release €5bn solvency capital C-ROSS will require foreign rei
Slide 31: Commercial motor de-tarification reform
P-C reinsurance in Greater China Commercial motor de-tarification reform China motor market premium €bn Commercial motor de-tarification reform Commercial motor Compulsory third-party liability Pricing data Base rate Own price collection setting setting The pilot reform roll-out in the six provinc
Slide 32: P-C motor quota-share treaties
P-C reinsurance in Greater China P-C motor quota-share treaties Munich Re portfolio – P-C quota shares1 Comments ILLUSTRATION Large p-c motor quota-share treaties balance out other volatile treaties written in ML China Thin margins for these treaties reflect the limited volatility/downside due t
Slide 33: Loss events in China 1980–2014
P-C reinsurance in Greater China Loss events in China 1980–2014 Overall vs. insured nat cat losses in China US$bn Majority of losses from typhoons and floods … % 150 Climatological Geophysical Overall losses 8 19 Insured losses Total 125 loss events Hydrological 1,200 Meteorological 100 36 37 75 …wh
Slide 34: Munich Re nat cat strategy in ML China
P-C reinsurance in Greater China Munich Re nat cat strategy in ML China Nat cat strategy Government schemes Earthquake pool Commercial programmes Government-initiated nat cat Nation wide residential Commercial nat cat programmes earthquake pool programmes Disaster expense cover Capital market soluti
Slide 35: Chinese government initiating various nat cat insurance programmes
P-C reinsurance in Greater China Chinese government initiating the establishment of various nat cat insurance programmes State Council’s main goal Government programmes in ML China Accelerate the development of the modern Closed insurance industry Under discussion Main covers under Government progra
Slide 36: Key financials – Decent profitability
P-C reinsurance in Greater China Key financials – Decent profitability Gross written premium €m Combined ratio % Underwriting result €m 107 1,605 94.9 94.6 100 92.8 90 91.8 1,285 69 995 1,053 824 52 82.1 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Development in line
Slide 37: Munich Re – Development of business portfolio
P-C reinsurance in Greater China Munich Re – Development of business portfolio Premium split by line of business % Comments 2 4 Moderate motor share reduction: 9 8 In 2014 and 2015, no participation in motor 6 Engineering solvency deals and general trend towards 8 reduced motor cessions under quot
Slide 38: Market challenges and opportunities
P-C reinsurance in Greater China Market challenges and opportunities Major market challenges Opportunities In the primary insurance market, esp. the Nat cat programmes and quasi-compulsory commercial sector, premium rate is far below liability products driven/encouraged by the risk-commensurate
Slide 39: Key takeaways and outlook
P-C reinsurance in Greater China Key takeaways and outlook Financial Underlying premium development in line with growth of the reinsurance market results Decent profitability despite challenging market environment Munich Re well positioned in Greater China with its strong franchise Strategic
Slide 40: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurancein Asia Cossette General introduction to Australia/Ne
Slide 41: Continuous GDP growth …
P-C reinsurance in Southeast Asia and South Korea Continuous GDP growth … Annual real (inflation adjusted) GDP growth % 15.2 2010 2011 2012 2013 2014 Average 2015-2020e 7.6 7.8 7.4 6.8 7.2 6.4 6.5 6.4 6.5 6.5 6.2 6.2 6.0 6.1 6.2 6.0 5.6 5.5 6.0 5.6 5.0 5.2 5.6 5.2 5.4 4.4 4.7 4.1 3.7 3.5 3.7 3.4 3.4
Slide 42: … and rising wealth, especially in Vietnam and Indonesia
P-C reinsurance in Southeast Asia and South Korea … and rising wealth, especially in Vietnam and Indonesia Gross national income (GNI) per capita USD ‘0001 1990 2000 2010 2020e 88.6 +24% 71.3 51.1 +31% 40.6 33.9 +37% 30.9 27.8 +30% 20.9 20.3 +58% 15.5 +49% 16.1 12.7 12.4 +66% 11.6 10.0 10.4 8.9 8.0
Slide 43: ASEAN region – Key features of (re)insurance markets
P-C reinsurance in Southeast Asia and South Korea ASEAN region – Key features of (re)insurance markets Fragmented insurance markets with approx. 350 players and large growth potential Heterogeneous characteristics in each market with varying needs for reinsurance Non-domestic reinsurers hold m
Slide 44: South Korea – Key features of (re)insurance market
P-C reinsurance in Southeast Asia and South Korea South Korea – Key features of (re)insurance market Ninth-largest p-c insurance market in the world, third-largest in Asia Market share of top 4 insurers: ~75% Mature and saturated p-c market, growth mainly driven by long-term savings business
Slide 45: Primary and reinsurance markets – Key features
P-C reinsurance in Southeast Asia and South Korea Primary and reinsurance markets – Key features Stage of development Mature markets Emerging markets1 % Insurance density South Korea: High Low Singapore: Medium Growth potential Korea 34 Thailand 45 primary insurance Malaysia 50 Singapore 48 Vietnam
Slide 46: Primary and reinsurance markets – Premium development
P-C reinsurance in Southeast Asia and South Korea Primary and reinsurance markets – Premium development Gross written premiums €bn Premium growth 2013–2020 Other ASEAN Malaysia ASEAN: ~€14bn Vietnam CAGR 105.4 Philippines ~6% Over all periods ~30% of premium Singapore Thailand volumes accessible f
Slide 47: Primary insurance market – Line of business composition
P-C reinsurance in Southeast Asia and South Korea Primary insurance market – Line of business composition Gross written premiums €m Other 53,092 Marine Casualty 36,800 5,180 Property 4,164 3,644 3,407 2,976 2,947 2,428 2,329 1,155 617 672 868 2010 2014 2010 2014 2010 2014 2010 2014 2010 2014 2010 20
Slide 48: Primary insurance market – Development of loss ratios
P-C reinsurance in Southeast Asia and South Korea Primary insurance market – Development of loss ratios Loss ratios for largest ASEAN markets1 % ASEAN – Loss ratio by line of business % Korea Casualty Marine 277.2 ASEAN Property 97.2 65.4 153.0 58.5 58.3 56.0 54.4 46.5 40.8 52.0 84.9 52.1 35.9 83.1
Slide 49: Reinsurance – Buying motivations
P-C reinsurance in Southeast Asia and South Korea Reinsurance – Buying motivations Reinsurance buying motivation in Southeast Asia and South Korea Risk transfer South Korea Singapore Emerging Capacity Capacity Capital Consultancy Capital management services management Consultancy Reinsurer's Improve
Slide 50: Reinsurance – Distribution channels and market shares
P-C reinsurance in Southeast Asia and South Korea Reinsurance – Distribution channels and market shares P-C reinsurance market premium (share of ceded premiums) % Market shares Direct 2013 Non-domestic Domestic Broker 2013 reinsurers reinsurers ~2/3 ~1/3 10 10 10 15 15 10 ASEAN 25 35 30 45 50 60 70
Slide 51: Munich Re – Key financials
P-C reinsurance in Southeast Asia and South Korea Munich Re – Key financials Gross written premium €m Combined ratio % Underwriting result €m 339 342 258.8 ASEAN 121 284 294 286 Korea 63 58 27 20 14 26 108.7 –14 –3 101.7 93.0 82.8 51.0 85.5 67.1 79.6 ASEAN Korea 19.1 –227 2010 2011 2012 2013 2014 20
Slide 52: Munich Re – Business in ASEAN
P-C reinsurance in Southeast Asia and South Korea Munich Re – Business in ASEAN GWP – Breakdown by region % GWP – Breakdown by line of business % €135m €215m Other ASEAN 4 1 Others 6 2 7 8 15 6 12 Indonesia Casualty 5 20 17 16 16 Phillipines Engineering 4 22 22 29 Malaysia Marine 9 61 22 Thailand Mo
Slide 53: Munich Re – Business in South Korea
P-C reinsurance in Southeast Asia and South Korea Munich Re – Business in South Korea Split by line of business % Outlook €149m €127m Others Continuing soft market given abundant capacity 2 2 and increasing retentions 6 Motor 13 Frequent sizable single losses due to higher 40 Marine values and b
Slide 54: Singapore – Leading insurance market place in Asia
P-C reinsurance in Southeast Asia and South Korea Singapore – Leading insurance market place in Asia Economy Triple-A rated economy with strong growth potential Sound and stable location for business expansion into Asia World's fourth most important financial centre, easily accessible Robust
Slide 55: Special feature – Lessons learnt from Thai floods in 2011
P-C reinsurance in Southeast Asia and South Korea Special feature – Lessons learnt from Thai floods in 2011 Background – Flood causation Conclusions and recommendations Monsoonal and tropical cyclone-triggered rains – Control risk accumulation, especially for nat cat braking floodgates and allow
Slide 56: Munich Re – Medium-term strategy in ASEAN region
P-C reinsurance in Southeast Asia and South Korea Munich Re – Medium-term strategy in ASEAN region Opportunities Munich Re’s strengths GDP growth, push for higher insurance density Strong presence with full mandate Increasing sophistication of regulatory frameworks Bundling of specific exper
Slide 57: Key takeaways and outlook
P-C reinsurance in Southeast Asia and South Korea Key takeaways and outlook Twofold growth strategy: South Support top four insurers with Munich Re’s full product range and Korea develop selected smaller and medium-sized insurers ASEAN Attractive growth markets despite some challenges markets
Slide 58: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurance in Asia Cossette General introduction to Australia/N
Slide 59: Market: Strong momentum building up for resurgence in economic growth
P-C reinsurance in India Market: Strong momentum building up for resurgence in economic growth GDP INR tn After recent slowdown, economy expected to grow by ~7% p.a. to the third largest economy by 2020s – main drivers: 96 Demography: population of 1.27 billion representing 17.3% of world populati
Slide 60: Insurance reforms add to attractiveness of Indian p-c market
P-C reinsurance in India Much-awaited insurance reforms add to the overall attractiveness of Indian p-c market Primary and reinsurance premium projections INR bn Breakdown by line of business in 2022 % 2014 2018 2022 Other Motor CAGR CAGR CAGR 11 53 11.0% 1,944 11.2% 10.1% 1,483 Enge- Fire 1,296 Tot
Slide 61: Focus on four key pillars to explore p-c reinsurance opportunities in India
P-C reinsurance in India Focus on four key pillars to explore p-c reinsurance opportunities in India Development of ceded reinsurance premiums INR bn Growth drivers 368 Under-penetration to meet growing needs New segments of large consumer base (motor, personal Agro accident, home-owners) 25%
Slide 62: Munich Re (Group) in India – Strong presence and commitment
P-C reinsurance in India Munich Re (Group) in India – Strong presence and commitment Reinsurance ERGO and Munich Health Presence through representative office: Three joint ventures – HDFC ERGO for p-c Property-casualty (1998) and service company, (2007), Apollo Munich for health (2007) and life (200
Slide 63: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurance in Asia Cossette General introduction to Australia/N
Slide 64: Japan – Saturated and highly professional insurance market …
P-C reinsurance in Japan Japan – Saturated and highly professional insurance market … Limited growth opportunities … % 10 Japan the third-largest economy in the world Base trend of low growth expected to continue … 5 … e.g. due to declining population – leading to lower unemployment rate and i
Slide 65: … dominated by top three insurance groups
P-C reinsurance in Japan … dominated by top three insurance groups Macro environment Regulation Technology M&A Focus on policyholder protection Advanced intelligent Industry consolidation in the Economic value-based solvency transportation system mature domestic market regime under discussio
Slide 66: Primary insurance market – Steady top-line growth
P-C reinsurance in Japan Primary insurance market – Steady top-line growth Primary insurance – GWP €bn Breakdown by line of business – GWP 2014e % GWP Other Motor Cession rate % 6 41 75.5 77.3 69.8 71.8 67.0 Residential 14.6 earthquake 15.4 15.6 2 14.7 TOTAL 13.7 €77.3bn CALI1 9 2010 2011 2012 2013
Slide 67: Reinsurance market – A competitive environment
P-C reinsurance in Japan Reinsurance market – A competitive environment Ceded reinsurance premiums (incl. Kyosai) €bn Breakdown by line of business (total) % Available to CALI1 11.8 11.3 overseas 46 11.0 10.3 reinsurers 9.2 29 TOTAL €11.3bn Residential Other earthquake 12 13 Breakdown “available to
Slide 68: Munich Re – History of more than 100 years in Japan
P-C reinsurance in Japan Munich Re – History of more than 100 years in Japan Munich Re in Japan Business relations with the Japanese insurance market since 1912 First permanent representative assigned to Tokyo in 1953 First foreign reinsurer to open liaison office in Tokyo in 1967 – Converted
Slide 69: Munich Re – Key financials
P-C reinsurance in Japan Munich Re – Key financials Gross written premium €m Combined ratio % Underwriting result €m 444 287 333 398 401 537.3 190 142 331 320 43.2 52.2 22.6 23.8 –1,706 2010 2011 2012 2013 2014 2010 20111 2012 2013 2014 2010 20111 2012 2013 2014 Top-line strongly impacted by 201
Slide 70: Munich Re portfolio
P-C reinsurance in Japan Munich Re portfolio Breakdown by line of business – GWP 2014 % Breakdown by nature of business – GWP 2014 % Other Property Facultative Treaty 2% (almost exclusively 11% 89% nat cat) Marine TOTAL 80% TOTAL 4% €320m €320m Casualty 14% April renewal 2015 – Market environment Ap
Slide 71: Natural catastrophe business in Japan
P-C reinsurance in Japan Natural catastrophe business in Japan Nat cat losses in Japan US$ bn Munich Re positioning 200 Earthquake Munich Re writing earthquake and Overall losses Insured losses Tohoku wind/flood business in Japan 150 Earthquake Despite upward trend in nat cat losses, Kobe 100 Ty
Slide 72: Significant nat cat events in recent years
P-C reinsurance in Japan Significant nat cat events in recent years Thai floods (10/2011) Snow Japan (2/2014) Accumulation of single large Fourth costliest insured nat cat event risk losses in Japan Snow Timely and sufficiently accurate market Detailed exposure data were Japan not available
Slide 73: Munich Re's strategic positioning – Unique selling propositions
P-C reinsurance in Japan Munich Re’s strategic positioning – Unique selling propositions Premium capacity provider Premium partner Premium solution provider Offering large capacities with Strong local presence providing Providing solutions in Japan sustainable terms and clients access with glo
Slide 74: Business opportunities
P-C reinsurance in Japan Business opportunities Tailor-made Capital efficiency solutions – Cyber Rising data volume creating solutions close interaction with C-levels potential for new risk segment via dedicated teams Munich Re already active in the Special product lines – e.g. USA and Europ
Slide 75: Key takeaways and outlook
P-C reinsurance in Japan Key takeaways and outlook Financial Prone to volatile results due to high nat cat share results Reliable partnership indispensable to perform in the Japanese market Sustainably provide capacity Strategic Support clients in their global growth strategies – Emerging gl
Slide 76: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurance in Asia Cossette General introduction to Australia/N
Slide 77: Life insurance in Asia
Life reinsurance in Asia Life insurance in Asia GDP growth will drive life insurance spending % Large and growing workforce bn Premium CAGR 2014-2020 Working-age population 15 3 Indonesia 12 China Pakistan India 2 Asia 9 Thailand Vietnam Europe Philippines 6 Malaysia 1 North America Singapore 3 Germ
Slide 78: Highly-diverse mix of mature and emerging markets
Life reinsurance in Asia Highly-diverse mix of mature and emerging markets Mature Asia Emerging Asia Japan Hong Kong Singapore Taiwan South Korea China India Malaysia Thailand Philippines Indonesia Vietnam High Low Ageing population Insurance penetration Product sophistication Pensions gap Low High
Slide 79: Life reinsurance market in Asia
Life reinsurance in Asia Life reinsurance market1 in Asia Individual new reinsurance premium US$m Group total reinsurance premium US$m CAGR CAGR 8.5% 19.7% 603 642 513 553 565 576 445 468 375 344 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Reinsurer market shares – Premium % Past trend to cont
Slide 80: Life reinsurance environment
Life reinsurance in Asia Life reinsurance environment Non-cyclical % High barrier to entry % View that adequacy of life reinsurance pricing in Asia is rational Market share of contestable cessions of top six reinsurers in Asia 87 90 83 83 80 79 2012 2013 2014 2012 2013 2014 Market (generally) discip
Slide 81: Munich Re life reinsurance in Asia
Life reinsurance in Asia Munich Re life reinsurance in Asia Decentralised structure Regional hub in Singapore Beijing Seoul Tokyo Shanghai Takaful hub in Malaysia Taipei Hong Kong Mumbai Strong local presence Kuala in all key markets Lumpur Singapore Infrastructure mostly complete Munich Re well-pos
Slide 82: A leading life reinsurer
Life reinsurance in Asia A leading life reinsurer The no. 1 player % The leading brand in Asia % Market penetration – Individual and group Local brand positioning 72 69 66 60 58 55 54 42 31 27 25 7 Munich A B C D E Munich A B C D E Re Re Pole position % Pre-eminent position with clients Reinsurers l
Slide 83: History of profitable growth
Life reinsurance in Asia History of profitable growth Gross written premium €m Technical result €m Value of new business €m Non-traditional Non-traditional 97 93 Traditional 1,178 Traditional 81 15 8 957 959 872 871 17 54 58 54 59 56 712 571 408 334 11 7 613 35 82 85 29 63 48 49 466 464 537 344 388
Slide 84: Quality back book
Life reinsurance in Asia Quality back book Claims experience better than assumed1 €m Lead relationship No. of companies citing reinsurer as 21 110 1st or 2nd most important 19 88 15 61 55 43 6 21 0 2010 2011 2012 2013 2014 Munich A B C D E Re Source: NMG Consulting Asia client survey 2014 Positioned
Slide 85: Munich Re Asia life reinsurance portfolio
Life reinsurance in Asia Munich Re Asia life reinsurance portfolio Shift to emerging markets – Premium income % Shift to living benefits – Premium income Other living benefits Emerging Asia Critical illness Mature Asia Mortality 2012 2014 2012 2014 Risk profile is stable, limited exposure to long-te
Slide 86: Value proposition tailored to market needs
Life reinsurance in Asia Value proposition tailored to market needs – Optimisation vs. know-how transfer Mature Emerging Consultancy service Consultancy service Capacity Capital management Capacity Capital management Optimisation Know-how transfer Industry-leading automation provider (MRAS) Loca
Slide 87: Mature Asia market – Example: Japan
Life reinsurance in Asia Mature Asia market – Example: Japan Large but not growing €bn Challenging environment Top 10 life primary markets in 2020 Little or no GDP growth United States Japan Challenging demographics China Life insurance in structural decline except for United Kingdom France te
Slide 88: Emerging Asia market – Example: China
Life reinsurance in Asia Emerging Asia market – Example: China Large and growing €bn Positive growth outlook Top 10 life primary markets in 2020 Strong policy support United States Japan Target: 5% penetration by 2020, implies China 15%+ CAGR United Kingdom France “national ten” initiatives It
Slide 89: Emerging Asia market – Example: India
Life reinsurance in Asia Emerging Asia market – Example: India Still relatively small… €bn Life market is recovering Top 10 life primary markets in 2020 Long-awaited Insurance Bill (2008) enacted in United States Japan December 2014 China Reinsurers can now open branches in India, United Kingdom
Slide 90: Product development – New products developed and reinsured in partnership
Life reinsurance in Asia Product development – New products developed and reinsured in partnership with clients using global expertise and proven model Integrate with client’s existing product development process Development and Discovery workshop Preliminary analysis Idea sharing implementation Und
Slide 91: Financially-motivated reinsurance – A key strategic pillar
Life reinsurance in Asia Financially-motivated reinsurance – A key strategic pillar with regional hub in Singapore Market profile, needs Important value contribution – VNB €m Diverse regulatory markets and needs Client base both multinationals and local 17 15 insurers 11 Increasing local capit
Slide 92: Asset protection
Life reinsurance in Asia Asset protection Financial solutions regional hub in Tokyo Japan – Historical milestones and key figures Providing client solutions where: Hedge effectiveness Design and reinsurance of savings products require enhanced capabilities to manage market, policyholder-behaviour
Slide 93: Munich Re Automation Solutions Ltd (MRAS)
Life reinsurance in Asia Munich Re Automation Solutions Ltd (MRAS) – World-leading provider of new business software solutions 74 clients in 24 countries worldwide Enable change Grow via service Help clients enter new Take new business business segments process to next level Allfinanz Munich Re soft
Slide 94: Family (life) Retakaful – Shari'a-compliant Islamic reinsurance hub
Life reinsurance in Asia Family (life) Retakaful – Shari’a-compliant Islamic reinsurance hub in Kuala Lumpur Low insurance penetration in Islamic markets Strong VNB growth €m Insurance penetration (%) GNI1 per capita (‘000 US$) 4 160 8 3 120 5 2 80 1 40 2 0 0 1 1 2010 2011 2012 2013 2014 Munich Re’s
Slide 95: Key takeaways and outlook
Life reinsurance in Asia Key takeaways and outlook Financial Track record of 10%-15% CAGR results Disciplined underwriting philosophy A dominant life reinsurer Strategic Premium reinsurer with differentiated services positioning Strong local presence Healthy back book Portfolio Increas
Slide 96: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurance in Asia Cossette General introduction to Australia/N
Slide 97: Australia/New Zealand – Macroeconomics at a glance
General introduction to Australia/New Zealand Australia/New Zealand – Macroeconomics at a glance Real GDP growth % 10-year government bond yields % 4 8 3 6 2 4 1 2 Australia New Zealand Australia New Zealand 0 0 2010 2012 2014 2016e 2018e 2020e 2010 2011 2012 2013 2014 Insurance penetration (2014) %
Slide 98: Highly professional and well-regulated primary insurance markets
General introduction to Australia/New Zealand Australia and New Zealand to operate as highly professional and well-regulated primary insurance markets Market dynamics p-c Market dynamics life Ongoing market concentration, top five players Concentrated market: top nine players have have ~85% of t
Slide 99: Absence of large nat cat losses putting p-c rates under pressure
General introduction to Australia/New Zealand Absence of large nat cat losses putting p-c rates under pressure – Life market expected to harden P-C (re-)insurance market – GWP1 A$ bn Life (re-)insurance market – GWP1 A$ bn Primary insurance Reinsurance Primary insurance Reinsurance 64.4 47.1 49.6 41
Slide 100: Property-casualty – Focus on managing volatility and innovative solutions
General introduction to Australia/New Zealand Property-casualty – Focus on managing volatility and exploiting innovative solutions in Australia/NZ Result volatility of market vs. profitability % Sustain portfolio ILLUSTRATION Manage volatility Higher Developed market with Sustain portfolio Manage
Slide 101: P-C markets in Australia and NZ prone to nat cat volatility
General introduction to Australia/New Zealand P-C markets in Australia and New Zealand prone to nat cat volatility of various perils Nat cat losses in Australia and NZ US$bn Key characteristics ~21 ~36 Random large loss occurrence with most years 15 Overall losses showing benign claims experience
Slide 102: Long-term business commitment and well-established local presence
General introduction to Australia/New Zealand Long-term business commitment and a well-established local market presence Munich Re offices in Australia and New Zealand Munich Re has been active in Australia since August 1955 Markets served through three offices with more than 250 staff Sydney
Slide 103: Significant premium increase – Australia and New Zealand gaining importance
General introduction to Australia/New Zealand Significant premium increase – Australia and New Zealand gaining in importance Australia/NZ operations – GWP €m Share of reinsurance GWP 2014 (2010) % P-C Life 1,932 AUS/NZ Other 1,695 1,661 7 (5) 83 (84) 1,388 727 1,173 629 698 487 384 1,066 1,205 901 9
Slide 104: Natural catastrophes resulting in earnings volatility for p-c business
General introduction to Australia/New Zealand Natural catastrophes resulting in earnings volatility for the property-casualty business Combined ratio % Underwriting result €m Actual 519 258.4 473 Normalised1 167.2 –60 105.4 –516 –1,452 51.5 53.1 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Ac
Slide 105: Australian operations run on a shared services model
General introduction to Australia/New Zealand Australian operations run on the basis of a shared services model with powerful synergy opportunities Business model Ambition Traditional p-c reinsurance Optimising value for clients Mainly nat cat business Opinion leader and preferred discussion par
Slide 106: What makes Munich Re different in Australia/New Zealand
General introduction to Australia/New Zealand What makes Munich Re different in Australia/New Zealand Pacific Australia and New Zealand key markets for Munich Re markets Strong Market-leading position driven by outstanding services, a high level of expertise and footprint tailor-made solutions that
Slide 107: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life re in Asia Cossette General introduction to Australia/New Zealan
Slide 108: Primary life insurance market – Players and market shares
Life reinsurance in Australia/New Zealand Primary life insurance market – Players and market shares Market share (2014 in-force premiums1) A$m Distribution channel breakdown (2014) % 2,500 Group risk Individual DII Group IFA2 Direct IFA2 2,000 Individual LS 41 38 17 48 1,500 1,000 In-force New sales
Slide 109: Significant changes for financial advisers
Life reinsurance in Australia/New Zealand Significant changes for financial advisers – Restructuring of remuneration affecting primary life insurance market ... The ASIC Review1 The Trowbridge2 Report More than 37% of advice received by Max. 20% level commission on advice consumers failed to com
Slide 110: Various compounding factors contributing to a complex structure
Life reinsurance in Australia/New Zealand ... as well as various other compounding factors contributing to a complex structure External factors – Examples Internal factors – Examples Ageing demographics Workplace conditions Data and analytics Claims philosophy Increase in the Changes in statutor
Slide 111: Focus on Individual Disability Income Insurance (DI)
Life reinsurance in Australia/New Zealand Focus on Individual Disability Income Insurance (DI) Industry quarterly net results for individual disability income insurance A$m 100 Numerous product features added with little or no change in price 0 Complex products –100 Simplified underwriting –20
Slide 112: Focus on Group insurance business
Life reinsurance in Australia/New Zealand Focus on Group insurance business Industry quarterly net results for Group business A$m 100 Short-term policies but guaranteed renewable No sunset clause, resulting in a long tail of TPD1 claims 0 Large industry superannuation funds dominate, competing
Slide 113: Reinsurance market
Life reinsurance in Australia/New Zealand Reinsurance market Individual new cessions A$m Group total cessions A$m 337 1,969 304 259 1,542 217 1,269 188 1,071 979 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Individual new cessions 2014 – Market shares % Group total sessions 2014 – Market shares
Slide 114: Drivers for purchasing reinsurance
Life reinsurance in Australia/New Zealand Drivers for purchasing reinsurance Cession rates % Drivers for purchasing reinsurance 40 Cession rates are relatively stable and high for group business Principal motivations for reinsurance according to NMG Consulting 30 Risk transfer Solvency/capit
Slide 115: Munich Re Australia – Company profile
Life reinsurance in Australia/New Zealand Munich Re Australia – Company profile Snapshot of Munich Re Australia Geographic and product mix (2014) % Business relations with New Zealand Australia Group lump Individual 5 95 sum DI the Australian insurance 20 35 market since 1955 Market is served GW
Slide 116: Munich Re Australia – Key figures
Life reinsurance in Australia/New Zealand Munich Re Australia – Key figures Gross written premiums €m Technical result €m VNB €m 698 727 36 29 629 15 20 15 487 –2 384 –15 –75 –129 –167 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Growth slowing due to Disability bus
Slide 117: Short-term stabilisation and re-engineering of the business
Life reinsurance in Australia/New Zealand Munich Re Australia – Short-term stabilisation and re-engineering of the business Business plan – Development phase What have we done? What are we doing? Where are we going? Re-engineered operations Refining capabilities Realise competitive advantage Redes
Slide 118: Key takeaways and outlook
Life reinsurance in Australia/New Zealand Key takeaways and outlook Adjust rates and conditions to safeguard profitably Business Retain clients on acceptable new and sustainable terms and conditions strategy Rebuilding the Group proposition with an analytical approach Using the right tools t
Slide 119: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurance in Asia Cossette General introduction to Australia/N
Slide 120: Munich Re – Position in the Australian property-casualty market
P-C reinsurance in Australia/New Zealand Munich Re – Position in the Australian property-casualty market Responsible region Munich Re business model Australia Risk Solutions1 Traditional 30% reinsurance New Zealand TOTAL 70% GWP Pacific Islands €1.2bn Reinsurance market – GWP2 A$m Primary insu
Slide 121: Traditional reinsurance – Key financials
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Key financials1 Gross written premium €m Combined ratio % Underwriting result €m 311 847 523 459 754 664 639 551 –48 195 106 –523 33 34 –1,440 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2011/12: Taki
Slide 122: Traditional reinsurance – Nat cat business a core element of the Group
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Nat cat business a core element of the Group Munich Re (Group) – Nat cat exposure (net of retrocession)1 €bn AggVaR (return period 200 years, pre-tax) Australia within the top 5 nat cat exposures 4 Australian regulatory requirement
Slide 123: Special feature: Christchurch earthquakes
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Special feature: Christchurch earthquakes Development of total market loss €bn Illustration EQ3 EQ2 Jun 2011 20 Feb 2011 EQ1 Sep 2010 Increase Increase Increase 2010 2011 2012 2013 2014 Christchurch earthquakes Loss complexities Less
Slide 124: Traditional reinsurance – Client structure
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Client structure Gross written premium by client1 in 2014 % Client 1 Highly concentrated market – several Other 33 large insurers dominating personal and 17 commercial lines Client 5 Munich Re portfolio reflects market 5 structur
Slide 125: Business model: Value optimiser and complex risk taker
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Business model: Value optimiser and complex risk taker A unique offering ... ... exemplified by Premium discussion partner Strong local presence and expertise Opinion leader – providing local/global know- Easy access to Munich Re
Slide 126: Traditional reinsurance – Portfolio mix
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Portfolio mix 20101 20141 Recent development Other Property Other Property Change in cedants’ purchasing, 1 prop. 4 prop. e.g. switch from property 50 8 proportional to non-proportional Property TOTAL facult. TOTAL Active portfol
Slide 127: Traditional reinsurance – Portfolio management
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Portfolio management Property Casualty Maintain leading shares in core nat cat and risk programmes Keep shares in preferred programmes Balanced participation across programmes and regions Potential business opportunities thro
Slide 128: Traditional reinsurance – Competitor landscape
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Competitor landscape Competitor landscape – Top-tier global reinsurers dominate the market1 Offshore Munich Re Challenging environment with gradually declining placements 23 premiums 42 Shift from proportional to XL Trend towar
Slide 129: Traditional reinsurance – Market outlook
P-C reinsurance in Australia/New Zealand Traditional reinsurance – Market outlook Australia/New Zealand market overview1 A$bn Observations 60 Primary insurance premium growth driven by inflation-linked increases in personal lines rather CAGR 50 than underlying price increases or expansion of 3.8%
Slide 130: Risk Solutions – Market characteristics and corporate strategy
P-C reinsurance in Australia/New Zealand Risk Solutions – Market characteristics and corporate strategy Market characteristics Australia Market consolidation in an advanced stage as top 3 insurers control more than 50% of the market Trend towards increasing retentions result in shrinking reinsur
Slide 131: Risk Solutions – At a glance
P-C reinsurance in Australia/New Zealand Risk Solutions – At a glance At a glance Value proposition Established in Australia/New Zealand since 2008 100% owned by Munich Re Group Underwriting > A$500m per year Munich Re (Group) financial strength rating Equity interests in selected MGAs to
Slide 132: Risk Solutions – Key Financials
P-C reinsurance in Australia/New Zealand Risk Solutions – Key Financials Gross written premium1 €m Combined ratio1 % Underwriting result1 €m 358 14 312 324 105 104 7 102 238 237 –4 97 95 –11 –12 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Underlying organic growth in
Slide 133: Key takeaways and outlook
P-C reinsurance in Australia/New Zealand Key takeaways and outlook Australia/New Zealand a core market with good underlying performance Financial Benefitting from covering the full value chain – limited growth prospects in traditional results reinsurance largely offset by primary insurance opera
Slide 134: Agenda
Agenda Introduction Becker-Hussong General introduction to Asia Wenning P-C reinsurance in Greater China Chang P-C reinsurance in Southeast Asia and South Korea Buholzer P-C reinsurance in India Kotak P-C reinsurance in Japan Eckl Life reinsurance in Asia Cossette General introduction to Australia/N
Slide 135: Executive summary – Business in Asia-Pacific
Executive summary Executive summary – Business in Asia-Pacific providing substantial earnings contribution Emerging Driver of global GDP and insurance premium growth – Asia Accompanying clients as knowledge partner and service provider Mature Saturated markets with rather limited growth prospects –
Slide 136: Financial calendar
Shareholder information Financial calendar 2015 6 August Interim report as at 30 June 2015 5 November Interim report as at 30 September 2015 2016 4 February Preliminary key figures 2015 and renewals Balance sheet press conference for 2015 financial statements 16 March Analysts' conference in Munich
Slide 137: For information, please contact
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@munichre.com E-mail: cfranz
Slide 138: 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